Key legal responsibilities:
- A real estate agent has a legal and ethical responsibility to act in the client’s best interest. For example, he/she should be honest regarding a property’s market value and not mislead a potential buyer to buy above their budget and criteria to benefit from a higher commission.
- Any conflicts of interest must be disclosed and he/she should negotiate in good faith.
A realtor has to be honest and straightforward about all the details of the property and the relationship he/she has with any potential buyer.
*For example, if a client is selling, he/she should be informed adequately and truthfully if the potential clients are willing to pay more than the asking price, the buyer’s intentions towards the property, all the offers that have been received and also any other information that the real estate agent has that could potentially discourage the seller into selling the property to that person or entity.
*If your client is buying, you must inform them how long this property is listed in the marketplace, if the asking price is fair and what the market value is, if any other offers have been made for this property, what the offer put in the table should be having in mind always the best interest of your client.
You may have heard of the acronym “OLD CAR” which translates as:
- Obedience – You (the realtor) must obey your client’s lawful instructions and requests as agreed.
- Loyalty – You should try and obtain the best possible deal for your clients even if it means you will gain less commission from the deal.
- Disclosure – All facts and knowledge in regard to the deal and property information must be disclosed to all parties including any contradicting interests and relationships between yourself and the third party
- Confidentiality – Unless otherwise agreed, all personal information must be kept for yourself up to the extent allowed by the law.
- Accounting – All money and property transactions must be kept in accurate records.
This is stated in the AML law and the agency must be informed and up to date regarding the necessary procedures. They should strongly advise potential clients to consult a lawyer to perform due diligence before any transactions take place. This protects all the involved parties.
Reasonable care – The agent’s duty strictly requires that they exercise their duties with competency and that they display the professional skills expected of someone holding a real estate license in the best interest of the client.
A real estate agent has to carry out an investigation before bringing any property to a potential client which includes: A physical visit to the property to inspect and check for any obvious damages that could potentially lower significantly the value of the property but also all the legal parts that could affect the price of a property such as zoning (ex. residential, agricultural, animal rearing, industrial, green belt, and tourist zones), any other limitations or repairs required, if there are mortgages and impediments, ownership and title availability, bank memos, etc.
What are the commissions that real estate agents usually charge?
A real estate agent usually charges a 5% commission for a sale of the property, but if there is an exclusive agreement of exclusivity, the commission could drop up to 4%.
