4 ms·

Your agent, no matter who is paying them, has a fiduciary duty to you. I’ve bought and sold a lot of property and can guarantee you that the fact that commissio

by dd36 8y ago

Your agent, no matter who is paying them, has a fiduciary duty to you. I’ve bought and sold a lot of property and can guarantee you that the fact that commissions are paid by sellers makes zero difference. Really, it’s coming out of the purchase price, which is netted to the seller but technically is being paid by you.

nkurz 8y ago
Your agent, no matter who is paying them, has a fiduciary duty to you. This isn't universally true. In some US states, the frequent problem is that the agent who is showing you homes (and who you tend to think of as "your agent") is not actually your agent (with fiduciary duty to you), but a subagent of the seller (with fiduciary duty to them). Here's an excerpt from recent report on this: --- For many years, a large majority of home buyers and sellers have worked with real estate agents. Most consumers believe that these agents always or almost always are required to represent the interests of the home buyer or seller with whom they are working. ... Yet, real estate agents often are not required by law to represent the interests of the buyer or seller with whom they are working, and many do not. In reality, there are a number of different types of relationships allowed in most states between real estate agents and their clients. • Single agent: The agent works solely for the client and has fiduciary responsibility. A fiduciary agent is “obligated to procure the greatest advantage to his client.” • Designated agent: The agent is recruited by the listing agent to work with a buyer and has fiduciary responsibility to that buyer. • Subagent: The agent works with the buyer but has fiduciary responsibility to the seller. • Dual agent: The agent somehow is expected to represent the interests of both the seller and buyer in a home purchase. • Transactional agent: The agent works with both buyer and seller to facilitate a sale but has no fiduciary responsibility to either party. https://consumerfed.org/wp-content/uploads/2019/01/the-agency-mess-home-buyer-and-seller-confusion-report.pdf https://consumerfed.org/wp-content/uploads/2019/01/the-agenc... --- So while it's possible that you live in a state where you are correct, where subagency and dual-agency are forbidden, in the absence of a signed contract for the services of a buyers agent, others should not follow your advice until they are certain the same is true for them.
- ry4nolson 8y ago
  So who does a Secret Agent have a fiduciary responsibility to?
  - deleted 8y ago
    [deleted]
  - klipt 8y ago
    Depends, are they a double agent?
- hobbyjogger 8y ago
  > In many US states, the frequent problem is that the agent who is showing you homes (and who you tend to think of as "your agent") is not actually your agent (with fiduciary duty to you), but a subagent of the seller (with fiduciary duty to them). Subagency was common up until the 90s but is exceedingly rare in today's market (and outright illegal in many states). In 2019, it is not at all a "frequent" problem.
  - nkurz 8y ago
    You are right, and I probably overstated the frequency of that particular form of agency to point out a worst-case-scenario. I likely should have stuck with the main message that for a variety of reasons, an agent who is showing you a house does not necessarily have your best interests at heart. Do you happen to know how common it is for current buyers to be represented by an agent who does owe them sole fiduciary responsibility?
- Spooky23 8y ago
  End of the day, an attorney represents your interests. A real estate agent may represent you but their actual duties are fairly minimal. Real estate agents fiduciary responsibility is held to a reasonable care standard for matters relating to real estate. That means they need to be competent. Many of the things that buyers seek advice from agents are answered like "In my experience, blah blah blah". Those are usually legal questions, which agents are not able to answer. Often when people get in trouble, its because they don't understand what they are asking and mistake salesy fluff for an answer. End of the day, 99% of what a "buyers" real estate agent does is bullshit that makes you feel better. "Sellers" real estate agents get listings, period. Buyers agents exist because people good at getting listings have a disincentive to talk to buyers. The buyers agent's primary task is getting ahold of keys quickly and pushing sellers to accept offers. Shitty agents who are incompetent or dishonest may slow-roll things to get you to accept offers quickly. They may help you identify the type of home you want, but that isn't a fiduciary duty.
xondono 8y ago
Even with fiduciary duty, most agents undersell property. When the first offers are underpriced, a lot of agents will pressure you into selling, because their income is tighly coupled with the number of transactions per year. There’s a couple of studies from the US that concluded that most sellers close the deals way too early, and that rationally they should have waited for more offers.
- gnopgnip 8y ago
  The sale price, and what offer to accept is not the decision of the agent, it is up the seller.
  - vkou 8y ago
    It is up to the seller, but when an experienced professional who tells you they have your best interests in mind tells you to underprice (because it's better for their bottom line)... Actually, that's the poster child for a conflict of interest.
pnw_hazor 8y ago
Real Estate agents are hopelessly conflicted. I don't use them so the seller's agents ends up working for me too. They tend to slip into a mediator role more than a fiduciary. Lawyers would get disbarred it they operated similarly.
tomohawk 8y ago
In our state, there is a well known realtor who has grown his practice using unethical methods. As one example, his agents routinely hang on to bids and don't present them to sellers within a reasonable time, using them to get buyers who have contracted with them to put in bids. ("You better put in a bid above asking - other people have put in bids"). This allows him to get the full commission instead of sharing it with other companies.

by dd36 8y ago

nkurz 8y ago

Your agent, no matter who is paying them, has a fiduciary duty to you. This isn't universally true. In some US states, the frequent problem is that the agent who is showing you homes (and who you tend to think of as "your agent") is not actually your agent (with fiduciary duty to you), but a subagent of the seller (with fiduciary duty to them). Here's an excerpt from recent report on this: --- For many years, a large majority of home buyers and sellers have worked with real estate agents. Most consumers believe that these agents always or almost always are required to represent the interests of the home buyer or seller with whom they are working. ... Yet, real estate agents often are not required by law to represent the interests of the buyer or seller with whom they are working, and many do not. In reality, there are a number of different types of relationships allowed in most states between real estate agents and their clients. • Single agent: The agent works solely for the client and has fiduciary responsibility. A fiduciary agent is “obligated to procure the greatest advantage to his client.” • Designated agent: The agent is recruited by the listing agent to work with a buyer and has fiduciary responsibility to that buyer. • Subagent: The agent works with the buyer but has fiduciary responsibility to the seller. • Dual agent: The agent somehow is expected to represent the interests of both the seller and buyer in a home purchase. • Transactional agent: The agent works with both buyer and seller to facilitate a sale but has no fiduciary responsibility to either party. https://consumerfed.org/wp-content/uploads/2019/01/the-agency-mess-home-buyer-and-seller-confusion-report.pdf https://consumerfed.org/wp-content/uploads/2019/01/the-agenc... --- So while it's possible that you live in a state where you are correct, where subagency and dual-agency are forbidden, in the absence of a signed contract for the services of a buyers agent, others should not follow your advice until they are certain the same is true for them.

ry4nolson 8y ago
So who does a Secret Agent have a fiduciary responsibility to?
- deleted 8y ago
  [deleted]
- klipt 8y ago
  Depends, are they a double agent?
hobbyjogger 8y ago
> In many US states, the frequent problem is that the agent who is showing you homes (and who you tend to think of as "your agent") is not actually your agent (with fiduciary duty to you), but a subagent of the seller (with fiduciary duty to them). Subagency was common up until the 90s but is exceedingly rare in today's market (and outright illegal in many states). In 2019, it is not at all a "frequent" problem.
- nkurz 8y ago
  You are right, and I probably overstated the frequency of that particular form of agency to point out a worst-case-scenario. I likely should have stuck with the main message that for a variety of reasons, an agent who is showing you a house does not necessarily have your best interests at heart. Do you happen to know how common it is for current buyers to be represented by an agent who does owe them sole fiduciary responsibility?
Spooky23 8y ago
End of the day, an attorney represents your interests. A real estate agent may represent you but their actual duties are fairly minimal. Real estate agents fiduciary responsibility is held to a reasonable care standard for matters relating to real estate. That means they need to be competent. Many of the things that buyers seek advice from agents are answered like "In my experience, blah blah blah". Those are usually legal questions, which agents are not able to answer. Often when people get in trouble, its because they don't understand what they are asking and mistake salesy fluff for an answer. End of the day, 99% of what a "buyers" real estate agent does is bullshit that makes you feel better. "Sellers" real estate agents get listings, period. Buyers agents exist because people good at getting listings have a disincentive to talk to buyers. The buyers agent's primary task is getting ahold of keys quickly and pushing sellers to accept offers. Shitty agents who are incompetent or dishonest may slow-roll things to get you to accept offers quickly. They may help you identify the type of home you want, but that isn't a fiduciary duty.

xondono 8y ago

Even with fiduciary duty, most agents undersell property. When the first offers are underpriced, a lot of agents will pressure you into selling, because their income is tighly coupled with the number of transactions per year. There’s a couple of studies from the US that concluded that most sellers close the deals way too early, and that rationally they should have waited for more offers.

gnopgnip 8y ago
The sale price, and what offer to accept is not the decision of the agent, it is up the seller.
- vkou 8y ago
  It is up to the seller, but when an experienced professional who tells you they have your best interests in mind tells you to underprice (because it's better for their bottom line)... Actually, that's the poster child for a conflict of interest.

pnw_hazor 8y ago

Real Estate agents are hopelessly conflicted. I don't use them so the seller's agents ends up working for me too. They tend to slip into a mediator role more than a fiduciary. Lawyers would get disbarred it they operated similarly.

tomohawk 8y ago

In our state, there is a well known realtor who has grown his practice using unethical methods. As one example, his agents routinely hang on to bids and don't present them to sellers within a reasonable time, using them to get buyers who have contracted with them to put in bids. ("You better put in a bid above asking - other people have put in bids"). This allows him to get the full commission instead of sharing it with other companies.