How important is confidentiality when it comes to the sale of Real Estate? For some, it is an “iron clad” rule never to be broken, and to others, well the lines are a bit blurry.
Let’s go back to the market of the early 1990s and review a sale I had worked on. The Seller had his home on the market with an agent and received a notice from the bank that they would be seizing the property for nonpayment of the mortgage. The date the locks would be changed was about 35 days from the receipt of the notice. The agent took their sign down and basically fired the client. I stepped in and listed the property and had it sold in a few weeks. The bank allowed the sale to go through and the Seller saved a substantial amount of money by selling it themselves. Which brings me to the question, who was aware that the property was being lost back to the bank? The short answer is no one knew. Not even the selling agent who did a home inspection and tried to renegotiate the accepted price due to a roof issue. (The Seller would have reduced the price due to the cause of selling, however, I stepped in to hold the offer price.)
By not disclosing the reason for the sale, the property was not “stigmatized” and was not seen as a fire sale. It is a common question that comes up for a listing agent; “why is the Seller selling?” How the listing agent handles it can speak volumes about how they believe in the duty of confidentiality.
The word used to describe this is “fiduciary.”
”A fiduciary is defined as “a person who holds a legal or ethical relationship of trust with one or more other person or group of persons. Typically, a fiduciary prudently takes care of money or other assets for another person.”
When applied to Real Estate sales, a fiduciary is a person who works on behalf of a client, with the client’s best interests in mind. Engaging in any activity that would harm the client is a breach of this trust. Hence, the importance of confidentiality.
There are many reasons a homeowner chooses to sell a property; divorce, financial challenges, death, issues with tenants, municipalities or to move out of the area. Other reasons could be moving to a larger or smaller home or selling to move to a rental as part of a retirement plan. When an agent keeps the reasons behind a sale private, the property has a better chance of selling for market value than if a Buyer feels there is a need to sell. This all begins with confidentiality.
There are things that need to be disclosed when a property sells. Any “latent defects” property may have needs to be disclosed by the Seller. A latent defect is considered a major issue that a property may have and is known to the Seller. Many latent defects are hard to notice or discover, such as foundation issues, wiring problems, and water (well) issues. Another disclosure that a Buyer needs to be made aware of is if there have been any unnatural deaths that the Seller knows about.
Over the past 3 decades, I have heard agents disclose the reasons their client is selling more times than I could count. Divorce is a common reason for a sale, and I have heard from listing agents that this is the motivation for their clients. This never helps attract market value offers.
I feel that when a Seller trusts me with the sale of their property, it is my duty to protect them, and it all starts with confidentiality. In fact, one of the first rules I cover with my Sellers is to not share why they are moving to a showing agent. It is not uncommon when a showing agent is touring a property to ask the Seller where they are moving to, A simple question that could cost the Seller if they share that they are selling for a need, not a want.
Someone early in my career offered a sage piece of advice; “when you are talking to a Buyer or an Agent working with a Buyer, interested in a property you have on the market for sale, imagine the Seller is right beside you listening to everything you say. “In other words, keep the Seller’s best interest in mind. It is all so simple, yet it is a grey area where a statement that is not in the best interest of a client can be shared.
If you are interested in exploring the opportunity to sell your home, or finding a home to purchase, I can be reached at lindsay@buyselllove.ca