How to Buy a House in Maine: Are You a Customer or a Client?
The Importance of the Buyer Representation Agreement
- To disclose all material defects pertaining to the physical condition of the real estate that are known by the licensee;
- To treat both the buyer and seller honestly and not knowingly give false information;
- To account for all money and property received from or on behalf of the buyer or seller; and
- To comply with all state and federal laws related to real estate brokerage activity.
So what's missing in that? A couple very important things. First, as a customer you should not expect confidentiality! You also should not expect professional advice (How much should I offer?). And you should not expect the licensee to promote your best interest.
(Note: The same is true for a seller and a listing agreement, we're just focusing on buyers in this post.)
However, once you have entered into a written client relationship agreement, you can expect all those things and more.
The OLD CARD—An Agent's Duty to a Client
In real estate, we use "OLD CARD" as shorthand for our duties to our clients (often called our "fiduciary duties"). So now you HAVE entered into a client relationship via a written agreement. What does that get you? What is your REALTOR obligated to provide you?
O – Obedience: A licensee must obey the client’s lawful instructions.
L – Loyalty: The duty of loyalty is the legal expectation that the licensee will put the client’s interest ahead of everyone else, including the licensee’s own personal interests.
D – Disclosure: The licensee must disclose all material facts or information that, if known, would change the decision of the client. Material defects must also be disclosed.
C – Confidentiality: This is the only fiduciary duty that extends beyond closing. The licensee cannot disclose information that would adversely impact the negotiating position of the client in the transaction or any other information that the client directs to be kept confidential.
A – Accounting: The licensee is accountable for the money and property of others that comes into his or her possession.
R – Reasonable Care: The licensee has a duty to be reasonably careful in the conduct of the business of the client. This means keeping abreast of industry changes, making sure all of the proper forms are used, preparing offers in the proper manner, etc.
D – Diligence: The fiduciary duty of diligence requires the licensee to be attentive to the interests of his client.
So remember, until you have entered into a written agreement for representation, a licensee owes you NONE of the OLD CARD duties!
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