Q: My husband and I are buying a condo in Brooklyn. We found out that our real estate agent and the seller’s agent work in the same office and report to the same boss, and that the seller has done multiple deals with this team. During our negotiations, there have been a few issues, and the outcome is always that our agent bends to the will of the seller. What is the obligation of a real estate firm if it employs the agents on both sides of a deal? What rights do we have if we don’t feel a broker is objectively representing our interests?
A: Your real estate agent should be representing your interests with what state law calls “undivided loyalty.” If that’s not happening, you need a new agent.
“Ethically, there should be a clear separation of interests,” said Steven O. Goldschmidt, director of sales at Coldwell Banker Warburg and co-chair of the Real Estate Board of New York’s Residential Brokerage Ethics Committee.
In New York, it is legal — though discouraged — for an agent to represent both a buyer and a seller, or for members of the same team to represent both parties. But you, as the client, must be notified of this arrangement and the limitations that it could create for your agent. State law requires that agents fill out a form in which they disclose to their clients whether they are acting as a dual agent (representing both parties), or as a dual agent with designated sales agents, which could be the scenario you describe.
“In a traditional relationship, your agent’s loyalty is solely to you,” said Ruta Behrend, partner at Tane Waterman & Wurtzel P.C. “Under dual agency, however, key fiduciary responsibilities, such as loyalty, confidentiality, and full disclosure, are necessarily divided.”
If the brokerage did not inform you about its relationship to the seller, it would be in violation of state law, and that could impact whether your agreement with the company is enforceable. It could also lead to disciplinary action by the New York State Department of State.
You can contact the management of the brokerage office and ask to be connected with an agent who is not part of the team representing the seller. Or you can seek representation elsewhere — though this might be difficult if you’re deep in the sale process. Before you break off any relationship with your agent, have your lawyer review the agreement you and your agent signed, to ensure you are not breaching your contract.
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