Why you should avoid an agent who won't tell you this!

When you decide to purchase a property you need to know your rights as a buyer to protect yourself. Sellers who use a real estate agent have selected a real estate professional to represent them and get their home sold for the most money possible. They have a written contract in place that states this and they have agreed to compensate the agent for this task. The agent in turn will use that money to compensate a real estate agent who helps get the home sold. Up until January 1st 1995 ALL real estate agents were working for sellers regardless if they had any connection to the property a buyer was interested in. In my opinion, this was not serving the best interests of the buyers. January 1st 1995 the rules were changed so that Buyers could have the same rights and privileges as sellers and in fact, buyers now have two options.

Agents will NOT put a home on the market and begin the process of selling the home until they have a written contract signed by all owners of the property. The general public would believe an agent foolish to do otherwise. Agents, in general, have done a poor job educating Buyers about their rights and I hope to change that. If you meet and agent and they fail to give you this critical information my recommendation to you is to find another agent, one who is knowledgeable and has YOUR BEST INTERESTS in mind! A professional real estate agent will let Buyers know they can choose to be treated as a client or to simply receive customer service; each choice has different rights and obligations.

Difference between Customer Service and Client

Let’s look more closely at these two options to better understand the details.

Customer Service:

In this situation the real estate agent is required to answer all questions truthfully and honestly. When a buyer wishes to make a purchase the agent is obliged to present them with comparable properties and prepare the paperwork. The agent has no obligation to provide any information which may be helpful to the buyer’s negotiations however they must make all efforts to avoid misrepresenting any information as well. This is a lot like the days before January 1, 1995 where the agent is required to do what’s best for the Seller.

  • Under a Buyer Customer Service Agreement, the Salesperson owes fiduciary duties to a client (Seller), while treating a customer fairly, honestly and with integrity.

Fiduciary Duties to a Customer

Wikipedia defines Fiduciary Duties as thus: “A fiduciary duty[2] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.” (http://en.wikipedia.org/wiki/Fiduciary).

Under a Buyer Customer Representation, the Salesperson owes fiduciary duties not to a Buyer but to the Seller (client), however must treat a customer fairly, honestly and with integrity.

If the Sales Representative is not representing the Buyer as a client in a transaction the Sales Representative is always representing the interests of the Seller (client) whether or not the property is listed with the Sales Representative.

Responsibilities to a Customer

Honesty – no fraud or misrepresentation (disclose material facts)

Fairness – make timely agency disclosures so that customers can protect their interests plus explain the difference between customer and client.

Accounting – honoring licensing laws requiring care of moneys of others.

Reasonable Care and Diligence – obey laws/regulations pertaining to transactions.

“Buyer/Client” Representation:

In this situation the agent is able to offer all their knowledge and expertise to the Buyer while at the same time taking great care to ensure the Buyer’s situation is never compromised. Here the same obligations to the Buyer exist as in Customer Service with a number of additional items:

  • Provide the Buyer with information on all properties available in the market place for sale that will best suit the Buyer’s needs.
  • Provide the Buyer with sources of financing best suited for the individual or individuals and the property being funded.
  • Provide the Buyer information on prices of sold homes in any given market or neighborhood.
  • Provide the Buyer with an Evaluation (Comparative Market Analysis) of the property, they are considering buying or renting.
  • Advise the Buyer on Market Value of the property and recommend initial offer price when commencing the negotiating process.
  • Advise the Buyer or assist with all negotiating options in a multiple offer situation.
  • Prepare the Offer of Purchase to protect the Buyer’s interests.
  • Advise the Buyer on the terms to offer on the home.
  • Under a Buyer Representation Agreement the Salesperson shall promote and protect the best interests of the Salesperson’s Client.

A good agent representing you as a Client will do their utmost to:

  • Uncover information that will help you decide on a property to make an offer on
  • Uncover information that will assist you in your negotiations
  • Protect your information that may be detrimental to you during negotiations

Fiduciary Duties to a Client:

  1. Undivided Loyalty – prohibits the agent from advancing any interests adverse to the client’s interest or conducting the client’s business to benefit a customer, a subagent, the agent or any other interests to the detriment of the principal. It is the duty of undivided loyalty that establishes the obligation to act solely in the best interest of the client.
  2. Obedience – requires the agent to act subject to the client’s continuous control by not exceeding the scope of authority conferred by the client and obtaining and following all lawful instructions.
  3. Reasonable Care and Diligence – requires the agent to protect the client from foreseeable risks of harm and recommend that the agent obtain expert advice or assistance when the client’s needs are outside the scope of the agent’s expertise.
  4. Confidentiality – prohibits the agent from communication key personal information about the client which was given to or acquired by the agent within the scope of employment as an agent to the client. Personal information must be kept confidential unless the client releases the agent or subagent from this duty.
  5. Full disclosure – requires the agent to disclose affirmatively all information concerning the transaction which might affect the client’s best interests.
  6. Accounting – requires the agent to promptly report to the principal all money and property received and paid out, and upon request, to render an accounting. Also requires the agent to safeguard any and all money or property held on behalf of the client.

Commitment to You as a Buyer Client

In addition to all the added care and commitment (at no additional cost) great agents will also offer you:



  • Right Home: Make available to you every home in the market today that will suit your family needs or lifestyle.
  • Right Price: Negotiate on your behalf the best price
  • Right Conditions: Advise you on appropriate clauses and conditions for your situation.
  • Locations: Ensure that you’re aware of area influences and how it can affect the value of the property you’re considering.
  • Neighbourhoods: Identify the best neighbourhoods based on your needs / desires.
  • Amenities: Identify the location of schools, churches, recreation and shopping facilities.
  • Transportation: Identify public transportation routes
  • Financing: Provide access to financial experts to arrange for the best financing rates and terms.
  • Agreement of Purchase & Sale: Create an Agreement of Purchase and Sale that protects your interests during and after the sale and executing all subsequent related documents.
  • Building Inspection: Advise & recommend reputable home inspectors including fire, electrical, water and sewage systems.
  • Water Tests: Ensure Safe Drinking Water.
  • Seller Property Information Statement: Seek out possible defects that may cost you money later or prevent you from being able to get a mortgage.
  • Legal: Recommend reputable lawyers and advise on their role & job description.
  • Title Insurance: Explain its need and use.
  • Costs: Provide information on all costs that you may incur through the buying process beyond the cost of the home
  • Possession Day: What to expect and when do you get the keys.
  • Moving Day: Provide information on how to arrange your moving day so as to limit and reduce moving expenses.

As noted above you will WANT to have an agent explain all of this to you before seeing homes to make sure you are protected and that you are getting the absolute BEST service possible.


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