The National Association of Exclusive Buyers Agents (NAEBA) released a letter to Congress today urging members to include real estate agency disclosure language in legislation relating to mortgage lending reform, including the Anti-Predatory Lending Act and the ongoing discussion over the formation of a Financial Products Safety Commission.
Too many consumers have no idea that when they contact an agent listing a home, that agent must do everything possible to achieve the best outcome for the seller, stated John Sullivan, President. As a result, these consumers have no one involved from the beginning of the transaction who can advise them on negotiating techniques, price points or the acquisition of an appropriate loan.
As Congress considers a range of measures to better inform consumers of their rights and responsibilities in the home buying process, NAEBA hopes to include clear, transparent and mandatory real estate agency disclosure language in legislative vehicles as they move forward.
Clear, consistent and transparent real estate agency disclosure will help consumers better understand that there are many types of real estate agents, each of whom have responsibilities to different parties in a real estate transaction, stated Sullivan, Common sense suggests that when an agent is representing a seller or, in the case of dual agency both parties, neither the buyers nor sellers interests are fully served. Consumers need to have all the facts in hand in order to make informed decisions.
A recent NAEBA white paper titled Consumer Protection and the Real Estate Industry, makes clear the extent of the problem. While the states have attempted to better inform consumers through state disclosure laws, inconsistencies in these laws, as well as lack of compliance and enforcement, have left most home buyers in the dark. In fact, 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.
NAEBA believes that, at a minimum, consumers should know what kind of agent they have and who specifically that agent is responsible to in the transaction. The organization is supporting language that will bring transparency to the process by:
making clear all types of agency representation available;
providing consistent definitions of agency throughout the country;
clarifying the time and method of disclosure;
obtaining written confirmation from the consumer that they have received and understand the information; and,
providing for enforcement with significant penalties
In keeping with ongoing efforts to provide consumers with the tools they need to avoid foreclosures, we urge Congress to establish a federal requirement for real estate agency disclosure in the home buying process. Armed with the facts, the home buying public will be much better able to make informed and appropriate decisions decisions that will impact their financial well-being for years, stated Sullivan. We look forward to working with members of the U.S. House and Senate to help their constituents on this important issue.