Home Buyers are confused when it comes to dual agency arrangements in real estate, according to a new report from the Consumer Federation of America that reflects results from a consumer survey and a mystery shopper survey of real estate agents.
Two-thirds of home buyers surveyed believe that real estate agents are always or almost always required to represent the interests of the home buyer or seller they’re working with. However, they’re confused when agents can also work with the other party. They often also are misguided in believing that there would be a cost savings in having the Listing / Seller’s agent also represent them.
“Today, many home buyers and sellers do not know whether their agent is representing their interests, those of the other party, or those of neither,” says Stephen Brobeck, a CFA senior fellow and author of the report. “Given the huge expenditure of a home purchase and the conflict of financial interests between sellers and buyers, it is important that consumers know who their real estate agent is actually representing.”
States have laws requiring real estate interests and relationships to be Fully disclosed to clients. But the CFA report suggests the laws unfortunately may not be sufficient. The report discloses that the laws typically define agent roles as “agent,” “subagent,” “transactional agent,” “designated agent,” and “dual agent”—words that the majority of consumers say they do not understand especially throughout the transaction.
Also, the CFA notes that these disclosures could be diminished by the fact that they are only required (in some States) to be given orally and may not be required early on during the home purchase. In California, It is mandated that this information must be provided in Writing to buyers and sellers before the beginning of any transaction, and is called the Agency Disclosure.
The CFA also notes that some agents are failing to make these disclosures or mention dual agency issues to both the buyer and sellers. (in some states)
The failure of these disclosures can harm consumers, the report says. For example, home buyers who think subagents are working for them often have disclosed information about their finances and house price ceilings that the subagents are then legally required to share with sellers.
The CFA report calls for reforms including the prohibition of dual agency. Eight states currently ban the practice. Also, the report calls for clearer written and verbal communications from the real estate professional to the consumer about whether the agent will function as a fiduciary agent, subagent, or transaction agent or facilitator and what exactly that will mean to them and to the buyers and sellers relationships.
“These reforms would benefit both consumers and real estate agents,” Brobeck says. “More informed home buyers and sellers will make better decisions. … And agents will not face the risks and ethical dilemmas of dual agency and undisclosed subagency. Read the CFA’s full report. https://consumerfed.org/wp-content/uploads/2019/01/the-agency-mess-home-buyer-and-seller-confusion-report.pdf
In a nutshell – The Job of YOUR Buyers OR Sellers agent is to make Sure that your Purchase / Transaction is
* And that there are NO Major Issues in the Transaction
REAL ESTATE GLOSSARY FOR THE FIRST TIME HOMEBUYERS
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Buyers beware : Report Raises Concerns Over Dual Agency, Why Using the Listing Agent does Not benefit the buyer