Navigating the complexities of real estate transactions can be challenging, especially when it comes to understanding fiduciary duties and agency relationships. This video goes over some common real estate exam agency questions you need to know for your real estate exam.
Fiduciary Duties in Real Estate:The video begins by clarifying that in a real estate transaction, the fiduciary duties are owed to the principal, who is essentially the client. These duties, often remembered through acronyms like 'LOADS' or 'OLD CAR,' include Obedience, Loyalty, Disclosure, Accounting, Confidentiality, and Reasonable skill and care. Each of these duties represents a commitment to act in the best interest of the client, maintaining confidentiality and professionalism.
Principal vs. Client:A common point of confusion addressed in the video is the relationship between the client and the principal. The explanation makes it clear that these terms refer to the same entity – the person who has hired the agent or broker. Understanding this relationship is crucial for real estate professionals to ensure they are fulfilling their obligations correctly.
Single Agency and Dual Agency:The concept of agency types is also covered. A single agency involves an agent representing one client in dealings with third parties, whereas dual agency arises when an agent represents both the buyer and the seller in the same transaction.
Broker's Commission and Listing Price Decisions:The video highlights that the broker's commission in a typical agency relationship is determined by mutual agreement, not by state law or real estate boards. Additionally, it is emphasized that the final decision on listing price always rests with the property owner, not the salesperson or broker.
Ethical Considerations and Legal Compliance:Real estate agents are reminded of their ethical responsibilities, such as not encouraging clients to break contracts or acting in ways that could lead to legal issues. For instance, a broker should not advise people to terminate existing contracts to gain business.