Agency, Brokerage Relationships, and Fiduciary Duties
Client versus customer
Michigan brokerage relationships turn on whether a person is a client or a customer. A client has an agency agreement, usually written, and receives fiduciary duties; a customer may receive honest dealing and material-fact disclosure but not loyalty or advocacy. Candidates must distinguish the seller’s client from an unrepresented buyer who merely works with the seller’s agent. The agent’s loyalty remains with the seller while still treating the buyer honestly.
Fiduciary duties
Memorize the core duties-care, obedience, loyalty, disclosure, accounting, and confidentiality. Loyalty means no self-dealing and no advancing a competing interest. Disclosure means revealing material facts and any conflict, not hiding defects or financial incentives. Confidentiality continues after the relationship ends for information whose disclosure would harm the former client. Accounting means safeguarding and documenting money and property.
Dual agency traps
Dual agency arises when one brokerage represents both sides. It requires informed written consent and neutral handling; without consent, the brokerage should not act as a dual agent. Questions often place a buyer’s confidential motivation in front of a seller’s agent and ask whether it may be revealed. The safe analysis: the agent owes the seller loyalty, but must not misrepresent or conceal material facts from the buyer.
Worked example
A seller tells the listing agent, “I will accept $20,000 below list.” The agent must not tell a buyer’s representative that floor unless the seller authorizes it. The agent may still disclose known material defects to the buyer and must avoid misleading statements.