“But to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respects has he failed to discharge these obligations? And what are the consequences of his deviations from duty?”
– Justice Felix Frankfurter, SEC v. Chenery Corp., 318 U.S. 80, 85-86 (1943)
A Realtor you work with to buy or sell a house in the traditional way is a Fiduciary. Fiduci – What? What is a fiduciary? Kathleen Elkins, writing for Make It, says, “It’s a key financial term. Yet most Americans cannot define it, and that puts them at risk.”
What is a Fiduciary?
Mark Walker at Reality Business News defines the subject: “Fiduciary means faithful servant. A person or organization who enters into a legal agreement to put another person’s needs first – even ahead of their own. In a real estate context, this means your Realtor is ethically required to put your best interests first. There are also a number of other responsibilities that come along with a fiduciary relationship:”
- Care – your real estate agent must give you their best at all times. They must use their skills, experience, and expertise to help further your best interests, even ahead of their own. The agent must use all of her skills to the best of her ability on behalf of the client.
- Loyalty at all times – The agent owes undivided loyalty to the client and puts the client’s interests above her own.no matter the situation, your Realtor must put your best interests ahead of everyone else’s during your transaction – that includes their own interests. There are no exceptions. Loyalty is a must.
- Confidentiality – Realtors are negotiation experts, and you hire them, in part, to handle the tricky business of negotiations for you. Any private info that you reveal to your agent should remain exactly that – private and confidential. This is especially so if it concerns info that could hamper your negotiating position.
- Full obedience – your real estate agent has an obligation to do as you wish –The agent must obey all lawful orders that the client gives her.
- Accounting – any funds that you entrust to your real estate agent must be accounted for properly. A Realtor must not, accidentally or otherwise, commingle your entrusted dollars with their business or personal funds.
- Total disclosure – remember; your agent has a responsibility to you. If they gain information that could assist you in negotiations, they have a duty to tell you, even if it makes their life more difficult. You are number one.
Being a Fiduciary
One final thought: a Realtor and a Registered Financial Advisor are fiduciaries, but not a stockbroker.
Those not working to the fiduciary standard are held only to a suitability standard, meaning their advice must be suitable for your financial situation.”
Stockbrokers are bound to a lower legal standard called suitability. The non-fiduciary stockbroker must only follow the standard of “suitability,” which does not require the client’s interests to be placed first; stockbrokers need only provide suitable advice given the client’s resources.
Good to know?
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CashFlow Chick and Coal to Cash Homebuyers, Inc. are owned by Paige Panzarello. She has been in Real Estate as a Landlord, Builder, and Investor since 1996.
We buy as-is. An investor will estimate the repairs needed to restore your property, arrive at an offer, and will purchase the property as-is.
When we buy houses fast, there are no fees! We don’t charge you a real estate commission, and we may take care of any other nagging financial problems such as back taxes, code violations, or past due water and sewer bills.
Paige also helps to educate people on the importance of Passive Income, deal evaluation, money management, how to wisely interact with money, and what the heck does a profit and loss and balance sheet actually look like?
