Real estate has a lot of jargon, and like most professions, we take it for granted and don’t explain it to our clients well. A very good example of this in my industry is “fiduciary duty.” As a member of the National Association of Realtors, on top of being a real estate broker licensed in Oregon and Washington, I have a fiduciary duty to my clients. What is this duty, and why do (my client obs) care? A fiduciary duty is an “obligation to act in the best interest of another party” and to put their interest above my own. When I represent a buyer or seller in a real estate transaction, I put their interests above all else. More of a breakdown of these duties:
OLDCAR is an acronym for the central fiduciary duties required of a real estate professional acting as an agent of their client.
Obedience: As an agent of your client, you must obey their instructions, barring illegal, unethical requests, or requests which contradict terms of the contract.
Loyalty: As the agent for your client, you must be loyal and keep their best interests ahead of those of any other party, including yourself. How much commission you might make, particularly in competing offer situations, should not be a consideration and would be disloyal to your client.
Disclosure: In many states the law requires a real estate agent, whether in an "agency" capacity or not, to disclose material facts to their client. Material facts are those which, if known by the buyer or seller, might affect purchase or sale actions.
Confidentiality: Your fiduciary duty of confidentiality means that you do not disclose anything that you learn about your client, their business, financial or personal affairs or motivations.
Accounting: Accounting for all documents and funds in the transaction is a fiduciary duty. Accurate reporting of the whereabouts of all monies pertaining to the transaction and their ultimate disposition is a fiduciary responsibility.
Reasonable Care: This duty is one to which special care should always be paid. The words "reasonable care" are only finally fully defined in many cases by a judge or jury when it's too late to change your actions, but amount essentially to the duty owed to any client by an agent/brokerage through state and Federal agency/common law and Federal regulatory law.
Some real world examples include:
Getting a lower purchase price for my buyers which results in my commission being lower.
Negotiating repairs and concessions that benefit my client.
Disclosing info on a house that I have previewed in the past to buyers.
Keeping the reasons for clients moving confidential. This can affect how the other side negotiates. I found out recently that one party of a selling couple (not my clients) has already moved out of state. We asked for a lot of repairs and got them due to us knowing they are highly motivated.