State law has required real estate agents and brokers since the beginning of the year to let unaccompanied buyers know formally who is representing whom.
In particular, brokers holding open houses are to ask persons who visit to sign an agency disclosure form. They must not only make the request, as I have written in the past, but they must verbally make clear where their loyalties lie.
In other words, brokers have a legal obligation to declare that it is the seller’s best interests they are bound to serve, not the buyer’s.
Yet, either through the brokers’ guile or ignorance, I witnessed interactions at two open houses on the Upper West Side last weekend that flouted state statute.
A broker in a two-bedroom apartment was selling a young couple hard, singing the co-op’s praises, saying he would recommend a lender to them and encouraging them to be in touch.
Outside, they indicated ignorance of agency, not recognizing three important considerations: 1. The broker has a fiduciary responsibility to obtain the best price for the unit on behalf of the seller, and 2. The seller usually pays the same commission to the broker whether that broker receives the whole amount or has to split the fee with a buyer’s broker, and 3. There is no cost to the buyer either way.
It turns out that the couple thought the apartment was too dark, but I advised them never to buy from any listing broker without their own representation. I also emphasized that their representation didn’t have to come from me, and it likely will not.
As for the other apartment, a potential buyer was quizzing the listing broker at length about the cheap renovations, possibility of modifying the floor plan and the prices of comparable sales in the building. He, too, was provided with neither a disclosure form nor an explanation of its meaning so far as I could determine.
The law couldn’t be more plain, and the behavior of two agents out of a small sample over the humid holiday weekend couldn’t be more wrong. Or, I believe, more telling.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022
Having lectured on this law, the brokers and associates seems to wait too late when they have this form signed. The word substantative is used and that means before a buyer tells you anything that has substance this agreement must be signed.If a buyer says “I can only pay $300K,” that’s substance..an agreement must be signed, if a buyer says I must finance 50%, that’s substance…an agreement must be signed… the agreement levels the playing field for everyone. The intention oF the state is to disclose immediately who you represent and make it fair for everyone. These disclosure agreements bring fairness to a real estate transaction at the beginning of the reationship. Isn’t that what we want in life…Be Fair…Sign your agreemenT immediately. Something to think about!