You should understand the legal responsibilities your real estate agent has to you and the other parties in the transaction. If you are a home buyer ask your buyer’s agent to explain the type of agency relationship they have with you and with the brokerage company. In our article, we discuss the different agency types and their duties. New York State law requires the agent present you with the agency disclosure form provided below at your first meeting. Whether you are a home buyer, investor or seller it is important to understand the duties owed to you.
The seller hires a listing agent to represent him or her. The agent’s fiduciary responsibilities are to the seller alone. The agency relationship is created by the listing agreement.
The buyer hires a buyer’s agent to represent them in a real estate transaction. The buyer’s agent owes fiduciary responsibility solely to the buyer. The buyer’s agent can work for a straight fee paid by the buyer, or receive payment from the seller via a commission split with the listing agent.
These agents work in cooperation with or at the behest of a listing agent or a buyer’s agent. Significantly, the broker’s agent does not work for the same firm as the listing/buyer’s agent with whom they are engaged. These agents don’t have a direct relationship with either the buyer or seller.
Dual agency is a relationship that occurs when the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agents have limited fiduciary responsibilities, and there is a potential for conflict of interest. Because of this, all parties in a dual agency relationship must give their informed consent. Disclosed dual agency, in which both the buyer and the seller are aware that a single agent is representing both of them, is legal in most states. Understand the perils of dual agency.
Dual Agent with Designated Sales Agent
This is a brokerage practice that allows the managing broker to designate which agents in the brokerage will act as the agent for the seller and which will represent the buyer. Designated agency avoids many of the pitfalls associated with a dual-agency relationship. The designated agents give their clients full representation, with all the attendant fiduciary duties. The broker supervises both groups of agents.
The Importance of a Qualified Buyer’s Agent
At Elika, we understand why different properties appeal to different buyers; so we know how to present you with properties that fit your lifestyle. We help with the deluge of paperwork also associated with buying a home. We help make sure that our clients understand the purchasing timeline. And by keeping our clients informed every step of the way, we keep the process relaxed. As we are familiar with New York neighborhoods and properties, we can also offer a professional, experienced point-of-view, which is valuable when applying, negotiating, and financing.
New York is one of the most culturally diverse cities in the world. With many beautiful neighborhoods to choose from, limitless food and entertainment options, and relatively stable property values, it is easy to see why people decide to buy New York Real Estate. Unfortunately, it is also easy to make simple mistakes when purchasing in the city. Proper buyer’s representation from Elika is an essential tool that will eliminate the errors, and reduce your stress while getting the best possible real estate deal.
You might have heard the term “designated agency” in real estate circles. In a single real estate transaction, this term refers to the buyer’s agent and the seller’s agent working for the same brokerage firm. In this scenario, the buyer and the seller are denied true representation, and one firm earns the full commission.
Similar to the designated agency, dual agency defines the relationship between a single real estate broker who represents the buyer and seller in the same real estate transaction. In both dual agency and designated agency, the brokers who are employed by the same real estate firm are prohibited by law from negotiating for their clients (the buyer and seller), but instead, more focused on closing the transaction. What’s more, under these circumstances, brokers can be privy to confidential information from the buyer and seller that they would not have had access to otherwise.
Even though legal in New York State, these types of agency are considered conflicts of interest, in that they do not provide undivided loyalty to the client. Instead, these relationships are profitable for the brokerage firm and discourage trust between the broker and their client.
For these reasons, when purchasing property in NYC, it’s best to work with an exclusive buyer’s agent, one with whom you can build a relationship. A knowledgeable, excellent buyer’s agent will negotiate on your behalf. Based on the Real Estate Board of New York’s co-brokering policies, either the seller pays the full commission (usually ranges from 4 to 6 percent) to the listing agent, or the commission is split 50/50 between the buyer’s agent and the broker who listed the property. Regardless of the listing price, legally, that amount of commission will be paid, so it’s probably a wise idea to take advantage of the expertise of a buyer’s agent and reap the benefits mentioned above.