The Nest

NestApple's Real Estate Blog

Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.

What is a NY Disclosure Form?

Go Back To Previous Page

In the real estate world, we talk about the real estate NY Disclosure Form, also known as New York State Disclosure Form for Buyer and Seller. NY Disclosure FormThis document is an agency disclosure form that brokers and agents must give to real estate buyers and sellers. The questionnaire explains various types of agency fiduciary relationships. It outlines who the real estate agent serves. Similarly, there is a NY Agency Disclosure Form for rentals. It’s called, New York State Disclosure Form for Landlord and Tenant.

Working with a broker is a fact of life. Indeed, pretty much everyone is looking to buy, sell, or rent an apartment in NYC. For some people, the broker can seem like a shrink or a nurse. More importantly, a broker has a fiduciary responsibility towards a client or several clients in the case of a dual agency. Brokers can work for both sides simultaneously!

This is why customers can refuse to sign the real estate NY Disclosure Form. Brokers must present it, but customers can say, “no, thank you.” Most people don’t know what we are going to share now. For example, if you were to sign it, it is not a binding contract. It is only a NY State disclosure form.

1) When are sellers presented with the real estate NY Disclosure Form?

Brokers ask sellers to sign the real estate NY Disclosure Form at the same time they ask them to sign the Listing Agreement. This documentsigning the NY Disclosure Form highlights a fiduciary duty with the seller. The broker can work as (i) Seller’s Agent, (ii) Dual Agent, or (iii) Dual Agent with designated sales agents. Regarding buyers, a broker can act as (i) Buyer’s Agent or (ii) Dual Agent.

2) Seller’s agent & listing broker

Seller’s agent is a type of fiduciary relationship between a broker and a seller. Nevertheless, it is not easy for most brokerage firms, especially large ones to implement. Those firms sometimes have many agents who may also represent buyers for the seller’s property they are also serving. Therefore, those companies cannot solely represent sellers unless those sellers want to exclude all of the prospective buyers represented by this brokerage.

3) Dual agency

This choice is tricky for both buyers and sellers as the broker will have to represent both competing parties simultaneously. In reality, this becomes Broker asking client to sign a real estate listing agreement in new yorkchallenging. An ethical agent will have a hard time sharing only information on a need-to-know basis. If a Dual Agent knows that a seller needs to sell and is desperate, this broker can’t share this information with the buyer he represents as well.  If the Dual Agent knows a buyer can pay more, he can’t share this information with the seller either.

The bottom line, the broker’s hands are sometimes tied.  This behavior makes this Dual Agent somehow less efficient to both sides. Unethical agents will tend to favor a given party in the negotiation, and generally the first party who hired them to sell the apartment. In these conditions, it is hard to respect your fiduciary duties towards both parties. The Dual Agent tends to favor the interests of the seller for many reasons. The seller is his client, and he probably has a personal relationship. Also, the seller client will still be there in case the buyer flakes.

We recommend buyers remain firm in not agreeing to Dual Agency when purchasing a home. In fact, why would you give up your right to free and undivided representation from a buyer’s broker?  From a monetary point of view, why would you pay double commission to a listing agent who could or could work for your best interests?  Lastly, why would you give up on an opportunity to get some of that commission back via a buyer commission rebate for yourself? Dual agency is like getting paid double for half the work!

4) Advanced Informed Consent to Dual Agency in the real estate NY Disclosure Form

If a seller refuses to accept the Dual Agency, this seller can check both boxes (i) Seller’s Agent as well as (ii) Advanced Informed Consent DualWhat is a NY Disclosure Form? new york apartment Agency. If the seller does that, the seller’s broker will only represent the interests of the seller until the Dual Agency happens. Similarly, if a buyer signs the Dual Agency, then the seller has already decided to accept it.

This is sometimes an advantage for the seller in a Full Service for a 1% listing. Indeed, the seller has the opportunity to save more in commission if the listing Agent can convince the buyer to remain unrepresented.

5) Dual Agent with a Designated Sales Agent in the real estate NY Disclosure Form

This concept is valid for the giant brokerage firms (Corcoran, Douglas Elliman, Compass, etc.) The brokerage is a Dual Agent. However, there are separate individual brokers representing buyer & seller. This example frequently happens when a separate agent of a given brokerage happens to represent a buyer interested in a unit listed by another seller’s agent of the same firm. In this case, the brokerage knows information about both sides of the deal and needs to stay neutral.

6) Buyer’s Agent

The buyer’s agent is the most common relationship for a home buyer to have with a broker. There cannot be any confusion as to whose side the agent Broker asking client to sign a real estate listing agreement in new yorkis on. You can also earn two-thirds of your broker’s commission through NestApple. This way, your incentives are aligned with your Agents. 

You can just refuse when the seller’s broker’s hand you that NY Disclosure Form to sign while checking the box “Dual Agent.” Brokers must present the form to their clients, but you are not required to sign it.

7) What if I have already signed a real estate NY Disclosure Form?

It does not matter. If a broker made you sign a NY Disclosure Form and checked Dual Agent, you always have the right to get representation by a Buyer’s Agent later. We remind buyers that the purchase price includes the broker fees and the cost of your representation. The buyer and the seller are paying for the broker fees. Buyers should not give away the benefit of representation and potentially the cashback.

A seller’s broker would be kind of stealing from you if you agreed to dual agency because you could win some of this broker fee back via Nestapple cash back rebate.

Written By: Georges Benoliel

Georges has been working in Wall Street for the last 16 years trading derivatives with hedge funds. He has been an active real estate investor for over a decade. Georges graduated from HEC Business School in Paris and holds a master in Finance from ESADE Barcelona.

RSS Feed