Many people seek the services of a real estate broker when house hunting. Real estate brokers and their sales people provide valuable services to both buyers and sellers of properties in New York. Nevertheless, as a buyer, it is important to understand the real estate broker’s relationship with you, else in some cases you may inadvertently put yourself at a competitive disadvantage when bidding on a property.
To understand how this could occur, you must know who the broker is working for as this fact determines what duties the broker owes to each party in the transaction. In the vast majority of cases in New York, the broker has been hired by the seller and owes, among other duties, that of confidentiality and full disclosure to their employer, the seller. The only duties they owe to you, the buyer, is that of honesty and fair dealing. If you, as a buyer, tell the broker certain information that you don’t want to get back to the seller, say for instance your top price, not only is the broker under no obligation to keep this information confidential, but, in fact, has a duty to disclose this to the seller. You can imagine how this could weaken your bargaining position.
The scenario where a buyer mistakenly believes the broker is working for them and owes them a duty of confidentiality, is not far fetched. In fact, a study conducted by the Federal Trade Commission showed a large percentage of buyers believed just that. As a result, many states, including New York, enacted legislation requiring brokers to disclose, in writing, exactly who they are working for and what duties they owe to each party.
If you keep in mind who the broker is working for when you are house hunting, you can increase your chances of getting your new home at the best possible price.
