What Are the Fiduciary Duties of a Real Estate Agent?

You have to build strong relationships with your clients to have a long, lucrative career in real estate.

The top producing agents earned their fame and fortune because of the people they know.

So, how do you build a strong, reliable, trusted relationship with people?

The answer: provide good customer service.

When your clients like working with you, they will recommend your services to other people they know. That’s how successful real estate agents create their careers.

Their network starts finding work for them.

Now the question becomes, “how do you provide great customer service to your clients.” To do this, you have to build trust with your client.

The National Association of REALTORS® created a method to build trust that has helped millions of agents generate satisfying customer service.

NAR promotes professional standards and ethics (like the REALTOR® Code of Ethics), but fiduciary duties themselves come from real estate agency law (state statutes/common law) and apply when you represent a client.

This method is a set of ethical rules that agents follow to foster a trustworthy relationship with clients.

It’s called fiduciary duties. So, let’s learn about the fiduciary duties of a real estate agent so you can foster trust.

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What does fiduciary mean?

In its simplest form, fiduciary refers to a trust.

Once a client signs a contract with you, a fiduciary relationship forms.

More accurately, once you enter an agency/representation relationship, fiduciary duties apply. In many states that relationship is established in writing, and the timing can vary by state and situation.

This relationship means that the client now places their trust in your hands. In return, you perform your work with your clients’ best interests in mind.

The fiduciary duties of a real estate agent are:

• Loyalty
• Obedience
• Confidentiality
• Disclosure
• Accounting
• Reasonable Care

Now that we know the fiduciary duties of a real estate agent, let’s explore what they mean.

In many markets, buyers are now asked to sign written agreements earlier in the process than they were in the past. For example, NAR’s MLS policy changes became effective August 17, 2024, and require MLS participants “working with” a buyer to have a written buyer agreement before touring a home (including live virtual tours), unless inconsistent with law.

CA DRE explains AB 2992 adds requirements for buyer representation agreements (including required terms), with timing that differs from the trade association practice.

What are the fiduciary duties of a real estate agent?

Real estate agents must fulfill their fiduciary duties. By doing so, they uphold the credibility of not only themselves but agents across the country.

So, let’s see how you can apply the fiduciary duties of a real estate agent to your career.

Loyalty

Loyalty refers to an agent’s responsibility to be loyal to their principal (client.) Regardless of the situation, you must always put the interests of your client ahead of your own.

For example, you represent a buyer who wants to buy a 5-bedroom property with a maximum budget of $1,000,000. If you find a listing that meets your clients’ requirements for $700,000, you have to tell them.

Monetarily speaking, you earn a bigger commission check if your client buys a $1,000,000 listing. But, because the $700,000 is a better deal for your client, you must tell them about it.

On the other hand, if you represent a seller, then you must do everything in your power to sell the property. You must market the listing and close it while getting the best deal for them.

Obedience

One fiduciary duty of a real estate agent is to adhere to the lawful requests of their clients.

If your client asked you to take a break from marketing their home for a week, then you are legally obligated to follow their instructions. Also, if your client asks you to stop showings while they aren’t around, you have to stop showings.

But, you may encounter a client who asks you not to entertain offers or showings for people of a specific religion or race. In this situation, you should not follow the order because doing so is discrimination, an unlawful act.

A client may also request that you do not disclose a property defect. Withholding this information may help you sell the property fast and earn more money, but it’s illegal. So, you are obligated to disclose all information about a house – even if it goes against your client’s wishes.

Confidentiality

This fiduciary duty instills the client’s confidence in you as their representative.

Confidentiality of information means not sharing information that your client gives you. This information is vital if the disclosed information damages the reputation of your client and affects ongoing negotiations.

Here’s an example: if you represent the buyer and discover they are comfortable paying more, you shouldn’t disclose this information to the listing’s agent.

On the other hand, if you’re the seller’s agent, you cannot inform buyers that your client is willing to accept low offers.

Always ensure you’re getting the best deal for your clients.

Disclosure

If you have information that can benefit your client in the negotiations, you must disclose it.

For example, you must share information about the property’s well-being with your client. This information will position your client better for negotiating a lower price if there is a property defect. Also, if you represent a seller and find out that the buyer urgently wants to sell, you can tell your client.

This example is likely meant to say the buyer urgently wants to buy (for example, they need to move quickly), which could affect negotiating leverage.

Another piece of information you must always disclose to your client are offers. Regardless of how bad an offer is, you should share it with your client. Also, You must inform your client should a potential buyer or seller be someone with whom you have a relationship.

Accounting

Another fiduciary duty of a real estate agent is to take good care of the client’s funds. The first part of this duty is understanding the elements of financial transactions and how you should handle them.

You have to let your client know where their money is going.

Whether you’re a buyer’s agent or a seller’s agent, you have to keep track of the money.

You can’t accept your client’s funds. For example, if your buyer hands you their deposit for the property, you must send it to escrow. Do not deposit it to your account, even if you intend to send it to escrow.

In many states, a broker/agent can receive client funds (like an earnest money check), but it must be treated as trust funds and handled under strict state rules and brokerage procedures (often delivered to neutral escrow, placed in a broker trust account, or handled as otherwise permitted). The key point is: never put client funds into a personal account and always follow the required timelines and recordkeeping rules.

Reasonable Care

The last fiduciary duty is to apply reasonable care.

As a real estate agent, people expect you to act as a capable professional.

You must apply and exercise your skillset and knowledge with diligence. By doing so, you create a strong, trustworthy relationship with your client.

Do you have a fiduciary relationship with the third party?

Do fiduciary duties of a real estate agent apply to third parties? To put it simply, no.

But, just because you don’t have a fiduciary relationship with them does not mean that you are allowed to break the rules. You’re a licensed professional, so you should uphold your professionalism with everyone you work with.

Even when someone isn’t your client, you may still owe duties like honesty, fair dealing, and disclosure of material facts when required (rules vary by state and your role in the transaction).

Final Thoughts on the Fiduciary Duties of a Real Estate Agent

The fiduciary duties of a real estate agent demonstrate how to uphold integrity. When you practice these duties in every relationship, you will build trustworthy relationships.

These relationships will provide long-term benefits to your career because you provide exceptional customer service. That’s how real estate agents become successful. In short, don’t try cutting corners or sneaking your way to money because the best way to earn success is with integrity.