Just how far can Realtors Go?

2009-02-09T22:54:00Z

The question is, just how far can you go in giving advise to your client without stepping outside legal boundries? Alabama real estate agents just finished their continuing education a few months ago. One of the courses made mandatory by the Real Estate Commission was Risk Management which is a required course every other year. The reason is because of an increasing number of law suits involving real estate agents; especially in the area of misrepresentation. Realtors remember those big "don'ts" but sometime they overlook the small things like how far they can go in giving advise to their clients. Where does "fiduciary responsibilities" begin and where does it end.

We all know that it begins when an agency relationship is established (in writing) between a broker and a seller or buyer. First we need to understand what fiduciary means: One acting in a relationship of trust, regarding financial transactions. Fiduciary has a much deeper meaning than some agents think. Notice the definition said acting in a relationship of trust. This tells us where our fiduciary responsibilites end.

The consumer depends on the expertise of a real estate agent. We are suppose to know what we're talking about. Who knows what our market is going to do? Has it bottomed? Is it going lower? Will it turn around in 2009? Nobody knows for sure. If they did they would become very, very wealthy. Thus we should limit our advise to facts only. Lawsuits are currently pending with accusations of real estate agents incouraging consumers to buy property because it is all but guaranteed to make them a good return in their investment.

Giving this kind of advise is always dangerous; regardless of the market conditions. The safest bet is always to state the facts and leave the decision making up to the buyer or seller. Section 34-27-85 (a)(1) of the Alabama Real Estate License Law states: Loyally represent the best interests of the client by placing the interests of the client ahead of the interests of any other party. This means that we place the clients interest ahead of our own interest. Our top priority is not the commission; but its about providing a fair and honest service to the consumer.

Another reference in the law states in Section 34-27-36 (a) (4): Making any false promises of a character likely to influence, pursuade, or induce any person to enter into any contract or agreement is a viloation of the law that requires disciplinary action.

As a real estate educator, my main goal is to educate Alabama real estate agents so they may manage their risk. If you look in your rear view mirror while driving down the road, and see a blue light flashing, it's too late to be concerned about how fast you were going. The same applies to the real estate business. Educate yourself on the laws that govern our industry and then abide by those laws.

James Anderson

Just how far can Realtors Go?