What does your real estate agent owe you?

You know that you will pay your real estate agent what can be a hefty fee, but what exactly does your agent owe you, the client?

A real estate agent is considered a "fiduciary," defined by the Consumer Financial Protection Bureau as, ". . .someone who manages money or property for someone else." The CFPB goes on to explain that a fiduciary has the duty to act in ways that benefit their client and not themselves. In South Carolina, the law requires agents to be . . .

" . . . bound by the duties of loyalty, obedience, disclosure, confidentiality, reasonable care, diligence, and accounting."

The National Association of Realtors (NARS), the largest real estate professional organization in the country, represents millions of realtors®. In their Code of Ethics they go further, coming right out and quoting the Golden Rule as being what realtors® should abide by:

"REALTORS® can take no safer guide than that which has been handed down through the centuries, embodied in the Golden Rule, “Whatsoever ye would that others should do to you, do ye even so to them.”

This sounds great! But, what, exactly, can you can expect from an agent who follows these rules? The fiduciary duties of a real estate agent can be explained this way:

• Disclosure: Agents must tell you about all facts that may affect the value of a property you are considering buying. This does not include things that the agent can't see (like contaminated ground water) or doesn't have the expertise to see (like possible asbestos in the floor tiles), but if they know, they must tell.

• Confidentiality: They cannot tell anyone about a client's financial details or any other personal information -- not even to speed along a sale! (Remember the Golden Rule?). So, an agent can't reveal that her client, the seller, has a new job waiting across the country because that may cause a buyer to decide to offer less, knowing time is of the essence.

• Loyalty: Everything agents do must be in their clients' best interest, even above their own. Agents have opinions, too, but they can't show what they think of the bright pink room in their client's home. Not even eye-rolling.

• Obedience: Agents must do what their clients tell them, even if it means losing a sale. For example, if the seller wants to list their property at a way-too-high price, that is their prerogative and the agent must comply. Of course, the limit to this rule is the law - agents should not break any laws even if ordered to by their clients.

• Diligence: Agents must do what needs to be done on time and in the right way because, if not, deals can be lost and this is not in a client's best interest.

• Accounting: In South Carolina, agents must turn in all client funds to their brokers within 1 day of receiving them. 

• Reasonable care: Agents must do their work with reasonable care. They don't have to be perfect, but errors should be few.

Below are a few situations that a buyer or seller might encounter with their agent. Click the arrow to see the answer.

Does a seller's agent have to present every offer to the client?

Yes! Even if it is $1. (Unless, the seller gives explicit directions to limit offers to a certain range.)

Can an agent hold onto money for you as you wait for closing day?

No. Agents must turn in all monies to their broker within 24 hours of receiving it.

You put your house on the market. Your agent waits a month before scheduling the first open house even though you have made the house available. This is annoying, but is it bad practice?

Yes. This behavior violates the duty of diligence.

Your agent brings you a contract to look over before asking you to sign. You find an error in one of the dates. Is this a violation?

No, as long as it is corrected and all parties initial the correction.

If a buyer asks something about the property that the agent doesn't know, what should the agent do?

Say, "I don't know," and then give the client directions for finding the answer. For example, "You can find out where the flood zones are by going to FEMA.org/flood-zones."

If you want to read the entire Code of Ethics document, you can find it by clicking the button below.

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