Buyer Agency In New York Is The Only Way To Go

April 21st, 2008 category: Buyers

 

I’ve been asked before why I hate sub agency in real estate, and why I appreciate buyer agency.

When my real estate addiction began, it was a time of certainty for me- 24 years old, a two year old, and a mortgage. There was no question, at that age, that this was it- the “job” that worked for me. I realized that combining a genuine interest in houses with a genuine interest in sharing the “pride of ownership” with my prospective home owners was exactly where passions intertwined- I got my real estate license.

Because buyer agency was not yet available to the real estate community in Denver at that time (1980’s), it was with no existence of an alternative that I presented my ” agency status” to my first buyers- they were clear that I represented the seller in any home purchase that I might locate for them- disclosure was required.

We looked at many homes, laughed a lot, and developed rapport, culminating in a view (from their eyes) that was exactly in tandem with how I viewed my contribution: home locator, advisor, participant in a very important mission. We connected, these buyers and I.

Out of the blue, they called me to let me know that they had attended an open house, and it was “the one.” They followed this news up with: “But you’re our Realtor, so we told the guy that we want to buy it with you- we would never leave you out, Laurie.” The listing agent, being an agent of integrity, honored their request to have “their Realtor” involved. As “their Realtor”, I had never crossed paths with the seller or the listing agent, but the listing agent knew that he had a sale for his sellers, and wasn’t going to screw it up in an effort to get paid the full listing commission as opposed to splitting it with me.

He demonstrated ethical fiduciary to his seller; now it was my turn to provide my fiduciary duty to the seller.

Except, I’d never met them. I was, in the eyes of the buyers, “their Realtor.”

The market was good- the buyers offered the full price of $90,000. Upon the inspection, items of substance (if not expensive, annoying repairs) arose, and very cognizant of the fact that “fairness” to the buyers was also a requirement, I added an addendum to the contract stipulating very specifically what was to be repaired before closing (people didn’t, and generally still don’t, use attorneys for closings or advice or paperwork in Denver, Co. or the majority of States).

The items were not completed at the walk through, but the buyers wanted to move in (they knew that they had the items agreed to by the seller, in writing) so proceeded to close. A week later, nothing repaired.

When the sellers ultimately refused to do the agreed to repairs, the buyers called me, and let me know that they had a small claims court date- could I make it? I had, after all, facilitated the addendum.

I was horrified (really) when my broker reminded me that no, attending was not possible, because my fiduciary responsibility was to the seller, not the buyers.

 

While my awareness of my status with the sellers had compelled me to get advice from the broker (ultimately liable were I to appear in court on behalf of the buyers, at least, in his estimation) it took that murky, convoluted term “seller agency” to a level that was, bottom line, unfair to the buyers.

Because the items had been recorded and signed off by the sellers, the buyers won monetary compensation from the court, and all ended up even for them. They called to let me know, saying with legitimate sarcasm,

“We won the case, NO THANKS TO YOU.” We didn’t speak at all after that call.

Even in a situation in which it was possible to support the notion of “seller agency” when working with buyers, STUFF HAPPENS. Clearly, there was enough confusion in Denver to eliminate seller agency altogether- buyer agency permitted, for BOTH parties, a defined line by which their expectations could be met- it started very shortly thereafter (late ’80’s) and continues today as the way to conduct real estate.

Sellers, by the very nature of their listing agreement, receive full fiduciary out of the gate from their listing broker in NY (and elsewhere). When a seller of a home in NY commits to a real estate individual (and brokerage), they choose that person for many reasons, among them a awareness that they’re receiving fiduciary representation (and they are, or should be).

Sellers don’t NEED two agents, one who has listed the home, and one bringing a buyer, in order to receive double fiduciary. If a home seller feels that the listing agent isn’t enough protection, they picked the wrong agent.

Buyers, on the other hand, are equal participants, and when confusion about who represents whom disturbs the purchase, the feeling of getting “taken” or “lied to” is a possible (and unacceptable) result when they are without a buyers agent. Both the buyer and the seller (by extension- they’re dealing with an uncertain buyer) pay the piper in aggravation, if not money. Just ask any seller who has struggled with “concessions” from a wary buyer.

BUYERS: You Are Better Off Going It Alone Than Accepting Sub Agency (or broker agency) from “Your” Realtor. Anything that you disclose to your sub agency Realtor that benefits the seller will be relayed to the seller, as required. If you aren’t clear on this, your transaction will likely be sour for both you and the seller.

So, with an ongoing agenda of promoting buyer agency for sellers and buyers, just a cautionary tale to Realtors that might (as I did) find themselves wondering if real estate works from an ethical perspective- being called “their Realtor” and having it rescinded is a devastatingly AVOIDABLE event with buyers or sellers of real estate. It wasn’t avoidable in the 1980’s; IT IS AVOIDABLE NOW, New York.

Buyers agents, you are welcome to view our listings- we have our sellers covered. If your buyer wants to buy, we have sellers that want to sell. We’ll make certain that we watch every move; you do the same for your buyer. Getting houses sold with happy clients reaps rewards for all.

*A footnote: buyer agency is established via the NYDOS required disclosure at the time of your first substantive meeting with any Realtor. It is NOT required that you sign a contract. Call if you have any questions.

We also refuse to engage in “dual agency”, but that’s another blog…

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This entry was posted on Monday, April 21st, 2008 at 1:20 pm and is filed under Buyers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Buyer Agency In New York Is The Only Way To Go”

1. real estate broker Says:
   July 9th, 2008 at 6:11 am

   real estate broker…

   Now is the time to invest in US property, Don’t abandon it, invest in it….

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