When you engage a Realtor to act on your behalf as a Seller’s or Buer’s Agent, a formal agency relationship is established. This relationship is a contract that gives the Realtor a fiduciary duty based on six core principles. These principles follow the OLDCAR acronym.
- Obedience: Your Realtor should ultimately represent your interest and respect your decisions irrespective of their personal preferences. For example, when multiple offers – A and B are presented to you as the Seller, and you chose to go with offer B rather than A; a realtor is professionally obliged to advise you but still respect your choice.
- Loyalty: A Realtor’s loyalty and best interests are mainly to his/her clients and to no one else; this loyalty is even above personal gains including but not limited to agent’s commission, particularly in competing-offer situations.
- Disclosure: Ethically speaking, a Realtor is bound to disclose any and all material facts; including information in their possession that might be of any benefit to you as their clients before, during, and after the transaction process. For instance, your agent must disclose any information that may place you in the driver’s seat or aid you in negotiating a better deal.
- Confidentiality: Simply put, a Realtor is not expected to disclose any information learned about you, your business, financial or personal affairs, or motivations to others, including but not limited to the other parties in the transaction. This duty is for life and it survives the closing of the transaction unless a court of law instructs a disclosure of this duty.
- Accountability: A good Realtor should be able to account for all documents and funds in the transaction. Accurate reporting of all funds relating to the transaction and their ultimate disposition is a fiduciary duty.
- Reasonable care/diligence: Realtors are expected to advise intelligently on prices, inspections, negotiations, repairs, and many other aspects of a transaction. Remember, your realtor is not a jack of all trade, therefore, in case you ask your Realtor some questions regarding things out of his/her expertise, he/she will advise you on how and where to obtain the information you inquire.