Essential Real Estate Terms: Fiduciary

Whether first time home buyer or seasoned homeowner considering selling, there are a number of real estate terms that are essential to know. Today's word is Fiduciary.

Fiduciary—A relationship of trust created when a home buyer or home seller signs a contract with a REALTOR®. After a contract is signed, a real estate agent has several fiduciary duties that protect their client, This fiduciary relationship is not only effective throughout the transaction; it continues forever. This means as a first time buyer, once a contract is signed with an agent, that agent cannot tell anyone anything that is private about you and your situation. In Minnesota, these duties require the agent to be loyal, confidential, and obedient with their client's lawful instructions. They are accountable to the client and must disclose any information they learn that would be of benefit in the purchase of a home. Throughout the transaction and afterward, they must use reasonable care to protect their client's interests.

It is important for a first time buyer to understand what a fiduciary is because every seller that is listed with a real estate broker already has a contract in place. This means when a buyer calls the listing agent for information or stops by at an open house, the friendly REALTOR® asking about your ability to buy a home is under contract with and WORKING for the SELLER. This agent has a fiduciary duty to disclose EVERYTHING you say to the seller of the home. But it is not a two way street. The friendly agent cannot tell you anything that the seller doesn’t want you to know (unless it is about the condition of the property). Because of their contract, the agent cannot say why the seller is moving or if a price reduction is in the works.

As a home buyer, it is essential to interview potential agents to assist with the home search as soon as possible in the process. When good match is found, sign a contract with a REALTOR® so that your interests and information are protected. Then your REALTOR® can make calls to other agents on homes, set up private showings and assist you through the homebuying process. The agent you sign a contract with will be working for YOU! 

What if you just met the agent and you are not certain you want to work with this particular person? The contract does not have to be a long term commitment. I often sign up new home buyers for a couple of weeks and extend the contract once we have formed a stronger relationship. Rest assured that even if you decide to part ways with your agent, the fiduciary duty to keep your private information private continues forever.


Need to know more about buying or selling an home in the Minneapolis/St Paul area? Let me be your professional guide. If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me, Teri Eckholm of Boardman Realty, a call or visit my website for a FREE Home Buyer Success Guide or FREE Home Value Report. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District. Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Copyright 2015 www.terieckholm.com

Does a Home Buyer need to pay a Retainer for REALTOR in Minnesota?

Most home buyers, even first time home buyers, realize there will be fees to pay over and above the cost of the house itself. There are fees to the lender to originate the loan, fees for homeowner’s insurance and closing costs. Most home buyers also know it is a good idea to work with a REALTOR® to help them find the perfect home. Having an agent to represent you when purchasing a home is extremely important. As a professional real estate agent working in Anoka County, I have knowledge about homes, neighborhoods, taxes, school districts and contract negotiation. All of these skills are invaluable when it comes to writing a purchase agreement. But how does a REALTOR® get paid?

Most agents are paid at the time of the closing by the SELLER of the home you purchase.  So in many instances, as a buyer you do not pay commission to your REALTOR®. 

However, in Minnesota our buyer’s representation contracts do allow agents to charge a retainer fee from the buyers they are working with. The amount of time spent with a buyer from first contact to closing can be several months, even years. As agents we put in quite a bit of time showing homes to our buyers. Since the bulk of our commission comes from the seller of the property purchased, we work long hours without payment upfront. It is becoming more common for agents to request a retainer fee of several hundred dollars to offset these costs in case a buyer decides to give up their home search. This fee may or may not be refunded at the time of closing if when the agent receives the commission from the seller.  

How do you know if your prospective REALTOR® will be charging a retainer? You have to ask. Make sure you agent takes the time to explain the contract to you prior to signing. If you don’t feel comfortable paying a retainer fee, interview other agents before putting your signature on the contract. Remember you will be obligated to work with this person for several months until your closing. Find someone you like working with and trust.  Buying a house is an important investment and one of the biggest decisions you might ever have to make.

I personally do not charge a retainer fee. I use the Minnesota contract for buyer’s representation that has a spot for a retainer fee and I write in ZERO. It is my way of showing to the buyer, we are in this together. I will put in the time knowing I will be paid by the seller when we find that perfect place to call home.

Need to know more about buying or selling a Twin Cities home? Let me be your professional guide. If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me, Teri Eckholm of Boardman Realty, a call or visit my website for a FREE Home Buyer Success Guide or FREE Home Value Report. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District. Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Copyright 2015 www.terieckholm.com