Thursday, January 31, 2008

Fiduciary Duties are Important to First Time Home Buyers

This is Part 4 in my series on Columbia SC real estate agency laws.

In Part One, I expressed the importance of discussing agency relationships with real estate licensees (agents) and agreeing on your business relationship. In Part Two, I wrote about the difference between being a Customer and a Client. Part Three discussed the importance of some sellers and all home buyers becoming Clients.

This installment will discuss your expectations of a real estate agent and their fiduciary duties to you.

If you enter into a written agency agreement, as a Client, you can expect the real estate agent and her/his real estate Company to provide the following client-level services:

1. OBEDIENCE - If, and only if, you have SIGNED an agency agreement with an agent and/or real estate company, the agent is obligated to promptly and efficiently obey all of your LEGAL instructions. HOWEVER, you MUST HAVE a signed agreement to receive this level of client services.

2. LOYALTY - This fiduciary duty obligates a real estate agent to operate and negotiate in your best interest. Unless you have a SIGNED agency agreement with an agent or real estate company, the agent/real estate company is not required to be loyal to you. Therefore, when you walk on that new construction site and begin to sign documentation, remember this................

If you do not have representation with you, the on-site agent is not required to work for your best interest!

3. DISCLOSURE - An agent must disclose all known relevant and material information. For example, your agent should educate you about any factor that might affect the value or desirability of the home being considered for purchase.

By the way, NEVER ENTER INTO A CONTRACT without reviewing the Sellers Property Condition Disclosure Statement. If you are looking at new construction, this property will not be available to you for obvious reasons.

(NOTE -- Not all homes are required to have this document. For a list of exemptions, please feel free to email me at

4. CONFIDENTIALITY - Unless you give consent, an agent is obligated to safeguard your personal information and your ability/willingness to pay more for a home than your offer price. However, if you do not have a signed agency agreement with a real estate agent or company.....


5. ACCOUNTING - An agent and their real estate company is obligated to account for all money, deeds, documents and/or any other property given to them by you. For example, I have a client from Virginia that is moving to our area. In an effort for me to work on her behalf, she entrust me and Russell & Jeffcoat with $1250. This money is to be held in earnest and for payment of required inspections.

When hiring an agent, you must hire someone trustworthy! $1250 is not a trivial amount to being handing over to any Tom, Teresa, Dick, Denise, Harry or Harriet!

6. Reasonable Care and Skill - This is the most ignored duty by first time home buyers! Just because you have a friend or acquaintance that has their real estate license, that does not equate to possessing the skill necessary to fulfill this and the aforementioned fiduciary duties.

An agent is obligated to use reasonable care and diligence when representing you. You should expect a standard of care that only a COMPETENT real estate PROFESSIONAL can exhibit.

You should hire someone with superior skill and knowledge of the real estate market. No agent can possess superior skill AND knowledge by having closed only 1-4 transactions in their career.

You need to hire professionals such as an Accredited Buyer Representative, a Certified Residential Specialist or a real estate professional that has closed at least 25 transactions.

In my opinion, I would not want to be in the courtroom with an attorney that has never represented someone on trial for their freedom. That same mindset should be used in hiring a real estate agent.

In Part Five of this series, we will discuss Columbia SC Real Estate Types of Agency.

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