Recently, an experienced Realtor shared a story that is all too familiar. A community member, let’s call him Joe, approached her asking for advice about his real estate transaction, even though he had hired someone else (a personal friend) to be his Realtor. He was upset when she told him she couldn’t help him, because it was clear she knew the answers to his questions.
Why wouldn’t she answer? Because she knows that as soon as she does, she has a fiduciary responsibility to Joe, even though she’s not getting paid to help him. As a fiduciary, she must act on Joe’s behalf and put his interests ahead of her own. This is not just an ethical responsibility, but a legal one shared by every licensed real estate agent in California.
People sometimes underestimate the value of experience and the high level of service to be had from people who are truly experts in their field. This is why I recommend choosing a Realtor based on factors other than personal connections. Would you pick a surgeon because the two of you happened to go to high school together or would you look for a surgeon who does your particular procedure all the time? I had heart surgery last December and I can tell you, I picked the person with the best record for success. I recommend using that same technique when choosing a Realtor.
Real estate law is complex and bad advice can be incredibly costly. In the case with Joe, the Realtor didn’t get involved because she could see Joe had already been given bad advice that could put Joe (and by extension, her) in legal jeopardy. As soon as Realtors who are not affiliated with a transaction get involved, they can be called into court—even if their advice had nothing to do with the issue at hand.
For example, I had a crazy situation where I had to spend $5,000 in legal fees when I should never have been named in the lawsuit in the first place. A year after an escrow closed, the buyer and seller arranged to have the seller remove a tree on the property. The buyer wasn’t happy with the tree removal and sued the seller over it—and added me to the lawsuit, when I had absolutely nothing to do with the tree-removal agreement! Although the judge agreed that I had zero fault, I still had to pay my attorney’s fees.
I know of another situation where an inexperienced Realtor advised her clients (to whom she was related) to spend money repairing a house they didn’t own yet. If their loan had been denied or some other contingency had caused the escrow to fall through, those clients would have lost the significant sum they spent on those home repairs. When the potential buyers asked for advice from a Realtor who wasn’t involved in the transaction, the Realtor wisely deferred. He could see how this situation might result in a lawsuit and that he could be dragged into it.
So, you can see why Realtors are reluctant to give free advice. The advice might be free for you, but it isn’t free for them. Best case, you’re asking them for their time and expertise without paying for it. Worst case, you’re bringing them into a time-consuming and/or expensive legal problem that has nothing to do with them. You may think you’re asking harmless questions when you ask, “Should I agree to mediation? Should I put in a counteroffer? Should I pay for the pest and fungus work?” But it’s impossible to know where these things will lead.
Bottom line: please don’t be offended if a Realtor you haven’t hired refers you back to the Realtor you did hire (or their broker or an attorney). It’s not fair to ask a Realtor who isn’t involved in a transaction to give advice when they have no control and are not being compensated for their time and expertise.
If you have questions about property management or real estate, please contact me at email@example.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery. cou
Dick Selzer is a real estate broker who has been in the business for more than 45 years.