Selling side risks flow from the same duties as listing side risks. The duties of loyalty, obedience, confidentiality, disclosure, reasonable care and diligence, and accounting all apply. Just like on the listing side, each duty is a separate risk generator for risk identification purposes. What changes is the relative importance of each duty as a risk generator. Loyalty, obedience, confidentiality, and disclosure duties create the same type of risk on the selling side as on the listing side. The risks are similar but, with the exception of confidentiality, there is less opportunity to violate these duties on the selling side. The opportunity to violate the duty of reasonable care and diligence is, however, greatly increased on the selling side.

Loyalty to a buyer client means placing the buyer’s interests in front of the agent’s. The buyer’s primary interest is in finding suitable property at a price they are willing to pay. Loyalty can become a risk management issue on the selling side when the buyer’s agent tries to beat their client out of a property by buying it himself. Loyalty can also be implicated if the agent places the interests of other buyers (buyer/buyer conflicts) or third parties (lenders, consultants etc.) over those of the client. Analysis of this kind of selling side loyalty risks is covered in the Risk Analysis section of this subject.

Obedience, as was the case on the listing side, is rarely violated directly by an agent refusing to do what the principal asks. Obedience usually becomes a risk management issue on the selling side only if the buyer demands the selling agent withhold material information from the seller, lenders or other service providers. On the selling side, the information the buyer wants withheld typically involves the buyer’s financial position. That information may or may not be confidential depending on the circumstances and who the information is being withheld from. For instance, buyers may ask their agent to help them hide material financial information from a lender and thus create a conflict between the agent’s obedience duty and their duty of honesty and fair dealing. Analysis of these obedience risks is covered in the Risk Analysis section of this subject.

Confidentiality is implicated anytime an agent discusses the object of the agency relationship with a third party. On the selling side, that means potential risk anytime the buyer’s agent discusses the buyer’s motivation, financial situation or best price with anyone other than the buyer. Confidentiality is a big duty on the selling side of a real estate transaction. Agents sometimes forget that confidential information gained as the result of an agency relationship remains confidential even after the agency relationship ends. Analysis of these direct risks is covered in the Risk Analysis section of this subject.

Disclosure requirements create potential risk anytime the buyer’s agent withholds information from the buyer. For instance, an agent might withhold information about a newly listed property because their client has an offer in on another property. In Oregon, real estate licensees have a disclosure duty to all parties, not just their clients, creating yet another disclosure risk. This disclosure duty to all parties is implicated if the buyer wants material information (like inability to redeem an earnest money note) withheld from the seller. Analysis of disclosure risks is covered in the Risk Analysis section of this subject.

Reasonable care and diligence, without doubt, generates the most risk on the selling side. The buyer’s direct risks in a real estate transaction are huge. They may pay too much for the property or find the property contains material defects or discover that it is unfit for their intended purpose or that external factors (everything from bad neighbors to flood hazards) greatly reduce its desirability. When any of these things happen, the buyer will wonder why their real estate professional did not prevent the harm or at least warn them of the potential. Analysis of these reasonable care and diligence risks is covered in the Risk Analysis section of this subject.

Accounting is the final direct risk duty on the selling side. As on the listing side, the duty to account requires the agent to keep track of (account for) any money or property of the client’s coming into the agent’s hands as a result of the agency. Because Oregon law requires licensees to keep their client’s funds in trust accounts, accounting is mostly a matter of following trust account rules. Analysis of direct accounting risk is covered in the Risk Analysis section of this subject.
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