Watching the Goldman Sachs drama unfold, I am struck by the fact that, more than anything else, those of us who sell things are obligated to be clear about who we work for. During my career I have sold plenty of property I did not like and even some property I did not think was particularly well built or well designed. But I have always tried to be clear to everyone about who I work for. If I represent the seller, I will always be honest and forthright with buyers but I probably won’t be bending over backwards to point out that the molding is crooked or the sheetrock is thin. If I represent the buyer, on the other hand, I will be all over those issues and I will be looking to get answers. But in each case I have to make it perfectly clear to both the buyer and seller whose side I am on.
In most of the country, and most of New York State, agents are required to sign written disclosure forms which memorialize who they represent. In the co-op and condo world, however, written agency disclosure is only required when the property in question is in a building with four units or fewer. So most of the time the law doesn’t require it in co-op and condo buildings, which tend to have many more units than four. But disclosure itself is always required. A lot of agents don’t do it, and they should! If you are a buyer and you show up at an open house and then want to make a bid, you should be aware that the agent running the open house represents the seller, not you. And the agent should tell you that before you make an offer. If you are seeing a property with your agent which is his or her exclusive, you need to talk about representation. As the exclusive agent, he or she definitely represents the seller. But your agent can still represent you too, acting as a dual agent, if that is OK with both you and the owner.
More often than not representation is straightforward. There are two agents, one representing each side. But it can get complicated when both agents work for the same company, or when there is only one agent involved in the transaction. And the agent is obligated to make it all perfectly clear.
Goldman Sachs brokers didn’t do anything wrong selling securities they did not like much. Every salesman has done that. But were they clear and transparent about who they were working for? Not so much, it seems. And there’s the problem.