What does it mean to be a Licensed Real Estate Agent?
I met a client at a property last week and we got to chatting as we were waiting for the listing agent to arrive. He worked in International Development so I was telling him about my previous career which was very aligned and how I had recently decided to make a move to real estate.
His first question: “Are you licensed?”
My response: “Yes! If I wasn’t licensed I couldn’t be here showing you this property.”
I think part of the confusion was me explaining how our team works together (we’ll talk about that in another post), but I thought it would be a good idea to start this blog by talking about what makes a real estate agent licensed and why it’s important.
The “agent” in real estate agent comes from the term “agency.” "Agency" describes the relationship between the real estate professional and the person or persons being represented and law of agency describes the rules surrounding the role of the agent. So what does that actually mean?
An agent is someone who acts on someone else's behalf, at that person's request and both parties agree to the relationship. An agent can’t force you to work with them and you can’t force a real estate professional to be your agent. This relationship is solidified by having both parties sign a Buyer Agency Agreement.
Once the agreement is signed you become the client (until then you’re only a customer) and the agent owes you fiduciary responsibility - they are now in a position of trust and owe you loyalty.
Fiduciary responsibility means the agent must provide the client with the following:
Obedience. Agents must obey all of their clients' lawful instructions. If you ask your agent to do something illegal they can and should say no.
Loyalty. Agents must put their clients' interests ahead of all others, including their own.
Disclosure. Agents must disclose all facts pertinent to the transaction.
Confidentiality. Agents must keep any confidential information their clients share confidential. Confidentiality is a duty that survives the termination of the agency relationship - meaning confidential information can never be shared, even after the relationship ends.
Accounting. Agents must promptly account for all monies, property, and paperwork entrusted to them by their clients and keep appropriate records.
Reasonable skill and care. Agents must provide clients with quality, knowledgeable, and prudent service, and live up to the trust their clients have placed in them.
In most cases, a real estate professional acts as a special agent. 007 anyone? This means the agent won’t make any decisions or enter into any contracts on the client's behalf, but will simply act as an intermediary, liaison, and negotiator, conveying, representing, and advocating for your client's best interests. Once the transaction is complete, the relationship terminates.
To become licensed in Washington, DC I had to take a 60-hour course approved by the DC Department of Consumer and Regulatory Affairs and then pass the State (even though DC isn’t technically a state) and National exams. After I got my DC license I was able to apply for licenses by reciprocity in Maryland and Virginia and sit for their state exams. So now you know that your agent (hopefully me) put in the hard work and diligence to get this job and is a small business owner on top of it.
