I’ve got a situation that came up with one of my agents this week that I’ve been encountering more and more lately and I think that it’s something that the agent population needs to really think about.
My agent, who was the listing agent, called me and she was freaking out a little bit because it was three o’clock in the afternoon and the buyer’s option period was going to expire at 5:00 p.m. that day.
So a buyer’s agent had brought the clients, brought an offer. That contract was executed with a seven day option period, option money was delivered, no problem.
Now, we’re on the seventh day, it’s two hours before the end of the option period and my agent called me at three and said; “I’m freaking out because we negotiated a pretty hefty repair allowance, $5,000. And the buyer’s agent has not sent over the amendment signed by their buyers for my seller’s signature that reflects the $5,000 price drop.” She said, “Should I call this agent and let them know, ‘Hey, we’re coming up against it’?” Because obviously, that buyer is not going to have any leverage if their option period is over.
There’s really no reason for the seller to sign that amendment at 5:01 because now the unrestricted right to terminate has expired. I told my agent, the listing agent, “Listen, you absolutely should not and cannot call that buyer’s agent and tell them that because now you’re talking about a breach of your fiduciary obligation to your client.”
And what I’m talking about here is that listing agreement, which is a contract between the seller and the listing agent for you to represent them, only them and only their best interest.
So, if you out of the blue call the agent on the other side, in this case the buyer’s agent to remind them of what they need to do in order to best protect their clients, guess what? You’re in breach of that fiduciary duty.
I had an agent who had a similar situation a few weeks ago and the agent on the other side was actually angry at my agent because she had not informed him that he had neglected to put something in a contract and was about to miss a deadline and he used the words unethical or lack of professional courtesy.
Where does the line where professional courtesy ends and your fiduciary obligation begins?
It is a very clear line.
What is in the best interest of your clients?
So, in this particular case, I told my agent, the listing agent, go back to your seller, tell them what’s going on. If they want you to do that because they feel like, “Yes, we verbally agree to the $5,000, and we want to hold up our end of the bargain with respect to that money,” that’s their decision, but it’s not your decision to make. So the bottom line here is, you need to be sure that at every level, at every moment during a transaction, you are making sure that you are protecting your client.
Whether your client is the buyer or whether your client is the seller and don’t be intimidated by other agents who are looking to shift blame to you for their mistake and their calling it something under the guise of professional courtesy.