As a Real Estate Agent, What Are My Obligations to Buyers?

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Table of Contents

• Fiduciary Duty
• Full Disclosure
• Misrepresentation
• Competence in Market Knowledge
• Navigating the Legal Market
• Assistance with Financing
• Key Takeaways

As a real estate agent, you play a critical role in facilitating communication between buyers and sellers. It is your legal and ethical obligation to act in the best interests of your client, known as fiduciary duty. While it is essential to represent the seller’s interests, you must also understand your responsibilities towards buyers. This article discusses your ethical and legal obligations towards buyers as a real estate agent.

Fiduciary Duty

Real estate agents have crucial obligations towards their buyers, known as a fiduciary duty. This duty requires agents to prioritise the buyer’s interests above their own. Performing this duty involves honesty, integrity and transparency throughout the home-buying process. Agents must: 

• diligently represent their client’s interests;
• negotiate the best possible terms on behalf of their client; and
• disclose all relevant information to the buyer.

Full Disclosure

Real estate agents must disclose any relevant information about a property to ensure buyers are well-informed before making a decision. This includes potential issues such as structural problems, environmental concerns, or any other factors. As this could affect the property’s value or the buyer’s quality of life.

Some states have regulations that guide the professional and ethical standards that the public expects of real estate agents. For example, in New South Wales, agents must not exceed the agreed purchase price in negotiations or at auction without the express written authority of the buyer. An agent who violates these rules may be subject to penalties.

Misrepresentation

Real estate agents must understand their legal obligations to present buyers with accurate information and avoid misleading them. Misrepresentation can include:

• exaggerating the features of a property;
• concealing known defects; or 
• providing inaccurate information about the neighbourhood. 

Misrepresentation not only harms the trust between buyers and their real estate agents but also carries legal consequences in most states.

For example, in New South Wales, the Property and Stock Agents Act 2002 requires that a licensee or certificate holder must not persuade a person to enter into any contract or arrangement by: 

• any statement, representation or promise that is false, misleading or deceptive (whether to the knowledge of the agent or not); or 
• any failure to disclose a material fact of a kind set out by the regulations (whether intended or not) that the agent knows or ought reasonably to know.

Competence in Market Knowledge

Real estate agents should stay up-to-date with current trends in the property market to meet buyers’ expectations. Their understanding of the local real estate market is crucial, whether it be property values, neighbourhood dynamics or upcoming developments. By possessing such knowledge, agents empower buyers to make informed decisions and ensure they get the best possible deal in a competitive market.

Navigating the Legal Market

Real estate agents must possess a strong understanding of the legal aspects that surround property transactions to protect their buyers. They should ensure that all documentation is accurate and complies with local laws, guide buyers through the complexities of contracts, and address any legal concerns that may arise during the process.

Assistance with Financing

Financing is relied upon by many buyers for purchasing a home, in this process, real estate agents have a vital role to play. They should connect buyers with reputable lenders, explain different financing options, and help navigate mortgage applications. This includes helping buyers understand the financial responsibilities of their purchase and ensuring they are comfortable with the terms of their loan.

Key Real Estate Professional Obligations

This factsheet provides an overview of a real estate agent’s professional obligations.

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Key Takeaways

Real estate agents must disclose potential issues such as structural problems, environmental concerns, or other factors that could affect the property’s value or the buyer’s quality of life. As representatives of buyers, agents have a fiduciary duty to prioritise their interests above all else. Agents play a crucial role in guiding buyers through the complex process of acquiring a home. By upholding the highest standards of professionalism, transparency, and expertise, agents not only fulfil their obligations but also contribute to the overall success and satisfaction of their clients. In a dynamic and competitive real estate market, a well-informed agent can make all the difference in turning a buyer’s dream home into a reality. 

If you are a real estate agent and need help understanding your responsibilities, our experienced real estate lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.