Home Buying in Northridge>Question Details

justin, Home Buyer in Los Angeles, CA

Agents in Studio city and Granada Hills

Asked by justin, Los Angeles, CA Mon Nov 12, 2012

Nobody who answered my previous question addressed the critical issue of fiduciary duty. Does a Buyer's agent who works for an agency that employs listing agents have a fiduciary duty to the seller? (for examples, to report to the seller what you had told your buyer's agent was the maximum you were willing to spend, or to protect information accidentally discovered about the seller)

Using Google and looking through the two sites listed, NAEBA.org, and REBAC.net, I found two agents who claim to take no listings, Lori D. Frankfort in Studio City, and Richard Barclay in Granada Hills.

The first agent "works with a partner who only takes listings", while she "only works with Buyers". Would this mean she has a fiduciary duty to the Buyer, or does she still have such a duty to the seller?
The second agent is reported to be an Exclusive Buyer's Agent of an Exclusive Buyer's Broker.

Does anyone have experience dealing with either of the two, or know anything at all about them?

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Answers

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Caroline Harabedian’s answer
If you are representing the Buyer, the first line of duty is to the Buyer. However, you have to be morally accurate in all transactions. You don't have to tell the seller what your Buyer's max is, or any other confidential information. And always, you share what you learn about the seller with your Buyer if it will somehow affect the purchase.

To answer your second question, repetitively, you have a fiduciary duty first to who you represent. If you represent both buyer and seller, you have more of a duty to protect that who you were in contract with first, yet both at the same time. Sounds tricky, but a good agent can do it. Usually when one partner represents buyers and the other represents sellers, it just means one of them feels like showing houses, while the other doesn't. Each has their own duty to their clients.

Any further questions or clarification, please ask.
0 votes Thank Flag Link Mon Nov 12, 2012
WoW! BBB sure has made things sound more confusing than it actually is. As an "agent" - in this case for the Buyer, our role is to advise by providing information through facts, i.e.. market values, and if we are privy to additional information which has been provided to us by the sellers agent - such as the seller will only accept an offer at x amount or higher, then we can reveal that information to our client. But any actual decision is up to the client. Each agent is supposed to completely represent the client and if an agent is lax and reveals information to the other party that their client didn't authorize (unless it is a legal disclosure) than it is on that's client's agent. Each agent even in the negotiating process, should be only revealing information that the client has stated they want revealed. The Buyer's agent shouldn't know the "bottom line" that the seller will take or the seller's agent shouldn't know the "bottom line" that the Buyer will give unless either client has told their agent to reveal it. Often times I will know how much my client is willing to give as I want them to know that number up front - even if they are starting at a lower number so that I know how best to negotiate. The seller's agent does the same. BUT revealing that information is not allowed. As a matter of fact, often times an agent will advise a client who may be pre-approved for a loan up to say $600,000 but is making an offer on a property for $450,000, to only show a pre-approval for the $450,000 so that the range the Buyer can go is not revealed.

The role of each agent serves opposite purposes. The Buyer's agent is trying to get a property for the client at the lowest possible price and obviously the Seller's agent is trying to sell the property at the highest price. The ultimate goal, as in any negotiation, is to meet in the middle and that can take many different paths.

I am not sure if any of this is helping you but I hope so. Perhaps you would be best served talking directly to an agent regarding your questions and points of confusion rather than through this media.

If you would like to talk - feel free to call me at (818) 268-8099, or any other agent/broker that you trust.
0 votes Thank Flag Link Mon Nov 12, 2012
I'm still a bit confused. On their web page, I found that The Los Angeles Better Business Bureau warns, in their California Publication No. 040, that one's " agent works for the seller of the property and has a fiduciary responsibility to the seller. Although the agent can offer knowledge of the market, including giving you a listing of comparable properties sold in the area to help you decide what a fair price is for the property you want to buy, they cannot tell you, the buyer, what the seller's bottom line really is, even if they have that information. At the same time, the agent is required to tell the seller anything you mention aloud, for example, how much you are prepared to pay, during negotiations." ...
unless one has "entered into a separate agreement" with the agent.

So they seem to be saying that the Buyer agent DOES have a fiduciary duty to the seller, but only until the prospective buyer signs such a "separate agreement". ("separate" from what?)

But why would one let an agent be negotiating on one's behalf if they haven't signed such any such agreement? And why would one want to trust an agent who is willing to so negotiate before his duty to the seller has been replaced with a duty to the buyer by virtue of such an agreement?
0 votes Thank Flag Link Mon Nov 12, 2012
An agent has a fiduciary duty which is created by contract. A listing agent has a listing to sell an identified property or provide some other licensed service, which creates the relationship. A dual agency is created when the agent is representing both side of a transaction and a fiduciary is created with a buyer, when the buyer signs a contract with an agent for representation.. Since, as a matter of technicality, only Broker licensees may contract with the public and sales or associate brokers contract with a supervising broker to engage in licensed activities, contracts are between a broker and a client. The fiduciary resides with the entity which contracted for it..

Ken Dorfman, Broker
Kenneth B Dorfman Real Estate
DRE # 675912
Phone, 888 846 0688
E-Mail, Ken@TheRealEstateOffice.Biz
0 votes Thank Flag Link Mon Nov 12, 2012
Any agent representing EITHER a Buyer or a Seller has a fiduciary responsibility to THEIR CLIENT!! Much as a lawyer represents their client to the fullest - so does a REALTOR®. The agent's role may differ per client /transaction if they have contracted to represent the Seller or the Buyer - but either way the agent TRULY AND 100% are to represent their client. Since you are specifying as a Buyer's agent , you can even sign an Exclusive Buyers Contract with your agent which would bind you to that agent as much as it would bind the agent to you. This process isn't used much anymore primarily because most buyers do not want to commit to one agent but any agent will gladly sign such a contract. So to be as clear as possible - A Buyers Agent or an Exclusive Buyers Agent is bound by their license, the REALTORS® code of ethics and law to represent their client, the Buyer in this case - NOT THE SELLER. The entire purpose of being an agent is to be an impartial legal representative of your client in a legal contract to buy or sell property.
0 votes Thank Flag Link Mon Nov 12, 2012
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