Key Takeaways
- Five risk categories require proactive management: fiduciary breach, information asymmetry, competence, loyalty, and financial misalignment.
- Request full written disclosure of all agent and brokerage compensation from every source—hidden fees erode investor returns.
- Dual agency reduces advocacy to facilitation—decline it in favor of designated or independent representation.
- Protect against agent-created liability with E&O insurance verification, indemnification clauses, LLC structures, and written instructions.
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Test Your Knowledge
1.According to research, dual agency transactions result in approximately what percentage difference in sale prices compared to single-agency transactions?
2.Under what legal doctrine can an investor be held liable for their agent's misrepresentations?
3.What federal law requires disclosure of Affiliated Business Arrangements between brokerages and service providers?