What is a fiduciary in matters of selling a home in Utah? In any sales transaction, trust is critical. And nowhere is that trust more critical than in real estate.
Homeowners need to rely on a certain level of transparency from a broker. They need to rely on accountability and the knowledge an agent will act in their best interests. After all, that’s why you’re probably paying the average broker fee of 5 to 6 percent.
So how do you know when a broker is acting in your best interests?
The relationship between a broker and a seller might seem like a gamble. After all, it’s easy to be cynical and assume that an agent’s sole motivation in negotiating the sale of your property is the promise of a commission fee. But there are certain ethical standards and responsibilities that brokers need to adhere to if they are an independent agent. And while home sales can be dependent on the demands of a market, your broker still has an obligation to ensure your home is sold effectively and to your advantage. If you’re still concerned about your broker’s best interests in selling your home, here’s what you should look for.
What Is A Fiduciary?
In real estate, a fiduciary relationship is formed as a result of two parties—a fiduciary and a principal—entering into an agreement for the financial benefit of the principal. In short? It’s the relationship you (the principal) have as a homeowner with your broker (the fiduciary.) And it can be as simple as a verbal agreement or as formal as a legally binding contractual obligation detailed over a dozen or more pages.
In both cases, there are advantages to be gained. In Utah, the average commission fee for a broker has never deviated much from the national average of 5 to 6 percent; and given that the median home sale in Salt Lake County alone was reported to be $350,000 in 2018, that can be up to $21,000 for each property sold. And it’s not just immediate compensation that benefits a broker. Their business is driven by heavy sales volume, both current and future. The more homes they sell, the greater their portfolio. After all, would you really trust selling your home through a broker who doesn’t have any sort of proven track record?
Likewise, the benefit to your fiduciary relationship with a broker isn’t just a financial one. A broker doesn’t simply act as a liaison between you and a buyer. They’re responsible for marketing your home. Listing your home. Finding you the right buyer. Coordinating the sale. Negotiating offers. Drafting and executing a contract. Negotiating repairs the buyer will want. And advising you every step of the way.
Do I Need A Fiduciary To Sell My Home?
Not at all. Many people choose to sell their home without the intervention of a broker in what’s referred to as a “For Sale By Owner” (or FSBO) sale. And there’s obvious advantages to doing so. You may not want to pay a broker fee or you’re simply wary. And if you’re confident enough in yourself to act as your own marketer, seller and bank liaison, you might be one of the thousands of Utah residents who have done so successfully.
What Types Of Fiduciary Agreements Are Available?
If you’re choosing to work with a broker, there’s two common listings available to you as a homeowner:
Exclusive Agency Listing
An exclusive agency listing occurs when a broker represents and lists your home. You still reserve the right to sell the property yourself, or work with another brokerage who can find you a more accommodating buyer. However, you’re paying commission fees for both the listing broker and the broker who did successfully sell your home.
Exclusive Right To Sell Listing
An exclusive right to sell listing gives the broker the exclusive right to earn a commission by representing you and finding you the right buyer. This is probably the single most common fiduciary relationship between a broker and a homeowner. Unfortunately, it also means you forfeit the right to sell your own home unless stated specifically in the contract (something virtually no broker would consider.)
A professional fiduciary, such as Stagg Fiduciary Services in Salt lake City, represents people or organizations in all kinds of financial transactions or financial planning. For example, a fiduciary might oversee the investment portfolio of an individual or assets owned in a trust. There are also things a fiduciary will do in regards to real estate sales and real estate transactions. A real estate fiduciary can also be in charge of a transaction for the buyer or the seller of a real estate transaction. For example, assume there is a house that needs to be sold that is owned by an estate. Let’s also assume that the heirs to the estate want one person to oversee the transaction. A fiduciary can do this. This way all heirs know someone is making sure things are done properly and the proceeds from the sale of a property are handled properly.
What Standards Should I Look For When Establishing A Fiduciary Relationship With A Broker?
Generally speaking, common sense will be your best guide. But common sense doesn’t always take into consideration particulars; especially in a major transaction such as a home sale. Most licensed brokers follow a specific set of guidelines outlying fiduciary duties and obligations, and Utah is no different. But these aren’t just recommendations. They’re officially required by the Utah Division of Real Estate:
- Loyalty: which obligates the agent to place the best interests of the principal above all other interests, including the agent’s own
- Obedience: which obligates the agent to obey all lawful instructions from the principal
- Full disclosure: which obligates the agent to inform the principal of any material fact the agent learns about the other party or transaction
- Confidentiality: which prohibits the agent from disclosing, without permission, any information given to the agent by the principal that would likely weaken your bargaining position outside of any defect in the property or your ability to perform on the contract
- Reasonable care and diligence
- Holding safe and accounting for all money or property entrusted to the fiduciary
- Any additional duties created by the fiduciary agreement
Is There An Alternative To Brokers?
As we said, you can choose to list and sell your home yourself if brokerage fees and trust are a concern. But doing so takes not only time, but skill. Your broker is there to work for you, not themselves. They know how to market your home. They know the necessary legal requirements. They know how to coordinate with both banks and buyers. And frequently, they know what’s necessary to get you the best offer.
But the best offer can take time. And there are some times circumstances which simply won’t be in your favor. That’s why we offer an alternative fiduciary relationship with our “Sell Now, Move Later”https://www.garybuyshouses.com/utah-sell-now-move-later-program/ program. We offer Utah homeowners a chance to sell their property as is in as little as 3-5 business days. We’ll even work with you to ensure you don’t even have to move unless you’re ready to do so!
A fiduciary relationship is based on trust. If you can’t trust your broker when selling your home, then the only person you should be able to trust is yourself.