He goes on to write the following “…conflicts of interest in the real estate business are pervasive and costly, say experts.”

Durfee comments that “Many of these conflicts are well known. For example, it's common for a brokerage firm helping a company find office space to also work for landlords in the same market.”

“the largest real estate services firms — a group that includes Trammell Crow Co., Jones Lang LaSalle Inc., and CB Richard Ellis Group Inc., among others — derive about two-thirds of their revenues from owners and investors and the other third from occupiers”.

"People in the industry will say, 'Hey, there's no conflict. Show it to me,'" says Tom Gibson, a veteran of several brokerage firms who now has his own real estate services firm in Newport Beach, California.

"But whether [brokers] admit it or not, what usually happens is that you make sure the guy giving you the ongoing business — probably the property owner — gets the benefit of the deal as opposed to the tenant, who you'll probably never see again."

Excerpted From Divided Loyalties

And the NYS Department of State Counsels Office Legal Memorandum LI12 concurs with Mr. Gibson.

They tell tenants to BE WARY OF DUAL AGENCY which “With the growing number of very large and widespread brokerages, the issue of dual agency arises more frequently than ever before…"

The Legal Memorandum explains that "Dual agency typically arises in the following way: a real estate broker employs two salespeople, one who works for the buyer as a buyer's agent and the other who works for the seller as a seller's agent.

The real estate broker and his salespeople are "one and the same" entity when analyzing whether dual agency exists.

As soon as the buyer's agent introduces the buyer to property in which the seller is represented by the seller's agent, dual agency arises.

Significantly, by consenting to dual agency, you are giving up your right to have your agent be loyal to you, since your agent is now also representing your adversary. Once you give up that duty of loyalty, the agent can advance interests adverse to yours.

As a principal in a real estate transaction, you should always know that you have the right to be represented by an agent who is loyal only to you throughout the entire transaction. Your agent's fiduciary duties to you need never be compromised.”

Quotes excerpted from NYS Counsel's Office Website Warning

A firm that represents tenants exclusively falls into the category recommended by the State Counsel as “an agent who is loyal only to you throughout the entire transaction”.

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