Table of Contents
- Fiduciary Duty: Acting in the Vendors Best Interests
- Full Disclosure: Honesty and Transparency
- Pricing Strategy: Accurate Valuation
- Advertising Requirements
- Records and Accounting
- Presenting Offers
- Timely Communication: Keeping Vendors Informed
- Confidentiality and Privacy: Protecting Sensitive Information
- Continuing Professional Development
- Dispute Resolution and Complaints Procedure
- Key Takeaways
Your role as a real estate agent and assistant agent extends beyond simply facilitating property transactions. As a real estate agent, you must consider your legal and ethical obligations. You must do this as a trusted advisor, negotiator and strategic partner for your clients. At present, Australia has no federal real estate laws. As such, depending on which state you are based in, your obligations may vary. However, in all States and Territories, you owe the same core obligations to vendors. This article sets out the essential obligations you, as a real estate agent, owe to your vendor clients.
Fiduciary Duty: Acting in the Vendors Best Interests
Your primary obligation to vendors as a real estate agent is your fiduciary duty. This duty mandates that you act solely in the best interests of your client, the vendor, throughout the transaction process. This includes putting your client’s interests ahead of your own in all aspects of the relationship. You must also provide your client with accurate information. Additionally, you must make decisions that align with your client’s goals. However, you must not act in the client’s interests if it would be unlawful, unreasonable or improper to do so. This duty of care extends beyond the sale transaction and lasts as long as you are representing your client.
Full Disclosure: Honesty and Transparency
Transparency is crucial in maintaining trust between a real estate agent and their vendor clients. You are obligated to provide full and accurate information about the property. Additionally, you need to inform your client about the condition of the market, potential buyers, and any conflicts of interest. This helps your vendors make informed decisions as they clearly understand the situation.
Continue reading this article below the formPricing Strategy: Accurate Valuation
Setting the right price for a property is critical to a successful sale. Additionally, you are responsible for providing a realistic and accurate valuation based on market trends and comparable properties. You also have a statutory obligation to attempt to get the highest possible price for the vendor within these restrictions. Regarding the price, you should keep evidence of the reasonableness of the selling price. You may need to provide it to the vendor, potential buyers or regulator. If the estimated selling price is revised as it ceases to be a reasonable estimate, you must notify the vendor. Following this, you must amend the Agency Agreement. Further, you may need to amend or retract any advertisement published in relation to the property.
Advertising Requirements
Your vendor clients will be relying on your expertise and experience when it comes to advertising their property. Each State and Territory has different advertising requirements that you must comply with. For example, in NSW, the phrase “offers above” or “offers over” cannot be included in any advertisement. You also need to ensure the information in the advertisements you release is accurate and current. This is particularly important if any information relating to the property changes.
Records and Accounting
Depending on your state or territory, you may be subject to specific record-keeping requirements. You must enter into the written record any:
- information pertaining to the money involved in a sale transaction; and
- representations made to a potential buyer or seller about the likely sale price of a property.
Although, you should consider the relevant requirements in your state or territory.
Presenting Offers
You must provide all verbal and written offers to a client unless instructed otherwise by a vendor in writing. Your vendor may instruct you not to present offers to them if, for example, they are below a certain amount. In this instance, you must also notify the person making an offer that their offer will not be submitted to the vendor.
Timely Communication: Keeping Vendors Informed
The significance of prompt and effective communication cannot be overstated. By promptly and effectively communicating with key stakeholders, you build trust with these stakeholders. By adopting this communication style, you are also more likely to be in compliance with your legal requirements. Relatedly, it is imperative that you communicate with all parties in a timely manner. You need to promptly inform buyers and your vendor client about crucial developments in the transaction process. If you fail to communicate in a timely manner, you may face legal repercussions. You also may face financial penalties. Timely communication is not just a professional courtesy but a legal and ethical obligation.
Confidentiality and Privacy: Protecting Sensitive Information
During the course of your work, you may come across confidential, personal or sensitive information about your vendors. It is your duty to maintain this confidentiality and not disclose any sensitive information without proper authorisation. Although, you may have to disclose this sensitive information if required by law. As a real estate business, you should ensure that you have a privacy policy available on your website. Your privacy policy should set out:
- the type of information that you collect from vendors;
- the primary reason for collecting that information; and
- how the information is used, and if it is disclosed to any third parties.
Continuing Professional Development
As a real estate agent, you are also obligated to engage in continuous education within the profession. You must do this to stay on top of recent changes in laws and regulations applicable to your practice. The extent of this requirement varies based on the state or territory where you operate. Adhering to your Continuing Professional Development (CPD) requirements annually is crucial. You must adhere to your annual CPD requirements to maintain your licence and avoid possible fines. Likewise, fulfilling your CPD requirements means you can deliver the highest level of service to your vendors. By staying aware of relevant industry developments, you can provide your clients with the best service possible.
Dispute Resolution and Complaints Procedure
As a real estate agent, you have a crucial obligation to transparently inform vendors about how they may lodge a complaint. Likewise, you must inform them of the dispute resolution process available to them. This disclosure ensures your vendor clients are aware of the mechanisms in place to deal with any concerns or disagreements. These disagreements or concerns may occur during the property transaction. It is best practice that you provide clear information on the dispute resolution procedures to your vendor clients. In turn, your vendor clients are empowered to navigate potential issues with confidence. This fosters transparency and trust between you and your client. This commitment also aligns with your legal requirements. Further, you are able to run a fair and ethical real estate practice in which conflict resolution is handled responsibly and efficiently.
This factsheet provides an overview of a real estate agent’s professional obligations.
Key Takeaways
As a real estate agent, you should know being an agent is more than just facilitating property transactions. You must build relationships, foster trust and fulfil your obligations to your vendor clients. The obligations you owe to your vendor clients include but are not limited to:
- acting in their best interests;
- maintaining transparency in all your dealings with them;
- keeping up with your CPD requirements;
- providing expert-level guidance and advice.
By approaching your obligations with professionalism and integrity, you can create strong partnerships with your vendor clients. You can also ensure that you are in compliance with your legal obligations. If you need help understanding what your obligations are as a real estate agent to your vendor clients, contact our experienced real estate lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to a lawyer to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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