YOU’RE THE PRINCIPAL – I’M THE AGENT
Q: I recently was in contract representing a buyer. The seller was represented by an agent from another brokerage. After inspections, my buyer asked for a credit of $7,000 based on the inspection report showing a water intrusion issue. The listing agent immediately responded, “We’re not going to allow any credit since we feel that your buyer got a fair price for the property.”
I asked the listing agent if that was the seller’s position, and who is the “we” to whom she was referring. Listing agent said that she had not even presented our request to the seller and would not do so since she, listing agent, felt that the request was “unreasonable.” I insisted that she had an obligation to present our request. Listing agent responded that she had no such obligation because she was “sure that seller would not accept the requested credit.”
Isn’t she wrong? What can I do?
A: She is wrong.
Agents instinctively want to provide a high level of service and protect their clients. However, sometimes agents become too identified with their clients and talk about what “we” will or won’t do. The danger in this, of course, is that the agent risks making decisions for a buyer or seller which should be left to the client to make.
Sometimes you may hear: “We’re not going to do that” or “I’m not letting my buyer sign that.” Agents become accustomed to “this is how we do that” in a particular area or company. These customary ways of acting have their basis in good intentions but, again, agents risk making a decision for the client based on the local custom, or the agent’s preferences rather than allowing a client to make the decision.
This is a clear sign that the agent is overstepping his/her agency responsibility and taking on the role of decision maker for their client.
Remember: YOU ARE THE AGENT – THEY ARE THE CLIENT.
Your responsibility as an agent is to assist the buyers and sellers in the decision-making process. You have your agency duties, statutory duties (such as a conducting a diligent visual inspection of the property, etc.), and other duties imposed by the contract, regulations and case law.
It is the agent’s job to provide their client with the information to make a well-informed decision. Thus, as a fiduciary for a client, an agent must put him or herself in the shoes of the client, disclose all material information negatively affecting value or desirability that the agent knows or reasonably could obtain, and give advice and counsel regarding the property or relating to the transaction.
BOTTOM LINE: Agents help gather information, counsel, recommend, and send clients to other professionals for advice from appropriate professionals (home inspectors, contractors, attorneys, tax advisors, etc.).
Ultimately it is up to the buyer and seller to make the decisions in the transaction.
PRACTICE TIPS
1. If you encounter an agent on the other side of the transaction who appears to be making the decisions for his/her client, remind the agent of the obligation to present your offer or request to his/her client. If that does not work, then perhaps your manager/broker can contact the other agent’s manager/broker and try to get that agent to properly allow the client to make the decision.
2. Avoid making decisions for your clients. Both you and, particularly, the client should be clear that it was the client who made the decision.
3. Have a discussion up front with your seller or buyer about your role – and the client's role. Let them know that you will give advice and be making recommendations based on the information available, but that they, the client, are responsible to make the final decision.
4. If, after the client has all of the necessary information to make a decision and has heard your recommendations, the client wants to proceed on his/her own in another direction, or upon the advice of his/her own professionals, she/he are free to do so. Document your advice and their decision.
5. If a client is about to make a decision that you suspect could expose him/her to legal liability, recommend that the client consult with a qualified California real estate attorney before proceeding. Document that recommendation.
6. If the client is making a decision that could expose you and/or your brokerage to liability (e.g., refusing to sell to a buyer based on a fair housing violation), consult with your manager/broker. You may have to withdraw from the transaction.
7. ALWAYS document your file or transaction log for significant decisions – particularly if a client is making a decision contrary to your recommendations.
ATTORNEY-CLIENT PRIVILEGED COMMUNICATION. Do not forward to sellers, buyers or third parties. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
Copyright Broker Risk Management 2017 3/17/17