Who are you supposed to be as an agent in a real estate transaction? This question is more difficult to answer than it may seem. As an agent, you’re supposed to be your client’s BFF while also being their taskmaster; you’re supposed to be loyal to them, except when you’re required to disclose material facts against their will; and you’re never supposed to misrepresent yourself as an expert in anything… you’r’e not an expert in law, in appraisal, or in surveying. So, who are you?
Perhaps the most significant aspect of the client-agent relationship that’s confusing even for seasoned licensees is the issue of loyalty. Of course, it’s not like friend loyalty; it’s loyalty that is required by law. In most states, agents owe the fiduciary duty of loyalty to their clients, unless they are a transaction broker or dual agent.
It’s easy to hear “loyalty” and assume that means just doing whatever your client wants. However, loyalty in a fiduciary sense doesn’t mean that you’re loyal to your client as a person in general. Loyalty means that you are loyal to your client’s interest… though you are not loyal to their interest in general, but to their interest in the transaction. So this is a very specific and situational loyalty.
In my experience, the best agents focus on what I see as impersonal yet empathetic loyalty, though this may sound like a contradiction. This type of loyalty involves not saving your client from making bad choices, but saving your client from making uninformed choices. It’s about supporting your client; not telling them what to do.
Rarely is any choice objectively bad or good on its own. For example, buying a house with a horrifying mold problem sounds like a bad idea, but if you’re buying it for the land and you’re going to rip it down, then perhaps the mold doesn’t matter. Or perhaps your client wants to test an anti-mold patent they invented, or is a billionaire who just wants a weird challenge. The only way that this moldy purchase is likely not a good idea is if the buyer thinks it will be cheap and easy to fix, or doesn’t really consider the mold at all.
The uninformed choice is usually the worst choice, though even uninformed choices can prove to be lucky ones. Perhaps the land value skyrockets over the next two years, and then the uninformed mold purchase proves lucrative.
My point is that if you think being an agent is about telling clients what is objectively right or wrong, then being an agent probably isn’t the best career for you. You can say what is right and wrong regarding your role in the transaction, but the most you can do is provide context for your client, and then obey their instructions (as long as they are lawful).
Impersonal loyalty, to me, is the difference between saying “Yes, I will happily help you conceal material facts” and saying “I completely understand why you’d want to conceal that; however, unfortunately license law obligates me to communicate material facts to all parties in a transaction, so if the roof is noticeably leaking, then I’ll have to communicate that fact.”
It’s usually good to phrase things empathetically but neutrally. Being a fiduciary isn’t about personal judgment; it’s about arming your client with information and then dutifully executing any legal request they have relating to the transaction.
To be clear, helping your client conceal material facts is not something you should ever do. However, some clients are quite naive about the law and are in a stressful situation, so they may not entirely realize when they might be about to break a law. It’s the agent’s job to inform them of their duties and responsibilities in the transaction, and then to execute any directive they give you, as long as it’s legal.
That said, if you truly disagree with your client’s orders and feel that they have crossed a moral or legal boundary, then you may want to choose to stop representing them. In some situations, when you think they’re about to make a massive mistake, you may want to have them sign a document that releases you from liability. For example, if you have informed your client of all the risks of buying a house that is highly susceptible to flooding, but your client wants to risk it anyway, then you might ask them to sign a document stating that they are doing this against your guidance. This is basically saying that they are making a choice you disagree with, but at least it’s an informed choice, so they won’t be able to sue you when their house floods.
In other cases, you may actually want to check in with your personal judgement and fire a client. For example, if your client is trying to have you do racist things that violate fair housing law, it’s a good idea to get rid of that client.
Inflexible thinking can get in the way of being a good agent. As an agent, you’re dealing with clients who are constantly questioning what they want, what they can afford, or what they’ll settle for. Most of us in the high-pressure situation of buying or selling a home go through a series of re-evaluations as our dreams hit reality, so it’s natural for clients to completely change what they’re looking for multiple times. As an agent, the best thing you can do is keep them informed rather than telling them what to do. As their real estate therapist, being there to listen to them, to shift gears with them, and to give them all the information you can is usually the best that you can do.
