Some real estate transactions usually happen directly between buyers and sellers. The buyer, for example, directly transacts with the seller in closing a deal, and vice versa; and both parties either agree to a contract or disagree with a contract. However, most real estate transactions involve the help of an intermediary who acts as an agent or broker between the buyer and seller.
Real Estate Broker and Real Estate Agent
You may be asking, at this point whether a real estate broker and a real estate agent are all the same, for most people use both terms interchangeably. There are indeed some shades of difference between a real estate broker and an agent. On the one hand, a real estate broker has the license to operate a brokerage and can operate legally a real estate business. On the other hand, a real estate agent usually works under a broker. Likewise, the real estate agent has not yet met the necessary requirements to operate one’s real estate business. A broker usually gets a property included in the listings: hence, if you are a seller who wants your property to be listed, you should approach a broker. A real estate agent, on the other hand, works on a commission basis under a broker. Additionally, a broker can readily help you find the most suitable real property in a place. Say for instance, if you want to find a luxury brampton real estate, you should readily avail of the help of a broker in Brampton; and that broker will surely provide you with a listing of all the luxurious properties in Brampton.
As a broker, you need to be trusted by your clients and prospective clients. You need to build a reputation of trustworthiness and the only way to establish yourself as a reputable broker is by working ethically in most of your transactions. Reputations are slowly built. Say for instance, if you do not divulge to a buyer that you are also working for a seller, you will surely be liable, under the fiduciary law, for breach of trust. But what is this fiduciary law? Let me further expound on the concept of fiduciary law.
Fiduciary Duty Explained
Fiduciary duty is a duty of a broker or an agent to work solely for the interests of his/her clients. The clients are usually called the “principals” because they are the ones to whom the fiduciary duty is accorded. Let me clarify this by example: a buyer, for example, would approach a broker asking the broker to look for a property that would be the most suitable to the client’s need. After sealing a deal with the broker, the buyer would expect the broker to find the most suitable property with the most reasonable price. The buyer likewise expects the broker to work solely for the buyer’s interest. In such case wherein the broker both acts as an agent of the seller and the buyer, the broker is guilty of acting under “dual agency” which is illegal and unethical. However, if a broker wants to do a dual agency, he/she should inform the client beforehand about this dual agency, and this agreement should be put in writing, and should be signed by both parties.