What Is a Real Estate Agent's Fiduciary Duty to You?

When you hire a real estate agent in Michigan, you're not just hiring someone to open doors and schedule showings. You're entering into a professional relationship built on legal and ethical obligations that protect your interests at every stage of the transaction. These obligations are called fiduciary duties, and understanding them is one of the most important things any buyer or seller can do before signing a listing agreement or buyer representation contract.

If you've ever wondered what your agent is legally required to do for you — and what separates a licensed professional from someone who simply holds a real estate license — this guide breaks down the six core fiduciary duties under Michigan law.

What Does "Fiduciary Duty" Mean?

A fiduciary duty is the highest standard of care recognized in professional relationships. In real estate, it means your agent is legally and ethically obligated to act in your best interest — not their own, not the other party's, and not the brokerage's. Under Michigan's Occupational Code (MCL 339.2517), real estate licensees working under a service provision agreement owe their clients traditional fiduciary responsibilities that are both mandatory and generally cannot be waived.

The most common way to remember these six duties is the acronym OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable Care. Let's walk through each one so you know exactly what to expect from your agent — and what to demand.

Loyalty: Your Agent Puts You First

Loyalty is the cornerstone of fiduciary duty. It means your agent must put your interests above all others — including their own financial interests. In practical terms, this means your agent should never steer you toward a property that pays them a higher commission, never favor a personal relationship over your negotiating position, and never place their own convenience above your goals.

In Michigan, loyalty takes on extra importance in dual-agency situations — where one agent represents both the buyer and the seller in the same transaction. Michigan permits designated agency and dual agency with informed consent, but your agent must disclose any potential conflicts and ensure you understand how those conflicts are being managed. If your agent also happens to be the listing agent on a property you want to buy, loyalty obligations become more complex, and full disclosure is critical.

As a dedicated buyer's or listing agent, I make it a practice to represent only one side of a transaction whenever possible, so there's never a question about where my loyalty lies.

Confidentiality: Your Secrets Stay Safe

Your agent must keep your confidential information private. This includes your financial details, your motivation for buying or selling, the maximum you're willing to pay or the minimum you're willing to accept, and any personal information you share during the course of the transaction. This duty doesn't end when the transaction closes — it survives after the agency relationship terminates.

This is critically important during negotiations. If you tell your agent, "I'd accept $280,000 even though the house is listed at $310,000," your agent cannot share that information with the seller or the seller's agent without your explicit permission. That's the confidentiality duty in action. Conversely, if you're selling a home, your agent cannot disclose to a buyer that you're under financial pressure and might accept a lower offer.

In my experience, the most effective way to protect your interests is to have open, honest conversations with your agent about your goals, budget, and bottom line. The more I know, the better I can serve you — and the legal framework ensures that information stays between us.

Disclosure: Full Transparency on Material Facts

Disclosure is perhaps the duty that most directly impacts your financial outcome. Your agent is required to disclose all material facts about a property that could affect its value or desirability. This includes known defects, environmental hazards, zoning restrictions, pending assessments, and any other information that a reasonable buyer would want to know before making a decision.

In Michigan, sellers complete a Seller's Disclosure Statement under the Seller Disclosure Act (MCL 565.961 et seq.), which requires them to disclose known material defects. Your agent's job is to ensure that disclosure is thorough and complete — and to help you interpret what those disclosures mean for your decision-making. If your agent knows about a foundation issue, a history of flooding, or a boundary dispute and fails to disclose it, they've breached their fiduciary duty.

Disclosure also works in the other direction. As a buyer, your agent should encourage you to disclose relevant information to the seller (within strategic limits) and should help you understand what information must be shared and what should remain confidential during negotiations. This balance is where experience and judgment matter most.

Obedience: Following Your Lawful Instructions

Obedience means your agent must follow your lawful instructions and directives. You set the goals — your agent executes the strategy. If you tell your agent you want to offer $275,000, they must submit that offer. If you tell them you don't want to see homes above $350,000, they should respect that limit. If you want to reject an offer that comes in above asking price, that's your right, and your agent must honor it.

The key word here is lawful. Your agent is not required to follow instructions that would violate fair housing laws, ethical standards, or legal requirements. For example, if a buyer asks their agent to discriminate against sellers based on protected characteristics, the agent must refuse. Similarly, an agent cannot help a client misrepresent information on loan applications or hide material facts during a transaction.

Obedience also means your agent should execute your decisions promptly and competently. In a competitive market where timing can make or break a deal, having an agent who acts quickly on your instructions — not one who second-guesses every move — is essential.

Reasonable Care and Skill: Doing the Job Well

Your agent must exercise reasonable care, diligence, and skill in performing their services. This goes beyond simply following instructions — it means applying professional expertise, staying current with market conditions, and meeting the standard of care that a competent real estate professional would provide under similar circumstances.

In practical terms, reasonable care means:

• Accurate market analysis: Providing realistic comparative market analyses rather than inflated estimates to win a listing.
• Thorough contract review: Ensuring you understand every clause in the purchase agreement before you sign, and flagging terms that may not be in your best interest.
• Timely communication: Responding to calls, emails, and texts within a reasonable timeframe and keeping you informed of all material developments.
• Due diligence on properties: Identifying potential issues — zoning conflicts, easements, title concerns, and environmental risks — before they become your problem.
• Knowledge of Michigan law: Understanding state-specific disclosure requirements, contract provisions, and procedural rules that affect your transaction.

The standard of care is measured against what a reasonably competent agent would do in the same situation — not perfection, but genuine professional competence. If your agent fails to spot a material issue that any competent professional should have caught, they may be liable for damages resulting from that oversight.

Accounting: Every Dollar and Document accounted For

Your agent must provide a timely accounting of all money and property received or handled on your behalf. This means if your agent receives earnest money deposits, escrow funds, security deposits, or any other funds connected to your transaction, they must account for every dollar — where it went, when it was transferred, and who holds it.

In Michigan, earnest money is typically held in an escrow account managed by the title company or closing agent, but your listing or buyer's agent is responsible for ensuring those funds are properly documented and deposited. If your agent handles any funds directly, they must provide written accounting upon request.

This duty also applies to documents. Your agent should keep you informed about the status of all paperwork — purchase agreements, amendments, inspection reports, appraisal documents, title commitments, and closing statements. A well-organized agent who tracks every document and provides clear updates is fulfilling this duty every day.

How Fiduciary Duties Differ Between Buyer and Seller Representation

Whether you're buying or selling, your agent's fiduciary duties are the same in substance — but they manifest differently depending on which side of the transaction you're on.

For sellers, the agent's duty is to market the property effectively, price it strategically, negotiate the best possible terms, and protect the seller's confidential information throughout the process. The agent should advise the seller on disclosures, repairs, and staging that will help achieve the best outcome.

For buyers, the agent's duty is to identify properties that meet the buyer's needs and budget, negotiate the best price and terms, disclose material information about properties of interest, and protect the buyer's confidential information — including how much they're willing to pay. A buyer's agent who shares your maximum budget with the listing agent has breached their fiduciary duty.

What Happens When Fiduciary Duties Are Breached?

If an agent fails to fulfill their fiduciary duties, the consequences can be significant. Clients who suffer financial harm due to an agent's breach may be entitled to damages, which can include lost profits, reduced property value, or the cost of correcting issues the agent should have identified. In severe cases, the Michigan Department of Licensing and Regulatory Affairs (LARA) can investigate and impose disciplinary action, including license suspension or revocation.

The best protection against a breach of fiduciary duty is choosing an agent who takes these obligations seriously from day one. Ask your agent how they handle confidentiality, what their disclosure process looks like, and how they ensure they're following your instructions. A confident, experienced agent will have clear, direct answers.

Why Understanding Fiduciary Duty Empowers You

When you understand what your agent is legally required to do for you, you're in a much stronger position to evaluate whether they're meeting those obligations — and to hold them accountable if they're not. You'll ask better questions, communicate more effectively, and feel more confident throughout the process.

Fiduciary duty is ultimately about trust. It's the legal framework that ensures your agent is working for you, not for themselves. And when you work with an agent who genuinely embraces those obligations — who sees them not as legal constraints but as the foundation of professional service — the result is a smoother transaction, better outcomes, and a relationship built on mutual respect.

If you'd like to learn more about how I uphold my fiduciary duties on every transaction, schedule a consultation, call me at 810-513-3335, or email joyce@midmichiganliving.com. I believe that honest guidance and exceptional service start with putting your interests first — always.

For more on choosing the right representation, read about how to choose the right real estate agent in Michigan and Michigan's real estate disclosure requirements.