In Real Estate we use the Latin Term “Caveat Emptor”, which means Buyer Beware. It is used as a warning to anyone buying something that there might be unforeseen problems or faults with what is purchased. When obtaining your license as a Realtor, you learn this phrase over and over...it’s basically to ensure you do your own due diligence (taking Reasonable Care) when purchasing a property for your clients to avoid any potential lawsuits.
Another term that gets hammered home is “Fiduciary Duties”. Fiduciary duties are legal obligations to the client and are composed of 6 elements: Obedience, Loyalty, Disclosure, Confidentiality, Accounting and Reasonable Care. Many people are unaware of the fiduciary duties of their real estate agent, which brings me to the reason for this post.
Just recently I had a conversation with another Real Estate Agent who said his buyers were interested in purchasing a home I had listed. The conversation went something like this:
Agent: My buyers are interested in this property, but I want to know how much room there is to move on the price.
Me: I am not comfortable speaking for my clients, so if you want to place an offer on paper, then I can discuss it with the sellers.
Agent: That’s why I was asking about the price, I don’t want to waste anybody’s time. My buyers will pay $xxx,xxx (which was $20,000 below asking price) but cannot afford any more. What do you think about that?
Naturally, there was a lot more to the conversation, but I wanted to stop here and point out a KEY violation in this agent’s fiduciary duties to his clients!
Agents must safeguard their clients' secrets. For example, Agents often know the lowest price that a seller-client will take, but the agent must keep it a secret. Likewise, if a seller must sell due to an emergency, the agent may not reveal the seller's distress. Buyer's agents must also keep their clients' secrets. For example, the highest price that a buyer is willing to pay, or that the buyer loves a given house are secrets.
In short, the fiduciary duty of confidentiality means that you do not disclose anything that you learn about your client, their business, financial or personal affairs or motivations.
Unfortunately this is not the only time I have had almost this exact conversation...in fact I found myself noticing I was repeating myself a lot. What else is unfortunate, is that the term “Buyer Beware” now not only pertains to the home in which you are purchasing, but also to the Real Estate Agent you have placed your faith and trust in to do the best job representing you on what is probably the biggest purchase of your life! If the agent knew the maximum amount his clients could afford, why did he waste his client’s time showing them a property that was out of their reach, getting them excited about the home and giving them hope? Whose best interests does he have in mind – his or his clients??
This sort of thing really ruffles my feathers!