Anyone licensed in the Real Estate industry works in the capacity of a Fiduciary for the Principle, better known as the Buyer/Seller. To act as a Fiduciary means the Agent and Brokerage they are affiliated with are bound to act in the best interests of the Principle and in accordance with the Code of Ethics. This is accomplished through the execution of a set of duties the agent is required to perform while representing the Principle. Each Brokerage has a different way of verbalizing what these duties are. So for simplicity, I like to refer to John A. Yoegel’s article entitled "6 Fiduciary Duties of a Real Estate Agent". John outlines the fiduciary duties as Accounting, Care, Confidentiality, Disclosure, Loyalty, and Obedience.  

My concern lies with how effectively fiduciary responsibility and acting in a manner consistent with the code of ethics can be adhered to in an industry with such a low barrier to entry. Yet, it is so vital to the Principle’s experience. In my time as an agent and now brokerage owner, I have come across numerous situations where this was not the case. For example, in the past, I’ve been unable to show clients a home I knew met their expectations due to the seller’s agent not responding to phone, text, or email. When this happens, it takes every ounce of energy in my body not to break the code of ethics. Contact the seller directly. And inform them they’ve lost an opportunity to sell their home. All because their agent isn’t performing to their fiduciary responsibility.  

So, as a Principle, how can you determine if the agent you have selected is performing adequately as a Fiduciary and in accordance with the code of ethics? Better still how can you approach selecting an agent/brokerage so you can be confident that your agent is properly working as a fiduciary and adhering to the code of ethics?

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First and foremost, interview a handful of agents from different brokerages before making your decision. More people than ever are utilizing agents to assist with their real estate transaction, but 70% of those people go with the first agent they are introduced to. As a principle, if you take the time upfront to get a feel for an agent’s personality, philosophy, experience, and ensure that you have a comfort level with the agent you select versus others, you will save yourself a lot of pain and frustration down the line.  

As the relationship kicks off, you should continually evaluate the agent throughout the process and look for red flags that violate the code of ethics or their fiduciary responsibility. If selling, did the agent pressure you regarding their recommended list price, or did they present an unbiased market evaluation for you to make an informed decision when setting the price to list your home? If the latter is true, then the agent put your interests above their own (loyalty) and acted based on the direction you gave them (obedience). After listing your property, did the agent host regular open houses and did they utilize social media and other forms of media to market your property (care)? When obtaining feedback from the open houses or when accepting offers, did the agent disclose all pertinent information presented to them regarding your home (disclosure). In negotiations, did your agent keep private items they discussed with you regarding your reasons for moving so as not to influence the buyers offer negatively (confidentiality). Finally, when closing the deal did the agent properly handle all monies and contract paperwork (accounting).

If you can answer Yes to all of these, then congratulations, you found yourself a good, ethical agent. If at any time during your relationship the answer to one of these items flips to no, then you need to immediately escalate your concerns by speaking to the broker at a minimum.

The overall message here is that the real estate transaction is such a serious and financially burdensome transaction that 90% involved with it seek help in executing it. A little research and time on the part of the principle will increase the likelihood of obtaining the best possible representation, a successful transaction, and a positive experience. 

Todd Wilkinson is the Founder and Owner of FonHome Realty.   FonHome is a customer-centric brokerage where our clients are in control and our experienced agents are respected for providing the positive and exciting experience the real estate transaction should be. Todd is an accomplished real estate investor with an undergraduate degree in Financial Economics and a Masters’ degree in Business Administration.  Todd has held senior management and executive level positions with the world’s two largest retailers and a successful startup venture.  Todd has served terms on the University of Arkansas Advisory Board and is actively involved with the St. Theresa School in Kenilworth.  Todd opened his own brokerage after feeling underserved in his personal experiences with real estate transactions and wanted a firm whose mission was on serving the fiduciary responsibilities guaranteed to the Buyer and Seller.  Contact Todd today for a free Comparable Market Analysis for your home or for advice on beginning your search for a new home at www.fonhomerealty.com.

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