A study by the Federal Trade Commission (FTC) in 1983 found that over 72% of home buyers thought that the agent showing them homes represented their interests, when in fact they represented only the interests of home sellers.  

This study was prompted by complaints, mainly by home buyers, that information they gave ‘their agent’- unbeknownst to home buyers- was being passed on to home sellers.  This information was being used to the seller’s advantage to help negotiate maximum selling prices at the best possible terms.  The agents were following their legal duty of ‘full disclosure’ as ’subagents’ to sellers.   This included disclosure of sensitive information by real estate agents to home sellers of properties listed by companies other than the listing company.  Up until the Agency Disclosure Laws, few home buyers were ever aware of this.

The result of this FTC study was for each state to enact their own version of a Real Estate Agency Disclosure Law, which would explain to buyers and sellers the types of real estate agents available, their respective duties, and who represented whom in a real estate transaction.

New York State’s first Agency Disclosure appeared in 1992, with some notable revisions and changes made, leading to the most recent version.  It is interesting to note that Dual Agency at that time was considered a ‘legal and ethical gray area that State and Realtor officials recommend avoiding.’  Today, Dual Agency is a normal and accepted practice offered by most real estate companies (see previous posts on the pitfalls and dangers of Dual Agency to home buyers).   Dual agency mainly benefits the interests of the real estate company, by allowing it to keep an entire commission (double the money), while providing half the work and representation to the buyer and seller.

The current version of Agency Disclosure explains Seller’s Agent, Buyer’s Agent, Dual Agent, Dual Agency with Designated Sales Associates, and Broker’s Agent.  It is required by law that this form be provided to any consumer at ‘the first substantive contact’, before viewing any property, and before providing the agent with any personal or financial information about themselves.   The consumer is asked to sign the disclosure form and should be given a copy. 

The consumer always has the right to choose the type of agent they want to work with.   A buyer need not consent to Dual Agency with a simultaneous and notable reduction of the agent’s duty of undivided loyalty.  You can be referred to a different real estate broker (agency) to represent you on that transaction.

Please visit our website to read the current NYS Agency Disclosure, and also view a copy of a notice written by the NYS Department of State Counsel’s Office entitled ‘Be Wary of Dual Agency.’