Connect with a top agent to find your dream home

Get started

What Are the Fiduciary Duties of a Buyer’s Agent? Here is What You Need to Know

At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

Disclaimer: This article is meant to be used for educational purposes only and is not intended to be construed as legal advice. HomeLight always encourages you to reach out to an advisor regarding your own situation.

If you step into a doctor or lawyer’s office, you’d expect them to act in your best interest.

In the case of a doctor, that could mean offering you proper medical advice and disclosing any health risks you may be facing. For a lawyer, it means respecting your confidentiality and advocating for you within the bounds of the law.

In both cases, you’d expect them to have your best interests at heart and to take action based on what your needs require.

The same applies with a real estate agent. If you’re working with a buyer’s agent to buy a home, your agent should keep your best interests at the heart of the transaction.

“​​It’s just like an attorney client contract,” says Janet Anderson, a real estate agent with 16 years of experience in Tracy, California. “​​From the very beginning when you sign that contract until you close escrow, you know they are representing you at their best ability.”

To ensure that agents are advocates for their clients, most adhere to a set of six fiduciary duties. Let’s take a look at what the term fiduciary duty means and how these ethical guidelines apply in real estate transactions.

It’s a legal contract stating that they are going to represent them [the client] to their fullest ability and bring everything to their attention and fully advise them. Most Realtors® out there truly do care about their clients and want to do their best for them.
  • Janet Anderson
    Janet Anderson Real Estate Agent
    Janet Anderson
    Janet Anderson Real Estate Agent at Keller Williams Realty
    • star
    • star
    • star
    • star
    • star
    Currently accepting new clients
    • Years of Experience 17
    • Transactions 291
    • Average Price Point $491k
    • Single Family Homes 264

What is a fiduciary duty?

A fiduciary relationship is one where a person holds a legal or ethical relationship of trust with another. The term is usually associated with financial circumstances where one party may be entrusted to care for someone else’s money or assets. The word fiduciary comes from the Latin word “fiducia” which translates to “trust, confidence, and reliance.”

In real estate, fiduciary responsibilities are an agent’s commitment to act in their client’s best financial interest. For a listing agent, that means trying to sell a home for the highest amount of money in the least amount of time.

Buyer’s agents protect their clients’ best interests by helping them find homes that fit their needs and budget by leveraging their knowledge of market trends to help them get the best deal possible. Your real estate agent should share details about your local market with you in order to help you make an informed decision about buying a home.

These duties are often outlined in the agency or buyer-broker agreement a buyer signs when they agree to work with an agent. That document will outline an agent’s duties to their clients and should include a description of their fiduciary responsibilities.

“It’s a legal contract stating that they are going to represent them [the client] to their fullest ability and bring everything to their attention and fully advise them,” Anderson says. “​​Most Realtors® out there truly do care about their clients and want to do their best for them.”

Do both real estate agents and Realtors® have fiduciary responsibilities?

The difference between a real estate agent and a Realtor® is often confusing for buyers — especially because most people use the terms interchangeably.

The term real estate agent is used to describe any type of agent whereas the label Realtor® is reserved for members of the National Association of Realtors® (NAR). An easy way to think about the difference is all Realtors® are real estate agents, but not all agents are Realtors®.

NAR members have committed to following the organization’s Code of Ethics and Standards of Practice, which go beyond the basic fiduciary responsibilities that may be outlined in your buyer-broker agreement.

Realtors® also need to maintain their licenses and can’t have had any civil judgements against them in the past seven years in order to become members.

As a general rule, both Realtors® and real estate agents both have fiduciary responsibilities to their clients as those duties are almost always outlined in a buyer’s agency agreement.

Looking for a Buyer's Agent Who Understands Their Fiduciary Responsibilities?

An expert buyer’s agent will always act in your best interest during the homebuying process. Our agent matching tool analyzes millions of transactions to find the best agent for your needs.

What are the fiduciary duties of a buyer’s agent?

A real estate agent’s fiduciary duties fall into six categories: Loyalty, confidentiality, accounting, disclosure, obedience, and reasonable care and diligence. Let’s take a deeper look at each one and when they might apply in a real estate transaction.

1) Loyalty

Loyalty is, without a doubt, the most important of a real estate agent’s six fiduciary duties. It means that an agent will act solely in your best interest and will disclose any potential conflicts of interest.

“It applies from start to finish,” Anderson says, but let’s take a look at a few specific examples.

An agent who acts in your best interest won’t encourage you to make an offer way over asking (and beyond your budget!) just to increase their commission. Instead, they’ll use comparative market analysis and any information gleaned from the listing agent to help you craft an offer that gives you the best advantage while not breaking the bank.

Another scenario: An agent shouldn’t show a buyer a house where they are also the listing agent without disclosing it first. And they definitely shouldn’t pressure you to look at properties where they’re the listing agent.

Though dual agency, where an agent represents both the buyer and seller in a transaction, is legal in some states, to act as a dual agent without disclosing it would be a breach of fiduciary duty. Dual agency occurs in only 10% to 20% of transactions.

2) Confidentiality

When you share information with your agent, such as your budget or your motivations for buying a home, you’ll want them to keep that information private. After all, you wouldn’t want a seller to know what your top number is going into negotiations or they might not agree to a more reasonable amount.

Confidentiality is the fiduciary duty that protects clients in these scenarios. When you disclose something to your agent, it’s expected to remain between the two of you unless you give them explicit permission to share that information with the seller.

3) Accounting

As a fiduciary, your agent will have some accounting responsibilities. They will need to keep a careful eye on any money or documents you entrust them with and document when any funds are exchanged.

This also means that your agent can’t put any funds you entrust them with into personal or business accounts.

The accounting portion of an agent’s fiduciary duty will mostly take place during the closing period for your home purchase. During this time, you may give your agent some funds via a cashier’s check, like your earnest money or initial deposit, to put into an escrow account while you wait for the sale to close.

4) Disclosure

Whether it’s obtaining information on other potential offers or pointing out potential problems with the home, your real estate agent is required to disclose any pertinent information to you.

Part of their job is to help you catch any red flags before you make an offer. If they notice any major structural flaws on a tour or think the house is overpriced based on comparable sales, they should say something.

“If a Realtor® sees something visually even, they need to point that out,” Anderson explains. “If they have any knowledge that could lower the value or could potentially be a risk to the client, they need to disclose that.”

When you’re ready to make an offer, your agent should also disclose any information they’ve found about the seller’s willingness to accept an offer below asking or any other offers that might be on the table.

Disclosure also applies to any potential conflicts of interest your agent may have. As we mentioned above, if you’re interested in a listing and your real estate agent is the listing agent for that property, then they are required to disclose that to you.

5) Obedience

Your agent needs to follow any directives or orders that you give them … within reason. If you ask your agent to do something illegal, however, they must refuse. An agent cannot take any actions that break local or federal real estate laws or those which violate the Fair Housing Act.

Other than that, an agent can offer advice during the decision-making process, but at the end of the day they need to follow your instructions.

For example, if you want to put in an offer that is way over asking price, your agent can try to dissuade you, but they should follow your directive if you decide that you still want to.

6) Reasonable care and diligence

You likely chose to work with a real estate agent because they have expertise in housing market trends, contracts, and other aspects of real estate transactions that you as a non-licensed person have little knowledge about.

An agent’s knowledge of local market trends can help you narrow your search from every listing in the multiple listing service (MLS) to just those that match your criteria and budget. While searching for homes, they can help find comparable properties so you can make informed decisions about how much a particular home is worth. NAR reports that 52% of buyers choose to work with agents because they wanted help finding the right home.

They’re also available to help you navigate writing an offer and entering into a contract once your offer is accepted. And they’re there to offer tons of other support and answer any questions you may have.

If your agent doesn’t volunteer this information — or worse if they don’t answer your questions — then what was the point of hiring them in the first place?

That’s where the reasonable care and diligence part of a real estate agent’s fiduciary duties comes in. A licensed agent is expected to share their knowledge of the industry to act in the best interest of their clients.

What happens if you feel that your agent has NOT fulfilled their fiduciary duties?

If you suspect your real estate agent has violated their fiduciary duties or is otherwise acting unethically, you may consider firing them or even taking legal actions.

“In our industry, unfortunately, there’s some that don’t understand [fiduciary duties],” Anderson says. “They’re looking for the bottom line and it’s for themselves and not just for their client.”

For minor issues, Anderson recommends talking with your agent first to ensure that there aren’t any miscommunications. This could apply if you think your agent isn’t responding quickly enough or you don’t think they’re providing thoughtful answers to your questions, and therefore are violating the reasonable care and diligence aspect of their fiduciary duties.

“There’s a lot of emotions when purchasing a home,” Anderson says. “Maybe there’s just a misunderstanding between the Realtor® and buyer.”

If you think your agent has committed a more severe or potentially illegal breach of fiduciary duty, you may want to contact a real estate attorney. They can help determine if your state has any protections that can help you and can advise on what you can do within the bounds of any agency agreements you may have signed.

In cases where your agent has done something illegal, you should contact your state’s real estate commission and file a complaint. A quick Google search with your state name and the term “real estate commission” can help you find out who to file a report with.

If your agent has just committed an ethical violation, you can also get in touch with your local NAR chapter if you feel it has violated their code of ethics. NAR has a directory where you can look up your local chapter to find out who to contact.

Whatever the case may be, you will likely want to fire your agent over a breach of fiduciary duty. You should consult your agency contract to learn what the protocols are for letting your agent go.

In some cases, you may be required to work with a different agent at the same brokerage until the contract expires. In others, you might be able to terminate the contract and move on.

How to find top agents

An agent who takes their fiduciary duties seriously is working with integrity. And an agent who works with integrity is one who has your best interests at heart.

“There’s a lot of wonderful Realtors® out there that really do truly care about their clients,” Anderson says.

What Anderson says is true — in 2021, 90% of buyers said they would use their agent again or that they would recommend their agent to others, NAR reported.

So, how can you find the one that’s right for you?

When you first start interviewing potential agents, they should be upfront and honest about their fiduciary duties. The best agents will want to share this information because they know it can help buyers better understand the process.

If you’re looking for an agent who will put your interests above all else in the transaction, HomeLight’s agent search tool can help you find top agents in your area by analyzing millions of real estate transactions and presenting you with the facts. Agents cannot pay to be featured on HomeLight’s platform, so you can get an unbiased match in just a few minutes.

From there, you can ask them about their perspective on their fiduciary duties, see what responsibilities are outlined in their contracts, and inquire about what characteristics make them a good fit to work with you.

Header Image Source: (LinkedIn Sales Solutions / Unsplash)