Real Estate Bill Of Rights
A Consumer's Guide to Employing Real Estate Brokers
AGENT - FIDUCIARY
When acting as your Agent, real estate brokers and salespersons are fiduciaries who owe the following fiduciary duties to you:
Undivided Loyalty - which prohibits your Agent from advancing any interests adverse to yours or conducting your business to benefit him/herself or others.
Obedience - which requires your Agent to act subject to your continuous control by not exceeding the scope of authority conferred by you and by obtaining and following your lawful instructions.
Reasonable Care - which requires your Agent t a) protect you from foreseeable risks of harm; b) exercise such care, skill, and competence necessary to ensure the transaction of your business to your best advantage; and c) recommend that you obtain expert advise or assistance when your needs are outside the scope of your Agents expertise.
Confidentiality - which prohibits your Agent from using or communicating information confidentially given to or acquired by him/her within the scope of employment as your Agent.
Full Disclosure - which requires your agent to disclose affirmatively all information concerning the transaction of your business which might affect your best interest including, especially, information about any existing or proposed interests which might be adverse to yours. To be adequate, such disclosure must clearly and completely disclose all the facts including their real effect on your interests and it must occur early enough for you to be able to use the information provided to take steps to protect your own interests; and
To Account - which requires your Agent to promptly report to you all money and property received and paid out and, upon request, to render an accounting and return all money and property lawfully belonging to you.
YOUR RIGHTS AS A CONSUMER OF REAL ESTATE SERVICES
Agent's do not sell a product; they sell service and it's better for both buyers and sellers to close escrow knowing that they have not made significant decisions alone.
Whether you're are a buyer or seller, you have the right to the advice, assistance, and loyalty of your own Agent in the real estate transaction, if you so choose.
You should never assume that a broker is acting on your behalf unless you have made the necessary arrangements for the broker to be your Agent.
When buyers employ their own Agents, the Agent is obligated to obtain the property at the lowest price and best terms possible. When sellers employ their own Agents, the Agent is obligated to obtain the property at the highest price and best terms possible.
Finders/Facilitators have authority to introduce prospective offerors and offerees who will communicate, negotiate, and contract directly. Finders/Facilitators are not Agents; so they owe no loyalty to either party. They may solicit payment from both parties and they cannot be relied upon for any advice or assistance in negotiations.
Sub-Agents (Fiduciaries) are Agents of an Agent employed to act for the Principal (seller). Unless otherwise agreed to, the Principal can be held liable for all of the sub-agent's errors and omissions.
Single Agents or Buyer's/Seller's Agents represent the buyer or seller in a fiduciary capacity. They will either represent buyers or sellers, but never both in the same transaction.
Dual-agents can legally represent both the Seller and the Buyer in a transaction, but only with the knowledge and written consent of both the Seller and the Buyer. There will be conflicts in the duties of loyalty, obedience, disclosure and confidentiality. Disclosure of confidential information may be made only with written authorization. This does not relieve the Broker of the obligation to disclose all know facts which materially and adversely affect the consideration to be paid by any party.
THE SPECIAL VALUE OF FIDUCIARY LOYALTY
When real estate brokers and salespersons act as your Agent, they must:
* Put your best interests before all others including their own. It is this undivided loyalty that represents the extra value that a Agent's services have to consumers over the services of non-fiduciaries, like dual-agents, who owe no undivided loyalty.
* Not represent interests, adverse to you, in the same transaction in which they agreed to act as your Agent because of the inherent conflict in the obligations owed to the two parties. For example, a Single Agent must not represent the seller and the buyer or the landlord and the tenant in the same transaction.
* Not become a principal in the same transaction in which they agreed to act as your Agent. For example, an Agent must not purchase the property you employed him/her to sell for you. If your Agency resigns in order to become a buyer or seller, you owe them no compensation.
* If your Agent is disloyal, (s)he can be fired, will forfeit compensation and must return any profit unless (s)he can prove that you freely gave your Informed Consent to such disloyalty. For your consent to be informed, your Agent must show that (s)he made Full Disclosure of the entire truth, including its real effect on your best interests, in words that plainly explain the risks and detriments of consenting to any proposal that basically asks you to waive your right to your Agent's undivided loyalty.
YOU ALSO HAVE RESPONSIBILITIES
You are accountable for the harm caused to other persons by those you authorize to act on your behalf. For example, you may be bound by the acts and omissions of your Agent and Subagents. Also any contract you enter into could be canceled because of misrepresentations by your Agents or Subagents.
It is your right to make all the business decisions including, especially, the terms upon which you employ brokers directly or indirectly and precisely how, or even whether, you authorize your broker to use a multiple listing service. For example, you might engage the M.L.S., choose not to offer unilateral sub-agency, and vary the commission offered to a dual-agent.
THE REAL ESTATE BROKER EMPLOYMENT AGREEMENT
"Listing agreements" are really broker employment contracts. It is in your best interest to have the terms you have negotiated with the broker put in writing.
You are buying a broker's services. Keep this in mind when negotiating fees. The essentials of an enforceable agreement to employ a broker are negotiable; including the work to be performed, compensation to be paid, scope of the broker's authority and time for performance.
You have a number of options. You can:
* Require your broker to actually produce the specified result in order to be paid or waive this requirement to allow your broker to claim payment regardless of who produces the specified result. Another option is to allow your broker to claim payment if anybody, except you, produces the specified result.
* Employ your broker to perform specified work. For example, (s)he can help you decide how much to offer and negotiate for you or you can employ a broker to achieve a specified result. Examples of such results are 1) produce a person ready and able to enter into a contract a) on terms you have fully specified; or b) on mutually acceptable terms; 2) procure a signed, written, enforceable contract with all contingencies removed; and 3) complete the sale or other transaction for which you employed the broker. The option selected is the event upon which your broker(s) will claim payment has been earned.
* Elect to pay for your broker's services in the form of a flat fee, hourly rate, or a percentage commission. Neither the amount nor method of compensation, nor any other term of your broker's employment contract is fixed by law nor can they be fixed by real estate competitors acting together, informally or in their roles as members of trade associations or multiple listing services. Even "standard" preprinted forms are fully negotiable.
* Authorize members of your Agent's firm to act as either your subagents or your broker's agents. In both cases you get the benefit of their fiduciary loyalty. If you designate them as your broker's agents then your broker, not you, assumes liability for their acts and omissions but you still have risk of contract cancellation due to their misrepresentations. If you designate them as your subagents then you assume both the liabilities for their acts and omissions and the risk of cancellation.
* Authorize other firms that are invited to assist your Agent in achieving the specified result to act as your 1) subagents; 2) your broker's agents; 3) finders; and/or 4) agents for the other principal. If you authorize other broker firms to act as your subagents or your broker's agents you incur the same type of risks described above. If you authorize other firms to act as non fiduciary finders you limit your exposure to liability, but there is some risk of contract cancellation and unknown risks of employing someone who owes no one any loyalty. If you authorize your Agent to work with other firms who are acting as agent for the other principal you incur no liability for their acts and omissions and no risk of contract cancellation for their misrepresentations. As long as it is clear to all where loyalties lie, one principal can agree to pay fees owed by another as a convenience of the transaction or offer the other a credit toward these expenses at closing.
* Neither the authority conferred on your brokers is fixed by law nor can real estate competitors, acting together, informally or as members of trade associations or multiple listing services impose uniform contract terms, deny consumers their choices or harass your broker for offering different rates, services, or terms.
* The law provides important remedies when your rights have been violated.