More than ever, our homes have become an integral part of our lives. Today they are much more than the houses we live in. They’re evolving into our workplaces, schools for our children, and safe
Agents Everywhere But Not One Working for Me
This could have been the battle cry of consumers throughout Florham Park, Madison, Morristown, Morris Township, Livingston, Chatham, Mendham, Chester, Parsippany, Pequannock, Montville and the rest of New Jersey in the late 1980’s and early 1990’s that led to the changes in real estate agency relationships. Prior to 1995, all New Jersey real estate agents worked for the seller. That meant all their fiduciary obligations were to the seller and never to the buyer, all allegiances were to the seller. During the consumer movement of late 80’s and early 90’s, a study was conducted asking recent buyers if they knew who the agent they worked with represented them or the buyer or the seller. Alarmingly, 75% of the buyers believed the agent that helped them find a house, took them to lunch, accompanied them through the entire process worked for them. More alarming, when agents were polled and asked who they represented in the transaction, amazingly 75% of the agents erroneously responded by stating they felt they represented their buyers interest. YIKES!
In order to allow for all parties to receive equal representation the State of New Jersey adopted four Business relationships between buyers and sellers and a Disclosed Dual Agency format which allows brokerage firms to represent both the seller and the buyer in the same transaction. In order to clarify how one pays homage to two kings, the State of New Jersey mandates all consumers be informed of these relationships “prior to the first discussion at which the buyer’s motivation or financial ability to pay is discussed”. Additionally, a written copy of the Consumer Information Statement is to be provided to each buyer prior to discussing the buyer’s needs or showing them a property. To further complicate matters, agents are to counsel their sellers and buyer clients regarding the limitations of dual disclosed agency. Both sellers and buyer clients are to provide their pre-informed written consent acknowledging the limitations of dual disclosed agency. This is done prior to the buyer previewing the property.
Although many brokerages and agents have clients sign these consents as a matter of course, they do so without making sure their clients really understand the ramifications and limitations of such a declaration. The purposes of my next blogs are to examine agency: as it relates to buyers, sellers, and dual-agency situations. By doing so, it is my hope that you will have a greater depth of understanding your rights as a consumer and be empowered to ask the right questions at the right time, in addition to saving you time and money.
Edwin Kalinka- Ed.S., MAS, CRS, CRB, ABRM, ePro