Understanding the Fiduciary Duties of a Real Estate Agent: What You Need to Know

When you hire a real estate agent or broker, you’re not just getting someone to list your property or show you homes. You’re entering into a legal relationship where that professional is bound by fiduciary duties—a binding legal and ethical obligation to prioritize your interests above their own. But what does this actually mean in practice, and how does it protect you?

The Core of Fiduciary Duty in Property Transactions

At its foundation, fiduciary duty is a legal requirement that mandates an individual or organization to act in the best interests of another party. While this concept is commonly associated with financial advisors, attorneys and trustees, it equally applies to real estate professionals who facilitate buyer and seller relationships in property deals.

When a buyer or seller signs an agreement with a real estate agent or broker, that document creates a fiduciary relationship. From that moment forward, the agent becomes legally responsible for representing your interests throughout the entire transaction process. This isn’t optional—it’s mandated by law. Violating these duties can result in lawsuits, professional disciplinary actions and significant reputational harm.

Six Essential Fiduciary Duties Real Estate Professionals Must Fulfill

Loyalty to Your Best Interest

This is the cornerstone of fiduciary duty. An agent must always advocate for you, even when doing so conflicts with their personal financial gain. For example, a true fiduciary will negotiate aggressively for the best price and terms rather than steering you toward a quick sale that generates higher commissions. Your financial outcome comes first; their earnings come second.

Complete and Honest Disclosure

Agents are legally obligated to reveal any material information that could influence your decision. This spans known defects in the property, competing offers on the table, zoning restrictions, pending renovations in the neighborhood, or any other factor that matters to the transaction. Withholding critical information—or misrepresenting property details—constitutes a breach of fiduciary duty and opens the agent to legal liability.

Protection of Confidential Information

Everything you share with your agent—your financial situation, why you’re moving, your negotiation strategy, your concerns—must remain confidential. This obligation persists even after the deal closes. Agents cannot leverage your personal information for their own benefit or share it with unauthorized parties. Breaking this trust is both unethical and illegal.

Following Your Lawful Instructions

Your agent must comply with all legitimate directions you provide, provided those instructions don’t violate laws or ethical standards. If you tell your agent to reject offers below a certain threshold, they must respect that boundary. The agent works for you, not the other way around.

Competent and Diligent Service

Real estate professionals are expected to deliver knowledgeable guidance backed by current market intelligence. This means staying informed about local market trends, maintaining thorough transaction documentation, educating you about risks and opportunities, and managing the process professionally from offer to closing.

Proper Management of Financial Records

Agents handle money—earnest money deposits, transaction costs, escrow funds. They must maintain meticulous records and handle all funds with absolute accuracy. Any mismanagement or commingling of client funds with personal accounts is a serious breach that can trigger legal consequences and license revocation.

When Fiduciary Duty Applies—And When It Doesn’t

Here’s where it gets nuanced: not every interaction with a real estate professional triggers fiduciary duties. A fiduciary relationship typically forms only when you’ve signed a formal agency agreement with an agent or broker representing you.

In some situations, an agent might function as a transaction coordinator—someone who facilitates the logistics of a deal without providing representation or advice to either party. In that role, fiduciary duties don’t apply. Similarly, an agent showing you properties without a signed buyer’s agreement may not have fiduciary obligations to you. Always clarify this upfront to understand what legal protections you have.

Common Violations and What They Mean for You

A breach of fiduciary duty occurs when an agent prioritizes their interests over yours or fails to fulfill their legal obligations. Real-world violations include:

• Concealing material facts about the property or market conditions
• Misrepresenting property features or neighborhood characteristics
• Steering clients toward transactions that benefit the agent financially rather than the client
• Unauthorized disclosure of confidential information
• Conflicts of interest that aren’t properly disclosed and managed

If you suspect your agent has violated their fiduciary duties, you have options. You can file a complaint with your state’s real estate licensing board, pursue legal action for damages, or attempt to resolve the dispute through mediation or arbitration depending on your contract terms.

The Bottom Line

The fiduciary duties of a real estate agent exist to protect you. They create a legal framework ensuring that the professional representing you in a property transaction must act with integrity, transparency and unwavering loyalty to your financial interests. Before working with any agent, confirm that you have a formal agency relationship in place—and don’t hesitate to hold them accountable if they fail to live up to these essential duties.