Today’s true or false is about the undivided loyalty of your real estate agent. Not knowing how undivided loyalty works can weaken your position in negotiations.
The Scenario: Undivided Loyalty
As a customer, the agent showing you a property be it rental or purchase the property has a loyalty to you. The agent cannot disclose any confidential information you shared with the agent.
False, Unless of course, you have a written contract with the agent. Customers do not have contracts with agents, clients do. No contract, no fiduciary duty of Undivided Loyalty.
Example
You are a buyer. Congratulation. And you need to purchase a property quickly. You are willing to go higher than the asking amount. *This makes you a motivated buyer. Something you don’t want the owner to know.
*Definition: Motivated Buyer or Seller. Someone with a pressing need to buy, sell or rent a property.
You found an agent to work with you in locating a property. You mentioned to the agent that you can pay more than the asking price.
Obligation to Inform
Guess what? The agent must inform the owner and the seller’s agent of this.
This is because the agent standing next to you is a cooperating agent on the sale. A cooperating agent works with the seller’s agent. The seller’s agent was hired by the seller. Thus, the agent that arranged to show you the property is working for the seller.
It’s All Legal
No, it’s not against the law. Unless you have a Buyer’s Agent. I will explain what a buyer’s agent is shortly.
Here’s what I find interesting. Buyers and renters will disclose confidential information. Knowing full well the agent works for the other side. Then complain that they did not get the best deal.
What is a Buyer’s Agent?
A Buyer’s Agent is a special type of agent. This person has taken a course to become a Buyer’s Agent. The real estate agent can now be hired to work for you. To do this you sign a contract with the agent. This changes the role of the agent from the cooperating agent to the buyer’s agent. Now you have undivided loyalty. As well as other fiduciary duties from the agent.
Note: All this is explained to you in detail before you sign the contract. The agent will arrange to meet with you to go over the contract. Contracts are quite detailed. An extensive question and answer follow the presentation given by the Buyer Agent.
Basic Terms Of The Contract
- The agent explains the contract in detail
- You agree to pay the Buyer’s Agent fee.
- This agent is the only agent you will work with.
- The contract has a start and termination date
- You will not buy property the agent has shown you without the agent.
- No effort by you to meet with the seller without the agent’s knowledge.
This is a shortlist of the items in the contract.
Undivided Loyalty At Last
When you have a contract with your agent. The agent works for you not with you. You are entitled to fiduciary duties from the agent. Undivided Loyalty is one.
The same is possible when renting a property. You can hire a Renter’s Agent to work for you in locating a rental. The process is the same. Sign a contract, adhere to the contract, get undivided loyalty.
To learn more see Agency Disclosure and Dual Agency.
Disclaimer
Disclaimer: I am not a lawyer and nothing stated here is legal advice. This article applies to the five boroughs of New York. All information deemed accurate but not guaranteed. Always check the real estate laws in your part of the country.
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