Maybe it’s time to reconsider fiduciary duty as the default for real estate agents…
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Something fairly interesting happened to me at Inman San Diego. Well, it happened near me and I happened to overhear the conversation.
An agent was speaking to a friend of mine about her practice, what she’s seeing on the ground, and what she’s really working on. Turns out, what she’s really focusing on right now is setting up affiliate relationships in title, escrow, and mortgage so that her team can more directly monetize her client relationships. It’s a smart business move, and one that other agent teams and even solo agents have already pioneered. There are companies that offer programs specifically geared towards the agent, not the broker.
The agent said something I have heard from brokerage owners for over a decade: real estate is a loss leader and the real profits are in affiliated services. It was always true for brokers, who are paying out the lion’s share of commissions to agents (if not 100% of it), but this was the first time I heard an agent say the same thing.
That conversation made me wonder if it is not time for the industry to reconsider making fiduciary agency the default for real estate agents. Perhaps the default for all real estate agents should be transactional agency. Perhaps it is time for us to consider whether the real estate agent really should be an agent who owes fiduciary duties to her clients or a facilitator who owes no duties to either the buyer or the seller but merely ensures that the transaction itself happens as smoothly and as trouble-free as possible.
Given how central fiduciary duty is to the self-identity of real estate agents everywhere, and to REALTORS specifically since it is Article 1 of the Code of Ethics, I understand even questioning whether it is still fit for purpose could be controversial. But hey, that’s kind of what I do here: ask questions and re-examine assumptions to see if they remain valid.
If you’re into questioning deeply held beliefs, continue on. If you are in leadership positions, especially at a REALTOR Association, definitely continue on. If neither of those things, then have a great day taking care of business.