In New Jersey, the role that any realtor can take is very specific in scope and responsibilities. Part of our duty as licensed professionals is to make sure you understand the state laws of agency. When we meet, we’ll give you a pamphlet that explains real estate agency in greater detail. Part of our initial meeting is a one page form that defines which of the four relationships we’ll have.
There are four types of agency relationships:
As a buyer’s agent, I strictly work only for the buyer, only promote and negotiate for the buyer’s interests, and any information we learn is relayed to the buyer. Whenever you work with an agent, make sure you understand who he or she represents.
The ABR -The ABR designation signifies that the agent has completed advanced training on issues specific to home buyers, and has a documented history of successfully representing buyers. In a nutshell, it means we’ve spent time and money to learn more about helping buyers, and we have a proven track record.
As a seller’s agent, I strictly work only for the seller and promote and negotiate for the sellers’s interests, and any information we learn is relayed to the seller.
As a dual agent, we represent BOTH the buyer and the seller and may not disclose any information that would give an advantage to either party without the other party’s consent. This might happen (as an example) If you choose us as your buyer’s agent and choose to make an offer for a home that is also our listing (where we represent the seller for the sale of her home). If that were to happen, we would represent both parties and would be a disclosed dual agent.
As a dual agent, we are not legally permitted to put one party’s interests ahead of another. If the sellers were getting a divorce, as an example of ‘inside’ information that would give a buyer a negotiating advantage, we would not be allowed to divulge that to our buyer. Under no circumstance would we ever disclose anything that would be against YOUR best interests. If something material to the transaction were discovered (such as a leaky roof, or the inability to deliver a clear title), you would be informed right away! This is the legal obligation of EVERY agent, whether they represent one party or the other.
Exclusive Buyer’s Agent or Dual Agency
When you’re buying a home, I believe there is one thing that shouldn’t be negotiable.
The agent you choose, should represent you, and you alone. Makes sense, right? (Or, as my kids used to say, “Duh, mom!”)
However, prior to 1978, it didn’t work that way. A buyer’s agent was simply a “subagent,” working with, or for, the listing broker who represented the seller! That’s right, before 1978 all agents involved in a transaction owed their allegiance to only one person. The seller who was paying their commission!
That practice is now called Dual Agency and continues to allow a listing broker to represent both sides of a transaction and collect the entire commission.
Though buyers are still lured into Dual Agency with the promise of “great” deals and promised fairness, today they hopefully have more protection. Before signing with a dual agent (one who also represents the seller) they must sign a Consumer Information Statement indicating they are aware they are doing so. An unsuspecting buyer while in the process of viewing Open Houses meets the Realtor working the Open House. The laws in New Jersey clearly state that upon first contact with a buyer the agent MUST disclose that they are representing the seller. Unfortunately, this isn’t always the case. The buyer assumes that the agent is working for them.
Why? Because it’s been legally recognized that dual agency (in some circumstances) has an inherent conflict of interest. (If it didn’t, you wouldn’t need the CIS!) During a price negotiation, is a dual agent more likely to favor the buyer – or the seller who wants the highest price for their home, and who is paying their commission? (Duh, mom!)
That’s why I’m an exclusive buyer’s agent. My clients’ best interests, and only their interests, are the ones I represent. I think that’s fair, and it’s not negotiable.
This is very unusual in residential transactions in our area. A transaction broker represents neither party and anything may be disclosed to the other party.