P. Barton Erickson
e-PRO, SRS 
REALTOR 20 Years
Co-Founder of the HouseJeanie Team

These are not legal definitions but are plain English descriptions of the Real Estate Business terms in Burlington County and Camden County in New Jersey. We have tried to clarify many of the perceptions of Real Estate terms and agent relationships, however, these statements are for informational purposes only. If you have any further questions about the legal implications of these definitions and business relationships, you may obtain legal advice from your own lawyer.

Agent (Also called Sales Agent): An Agent is a person that has had specific school training in Real Estate and has passed the State Exam for Real Estate License. An Agent can act either in behalf of a buyer or seller or both and is licensed by the State to sell Real Estate. (See Buyers Agent, Sellers Agent, and Disclosed Dual Agent) An Agent can only work for and be paid by a Real Estate Broker Owner. Agents are independent contractors working for the Broker and are paid a commission after the close of the real estate transaction.

Broker: A Broker is an Agent that has had specific additional school training in Real Estate, has successfully sold Real Estate in the representative areas (Residential, Commercial, Land and Rental) and has passed the State Exam for Real Estate Brokers License. A Real Estate Company can not transact Real Estate Sales without a Broker (Called a Broker of Record). A Broker is a person that acts either in behalf of a buyer or seller or both and is licensed by the State to sell Real Estate. (See Buyers Agent, Sellers Agent, and Disclosed Dual Agent) A Broker can own a Company that sells Real Estate. A Broker can work for another Broker in which case they are called Broker Associates. Broker Associates are independent contractors working for the Broker and are paid a commission after the close of the real estate transaction.

Buyer's Agent: The following is quoted directly from the Consumer Information Statement Real Estate relationships in New Jersey. . Provided by The New Jersey Real Estate Commission, CN 328, Trenton, NJ 06525-0325, Gloria Decker, Executive Director (rev. 8/98) ) You may obtain legal advice about business relationships from your own lawyer. This statement is for informational purposes only.

"A buyer's agent works only for the buyer. A buyer's agent has fiduciary duties to the buyer which include reasonable care, undivided loyalty, confidentiality and full disclosure. However in dealing with seller's a buyer's agent must act honestly. In deal with both parties, a buyer's agent may not make any misrepresentations on matters material to the transaction, such as the buyer's ability to pay, and must disclose defects of a material nature affecting the physical condition to the property which a reasonable inspection by the licensee would disclose. A buyer wishing to be represented by a buyer's agent is advised to enter into a separate written buyer agency contract with the brokerage firm which is to work as their agent."

Buyer Broker: See Buyers Agent

Code if Ethics: See Real Estate Ethics

Dual Agency: See Disclosed Dual Agent.

Commission (Payment for Services): See "Real Estate Offices & how Realtors get paid."

Disclosed Dual Agent: The following is quoted directly from the "Consumer Information Statement Real Estate relationships in New Jersey. Provided by The New Jersey Real Estate Commission, CN 328, Trenton, NJ 06525-0325, Gloria Decker, Executive Director (rev. 8/98) ) You may obtain legal advice about business relationships from your own lawyer. This statement is for informational purposes only.

    "A disclosed dual agent works for both the buyer and the seller. To work as a dual agent, a firm must first obtain the informed written consent of the buyer and the seller. Disclosed dual agency is most likely to occur when a licensee with a real estate firm working as a buyer's agent shows the buyer properties owned by the sellers for whom that firm is also working as a seller's agent or subagent.
    "A real estate licensee working as a disclosed dual agent must carefully explain to each party that, in addition to working as their agent, their firm will also work as the agent for the other party. They must also explain what affect their working as a disclosed dual agent will have on the fiduciary duties their firm owes to the buyer and to the seller. When working as a disclosed dual agent, a brokerage firm must have the express permission of a party prior to disclosing confidential information to the other party. Such information includes the highest price a buyer can afford to pay and the lowest price a seller will accept and the parties' motivation to buy or sell. Remember, a brokerage firm acting as a disclosed dual agent will not be able to put one parties interests ahead of the other party and cannot advise or counsel either party on how to gain an advantage at the expense of the other party on the basis of confidential information obtained from or about the other party. If you decide to enter into an agency relationship with a firm which is to work as disclosed dual agent, you are advised to sign a written agreement with that firm.

Dual Agency: See Disclosed Dual Agent.

Ethics: See Real Estate Ethics.

FSBO: For sale by owner.

Listing Agent: See seller's agent.

MLS, (Multiple Listing Service): The MLS is a separate (sometimes not for profit) company controlled by the local real estate board.

Realtor: The term Realtor varies in all areas across the country. In Burlington and Camden Counties in New Jersey, a Realtor is an Agent or Broker that pays dues to the Board of Realtors. Also, by the fact that they paid dues to the Board of Realtors they are also automatically members of the National Association of Realtors (NAR) and New Jersey Association of Realtors (NJAR).

Real Estate Company: A Real Estate Company can be a sole proprietorship, a partnership or incorporated, in the same fashion as a company in any other industry. In addition, any of these corporate structures can be part of a franchise organization. (See Real Estate Franchise) A Real Estate Company is basically a management company overseeing the activities of the Agents in varying degrees of supervision. Depending on the commission arraignment with the agent the company may provide various services for the agent such as, office space, stationary, telephone service, advertising, secretarial services, etc.

Real Estate Ethics: The local Board of Realtors and the NAR (National Association of Realtor) publish a standard of ethics. See Code of Ethics. Most real estate professionals abide by this code of ethics whether they are members of the National Association of Realtors or not.

Real Estate Franchise: Franchise companies are companies that license (license the use of the name only) and allow use of a common, recognizable name by a broker owned real estate sales company in exchange for a fee to be paid by the real estate sales company broker and/or agent/Realtors. The fees vary, depending on the type of franchise, exclusive area of sales coverage, and the agreement made by the broker owner of the real estate sales company and the franchise company. The franchise company advertises nationally and locally on TV, radio, magazines and newspapers to promote all individual broker owned real estate sales companies that use the same franchise name.  These franchise companies are not licensed to sell real estate and do not own or operate the area real estate sales companies.  The area real estate sales companies are licensed to sell real estate and are individually owned and operated companies.  Typical franchise Companies are: ReMax, Century-21, ERA, Coldwell Banker, Realty Executives, Prudential, Help-U-Sell, Assist-2-Sell, Better Homes and Gardens, GMAC, Realty World, and others. The area real estate sales companies use these franchise names as a prefix or suffix to their company names.

Real Estate Lawyer: See how to chose a Lawyer.

Real Estate Relationships: In New Jersey, Real estate licensees are required to disclose how they intend to work with buyers and sellers in a real estate transaction. (in rental transactions the terms "buyers" and "sellers" should be read as "tenants" and "landlords," respectively.)

    Before a person discloses confidential information to a real estate licensee regarding a real estate transaction, they should understand what type of business relationship they will have with that licensee.
    There are four business relationships: (1) seller's agent; (2) buyer's agent; (3) disclosed dual agent; and (4) transaction broker. Each of these relationships imposes certain legal duties and responsibilities on the licensee as well as on the seller or buyer represented.

Referrals: When a  licensed real estate agent, real estate company or relocation company refers a seller or buyer to licensed real estate agent or real estate company it is for the purpose of getting a piece of the action. This "piece of the action" is called a referral fee. This referral fee will cost the receiving real estate agent up to 35% or more of the agents normal commission. Some referral companies will deny the cost pass through to the agent and have in their contract a clause that if the realtors tell their client about the fee they will not receive any more referrals. 

Relocation Agent: A relocation agent is a licensed real estate agent that works for a real estate company. In some companies there are specific agents that receive all "incoming referrals" from the contracted Relocation Company. In other companies they are assigned based on the number of "outgoing referrals" given to the relocation company.

Relocation Company: A relocation company is an independent company that assigns real estate companies to sell or list properties or represent buyers in the purchase of properties. They are not required to be licensed in any state by any real estate board. They receive compensation by taking a large percentage of the real estate company and agent's commission. (This can amount to 15% to 30% and in some cases 50% of the commission) Real estate companies are selected generally by relocation companies based on the highest percentage of commission given to the Relocation Company and the number of "referrals" the real estate companies give to the Relocation Company. If the buyer or seller's employer has signed a contract with a relocation company the buyer or seller will have no say in the selection of a real estate agent or real estate company.

Seller's Agent: The following is quoted directly from the Consumer Information Statement Real Estate relationships in New Jersey. . Provided by The New Jersey Real Estate Commission, CN 328, Trenton, NJ 06525-0325, Gloria Decker, Executive Director (rev. 8/98) You may obtain legal advice about business relationships from your own lawyer. This statement is for informational purposes only.

"A Seller's agent works only for the seller and has legal obligations, called fiduciary duties to the seller. These include reasonable care, undivided loyalty, confidentiality and full disclosure. Seller's agents often work with buyers, but do not represent the buyers. However, in working with buyers a seller's agent must act honestly. In dealing with both parties, a seller's agent may not make any misrepresentation to either party on maters material to the transaction, such as the buyer's financial ability to pay and must disclose defects of a material nature affecting the physical condition of the property which a reasonable inspection by the licensee would disclose.
Seller's agents include all persons licensed with a brokerage firm, which has been authorized through a listing agreement to work as the seller's agent. In addition, other brokerage firms may accept an offer to work with the listing broker's firm as the seller's agents. In such cases, those firms and all persons licensed with such firms, are called "subagents". Sellers who do who do not desire to have their property marketed through subagents should so inform the seller's agent."

Sub-Agency: See seller's agent.

Transaction Broker: The following is quoted directly from the Consumer Information Statement Real Estate relationships in New Jersey. . Provided by The New Jersey Real Estate Commission, CN 328, Trenton, NJ 06525-0325, Gloria Decker, Executive Director (rev. 8/98) You may obtain legal advice about business relationships from your own lawyer. This statement is for informational purposes only.

"The New Jersey Real Estate Licensing Law does not require licensees to work in the capacity of an "agent" when providing brokerage services. A transaction broker works with a buyer or a seller or both in the sales transaction without representing anyone. A TRANSACTION BROKER DOES NOT PROMOTE THE INTERESTS OF ONE PARTY OVER THOSE OF THE OTHER PARTY TO THE TRANSACTION. Licensees with such a firm would be required to treat all parties honestly and to act in a competent manner, but they would not be required to keep confidential information. A transaction broker can locate qualified buyers for a seller or suitable properties for a buyer. They can then work with both parties in an effort to arrive at an agreement on the sale or rental of real estate and perform tasks to facilitate the closing of a transaction. A transaction broker primarily serves as a manager of the transaction, communicating information between the parties to assist them in arriving at a mutually acceptable agreement and in closing the transaction, but cannot advise or counsel either party on how to gain an advantage at the expense of the other party, Owners considering working with transaction brokers are advised to sign a written agreement with that firm which clearly states what services that firm will perform and how it will be paid. In addition, any transaction brokerage agreement with a seller or landlord should specifically state whether a notice on the property to be rented or sold will or will not be circulated in any or all Multiple Listing System(s) of which that firm is a member."