Agency in Real Estate
A real estate broker is a fiduciary and holds a position of trust and confidence. He cannot put himself in a position antagonistic to his principal’s interest, by fraudulent conduct, acting adversely to his client’s interests, or by failing to communicate information he may possess or acquire which is or may be material to his employer’s advantage, or otherwise.
The most significant word in this statement is “employer.”
This is what so many agents don’t seem to understand. It’s so important I constantly hold CE classes teaching Agency. Agency is all about relationships and responsibilities. Agency has multiple connotations but let’s focus on relationships.
Before there can be a relationship between the broker and consumer, an Agency must be established.
This requires signed documentation by the broker, or, an authorized representative for the broker, and the consumer. I like to think of an Agency Agreement as an employment contract. This agreement sets the parameters for the relationship during the life of the contract.
Unfortunately in the daily activities of the real estate world, I witness more than not, agents performing certain duties without legal authorization to representation.
This act of negligence is created from fear of rejection; the fear of asking the consumer to be employed and to be turned down. Quite the contrary, if the consumer is explained the benefits of representation, and laws are thoroughly disclosed, the consumer will welcome, no, they will demand to be represented.
In all my Agency classes, I try to impress on my students the importance of having an honest discussion right up front to build a base for a relationship.
We forget that the consumer is not as knowledgeable of the law as we are, so it is our duty to inform them. It may have been years since they last bought or sold property so take time to thoroughly explain the process, and explain that as their representative, you are to assist them by providing them the necessary information they need to make a quality financial decision while listing or selling.
So the next time you first meet someone that’s interested in buying or selling, forget trying to list the property, or forget trying to get a buyer’s agency agreement signed. Focus on having a quality conversation and establish a solid relationship and the Agency will happen automatically.
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There are currently 2 Responses to this blog entry.
Spoken Gently
Nice post Cal!
"...the importance of having an honest discussion right up front..."
I'm thinking open houses here, as well. All too often the agent allows the seller to have high hopes their home will sell during an open house, when in fact it probalby will not and the only one to gain anything is the agent by procuring a lead. And, to top things off, in the rare event an open house does provide a potential buyer for the seller's home, the agent enters into dual agency, of which the seller probably does not understand the full ramifications of the situation.
thataway61
Thanks for the feedback Joe! Credit goes to our Real Estate Coach James Anderson!