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4 Fiduciary Roles When Representing A Client
There is a code of conduct like a samurai’s credo that agents adhere to unless they come from the dark side. Yes, government agencies will put down their expectations on realtors and agents in black and white. But whether these “rules” are followed or not is another matter. The idea is that people who bound themselves by honour, pride, and ethics, do not need a governing body to tell them how to approach these issues. If someone needs to be coached on them, they are probably unsuitable for the profession from the start.
When you are hired as an agent for a home buyer or seller, you are serving as his fiduciary representative. As the client will not have the knowledge and expertise that you have, or they will not hire you in the first place, you will bear the responsibility in achieving his goals without engaging in shady tactics, despicable word plays, or even breaking the law. You will have these 4 roles.
Communicating what is required of the client
This includes helping to define the client’s objectives. Very often people do not have a clear idea of what they want or need. They might think they need a big house, but actually how they define “big” can be a blurred vision. With careful understanding, you could realise that what they require is something much smaller than first thought. On the same notion, a seller might feel that he wants to sell his house at $500,000 as that is all that he needs. But through appraisal, you could find that he is better off selling at $550,000. Even though you could cash in on a quick sale at $500,000, you will be morally obligated to inform his that his house can easily transact at much more than that.
To help a client become aware of what his needs are, you need to conduct surveys and interviews to uncover what exactly will meet his very objectives. Hiring you for a transaction is often just a mean to get to where he eventually wants to be. Uncovering those hidden desires will help both you and the client to be more productive.
Contributing your expertise
In all likelihood, you have spent more time working on real estate than your client. Don’t let your knowledge and experience go to waste. Inform him on the most cost efficient way to go about the process of closing and where are the places he could go for the best valued services.
Third parties like banks and insurers might pay a referral fee for referring your clients to them. And sad to say, some agents often refer their clients to service provider who pay the best referral fees rather than those who have the best value. In the name of ethics, you should recommend clients to service providers with the best value. If you do want to get a better fee, at least show clients a list of available services providers clearly indicating their charges and let him decide for himself.
In the process of buying and selling, make sure that your client is not taken for a ride. Too many agents see their role as just a person to sign off the closing. To add value, make sure buyer are not paying too much and sellers are not selling too low. You job is in helping close a good deal for your client, not just as a passive bystander waiting to cash in your cheque.
Pre-empt problems and solve them
Many transactions are not as straight forward as you want them to be. You need to be able to identify them early and offer solutions to rectify them. Many of these problems arise from diligence matters, divorce issues, problems with existing mortgages, seller financing, ownership disputes, mortgage approvals, ownership eligibility, stamp duties, etc. You are not in a position to say that you are clueless on these issues. You are a real estate agent and expected to have the answers to these issues.
A common problem agents face is when the client’s expectations on price is far from a fair market price. And in an effort not to offend clients, agents go along with unreasonable expectations hoping that they will “wake up” soon and smell the coffee. But that will also mean that you have failed to meet their extreme expectations. It will serve all parties well to inform them that they are way off from what is a fair price. Make sure you have market data on hand to support your expert opinion.
Put the client’s interest first – Yes, really
It can sound counter-intuitive to look out for others first. Especially when the result of added benefits to your client can be a loss of income for you. A typical example is when a buyer do manage to buy at a low price, your commission will be compromised.
But remember that real estate is truly a unique profession. You are compensated for helping others save on resources and money. If you fail to deliver these basic roles just because you have a payday at the back of your mind, you are not behaving ethically. The flip side is that when a client finds that you are truly looking out for him while sacrificing yourself, you can expect referrals to come your way soon.