Buyer’s Choice Realty blog

In a recent field visit by the Consumer Affairs Office 200 offices were visited and only 12 presented the mandatory licensee/consumer relationship disclosure.

The specific disclosure required was modified in 2005 but has been required by state law since 1993. The disclosure is to inform consumers of the potential relationships available to consumers of real estate and the specific relationship between the consumer, and both the firm and agent with whom they could decide to work.

In the past all real estate agents worked for the seller of real estate and buyers were on their own. All real estate agents from the listing company and the selling companies had the obligation to get the highest price and best terms for the seller. Thus all sellers were clients and all buyers were customers.

After a survey by the Federal Trade Commission released in 1983 buyers started to wonder why they couldn’t be represented the same way as sellers. This gave rise to the buyer agency movement which has taken on different faces across the country. Firms like ours, Buyer’s Choice Realty, sprung up and started representing buyers exclusively in a real estate transaction.

Initially firms were representing buyers only, but soon traditional real estate companies decided “we can represent both sellers and buyers”. Dual Agency emerged but liability and control issues moved the real estate industry to adopt a modified dual agency practice called Designated Agency, the current practice of the majority of real estate firms in Massachusetts.

Most consumers never realized that the agent driving them around looking at property was actually working for the seller. The pressure was on real estate companies to let consumer know what their representation policy actually is. The first official mandated written Massachusetts disclosure was instituted in 1993.

So for 17 years this disclosure has been in place and required to be presented at the first meeting with a buyer to discuss a specific property.

So why do you think there is such a failure on the part of 94% of real estate licensees to disclose?

In the Western part of Massachusetts I understand that some local newspapers actually printed the name of the offenders. What do you think. Was exposing them to the public too strong or was that an appropriate response?

After a year of implementation how is the new Mass Agency Law working?
 

In July of 2005 a new law went into effect that changed the old agency disclosure form and included new ways for real estate agents to do business in Massachusetts.  Practically speaking, it did away with sub agency, the approach that said, “If a cooperating agent wants to show my listing and get paid they better work for my seller�.  It also introduced a replacement option for Dual Agency called Designated Agency and formalized a non-agency relationship with consumers called Facilitator.

Now that summer of 2006 is ending, how has it gone for the past year of this new law?  My experience as a real estate instructor is that there is mass confusion in the field.  Real estate agents feel the new disclosure is very cumbersome and confusing.  Many are not sure exactly what sections of the form they should fill out and sign.  And there are still those who want to change hats midstream when the particular approach they have agreed to follow is financially penalized in the MLS offer of compensation.