New Entries
Attention Realtors: From Which Side of the Mouth do you Speak?
If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
Upon becoming a Realtor, an individual pledges themselves to a Code of Ethics which addresses their conduct as professional salespeople. Right there, first and foremost in Article 1, it states that Realtors pledge themselves to protect and promote the interests of their clients, and that this obligation is primary. In other words, the client’s interest is to be placed ahead of yours. Are you with me so far? This is important.
In California, one of the first documents we provide a potential client is the “Disclosure Regarding Real Estate Relationships”. The document states the “affirmative obligations” an agent has during the transaction. It also states that an agent has a fiduciary duty to their client.
I read many Real Estate Blogs, and a very good one is the Rain City Guide, it offers great content and is well written. Ardell DellaLoggia does a great jog of explaining what fiduciary duty represents.
It’s very understandable how an attorney/client relationship can exist within the meaning of fiduciary, but how about a Realtor/client. The disparity is that most attorneys’ I know are paid by the hour. Paid well too, I might add. Real estate agents are paid upon the successful close of escrow. Commission based sales are predicated upon someone buying something. Evidently the state of Washington saw the conundrum and eliminated the fiduciary relationship a Buyer has with an agent, as outlined in Russ Cofano’s post.
So back to the original question: Attention Realtors, From Which Side of the Mouth do you Speak?
I know for a fact, that fiduciary is one commonly overlooked component in the life of a Realtor. A very common issue is the amount of commission, a Seller is willing to pay to sell their home. Here at Up2date we just reported on commissions in the Pasadena Housing Market. I have had many competing agents tell me that their Broker prohibits them from showing a home that does not offer a competitive commission of at least 2.5%. I have had people we know tell us that they used Mr. or Ms. Agent with XYZ Realty, only to have them drive past a home that offered less than a “perceived” standard commission. Where is the “fiduciary” here?
If a Buyers Agent has a fiduciary duty to put their client’s interest first, do you take your prospective home buyer to a For Sale By Owner and risk the client falling in love with the house, with no guarantee of compensation for their hard working agent? Should an agent be expected to work for free?
My guess is that there are many agent’s who do not understand the ramifications and responsibilities that are created with a fiduciary responsibility. In order to maintain the integrity of our profession, we should not be allowed to selectively adhere to only the rules and regulations that benefit us. The Code of Ethics and Agency Disclosure’s exist for a reason; to educate and inform the consumer. Its time that all Realtors learned and applied these basic principals.
