New York Real Estate Lawyer Blog
Most homebuyers and sellers are accustomed to the usual model of agency: the seller and buyer each have a real estate “agent” representing them during the showing, negotiation and final closing of a real estate transaction. Typically, the realtor is an “agent” who works on behalf of a buyer or seller with “fiduciary” responsibility to act in their best interest. Wikipedia defines “fiduciary” as “a person who holds a legal or ethical relationship of trust with one or more other parties . . . and . . . entrusted” to act with loyalty to their principal- either the buyer or the seller.
But, what happens when the buyer and seller are both represented by the same agent, and that agent is typically being paid by the Seller under a multiple listing agreement? Say one agent has a listing, a prospective buyer calls the number on the web-site and gets that agent on the telephone, and then shows that house to the caller. In New York, most real estate brokers who represent sellers have a written agreement to be paid a commission at the time of closing. When the prospective purchaser calls about the house they want to purchase, they don’t contemplate that the agent is working for the seller.
In New York, that listing agent can show the house to the buyer, but must disclose that they will then be working both for the seller and the buyer, a “dual agent.” This arrangement is more common in small real estate markets with fewer properties and firms, but can also occur at a large real estate brokerage firms, where buyers and sellers have different real estate agents licensed by the same company. Dual agency is legal in New York State (but not all states) so-long as conditions for written disclosure are met. New York requires all real estate agents and brokers to specifically disclose their relationship to the transaction, buyer or seller or both.