Consumers 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 of consumer survey and a mystery shopper survey of real estate agents.
“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 report author. “Given the huge expenditure of a home purchase and the conflict of financial interests between seller and buyer, 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 disclosed to clients. But the CFA report suggests the laws may not be sufficient. The report says that the laws typically define agent roles as “agent,” “subagent,” “transactional agent,” “designated agent,” and “dual agent”—words consumers say they do not understand.
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.