Do I need a real estate agent to sell or buy real estate in Princeton? This is the gist of the questions coming to my blog in the last several weeks. I covered this subject before, but there were so many variations on this question, that I thought it may warrant re-visiting it again. This time I will focus on one issue: representation. All of this discussion applies to the state of New Jersey and laws may be different in other states.

Several things happened last week, that made me realize representation is not understood by many consumers. It's not surprising: the issue is kind of technical and kind of boring unless your live and breath real estate. Surprisingly, I found not all real estate agents explain representation to their clients sufficiently, if at all.

Back to the original question. Does a buyer or seller need a real estate agent? The short answer is "no". It is perfectly legal to buy and sell homes in the state of New Jersey without a real estate agent representation. I will focus in this post on the buyers. If the question was: " would I, as a buyer, be better off using an agent ?", the answer would be - "it depends on representation."

As a buyer you can do your research on the Internet. To see the house listed with a broker, you would need to have an agent show it to you. You have several options. To understand the difference in these options, you would need to understand the different ways agents represent clients and what it would mean to you as a buyer.

1. Listing/seller's agent representation.

A seller's agent usually has a fiduciary relationship (a special relationship of trust and confidence) with the principal, i.e seller. This special relationships carries certain duties that the agent must perform: care, obedience, accounting, loyalty, and disclosure.

An agent's loyalty means that they have to place a principal's interest above all other person's. When an agent represents the seller, he/she works only for the seller and owes fiduciary duties only to them.

When a buyer contacts the listing/seller's agent, they have an option of either being represented by this agent as a dual agent, or not represented at all.

2. Dual agent representation.

Dual agent works for both the buyer and the seller. This means that the agent will not be able to put one's party interest against the other, and can't advise or counsel either party on how to gain an advantage at the expense of the other party on the basis of the confidential information obtained from or about the other party.

3. No buyer representation.

The seller's agent, has an obligation to disclose to the seller all material information supplied by you as a buyer. For the buyer without representation, this option could be really least favorable.

The interesting thing is that the buyers often believe that one of these options is in their best interest. Many feel that they will get a "better deal" with the dual representation, because the agent would be more motivated, which will translate to them somehow buying the house for less. Without any representation for the buyer, they feel the seller would be more inclined to sell for less. The first of these options is suboptimal. The second can put a buyer at a real disadvantage. The best option is the following.

4. Buyer's agent representation.

Buyer's agent works only for the buyer and owes fiduciary duties only to them. This relationship is independent of who pays the commission to the buyer's agent.

There is another type of representation, such as transaction broker, which I didn't cover, because it doesn't occur often.

The above discussion applies to competent representation only without which these points would be irrelevant.

If you are looking to buy a house in the greater Princeton are, you may find these articles of interest:

How to buy a house without a real estate agent

15 Reasons you should not buy a home now ...5 reasons you should

What Did That House Sell For? January 2008

Who Else Wants Clarity About Real Estate Prices

Is Princeton Real Estate Local or Global?

Secrets To Buying A House In This Market

Secrets To Home Selling In A Bad Market

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