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The #1 Thing You Need to Know About Realtors

February 20, 2024

In a typical Agency Relationship (sole or single), one Realtor represents the client while another represents the opposing party. In this setup, the client is entitled to specific duties from their agent:

  • Full Disclosure: The Realtor is obligated to reveal all pertinent information that could impact the client’s decisions.
  • Loyalty: It is essential for the Realtor to consistently prioritize the client’s best interests.
  • Confidentiality: Any information shared in confidence must be safeguarded at all times.
  • Reasonable Care & Skill: The Realtor is expected to apply their expertise in line with industry standards.
  • Obedience: Compliance with the client’s lawful instructions is mandatory.
  • Full Accounting: All financial transactions related to the transaction must be accurately documented by the Realtor.

However, in a Dual Agency Relationship (where one agent represents both the seller and the buyer), complications arise due to inherent conflicts of interest. Since the seller and buyer often have conflicting objectives, such as price negotiations, it becomes challenging for the Realtor to serve both parties faithfully without compromising loyalty. Consent from all parties is required for this arrangement, transforming the Realtor into an impartial intermediary. While confidential information must remain confidential, certain disclosures, like property defects, may need to be revealed.

Interestingly, many individuals are unaware that an agency relationship can form informally without signing formal agreements. Casual interactions, such as meeting a Realtor at an open house, can inadvertently create an implied agency relationship. However, despite this legal implication, most people, including Realtors, are unaware of its existence. This lack of awareness, rather than malice, often leads to misunderstandings. Consequently, clients should assume that any information shared with the agent may be relayed to the opposing party unless agency relationship and confidentiality are explicitly discussed.

Efforts to educate individuals within the industry about agency relationships are underway, with Realtors now required to explain these concepts promptly. Nonetheless, this practice remains inconsistent.

In conclusion, it is crucial for clients to discern who represents their interests and who represents the opposing party when engaging with Realtors. Understanding one’s rights and the legal duties owed is paramount. If a client feels inadequately represented, reaching out to the Realtor’s regulatory body ensures adherence to industry standards.