Whether you opt for dual representation or prefer an agent who exclusively represents the buyer or seller, you will still need to have your contracts reviewed by a real estate lawyer. Buying or selling a home is an important step and an investment in life. In New York, buyers and sellers are always represented by separate attorneys in real estate transactions. We have represented both parties at closing and can help you complete a transaction when buying or selling a home. It`s a relationship that only works if all parties trust each other and agree on the details of the sale. There is little negotiation in a dual agency relationship, as the broker has incentives to do the best for both clients. In states where dual representation is legal, the buyer and seller must accept the agreement in writing for it to be approved. Verbal agreements are not permissible, as they can lead to problems later if a party claims to have been exploited and there is nothing in the writing to suggest that they have accepted the agreement. Agreeing to a dual agency relationship means that both parties agree that using an agent makes sense and that they trust the broker to represent their interests appropriately. Unless it is later determined that the broker acted unlawfully or flagrantly violated its fiduciary duties, it may be difficult to challenge the agreement if one of the parties feels upset. That is why some States prohibit this practice completely. In another amendment, the new law covers dual representation in transactions involving condominiums and co-operatives, which were previously exempt from disclosure requirements.
The new rules also allow sellers and buyers to appoint specific agents in a brokerage firm to represent them in the event of a problem with two agencies. More importantly, the form makes it clear that a double agent cannot: the Golden State court`s decision in Horiike v. Coldwell Banker could set a precedent for how a double agency is run there. In that case, two different Coldwell Banker brokers — Chizuko Namba and Chris Cortazzo — represented the buyer and seller of a Malibu mansion in 2007. In November, the California Supreme Court unanimously upheld a Court of Appeals decision finding that the seller`s agent owed the buyer the same fiduciary duty since he also worked for Coldwell Banker. Some industry insiders are concerned that the decision could change the information that sell-side brokers must disclose to both parties. The California Association of Realtors argued that restricting transactions with two agencies could hurt buyers if brokers actively avoid showing them offers held by their brokerage firm. Even where it is legal, double representation is not common, but is only practiced in about 10% of real estate transactions.
People always prefer their own real estate agents. Having the same broker or broker in opposing negotiating camps may seem like an ethical quagmire at first. But New York State only requires brokers to obtain written confirmation from clients that they “understand that they are waiving their right to undivided agent loyalty.” From a buyer-tenant perspective, the inherent risk of dual representation is a potential imbalance. The brokerage may or may not act in the best interests of a client since it has another client for the same business. The broker must still inform the buyer and seller when a dual agency will take place and obtain their written consent. But this disclosure occurs when “substantial contact” is first established. What constitutes “substantial” is a bit foggy. As a rule, things reach this level when negotiations begin. At this point, brokers need written confirmation from buyers and sellers that they understand the various roles of the business. A double agency usually looks like this: A real estate agent employs two sellers, one who works for the buyer as the buyer`s agent and the other who works for the seller as the seller`s agent. The real estate agent and his sellers are “one and the same” unit when it comes to analyzing the existence of a double agency. As soon as the buyer`s broker presents the buyer with properties where the seller is represented by the seller`s agent, double representation occurs.
It should also be noted that a duplicate agency can occur if the buyer`s agent and listing agent work for the same brokerage. Note that a double agent is different from a transactional agent. A transactional agent is a neutral third party that only facilitates a sale. A double agent represents both parties, while a transaction agent does not represent either party. A double agent can still provide advice and perform certain tasks on behalf of the client. In contrast, a trading broker is simply a neutral party responsible for ensuring that a sale is made appropriately. In the case of a buyer/seller transaction where there is dual representation, the representative must not only clearly explain to the parties the existence of the dual representation and its effects, but also obtain written confirmation from the potential buyer and seller to the dual agency. This acknowledgement requires that each principal who signs the form confirm that he understands that the double agent will work for both the seller and the buyer, that he understands that he can appoint his own representative to act exclusively for him, that he understands that he is waiving his right to the undivided loyalty of the agent.
and that they carefully weighed the possible consequences of a dual agency relationship. Double agency is a term used to describe an agency relationship in a transaction where a broker represents both the buyer and seller. Traditionally, the buyer has an agent, and the seller will have an agent (or one or both parties will choose to negotiate for themselves). However, it may be advantageous for a broker to represent both the buyer and seller in certain situations. The information contained in this memorandum should not be used in lieu of appropriate legal advice. In addition, information may change due to future interpretations of the licensing law by the courts and/or due to relevant changes. Private legal counsel should be consulted for legal advice on this memorandum. The problem is that buyers and sellers have competing interests and want the best results for themselves. A seller`s agent is under contract to best represent the interests of its main customer – the seller. A double agent has a duty to act in the best interests of both the seller and the buyer. While this is certainly possible, it is difficult, especially during negotiations. Some agents even advocate dual agency because they find that the transaction goes more smoothly when a single agent represents both buyers and sellers.
In addition, sellers with an offer that comes from a double agent may save more commission due to the reduced percentage. If you employ a real estate agent or salesperson as a broker, you are the customer. “The relationship between agent and principal is fiduciary in nature.” is based on one person`s trust or trust in the integrity and loyalty of another person. (Citation omitted) The fundamental obligations of such a trustee include good faith and undivided loyalty, as well as full and fair disclosure. These obligations are imposed on real estate licensees by licensing laws, rules and regulations, contract law, the principles of representation and tort law.