I saw this headline in today's issue of RisMedia, an online newsletter. Sadly, it does not surprise me. Real estate agents have a fiduciary obligation to their clients. This means that they must be an advocate for their clients, put their client's best interests ahead of their own and be totally honest and fair with all parties to a transaction. A good agent will do just exactly that. If the house has hidden problems that a first time (or any time) buyer might not be aware of, the agent is obliged to tell their client this. If the agent thinks the buyer can get the house for a better price, the agent must share that information with the buyer and be ready to discuss openly the pros and cons of coming in with the lower offer. If the agent is also a Realtor®, he or she also must adhere to a stringent code of ethics over and above the basic fiduciary obligations expected of all agents.

Unfortunately not all agents are aware of their obligations, or, if they are aware, they don't necessarily adhere to them. One of the problems is that there has been a huge influx of new agents into the business in the past 2 years and many of those agents are poorly trained. A second issue is the pressure to actually close escrows. This is a commission based business, and there is no compensation of any kind except commissions from closed escrows. Some agents are so driven to line their own pockets that they neglect their fiduciary obligation to give their clients good advice, or even to talk a client OUT of buying (or selling) a home if it is not in the client's best interest to do so.

According to the RisMedia news article, an "Agents' professional standards are almost directly proportional to their education and the amount of knowledge they've gained." A successful agent is one who is constantly taking courses, learning about new technology and ways of doing business. Many of the new agents have not had the time to take additional courses or assimilate the extensive "learn as you go" experiences of a seasoned agent. Unfortunately many seasoned agents have had the time and the opportunity but they just simply don't care. They are in it for themselves and nothing will get in the way of that.

If you are a buyer or a seller, be sure to search around for an agent who will be truly honest with you, one who is going to take the time to educate you as to what is truly important and what is not, one who will work for you as well as with you. Check the agent's credentials. Find out how experienced they are (not only how long they have been in business but also whether they are "full time" or "part time"). Ask for (and check) referrals. Remember, part of your own due diligence obligation includes making sure that the agent you hire is the best one for you!

© Lynne Mercer

March 2006

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