In New Jersey, real estate agents can work in one of four ways: Seller's Agent, Buyer's Agent, Disclosed Dual Agent and Transaction Broker (not an agency relationship). Every real estate licensee should give every consumer a "Consumer Information Statement" which tells consumers how licensees can work when they first meet. Below is a short summary of how agents work in the state of New Jersey. Ask the agents you meet in your search for properties or selection of an agent to list your home, how they intend to work with or represent you. When you first begin to work with an agent, you should review and sign a written description of the agency relationship.
A seller's agent owes his loyalty to the seller. The goal is to help the seller sell his property for the highest and best price the current market will bear. Once a listing has been signed, the seller's agent, (the listing agent) markets the property to buyers according to the agreed upon marketing plan. Generally this includes advertising the property in the Multiple Listing Service, in real estate print media and the Internet. Common marketing techniques also include holding open houses for both the public and real estate agents from different companies and direct mail to potential buyers.
Once a seller hires an agent from a real estate company to market his property, all agents in the same company also represent the seller.
The seller's agent(s) keep confidential the seller's motivation to sell (how strong or how weak) and the price the seller is willing to accept for the property other than the advertised asking price. However, all material facts about the property or the transaction must be revealed to potential buyers; for example, if the property is in a flood zone. In New Jersey, the seller's agent must visually inspect the property and let potential buyers know if he has observed any areas of concern; for example, stains on the ceiling which might indicate a leak in the roof. Any environmental issues (which the agent knows of personally) must also be disclosed. Standard contracts initiated by real estate agents in New Jersey also direct the potential buyer to check with the local borough hall for the list of any area environmental issues which have been identified by the EPA.
The New Jersey Department of Consumer Affairs has published a "Seller's Property Disclosure." At this point in time, the seller is not mandated to fill out this form; however, many real estate companies do request this of their sellers. It is essentially a history of the property for the period of time the seller has owned the property. By revealing this information to the buyer in writing, the seller can prove what was disclosed to the buyer, should any problems arise after a contract of sale has been signed.
The seller's agent must tell the seller any information he learns about the buyer's willingness to buy the property and the possibility the buyer may offer more than any offer the buyer has made. The seller's agent will counsel the seller on how to evaluate and respond to buyers' offers.
A buyer's agent owes her loyalty to the buyer. The goal is to assist the buyer purchase a property for the lowest price and best terms the current market will bear. The buyer's agent must keep confidential the buyer's motivation to buy (how strongly she wants to buy the property), and the highest price the buyer is willing to pay other than the price the buyer has offered.
When first working with each other, the buyer and the buyer's agent need to discuss how the buyer's agent will be paid and the scope of services the buyer will expect of her agent. For example, the relationship may be a "non-exclusive buyer agency agreement" (the agent will represent the buyer only on properties the agent has shown the buyer) and generally, in this type of relationship, the buyer's agent agrees to accept the fee paid by the seller through the listing company; the fee offered through the Multiple Listing Service. A buyer may require a more intensive search for suitable properties: MLS listed properties, properties offered directly by sellers (FSBO properties), or even properties that have not been listed. An "exclusive buyer agency agreement" will specify where and how the agent will search for properties, the method of payment, and how long the relationship will last (a beginning date and an ending date).
Once a buyer hires an agent from a real estate company to search for a suitable property, all agents in the same company also represent the buyer.
The buyer's agent also has a duty to visually inspect a property the buyer is considering and to tell the buyer if the agent notices any area of concern; for example, the shingles on the roof have begun to curl and are worn. In addition, the buyer's agent must verify the facts about the property; for example, is the property in the school district the seller says it is in?
One of the advantages of using a buyer's agent is that the agent can make any offer to purchase contingent upon the seller supplying the buyer with a "Seller's Property Disclosure" even if the seller did not complete one at the time of the listing. The buyer's agent must tell the buyer any information she learns about the seller's willingness to sell the property and any possibility the seller may accept less than asking price. In addition, a buyer's agent will give advice on any offer the buyer wishes to make.
Disclosed Dual Agent
A disclosed dual agent is an agent (or agents in the same company) who represents both the seller and the buyer in the same transaction. In the search for suitable properties, a buyer's agent may show properties that are listed by the agent's company as well as properties listed by other real estate companies. If the buyer wishes to purchase a company listing, a dual agency arises if the listing company also represents that seller as a seller's agent (in-house listings). Both the seller and the buyer must give informed (written) consent to the agent(s) working as a disclosed dual agent before the buyer's agent shows any in-house listings.
Under these circumstances, the disclosed dual agent cannot disclose to the seller the highest price the buyer is willing to pay nor how strongly she wants the property; nor can the agent tell the buyer the lowest price the seller will accept nor how strongly he wants to sell the property. In Disclosed dual agency facts relating to price and motivation must continue to remain confidential.
However, all facts material to the property or the transaction must still be disclosed. Any facts the agent(s) knows about the condition of the property must be disclosed. The ability of the buyer to pay for the property (is it probable that the buyer can obtain the stated amount of the mortgage?) and the ability of the seller to sell the property (for example, is the seller facing bankruptcy so the bank needs to approve of any contracts of sale?) must also be revealed.
During negotiations, the disclosed dual agent will act as a facilitator; the agent(s) cannot advise either party how to gain an advantage over the other party.
A transaction broker in New Jersey is a real estate licensee who represents neither the buyer nor the seller in a transaction. The goal of the transaction broker is to help the buyer and seller make a deal; it is a business relationship. The licensee must be honest (answer any questions the buyer or seller have, reveal all facts material to the property or the transaction, etc.), treat all parties fairly (give neither party information that would give one party an advantage over the other), obey the laws regarding money and property (for example, put initial deposit monies into the broker's trust account within five days of receipt, make sure all necessary documents are signed), and exercise reasonable care (for example, make sure the buyer and seller has the funds or ability to close the transaction).
During negotiations, the transaction broker will act as a facilitator. Since the agent does not represent either party, there is no duty of confidentiality. The agent can share information with either the buyer or seller in an effort to complete the transaction.
Before working with any real estate agent, discuss with the licensee how the agent will be working. Read all documents and seek legal advice if you have any questions about real estate relationships in the state of New Jersey.