The Law of Agency clearly sets out the broker’s duties to the principal (also known as the client), the one who retains and (usually) pays the agent. These fiduciary duties are complex, but they boil down to one thing: The agent must put the principal’s interest first, above anyone else’s, including the agent’s own interest. Among the specific duties involved are the following:
Obedience to the principal’s instructions unless they are illegal. (Examples of instructions an agent would not obey: Don’t show the house to any Lithuanians. Keep quiet about the broken furnace, or new thermostat wiring.)
Loyalty to the principal, which strictly interpreted (it sometimes isn’t) includes obtaining the highest possible price for the property and never suggesting any offer under the listed price.
Confidentiality, which prohibits the seller’s agent from sharing with you details of the seller’s financial or family situation, unless of course the seller has authorized such action to encourage offers. Whether the seller has received previous offers, and for how much, is also confidential information.
Notice, a duty that obliges the seller’s agent to forward to the principal (seller) any fact that it would be in the sellerís interest to know, whether or not the seller knows enough to inquire. This one is of vital importance for you to understand.
Unless you specifically hire your own buyer’s broker to repre sent you (more on that later), none of these duties is owed to you. Yes, you say, I know those are the duties of the listing agent. But I’m dealing with a different firm that cooperates through the multiple listing system. My broker is the selling agent, and that’s different.
No, it isn’t. Both firms are agents for the seller. The second one, the one you’re working with (let’s not say your agent) is cooperating with the first firm and the seller. You are merely a third party in that relationship, a customer rather than a client.
It can be scary to realize this, but things arenít as bad as they seem.
First, the law does require the broker to be honest, straight forward, and trustworthy with third parties. Your questions will receive honest answers, although sometimes an honest answer might be, I am not allowed to tell you whether the seller is facing foreclosure; I must keep financial information confidential.
Besides answering your questions honestly, agents and sellers have an obligation to volunteer information about any serious (material) hidden defects you aren’t able to see for yourself. This is where the furnace or thermostat comes into play. State laws differ, though, on whether they must also tell you about past problems that donít technically affect the real estate, such as sui cide or murder on the premises, illness of the seller, and the like.
Second, you will receive a great deal of service (see list in the next chapter) paid for by the seller, because without this service to buyers, the property might never be sold.
And finally, you can take heart from the fact that, as a practical matter, many seller’s brokers end up violating their duty to the seller. A good agent empathizes with you, wants you to find what you want at a price you can afford, and may emotionally adopt you. If brokers didn’t to some extent identify with the buyer, not much real estate would get sold!