New York is one of the 32 states that allow real estate companies to work for both the buyer and the seller of a property at the same time and in the same sale.

Friendly agents live by the brokerage’s rules

One of the first steps for many first-time commercial real estate or home buyers is often to ask their friends to recommend a good real estate agent. Soon, they have something like a personal relationship with an agent who may be a colorful character who loves talking to people and looking at houses.

While the customer works with an agent, agents work for a brokerage firm, and which firm can feel unimportant. However, their policies vary from company to company and from state to state.

A “designated agency” makes money from buyer and seller

Generally, brokerage firms have some clients who want to sell and others who want to buy. In New York and many other states, firms can represent both the buyer and seller of the same property at the same time.

Even if different agents work with each side, the firm has a commercial interest in both because it gets a cut of each agent’s commission. These “in-house sales” tend to be more profitable.

Some firms sometimes find ways to reward agents who sell properties of the firm’s sellers to the firm’s buyers. A study by the non-profit Consumer Federation of America found such transactions account for 20% of U.S. home sales.

Avoiding worries over conflicts of interest

An article in Forbes offers suggestions for avoiding this potential bind many real estate buyers may not even recognize. For example, buyers and sellers working with name-brand brokerage firms may find offices with acceptable policies for transparency, evaluation and approval.

The article quotes the manager of one such office saying, “Each client is advised to seek legal counsel, and our own attorney provides guidance on anything that could lead to misunderstanding or inadvertent misrepresentation.”

Some firms only represent sellers. Others only represent buyers. Presumably, such firms can offer customers the hope of a conflict-free transaction in which the broker’s agent is looking out for the customer’s best interest in, for example, finding a quality property at a good price.