Thursday, October 26, 2023 / by Tim Elder
In the world of real estate, the relationship between an agent and their client is built on trust, professionalism, and a set of ethical obligations. For an agent to effectively represent a client, they must uphold certain fundamental duties. These duties are paramount to ensuring that the client's best interests are always at the forefront. This article delves into the four core duties an agent owes to a client: obedience, loyalty, care, and accounting.
When a client provides a lawful and reasonable instruction, it's the duty of the agent to obey. This obligation ensures that the client, who is ultimately the decision-maker, has their directives executed accurately by their representative.
Example: If a seller instructs their agent to list their property at a specific price, even if the agent disagrees with that price, the agent should respect and follow the client's wishes, so long as it doesn’t contravene any laws or ethical obligations.
Loyalty is about placing the client's interests above all others, including the agent's own interests. It means avoiding conflicts of interest and ensuring that no actions or decisions benefit the agent at the expense of the client.
Example: If an agent receives two offers on a property and one offers a higher commission but is not the best deal for the seller, the agent must prioritize the client's best interest over the potential for higher earnings.
The duty of care requires agents to exercise competence, diligence, and skill in all their actions. It's about providing the client with the necessary information, insights, and advice they need to make informed decisions. Agents are expected to be knowledgeable about market conditions, provide timely responses, and ensure that all documentation and negotiations are handled with precision and expertise.
Example: If a buyer is interested in a property, the agent should investigate potential issues, such as property liens or structural problems, and inform the client to ensure they're making a well-informed decision.
Accounting is the responsibility of the agent to account for all funds and property entrusted to them. This includes earnest money deposits, down payments, or any other funds related to the transaction. These funds must be handled with utmost transparency, ensuring they are correctly documented and deposited in the appropriate accounts.
Example: If a buyer provides an earnest money deposit when making an offer, the agent must ensure that the money is deposited into an escrow account and not commingled with personal funds.
Real estate transactions are often complex, and for many people, they represent one of the most significant financial decisions of their lives. Given the gravity of this decision, it's imperative that agents uphold the highest standards of professionalism and ethics. By adhering to the fundamental duties of obedience, loyalty, care, and accounting, agents can ensure they're providing the best possible service to their clients, cementing trust and fostering long-lasting professional relationships.