This article was contributed by Intero Real Estate VP and Managing Officer Renee Kunz.
A Realtor is defined as a person who acts as an agent to sell or purchase property. Another definition that I hang my hat on is the term Realtor has one, and only one, meaning: Realtor is a federally registered collective membership mark which identifies a real estate professional who is member of the National Association of Realtors and subscribes to its strict Code of Ethics. You may ask why? The reason is the strict code of ethics.
Being a Realtor starts with creating a fiduciary duty. When you buy or sell a piece of property, typically this is the largest investment in a person's portfolio and should be handled professionally and ethically.
What is a fiduciary? A fiduciary, simply put, is standing in your client's shoes. Being loyal and trustworthy. We have legally-mandated duties to comply with this obligation. We need to act in the best interest of our clients. In fact, this is the most litigated issue in real estate claims.
A significant percentage of claims presented to insurance carriers offering errors and omissions coverages involve alleged negligence, professional negligence, negligent misrepresentations, and breaches of fiduciary duty by real estate licensees. Equally, civil actions brought against real estate licensees by the public usually include causes of action for negligence, professional negligence, negligent misrepresentations, and breaches of fiduciary duty. Fiduciary duties include, among others, loyalty; confidentiality; the exercise of utmost care (and in certain fact situations, reasonable care); full and complete disclosure of all material facts; the obligation to account to the principal; the obligation to act fairly and honestly without fraud or deceit; and the duty to "explain" and "counsel" about that which has been disclosed or should have been disclosed, thereby permitting the principal to make an informed and considered decision to buy, sell, lease, exchange, borrow, or lend. The concept is quite old.
Agency and Fiduciary go hand in hand. An agency relationship actually creates the Fiduciary Duties. The bottom line is you need to be aware as a consumer that when you align yourself with a Real Estate Professional, they need to be your Fiduciary!
Our profession is very complicated. On the surface it seems simple. However, how can the average buyer or seller know what to ask to make sure they are getting the proper representation? Again, that is why it is important to deal with a Realtor and have them be your Fiduciary. In fact, I was recently assisting a first time buyer and I said what questions do you have? And they responded, "…We do not know what questions to ask."
That really tells me and should tell all of you a lot. As a first time buyer, it is difficult to know the questions to ask! Questions like, "Do I need more than the 3 percent or 3.5 percent down? What are closing costs? What is escrow?" The questions go on and on.
As a Fiduciary, a Realtor's job is to eliminate the surprises and have a team of professionals to assist the buyer or seller with supplying all the answers before the questions come. That is when we are doing our job right!