Home Buyers Guide > Real Estate Tools for the Home Buyer

Real Estate Tools for the Home Buyer

The dissolution of common law of agency that was instituted individually by state legislatures throughout the country beginning in the mid-nineties resulted in eliminating the fiduciary duties of obedience, loyalty, confidentiality, and reasonable care. The net effect was, all too often, real estate sales-persons and frequently affiliated loan offers pushing home buyers and speculative investors into inappropriate loans, a practice that went largely unnoticed and unregulated until 2007. A review of the state disclosure statements reveals that the consumer was usually not advised of the existence of Exclusive Buyer Agency as an alternative.

As with the common law of agency, it is the individual State's responsibility to establish and regulate disclosure requirements. Due to the inconsistencies in state laws as well as lack of compliance and enforcement, most home buyers remain in the dark. Three studies by the National Association of Realtors since 2002 show that only about 30 to 35% of home buyers actually receive agency disclosure statements at their first meeting with a licensee, a level that is virtually unchanged since it was first revealed by the FTC in their 1983 study.

Two years ago Dr. Elizabeth Warren, a Harvard University Law Professor, proposed regulation of the financial industry that has evolved into pending legislation creating the Consumer Financial Protection Agency (CFPA). Dr Warren recently commented that "This agency is not about saving people from themselves or limiting choices. It is about giving people the tools to make good choices." The same can be said of agency disclosure in real estate. If consumers were made aware of all the agency options when buying or selling a home, we trust that they will make the right decision.

These developments have led your Board of Directors to the conclusion that this nation needs a standard agency disclosure form that describes all of the forms of representation that are available to the consumer. Therefore, we have been working diligently to get language placed in the legislation creating the CFPA that would mandate a National Agency Disclosure Statement. Working with an advocacy group in Washington DC, we have identified the method to get this done and who we need to get to sponsor insertion of the language in the legislation. Now we need you to work with our Executive Director, Kim Kahl, to contact your Congressional delegation to support this proposal.

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