In my very first real estate licensing class, my instructor introduced the topic of “fiduciary responsibility” right away. Having majored in economics in college, I was familiar with the idea that corporate board members and officers have a fiduciary responsibility to shareholders but wasn’t sure how this would apply to real estate. One paragraph in one of the first pages of my pre-licensing textbook reads:
“An agency relationship exists when one person (the agent) acts for, or on behalf of another person (the principal). The principal is also known as the client. This relationship is a fiduciary relationship, which means that it is a relationship based on trust. While treating all others honestly, the agent places the interests of the principal, or client, first. The agent must always remain loyal to the principal.” -Champions School of Real Estate (The Law of Agency– page 8, paragraph 1)
|Shoutout to Chere- my first ever fiduciary responsibility! 🙂|
In a way, I think this concept should be the foundation of every single job ever. I mean, wouldn’t it be awesome if all of our interactions and decisions were based on trust? However, in most jobs, you are not contractually bound to represent the interests of one person or party. That just wouldn’t make sense for most jobs and I’m sure it’s obvious why.
One of the trickiest (and hardest) parts of this job is acting on behalf of my client in a way that is in their interest when I know that the other party will likely not be benefitting from it. Luckily, though, I typically work with clients who are kind people and who, like me, seek to find a win-win scenario in any given situation. In other words, I love my clients even more because, for the most part, they operate with a fiduciary mindset for others.
Below is an article I read recently on the TAR website that relates to this topic!
What “fiduciary” means and how it applies to your real estate transaction
05/13/2016 | Author: Marty Kramer
I read the most incredible thing this morning: Some financial advisers can put their own interests above yours.
That’s right … as long as that financial professional recommends an investment that is “suitable,” he or she can suggest a fund with higher costs to you (and higher commissions for the adviser) than a cheaper fund that may be a better option for you.
Though that is shocking to me, I am encouraged by the following:
Many financial advisers adhere to a higher standard that puts the interests of the client above those of the adviser.
New rules are in the works to require this higher standard for advisers and brokers who work with retirement accounts.
More good news for anyone buying, selling, or leasing real estate: When you receive agency services from a licensed real estate agent or broker in Texas, that professional is required by law to put your interests above his or her own. It’s called a “fiduciary” relationship.
Even better news when you hire a real estate agent or broker who is also a Texas REALTOR®: All REALTORS® pledge to abide by a Code of Ethics that holds REALTORS® to an even higher standard than what’s required by law.
To make sure you’re getting the highest level of professionalism, make sure your agent or broker is also a Texas REALTOR®.