What Does Fiduciary Responsibility Of An Agent Mean?

I address this topic as I have had various clients and non-clients ask me interesting questions of late. Not wanting this to sound like a legal treatise and because I cannot and must not dispense legal advice, I want to discuss only the concept of representation of the client by the agent. Firstly, the Real Estate Agency (e.g. RE/MAX) is the actual ‘agent’ of the client and the Realtor involved with that client is he or she who is designated by the Agent to carry out the duties relating to the sale of the property. OK let’s hope the rest of this doesn’t sound like a lecture!

The questions I referred to earlier have been along the following lines. ” Why won’t you tell me, or my Realtor, what the other person’s competing offer is?” The answer is simply that the obligations to the Seller I represent preclude me from doing so. Maybe the “silent auction” style of bidding (with the incremental offer written below the preceding one) has confused the issue. The best explanation of the ‘multiple offer’ process asks of the Buyer – “What is the property worth to you?” The Buyer’s Realtor is the one assisting the Buyer with this decision and that is their “fiduciary responsibility”.

Another question of Realtor responsibility addresses “What obligation do I as a Realtor have of disclosure of facts that I am aware of regarding my Seller’s property?” First, there is a Property Disclosure Statement which the Seller generally completes disclosing any problems (deficiencies) of which they are aware. The Buyer acknowledges receipt of this in writing and can rely on this information BUT is still encouraged to have the property inspected by a specialist of their choice. What, however, if the Seller’s Realtor, via their ‘due diligence’, knew, or had a suspicion that a property had a deficiency (Latent Defect)? Buyer beware, I guess, or hope the Buyer gets an inspector? No, not acceptable. But, I hear you say, what if the Seller instructs their Realtor to ‘avoid any comments’ regarding problem X, be it an oil tank or last year’s basement flooding. Or worse still, counsels them to say ‘I don’t know’ if asked. The Realtor Code of Ethics requires that the Listing Realtor decline listing the property if they were instructed in such a manner.

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