The Agency Mess, a report published early 2019 by the Consumer Federation of America, decries inconsistent, complex, poorly enforced and confusing laws related to the roles and responsibilities of real estate agents. It also reinforces the reasons to avoid dual agency, describing it as when “the agent somehow is expected to represent the interests of both the seller and buyer.”
Most helpful, the report offers ways for home buyers to protect themselves in the face of disparate and poorly enforced state laws governing types of agency.
The current state of real estate practices, says the report, makes it hard for consumers to choose the right agent. It cites an October 2018 survey in which 55 percent of consumers responded that they didn’t understand the difference between a single agent, designated dual agent, subagent, transactional agent or dual agent. Sixty-six percent responded that they believed real estate agents were required to represent the interests of their clients all or almost all of the time. In practice, only one type of agent is certain to offer 100 percent representation to the home buyer.
The report recognizes this type of agent, noting that “a new group of agents (“exclusive buyer brokers”) did emerge that worked exclusively with buyers as their fiduciary agents.” As a result of opposition from other agents, adds the report, these exclusive buyer brokers “had difficulty surviving, and only a handful still practice today.”
(It is worth noting that, founded in 1992, The Home Buyers, Inc. — Minnesota’s pioneering exclusive buyer agency — is hardly new. What’s more, thanks to its 25-plus-year history of better advocacy, the agency continues to thrive).
To protect their interests, the report concludes that “home buyers should be aware that many agents will not be willing to act as their fiduciaries.” As a result, “home buyers should request a clarification as to the role of the agent.”
Minnesota law does, in fact, attempt to ease clarification by requiring real estate agencies to present prospective clients with the Agency Relationships in Real Estate Transactions form. Although it can be glossed-over or poorly explained, this form outlines the different types of agents and gives home buyers the chance to specify the type of representation they want. Representation is secured – and 100 percent representation is assured – when home buyers complete the Buyer Representation Contract: Exclusive.
You know why lots of second-time home buyers choose an Exclusive Buyers Agent over a traditional real estate agency? It's because they've already been through the process—and realize there's a better way to buy a house.