Fiduciary Duties Explained: The Role of a NYC Real Estate Agent
Fiduciary responsibilities are the cornerstone of the client-agent relationship A qualified real estate agent is more than a transactional guide—they are your advocate and partner. From the first conversation to closing.
In today’s digital world, many New York City buyers are tempted to browse listings on platforms like StreetEasy and pursue properties independently, assuming it will save time or money. However, navigating one of the world’s most competitive real estate markets requires more than just access to listings. The NYC market presents unique challenges—fast-moving inventory, bidding wars, intricate co-op board applications, complex property histories, and nuanced price negotiations—that can put unrepresented buyers at a significant disadvantage compared to sellers with professional representation.
At the heart of successful real estate transactions lies fiduciary duty: the legal and ethical obligation of agents to act solely in the best interests of their clients. Much like having legal representation in court, partnering with a qualified real estate agent ensures that your interests are protected, and your decisions are informed. By adhering to fiduciary principles, agents provide transparency, accountability, and expert guidance, giving buyers and sellers a competitive edge.
Real estate agents serve as trusted advisors, going beyond listings to advocate for their clients’ interests. As a member of the Real Estate Board of New York (REBNY), I am committed to upholding fiduciary responsibilities such as loyalty, disclosure, and confidentiality. These principles form the foundation of my practice, ensuring every step—from property selection to closing—is handled with professionalism and care.
1. Roles of Seller’s Agents and Buyer’s Agents
Understanding the distinct roles of seller’s agents and buyer’s agents highlights how fiduciary duties protect your interests during a transaction.
Seller’s Agent: Contracted by the property owner, a seller’s agent’s primary responsibility is to secure the best price and terms for the seller. This includes advising on pricing strategies, marketing the property to attract qualified buyers, and managing negotiations with the seller’s goals in mind. The agent’s sole allegiance is to the seller, ensuring their priorities are represented at every stage.
Buyer’s Agent: A buyer’s agent exclusively represents the buyer’s interests. This involves identifying properties that meet the buyer’s criteria, arranging showings, and negotiating favorable terms. A buyer’s agent also provides objective advice on property values, highlights potential issues, and advocates during negotiations to help buyers secure the best deal. In NYC’s competitive market, having a dedicated buyer’s agent can make a significant financial and strategic difference.
Both roles are rooted in fiduciary responsibilities, ensuring that clients’ needs are prioritized throughout the transaction.
2. Fiduciary Responsibilities in NYC Real Estate
Fiduciary responsibilities are the cornerstone of the client-agent relationship, ensuring that every interaction and decision prioritizes the client’s best interests. These duties are not merely guidelines but legally binding obligations that uphold trust, professionalism, and ethical standards throughout a transaction. By adhering to these principles, agents provide clients with the confidence that their needs, assets, and goals are being safeguarded at every stage of the real estate process.
Loyalty: The duty of loyalty is one of the most fundamental fiduciary responsibilities an agent owes a client. It requires that agents prioritize the client’s best interests above all others, including their own or those of other clients. This duty means avoiding any conflicts of interest that could undermine the agent’s loyalty to the client. For example, an agent should never steer a buyer toward a property they personally stand to profit from without fully disclosing that interest. Loyalty ensures that agents act exclusively to benefit the client’s objectives in the transaction.
Confidentiality: Confidentiality obliges agents to keep any sensitive information shared by their clients private, ensuring it cannot be used against them. For instance, an agent representing a buyer cannot disclose to a seller that the buyer is willing to pay more than the current offer. This duty also protects sellers by preventing agents from revealing circumstances that might suggest urgency, such as financial pressures. However, confidentiality doesn’t extend to withholding known material defects about a property, which agents are legally bound to disclose.
Disclosure: The duty of disclosure requires agents to share all relevant information with their clients, ensuring they are fully informed to make sound decisions. For sellers, agents must disclose all offers, potential buyers, and any information impacting the property’s value or marketability. For buyers, agents need to communicate information such as the property’s time on the market, price reductions, or the seller’s willingness to negotiate. This duty ensures that clients have complete knowledge, allowing them to pursue their best interests.
Obedience: Obedience mandates that agents carry out lawful instructions given by their clients promptly and diligently. Whether a buyer requests an offer submission or a seller instructs specific terms for showings, agents must honor these instructions. However, this duty does not require agents to follow unlawful requests. Obedience to lawful instructions ensures clients maintain control over their real estate transaction’s direction.
Reasonable Care and Diligence: The duty of reasonable care requires agents to exercise the skills and knowledge expected of a competent real estate professional. In practice, this means that agents should advise clients accurately, anticipate potential issues, and advocate effectively during negotiations. Agents should also investigate relevant facts related to the transaction, like property conditions or market trends. This duty ensures that clients receive advice and service reflecting a high standard of professionalism.
Accounting: The duty of accounting mandates that agents properly handle and protect any funds, documents, or property entrusted to them during a transaction. Whether it’s a deposit check, property keys, or important documents, agents must account for these items to avoid loss or mishandling. Accurate record-keeping and transparent communication about financial matters reassure clients that their assets are safeguarded and managed responsibly throughout the transaction.
3. Independent Representation in Transactions
Independent representation ensures that each party in a transaction has an advocate committed solely to their best interests. This is particularly important in complex transactions, as it avoids conflicts of interest and provides both the buyer and seller with confidence that they’re being fairly represented. However, in NYC’s densely populated market and within large brokerages, there are times when agents from the same brokerage might represent both sides. While legal, this setup requires careful handling to avoid any appearance of partiality.
4. When Independent Representation Isn’t Always Possible
In some transactions, the same brokerage may represent both the buyer and seller, leading to what’s known as dual agency. While permissible in New York with the informed consent of all parties, dual agency limits the extent to which agents can advocate exclusively for one side. Transparency and disclosure are essential to ensure all parties fully understand the nature and limitations of dual agency before proceeding. There are two main types of dual agency: traditional dual agency and dual agency with designated sales agents.
Dual Agency: In this arrangement, the same agent represents both the buyer and the seller in a transaction. While dual agency is legal in NYC, it limits the agent’s ability to fully advocate for either party. Instead of taking sides, the agent must remain neutral, focusing on facilitating communication, managing paperwork, and negotiating in a balanced manner. Dual agency requires written consent from both parties to proceed, with full disclosure of the arrangement to avoid conflicts of interest.
Dual Agency with Designated Sales Agents: To address the limitations of traditional dual agency, New York real estate law allows for a variation called dual agency with designated sales agents. In this scenario, two separate agents from the same brokerage represent the buyer and seller individually. Each agent is dedicated exclusively to their assigned party’s interests, while the brokerage assumes the dual agent role. This setup helps preserve independent representation while the brokerage benefits financially from both sides of the transaction. However, clients should remain aware of the brokerage’s shared financial interests.
5. Why Dual Agency is Not Advisable
While dual agency is legal and sometimes unavoidable in New York real estate transactions, it is generally not advisable for buyers or sellers seeking dedicated advocacy. The fundamental issue lies in the inherent conflict of interest: an agent representing both parties cannot fully prioritize the needs of one without compromising the other. Instead of exclusive advocacy, dual agents must act as neutral facilitators, which can leave clients feeling underserved during critical moments like negotiations or pricing discussions. Here are a couple of examples where dual agency may fall short:
Negotiating Price and Terms: A buyer wants to negotiate a lower price, while the seller aims to secure the highest possible offer. A dual agent is required to remain neutral and cannot advocate aggressively for either party, potentially leaving both feeling they didn’t receive full representation.
Disclosing Confidential Information: A seller mentions they are under financial pressure to sell quickly. A dual agent cannot use this information to benefit the buyer without breaching their fiduciary duty to the seller. This restriction limits the agent’s ability to provide strategic advice to the buyer while protecting the seller.
For buyers and sellers who want full confidence that their interests are the sole priority, independent representation is the most effective choice. By choosing separate agents for each side, both parties benefit from dedicated advocacy, clearer communication, and strategies tailored specifically to their goals. For more inflation consult NYC Department of State Legal Memorandum LI12: Be Wary of Dual Agency.
6. The New York State Disclosure Form for Buyer and Seller
New York law requires agents to provide clients with a New York State Disclosure Form for Buyer and Seller. This document outlines the types of agency relationships that are possible, such as buyer’s agent, seller’s agent, and dual agent. The form is not a contract but is designed to inform buyers and sellers of the different representations available, so they understand the agency structure in any given transaction. New York State Disclosure Form for Buyer and Seller.
6. The Role of Your Real Estate Agent
A qualified real estate agent is more than a transactional guide—they are your advocate and partner. From the first conversation to closing, your agent represents your interests, safeguards your assets, and provides personalized strategies to achieve your goals.
The right agent doesn’t just navigate the complexities of a real estate transaction; they offer clarity when decisions feel overwhelming, negotiate with precision to protect your financial interests, and provide insight to empower confident choices. Whether buying or selling, your agent should be someone you trust to prioritize your goals and guide you through every stage with professionalism, transparency, and care.
Choosing an agent who understands your unique needs and objectives is the foundation of a successful real estate journey. With dedicated representation, you gain not only a trusted advisor but also the peace of mind that every decision is intentional and aligned with your vision for success.
If you’re looking to buy or sell in New York City, having a trusted advocate who prioritizes your interests and upholds fiduciary duties can make all the difference. Reach out today to discuss how I can support your goals and guide you through the process.