One of the constants that seems to crop up with many buyers is that they are unaware of the role the real estate broker plays and whom the real estate broker represents when showing them a house.
Since the Deparatment of State requires a disclosure to be given to each buyer by the real estate broker showing them a house, if the prospective buyer is not receiving one and having it explained to them by the real estate broker, they may not be getting the correct information as to whom the broker represents.
When dealing with a real estate broker for the first time, the brokers sits down with you and shows you a form created by the Department of State of New York call the real estate disclosure form and you look at it and think, “What do I need to sign this for?”
This form must be signed by buyers and sellers in all residential real estate transactions, as well as prior to being shown any residential real estate for the first time.
The purpose of this disclosure is to make sure that the consumer, whether a buyer or seller, is properly informed of the agency relationship of the real estate agent they are working with, and the rights and obligations it creates. What does this mean, exactly?
If a seller hires a real estate broker to sell their home (they are paying the broker a fee to sell their home), the broker now has the relationship of a seller’s agent with the seller. This means that the broker has a fiduciary responsibility to the seller to sell their home with undivided loyalty to the seller. Any information in the course of selling or negotiating the seller’s home must be provided with reasonable care taken to represent the rights of the seller. The broker in fact is representing the seller and the seller’s interests.
As a seller’s agent, it is the responsibility of the real estate broker to disclose, to each buyer to whom they offer to show the seller’s home, their relationship with the seller, by having them sign the Department of State real estate disclosure form (with a copy retained for the buyer as well) in which it states that the broker has disclosed to the buyer that they are a “seller’s agent”.
By the way, if a real estate broker is a seller’s agent, it does not mean that they will not deal fairly and honestly with the buyer; in fact, the opposite is true. Disclosing to the buyer, up front, their relationship with the seller should only show the buyer the real estate broker’s good faith in making them aware of this relationship and their willingness to deal honestly with the buyer in disclosing all facts known to the agent, so they may make a knowledgeable decision regarding the property involved.
Another agency relationship is one where the buyer comes into the real estate broker’s office and engages the broker to represent the buyer’s interest. (This means that the buyer is responsible for the real estate broker’s fee).
In this instance, the real estate broker has a fiduciary responsibilty to the buyer and represents their interest with undivided loyalty. The buyer’s agent does this by negotiating the purchase of a home at a price and on terms acceptable to the buyer with the buyer’s interests in mind.
When representing the buyer as a buyer’s agent, the real estate broker must also disclose to a seller when showing their home that they are doing so as a buyer’s agent and representing the buyer, not the seller.
Some changes in the disclosure form were implemented by the Department of State as of January 1, 2007. A new updated version, a little more user friendly, was issued on January 1, 2008. These include a category not on the previous disclosure form called a “broker’s agent”. A broker’s agent is an agent who is authorized through the listing broker to show and offer a seller’s property. A broker’s agent also has a fiduciary responsibility to the seller through a co-brokerage with the broker who is the seller’s agent.
The other category added to the real estate disclosure form is called “dual agency”. This is not a common category, but is does happen sometimes that a real estate broker who is a seller’s agent for a particular seller has a situation where they also represent a buyer as a buyer’s agent specifically on the proposed negotiation of one specific real estate transaction. In a case such as this where the broker is representing both parties in this transaction, it must be disclosed to both the buyer and seller prior to showing and negotiating a deal between the two parties of the dual relationship that the real estate broker has with them.
The most important thing for you to know about the form is to make sure you are presented with this disclosure form prior to looking at, buyer, or selling any properties, so you may know up front which category your broker fall into.-Anessa Cohen.
