Characteristics of a White Knight
White knights are the men and women who dash in to rescue those in distress. In books, movies and even computer games, white knights are always the good characters: heroic, sympathetic and soft hearted. They protect and save the day. They often smell trouble coming a mile away and, without further ado, will head it off before their charge is harmed.
White knights act on instinct and are ready for battle. You won't find a white knight unarmed, for a coat of armor and sword are always close at hand. It's hard to sneak up on white knights or catch them unprepared. They harbor a steadfast belief that what they are doing is for the good of those they serve, even if there is little benefit to them for taking action. They put the needs of others first.
Why Brokers are Against Agents Acting as White Knights
The top two reasons are lawsuits and transaction cancellations. Brokers don't get paid if the transaction doesn't close. If an agent advises a client to take an action contrary to the successful closing of a deal, the pending sale could fall apart.
But wait, you may say, wouldn't you want to know if you had options? Of course you would. But the fact remains that agents are not authorized to act on a client's behalf without the client's permission. Some white knights make the mistake of putting themselves in the client's shoes, but they are not the client.
I've met agents who, while well-meaning, may make adamant statements such as "My seller will not entertain that sales price," when it is up to the seller to make that determination. Buyer's agents might claim, "My buyer will never accept that condition," when they've never asked the buyer. The buyer and seller do not belong to the agent. Buyers and sellers hire an agent to do the client's bidding.
If an agent acted at his or her own discretion and later the client felt mislead, duped or was not given the opportunity for input, the buyer or seller might decide to sue the agent and the agent's broker for interference, acting without authority or bad advice.
Fiduciary Relationships
With two exceptions -- transaction agents / brokers who operate as neutral third parties and agents who are dual agents -- most real estate agents work under a single agency. Single agency means a listing agent represents the seller and a buyer's agent represents the buyer. Single-agency agents are required by law to keep client information confidential and work in the client's best interests, even if it affects the agent's commission.
Realtors who subscribe to the Realtor Code of Ethics pledge to follow even more stringent standards of professionalism.
Why Some Agents Prefer to be a White Knight
In one instance, an out-of-state seller was faced with a hard-nosed buyer who presented her with a list of 23 items to fix on a Request for Repair. The buyer also demanded a sewer line replacement. The agent recommended that the buyer pay for the sewer but capped the repair list at a cost of $1,000, even though the seller was willing to pay for everything the buyer requested. Is that getting in the way of a transaction? Some brokers would agree. Fortunately, the seller won that battle.
Another buyer was willing to pay list price for a home. The agent could have written the offer at full price but instead suggested that the buyers write a counter offer for much less. The buyers hesitated, fearing they would lose the home if they didn't meet the seller's home pricing. But they took their agent's advice and bought the home for thousands less. Is that interfering? Again, some brokers would nod affirmative.
Many agents say it is in their client's best interest to receive all the information available, because an informed client is a person who will make the best decision. If the client decides, based on that information, to cancel a transaction, it is likely best for all parties concerned. If that makes an agent a white knight, so be it.
Nobody wants an agent who is going to order them around and bark demands, but it is perfectly acceptable for a client to be given all the options by an agent -- the pros and cons of every action -- so the client can make the final call. Personally, I believe that if a buyer or seller is about to make a mistake, the agent owes a fiduciary relationship to that client to pass along those suspicions. To do otherwise is unconscionable.
