A real estate salesperson is negotiating an offer on behalf of a buyer client. The seller's agent informs the salesperson that there are multiple competing offers. The buyer client, eager to secure the property, instructs the salesperson to offer $10,000 over the asking price and waive the home inspection contingency. What is the salesperson's primary fiduciary duty in this situation?
- ATo negotiate a lower commission for the buyer in exchange for the strong offer.
- BTo advise the buyer on the risks of waiving a home inspection and document that advice.
- CTo disclose the existence of multiple offers to other potential buyers to create a fair bidding environment.
- DTo ensure the buyer's offer is accepted by immediately submitting it as instructed.
Show answer & explanationAnswer & explanation
Correct answer: B. To advise the buyer on the risks of waiving a home inspection and document that advice.
The salesperson's primary fiduciary duty to their buyer client is loyalty and care, which includes providing competent advice and protecting the client's interests. While the client's instruction to waive an inspection is valid, the salesperson has a duty to inform the client of the significant risks involved and document that the advice was given and acknowledged, even if the client proceeds against it.
Why the other options are wrong
- A. Negotiating commission is not the primary fiduciary duty related to the buyer's instruction to waive an inspection or offer above asking.
- C. Disclosing other offers to outside parties would be a breach of confidentiality to the seller's agent and is not the salesperson's duty to *their* buyer client.
- D. While submitting the offer is part of the process, the *primary duty* in this specific scenario is to advise on risks, not just blindly execute instructions that may harm the client.
Fiduciary Duty of Care & Diligence
The fiduciary duty of care requires a real estate agent to apply their skill and knowledge to protect their client's best interests, including advising them on potential risks and consequences of their decisions, even if the client ultimately chooses a risky path.
- Agent must use reasonable skill and care.
- Advise clients on risks and benefits.
- Document advice given, especially for risky decisions.
- Protect client's interests above all else.
Memory trick: Always Advise, Always Act in Client's Interest.