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Before you disclose confidential information to a real estate licensee regarding a real estate transaction, you should understand what type of business relationship you have with that licensee. There are four business relationships: (1) seller’s agent; (2) buyer’s agent; (3) disclosed dual agent; and (4) transaction broker. Each of these relationships imposes certain legal duties and responsibilities on the licensee as well as on the seller or buyer represented. These four relationships are defined in greater detail below. Please read carefully before making your choice.
In New Jersey, real estate licensees are required to disclose how they intend to work with buyers and sellers in a real estate transaction. (In rental transactions, the terms “buyers” and “sellers” should be read as “tenants” and “landlords”, respectively.)
THE FOUR TYPES OF REAL ESTATE REPRESENTATION
- As a seller’s agent or subagent, a licensee, represents the seller and all material information supplied by the buyer will be told to the seller.
- As a buyer’s agent, a licensee, represents the buyer and all material information supplied to the agent by the seller, will be told to the buyer.
- As a disclosed dual agent, a licensee, represents both parties, however, he or she may not, without express permission, disclose that the seller will accept a price less than the listing price or that the buyer will pay a price greater than the offered price.
- As a transaction broker, a licensee, does not represent either the buyer or the seller. All information acquired from one party may be told to the other party.
SELLERS’ AGENT
A seller’s agent WORKS ONLY FOR THE SELLER and has legal obligations, called fiduciary duties, to the seller. These include reasonable care, undivided loyalty, confidentiality, and full disclosure. Seller’s agents often work with buyers, but do not represent the buyers. However, in working with buyers a seller’s agent must act honestly. In dealing with both parties, a seller’s agent may not make any misrepresentations to either party on matters material to the transaction, such as the buyer’s financial ability to pay, and must disclose defects of a material nature affecting the physical condition of the property which reasonable inspection by the licensee would disclose. Seller’s agents include all persons licensed with the brokerage firm, which has been authorized through a listing agreement to work as the seller’s agent. In addition, other brokerage firms may accept an offer to work with the listing broker’s firm as the seller’s agents. In such cases, those firms and all persons licensed with such firms are called “sub-agents.” Sellers who do not desire to have their property marketed through subagents should so inform the seller’s agent.
BUYER’S AGENT
A buyer’s agent WORKS ONLY FOR THE BUYER. A buyer’s agent has fiduciary duties to the buyer, which include reasonable care, undivided loyalty, confidentiality, and full disclosure. However, in dealing with sellers, a buyer’s agent must act honestly. In dealing with both parties, a buyer’s agent may not make any misrepresentations on matters material to the transaction, such as the buyer’s financial ability to pay, and must disclose defects of a material nature affecting the physical condition of the property which a reasonable inspection by the licensee would disclose. A buyer wishing to be represented by a buyer’s agent is advised to enter into a separate written buyer agency contract with the brokerage firm, which is to work as their agent.
