ARTICLES

PRINCIPALS versus PRINCIPLES™

By "Cec" Daniels, GRI

A very basic component to an Agency Relationship is fidelity or fiduciary. When there is a fiduciary duty, least according to Black's Law Dictionary, it is the highest duty implied by law. Hence the desire and need for laws that would take a real estate licensee out of these duties. I acknowledge that there are States that have established laws that an agent can be neutral in a transaction and those states have created terms such as Independent Contractor and Transactional Broker.

This article is not an attempt to offer opinions or the merits of any of the laws. My only concern is the practical issues of trying get a buyer buying and a seller selling. Over the past several years this is becoming more and more of a challenge.

The title of this Article suggests the direction I’m going to take. Real Estate Agency Relationships are very complex, yet at the same time very simple. I want to stay on the side of simplicity. The only rule that I will embrace here is the concept that we are duty bound to protect and promote the interests of our client, even over out own. If we measure all of our actions, conversation and efforts in that vain, agency issues disappear. In other words, if your "principles" get in the way of your "principals" agenda there is trouble.

Before I can go on, I need to talk about the transactional type of agency. Most of those laws state that there is an absence of an agency relationship or something to that effect. In itself that is great. That leaves me with the concern of the potential for an implied agency. Where the actions, representations or efforts may imply that we are an agent of one party or the other. I am one who believes that real estate agents are not what they think they are, instead, they become what they are perceived to be. Therefore I feel that you are either an agent of one or both aka, a dual agent. Not as a matter of law, but by the imputed ideals of the buyer or seller. In addition, I think "dual" is misspelled and should be “D U E L”.

Anyway, back to the issues I have raised. Since I do not work in a jurisdiction of non-agency, I am going to discuss issues that I am more familiar with.  But one more point before I continue.  Agency changes everyday and you need to be up to speed.

Situation: A buyer with very bad credit hires a buyer's agent to assist them in buying a home. A property is located in the MLS and the seller is facing foreclosure. There is an Offer and Acceptance and the buyer attempts to get a loan. The Buyer tries several different lenders and none will make the loan. The sale is cancelled and the Seller home is foreclosed.  Later, the Seller learns that the Buyer's Agent knew of the poor credit rating of the Buyer and never disclosed that to the Seller. The Seller files suit, stating that the Buyer's Agent had a duty to disclose the adverse credit rating and that by withholding the information the Seller lost all of their options in attempting to sell the home.