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The Difference Between a Functionary Agent and a Fiduciary Realtor

Every now and then I wander into some online Realtor Forums to share and trade ideas, see how markets are doing in other places, and see if I can answer questions or learn something new. The most disturbing thing I come across regularly is the misguided mindset of so many Realtors about their role as an agent. Most recently, this came up again around the issue of real estate inspections and whether or not we as agents should recommend specific inspectors to our buyers.

One agent posted “I offer them the Yellow Pages or to use a recommendation from a friend” to find an inspector. God help us all.

Why would a professional real estate agent hold this lame position? First, her Broker’s attorney may insist upon it. It’s a risk avoidance issue. Agents accept greater risk when we put ourselves on the line with specific recommendations for inspectors, lenders, vendors, etc. I understand that viewpoint, but I think it’s a copout. What it says is that the agent is more important than the client. That it’s more important for the agent to protect herself legally than to provide better than mediocre service. Whose interest is being served by that, and what does it say about the agent who follows this approach? It says that you the client are not very important.

Sylvia and I do recommend specific inspectors to our buyers, and we absolutely DON’T want our buyers randomly picking inspectors from the Yellow Pages. I also attend the inspection and estimate the repair costs of items noted on the inspection report. I then advise and educate the buyer about which items are normal and expected versus items for which we should seek remedy or cost offsets from the seller.

In other words, I’m in it up to my elbows with the buyer during the inspection process. What am I supposed to do – hide out in a coffee shop during the inspection and tell my buyer to call around for some bids if he wants to know how much a new water heater and a roof repair will cost?

Most competent real estate attorneys will tell me I shouldn’t be this involved. But I think the risk and liability in mine and Sylvia’s transactions is reduced by our greater involvement, not the other way around. So I don’t listen to the attorneys because I have no desire to be a “do nothing” Realtor who avoids questions and doesn’t provide information for fear of being sued. I instead choose to provide a high level of service to our clients. I choose to be a “Fiduciary” instead of a “Functionary”.

This difference between a Fiduciary and a Functionary is spelled out on pages 96 and 97 of The Millionaire Real Estate Agent book.

The chart below outlines the differences.
Read more …

Posted by Steve
7 years ago