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.”) 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 seller’s interest to know, whether or not the seller knows enough to inquire. This one is of vital importance for you to understand. |
