Don’t Let Real Estate Brokers Tell You What to Do

Did you know that in California, a real estate agent may not sell a home without working with a licensed broker? It is unfortunate, but some brokers have used this as leverage to tell agents exactly which client services to use – against the agent’s best interest.

This policy is not only bad business, but it is also against California law and could put the agent at risk professionally, financially, and legally. One example of this bad business is the “rent a desk” policy in which brokers rent space in their office to a service provider at below-market rates and then push business to the service provider, regardless of the quality of their services.

Another example is a broker who mandates that specific settlement service companies be used on the RPA. This endorsement may only mean the broker’s pockets are being lined, but many agents and their clients may falsely believe the services are chosen because they are ‘the best’.

In the event of a claim from a client, who the agent may have represented 10 or more years ago under a different broker, the liability follows the agent for the rest of their professional lives. The broker under whom the agent worked may have sold or closed his doors, or may deny that any influence was used to promote THAT specific provider.

The client may have the right to sue if he/she has recently learned of the problem even though the transaction took place years ago. No matter where the agent goes, he/she is responsible.

Agents must always apply “fiduciary duty to their client” as a self-protection against liability. Avoid breaching the fiduciary duty to your client to please the broker; it will be your liability for years to come.