Commercial PropertyAgent Disclosure Worse Than Ever
Although agency disclosure is required by state law that homebuyers are told the role of their real estate agent in the sales process, and most importantly, whom the agent represents, less than one-third of real estate agents comply, according to the National Association of Realtors" 2005 Profile of Home Buyers and Sellers.
Agency disclosure compliance has been on a downward trend since 2000, when 38 percent of homebuyers were disclosed at first meeting, 28 percent when the contract was written, and nineteen percent weren"t disclosed at all.
One out of five buyers weren"t sure whether they had been disclosed or not.
By 2002, compliance was worse. According to the National Association of Realtors Profile Of Home Buyers And Sellers in 2002, the NAR found that 35 percent of all buyers were disclosed at first meeting, 26 percent when the contract for purchase was written, and 18 percent weren"t disclosed at all. Twenty-one percent were unsure whether or not they had been disclosed.
At the time, NAR general counsel Laurie Janik told Realty Times, "Disclosed dual agency is probably the most difficult form of representation to perform properly," says Janik. "These statistics say that people are being sloppy. They need to take agency disclosure requirements seriously; it is a critical element of consumer protection. I don"t think it is good for practitioners or consumers that the trend line is going down. We aren"t going in the right direction -- compliance is worsening."
Fast-forward to the 2005 Profile of Home Buyers & Sellers when the NAR found that only 30 percent of homebuyers were disclosed at first meeting; 28 percent when the contract was written; 22 percent weren"t disclosed at all, and one in five were uncertain if they were disclosed at all.
A shockingly low number of first-time buyers were disclosed at first meeting -- only 23 percent, while repeat buyers were more readily disclosed (35 percent.)
That is a precipitous drop from 2004, when 37 percent of first-time buyers were disclosed at first meeting, but an improvement for repeat buyers. In 2004, only 23 percent were disclosed at first meeting.
According to the 2005 report, "Homebuyers should understand the role of their real estate agent in the sales transaction and who their agents represent. Agents usually require that a disclosure agreement be signed that describes who the agent represents in the transaction - buyer or seller."
What the reasons are for the deteriorating disclosures aren"t clear, but there are a couple of factors that may be driving poor disclosures.
Since 2000, the population of real estate professionals has doubled, with NAR memberships bursting from approximately 750,000 in 2001 to nearly 1.5 million by the end of 2005. It"s possible that there hasn"t been enough training of these new licencees.
Second, the NAR points out that disclosure laws by the states are "all over the place."
Iverson Moore, senior associate in public affairs for the NAR says, "There are a lot of newcomers, and in most cases they should be trained to disclose as early as possible, but not all state laws require it."
For example, in Alabama, disclosures are to take place "as soon as reasonably possible and before a licensee discloses any confidential information the licensee must provide a written disclosure, to be signed by the consumer, that describes the alternative types of brokerage services available ... ."
But in Arizona, disclosure isn"t required until much later in the transaction. "Before closing, a real estate broker must disclose in writing to all parties the name of each employing broker who represents a party to the transaction, and who will receive compensation from the transaction."
Arkansas" policy doesn"t have a date when disclosures are required. All the statute says is that "a licensee must clearly disclose to all parties to a real estate transaction or their agents which party the licensee is representing, as required by the commission."
Comments Laurie Janik, general counsel for the NAR, "Almost all states require disclosure of agency relationships.
These statistics are truly disappointing to me. I would have thought the numbers on compliance with agency disclosures would be increasing year by year as agents become accustomed to making them on a regular basis."
She advises, "I think greater emphasis in agent training on the benefits of agency disclosure might help to boost these numbers. Agency disclosure benefits everyone. It helps avoid any confusion among buyers and sellers as to whom the agent represents. It also helps the agents avoid creating unintended agency relationships with consumers."