Which scenario demonstrates a conflict of fiduciary duties for a real estate agent?

Conflicts, duties, and the real estate tightrope

Real estate isn’t just about finding a perfect property or negotiating numbers. It’s about trust. A licensed agent acts as a fiduciary for the client, which means a lot rides on doing what’s best for that client, even when it’s not the easiest path. That’s the heart of fiduciary duties: loyalty, disclosure, confidentiality, obedience, and care. When those duties clash with a client’s wishes, the result isn’t just an awkward moment in a negotiation. It’s a real test of integrity and professional responsibility.

Let me explain what fiduciary duties mean in everyday terms

Think of a fiduciary as a trustworthy guide, road-tested by years of training and ethics rules. The key duties usually include:

• Loyalty: Put the client’s interests ahead of your own or anyone else’s.

• Full disclosure: Be transparent about all material facts and all offers, so the client can make an informed decision.

• Confidentiality: Protect sensitive information that could affect negotiations or the client’s position.

• Obedience: Follow the client’s lawful instructions, provided they don’t breach the law or ethics rules.

• Reasonable care and diligence: Use your knowledge and skills to protect the client’s interests and help them reach a sound outcome.

When you hear “fiduciary duty,” picture a compass that’s always oriented toward the client’s best interests. The moment that compass points somewhere else for a personal gain, red flags start popping up.

The four choices Nikki faces—which one shows a fiduciary conflict?

Let’s walk through the scenario choices in plain terms, then zoom in on what each one implies about fiduciary duties.

• Choice A: Nikki presents all offers to her seller client.

This is the gold standard. When representing a seller, presenting every offer—regardless of the price—lets the client decide from a complete set of options. It respects the duty of disclosure and loyalty. There’s no hidden agenda here; the client has the information needed to negotiate the best possible deal. If you’re training your inner real estate instincts, this is the baseline behavior you want to emulate.

• Choice B: Nikki refuses to show a home due to personal beliefs.

Discretion, yes—refusing to show a home because of personal beliefs can be risky. If the belief is tied to protected classes or fair housing laws, refusing could be illegal or unethical. Even if it’s not a discrimination issue, it raises questions about fairness and equal access. As a fiduciary, Nikki should serve the client’s interests, but she should also comply with the law and ethical standards. This choice flags a red flag about how personal biases can conflict with professional duties.

• Choice C: Nikki's seller client instructs her not to present low offers.

This is the twist that makes fiduciary conflicts obvious. A seller instructs the agent to withhold offers that are perceived as “low.” But the agent’s duty isn’t to shape offers in the client’s favor by hiding information; it’s to present all offers so the seller can choose among them. Holding back low offers undermines the client’s ability to negotiate from a complete position, and it breaches the agent’s loyalty and full disclosure duties. It’s not just a preference issue; it’s a fundamental clash between what the client asks and what the fiduciary must provide. This is the scenario that clearly illustrates a conflict of fiduciary duties.

• Choice D: Nikki accepts a commission from a buyer for her services.

This one is trickier. In real estate, commissions can involve multiple parties and, in some arrangements, dual agency is possible—with full disclosure and consent. However, taking a commission from a buyer while representing a seller can create a financial incentive misalignment. The key concern isn’t only legal nuance; it’s the potential for conflict in loyalties and fair dealing. If Nikki’s duty to the seller could be compromised by the financial relationship with the buyer, that’s a fiduciary concern. Yet, as long as all duties are clearly disclosed, authorized, and managed within the law, some forms of dual agency can exist. Still, compared to Choice C, Choice D is less clearly a straightforward fiduciary conflict because it hinges on commission arrangements and disclosures rather than a direct instruction to withhold information.

So, why is Choice C the clearest example?

• The fiduciary duty of loyalty requires the agent to act in the client’s best interests, which includes presenting all offers that come in. If the seller tells the agent not to present low offers, the agent is being asked to withhold information that is material to the client’s decision-making process. That’s a direct violation of the duty of full disclosure. It also undermines the client’s ability to negotiate from a full, informed position.

• There’s a tension between a client’s instruction and the ethical obligation to be transparent. When a client tries to bend the process to exclude unfavorable terms, the agent faces a conflict: follow the instruction and risk harm to the client’s position, or push back and adhere to fiduciary duties. The ethical and legal framework leans toward keeping the process open and honest.

• It’s not just about “getting a good deal” for the seller. It’s about fairness, transparency, and trust in the market. If every offer could be quietly filtered, the seller could miss an opportunity that might have been workable or even optimal, given the full context of a negotiation.

What does this teach us about real estate professionalism?

• Clarity beats convenience. The moment a client attempts to override a duty with a simple instruction, the agent should pause, document, and explain the consequences. If needed, bring in the broker or ethics guidelines. This isn’t about stubbornness; it’s about safeguarding the client’s interests and the agent’s own professional integrity.

• Documentation matters. In these situations, a written record of what was communicated, what was offered, and why certain offers were presented or withheld helps prevent misunderstandings and protects both client and agent.

• Communication is the antidote to conflict. A proactive, transparent dialogue about how offers will be handled—and why—goes a long way. It also helps set expectations for both sides in a negotiation.

• Legal and ethical rules aren’t optional accessories. They’re the spine of the process. Even well-intentioned shortcuts can backfire in ways that are costly to the client and to the agent’s reputation.

A few practical ways to navigate fiduciary tensions

• Always present every offer, unless there’s a legally and ethically sound reason not to. If there’s a strategic reason to withhold, consult the broker and consider getting a written directive from the client that justifies a partial disclosure.

• Keep a clear paper trail. Emails, form confirmations, and notes from meetings aren’t just rote bureaucracy; they’re protection against later disputes.

• Be mindful of dual agency implications. If representing both sides becomes a possibility, make sure all parties consent in writing and understand the potential conflicts. Transparency here is non-negotiable.

• Tie every decision back to fiduciary duties: loyalty, disclosure, confidentiality, obedience, and care. If a decision seems to threaten any of those, pause and reassess.

Relatable anchors from the real world

Real estate is a people business, and people aren’t always perfectly rational. You might hear a seller say, “I don’t want to see low offers; let’s hold out for a high one.” It’s natural to want to protect the bottom line. But the market speaks in multiple voices: a strong low offer could turn into a strong mid-range offer after negotiation leverage is exercised, or it might open doors to other buyers who counter, improving the final outcome. A fiduciary guide doesn’t ignore market dynamics; they help clients understand them.

On the buyer side, the dynamics are equally nuanced. A seller may press for a quick sale or price point that seems attractive. A seller’s agent who understands fiduciary duties won’t let a shortcut—like hiding weak offers—skew the client’s negotiating position. The same principle applies behind the scenes to disclosures, confidentiality, and the honest representation of property conditions.

The bigger takeaway for students and future professionals

• Fiduciary duties aren’t decorative terms. They’re the operating system of ethical real estate practice. When a client’s instruction would undermine those duties, the right move is to explain the conflict, present the best available options, and proceed with integrity.

• Your everyday decisions matter. Small choices—like how you present an offer or how you document a client directive—add up to a lot of trust in the long run. Trust is the currency that keeps transactions moving smoothly and reputations intact.

• Study smart by thinking in scenarios. Real-world examples, like Nikki’s four choices, are more than quiz fodder. They’re mental models that help you spot red flags early and respond with clarity.

If you’re exploring how these ideas weave into the broader world of real estate ethics, you’ll find that other topics—like fair housing, confidentiality rules, and the mechanics of disclosures—often circle back to the same core principle: act in the client’s best interests, while upholding the rules that keep the market fair for everyone.

A closing thought

Choosing to present every offer isn’t just a checkbox on a list. It’s a trust decision. It signals that you take your role seriously, that you value transparent negotiations, and that you’re committed to protecting your client’s ability to make informed decisions. When you see a scenario like Choice C, you’re not just solving a multiple-choice puzzle. You’re engaging in a professional practice that honors the spirit of fiduciary duty.

If you want to keep the momentum, look for opportunities to observe or simulate cases in your courses, talk with mentors, or review MLS guidelines and state ethics rules. The more you immerse yourself in how these duties play out in real life, the more natural it will feel to stand by them when it matters most.

Resources and next steps

• Explore real-world scenarios in your course materials and ethics guides.

• Review disclosures and loyalty requirements in your state’s real estate laws.

• Discuss dual agency and conflict-of-interest questions with a broker or mentor to see how different jurisdictions handle them.

In the end, it’s not just about choosing the right letter in a test or a quiz. It’s about earning and keeping your client’s trust by doing what’s right, even when it’s not the easiest path. Choice C isn’t just the correct answer—it’s a reminder of the core promise you make as a real estate professional: to act with loyalty, transparency, and care, every single day.