Years ago, the buyer always assumed that an agent who was showing the houses for sale, (after all, she was that nice friendly agent) would automatically be representing he/she the buyer. Not so, Many agents were representing the seller, and as a result, the buyers were not properly represented with certain facts (problems within the home/lack of legalizations not being properly disclosed). New York State is a Caveat Emptor (Buyer Beware) state, and so it became a New York State law for the agent to properly explain agency upon the first substantive contact with a buyer, and to give the buyer the choice of whether he/she be represented by a buyer's agent, seller's agent or whether he/she would consent to dual agency or dual agency with designated sales agent (buyer/seller).
It takes the mystique out of the process, and the buyer not only knows who represents who, but also has the documentation to prove same.
What are the different representations?
Years ago (again), (well not so many years ago), if an agent represented the buyer as a seller's agent, but say for instance, he does not even know anything about the property, it could be stated that the seller's agent, could have misrepresented that property, and ultimately, there would have been additional liability to the seller as a result of that misrepresentation. New York State wanted to lessen the vicarious responsibility to the seller. In 2012, you will find it quite hard to find a listing in the MLS that offers a seller's agent compensation. NY State would rather have each buyer be represented by a buyer's agent.
When a seller engages the services of a listing Broker, that seller becomes the Broker’s client. This means the broker and its subagents (agents within the office(s) represent the seller unless there is a designated buyer's agent. The Listing agent owes the seller undivided loyalty, utmost care, disclosure, obedience to lawful instruction, confidentiality and accountability. They must put the seller’s interest first and negotiate for the best price and terms for his/her client, the seller. (The seller may also authorize subagents to represent him/her in marketing the property to buyers.) We call them Broker's agents.
1) Buyer's Agent - It is the Broker (Buyer Agent's) responsiblity to offer undivided loyalty, utmost care, disclosure, obedience to lawful instruction, confidentiality and accountability. The buyer's agent must put the buyers interest first and negotiate for the best price and terms for his/her client, the buyer. When I first meet a new prospective buyer and I must explain agency to them, there are several key points I always mention. One: the form is NOT a contract Two,:It is a NYS requirement that I discuss agency to every prospective customer/client I meet, and - Three: Why sign? "Wouldn't you want the person who is showing you homes to be fully representing you and not the seller?
2) Dual Agency - An agent can represent both seller and buyer, with the knowledge that the agent cannot fully provide the full range of fiduciary responsibilities to both buyer and seller. The agent must explain to both buyer and seller that each is being represented by the agent, and they are giving up their right to undivided loyally. The agent is NOT allowed to offer forth anything he/she might know about any financial obligations the seller might have. Dual Agency is becoming quite frowned upon, and the disclosure forms clearly state that the buyer and/or seller should carefully consider the possible consequences of a dual agency relationship before agreeing to same.
I always liken it to an agent 'sitting on the fence' and endeavoring to be fair to both parties without suggesting to the buyer what to bid, and not informing the buyer what the seller 'needs' or if the seller is in any financial trouble... At the same time, the agent cannot inform the seller that the buyer 'can afford more..' so the whole situation can become quite tricky..Who is that agent really representing?
The agent must always be honest to both parties.
4) Dual Agent with Designated Sales Agents : This seems to work to everyone's satisfaction. Bearing in mind that the seller is actually signing with the Broker (Company), and the buyer is actually signing with the sales agent of the Broker (agent's company), when a buyer for instance wishes to place a bid on a property that the same company is representing, even though the buyer's agent might not even know the listing agent, etc.. but since it is the same company, it becomes a dual agency. The Company is actually representing both buyer and seller.... NYS has stated the agent can allow a designated sales agent to represent the buyer, and a designated sales agent to represent the seller's agent.... therefore protecting both buyer and seller.
The agency disclosure is a source of contention to many agents as it is hard to explain legal documentation to someone - a potential buyer and stranger- when you first meet them. However, it should be once again clearly noted that signing a disclosure form does not cost anything, It is not a contract of any kind, and at the end of the day, wouldn't you - as a buyer,. want to know who you are being represented by?
Westchester is GREAT!
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