Richard Stephens, CRB, ABR, GRI, CRS, Broker
Rich Stephens, Realtors
Tulsa, Oklahoma

Fiduciary Duties Of A Real Estate Agent

A real estate broker who becomes an agent of a seller or buyer is deemed to be a fiduciary. Other examples of fiduciaries are trustees, executors, and guardians.

As a fiduciary, a real estate broker is held by law to owe specific duties to his/her principal (the person who they are representing), in addition to duties or obligations set forth in a listing agreement, buyer representation agreement, or other contract of employment. Subagents of the broker also owe the same fiduciary duties to the broker's principal. These specific fiduciary duties include:

Loyalty
One of the most fundamental fiduciary duties an agent owes to the principal. The duty obligates a real estate broker to act at all times, solely in the best interests of the principal, excluding all other interests, including that of the broker.

An example of breach of loyalty is when a broker purchases a property listed with his/her firm, and immediately resells it at a profit. Such conduct is usually considered appropriate and lawful by persons who act at arms length, but a fiduciary would be considered to have stolen an opportunity for profit that rightfully belongs to the principal.

Sellers Agent Buyer's Agent
Must do everything possible to gain an advantage for the Seller. Must do everything possible to gain an advantage for the Buyer.

Obedience
An agent is obligated to promptly and efficiently obey all lawful instructions of his/her principal that conform to the purpose of the agency relationship. However, the duty does not include an obligation to obey unlawful instructions, such as instructions to not market a property to minorities or to misrepresent the condition of a property.

Sellers Agent Buyer's Agent
Must obey all lawful instruction of the Seller, is not obligated to obey instructions from the Buyer. Must obey all lawful instruction of the Buyer, is not obligated to obey instructions from the Seller.

Disclosure
An agent must disclose to the principal all known relevant and material information that pertains to the scope of the agency. The duty includes any facts affecting the value or desirability of the property, as well as any other relevant information pertaining to the transaction, such as the other party's bargaining position, the identity of all potential purchasers, information concerning the ability or willingness of the buyer to offer a higher price, any intent to subdivide or resell the property for a profit.

An agent's duty of disclosure to his/her principal must not be confused with a real estate broker's duty to disclose any know material facts about the property value to non-principals. The duty to disclose known material facts is based on a real estate broker's duty to treat all persons honestly. The duty of honesty does not depend on the existence of an agency relationship.

Sellers Agent Buyer's Agent
Must reveal any known material defects in the property.

Must NOT reveal information about traffic problems, poor school system, declining property values, etc. since these items might make the property less desirable to Buyers.

Must tell Buyer everything they can find out about the Seller including the motivation for selling and any reasons the Seller may have for wanting a quick sale.

Must tell Buyer everything they can find out about the property, including traffic problems, poor school system, high crime rates, etc.

Confidentiality
An agent is obligated to safeguard his/her principal's lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal's bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property.

The duty of confidentiality does not include an obligation by a broker who represents a seller to withhold know material facts about the condition of the seller's property from the buyer, or to misrepresent the property's condition. To do so constitutes misrepresentation and impose liability on both the broker and the seller.

Sellers Agent Buyer's Agent
Must tell the Seller everything they can find out about the Buyer, including all financial details they can obtain.

Must conceal anything about the Seller that would help the Buyer gain an advantage, such as impending foreclosure, need to move in a hurry, need to sell to settle divorce, etc.

Must keep all information about the Buyer confidential, including the Buyer's ability or willingness to pay more for the property than they are offering as well as the Buyers motivation for buying.

Reasonable care and diligence
An agent is obligated to use reasonable care and diligence when pursuing the principal's affairs. The standard of care expected of a buyer's or seller's real estate broker is that of a competent real estate professional. By reason of his/her license, a broker is considered to have skill and expertise in real estate matters superior to that of the average person.

As an agent who represents others in their real estate dealings, a broker or salesperson is under a duty to use superior skill and knowledge while pursuing the principal's affairs. However, no broker is expected to perform tasks or know information outside the scope of his/her real estate license. Real estate licensees are not expected to perform services normally provided by engineers, lawyers, accountants, or other professionals. If concerns arise outside the scope of a broker's responsibility, the broker should acknowledge that and suggest that the principal seek assistance from a reliable outside source.

Sellers Agent Buyer's Agent
Must prepare themselves through education and study to competently represent the Seller in all matters. Must prepare themselves through education and study to competently represent the Buyer in all matters.

Accounting
An agent is obligated to account for all money or property that belongs to his/her principal entrusted to that agent. The duty compels a real estate broker to safeguard any money, deeds, or other documents entrusted to them relative to their client's transactions of affairs.

Sellers Agent Buyer's Agent
Must account to Seller for any money or documents entrusted to them. Must account to Buyer for any money or documents entrusted to them.

Whether a principal is a buyer or a seller, an agent always owes that person the above six fiduciary duties. These duties are inherent in all agency relationships and enforced by all courts of law in the United States.

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Tips For Home Buyers

Reasons To Get A Home Loan Before You Start Shopping For A Home

You do NOT have to have a home under contract to obtain a home loan. The lender is looking at your credit history and income when considering a loan application.

Some potential home buyers think they will have no problem qualifying for a loan only to be disappointed when they find out they don't. Others may afraid they won't qualify so they don't apply. We often see people who don't think they qualify for a home loan but don't know that many lenders offer loan programs for all types of borrowers.

Avoid disappointment resulting from looking at homes that are out of your price range. Looking at homes in a price range you can afford will keep you from being disappointed if you fall in love with a home only to find out that it is beyond your financial abilities.

Insure that you will meet your moving dead line. Knowing you must move by a certain date and still working on proving you are qualified for a loan can be a stressful experience. The two most common problems are resolving credit issues and proving you have the cash for your down payment and closing costs.

Applying for a loan as soon as possible will insure that any incorrect information in your credit history can be corrected before the closing date. It often takes 60 days or more to have information corrected in your credit files.

Having a Loan Commitment in your hand is like being a cash buyer. Every seller wants to work with cash buyers. It gives you leverage when presenting an offer and negotiating a counter offer. It will insure that the closing process goes smoothly when you do find your new home. Do not mistake a Loan Commitment with a pre-approval or pre-qualification, a pre-approval does not carry much weight with a seller since a pre-approval is only a cursory look at your credit history.

Applying for a home loan online can be a real convenience. You can apply for a mortgage online 24 hours a day 7 days a week. You can apply from your home, office, local library or any location that offers Internet access. No need to take time off work or away from play. Avoids feeling pressured by sitting in a lenders office and allows you ample time to collect all the necessary information.

Be sure you check the rates and fees for several lenders before you decide which one to use. Compare the lender fees, not just the interest rate. Ask each lender to provide you with a "Good Faith Estimate" of closing costs and carefully review it. If you see a fee you don't understand ask the lender to provide a clear explanation of the item. Then ask your real estate Agent to review the Good Faith Estimate. Being more familiar with the forms the Agent can spot any hidden "junk" fees.

Rich Stephens, Realtors, 5383 S. Sheridan Rd. Tulsa, OK, 74145 is a licensed Oklahoma Real Estate Brokerage, Richard Stephens, Broker.

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