Request for Comments "Real Estate Workshop&quot #00020

Submission Number:
00020
Commenter:
Tom Wemett
Organization:
Homebuyer Advisors LLC
State:
Massachusetts
Initiative Name:
Request for Comments "Real Estate Workshop&quot

You asked for comment on some specific questions and I’d like to focus on one, “How has residential real estate brokerage competition evolved over the last ten years?” I’ll start by suggesting that it is time for a new survey and study by the FTC as was done in 1983, “The Residential Real Estate Brokerage Industry.” I’ve attached a link to a blog post that discusses what the result was after that publication was released. There are brokerages who offer true fiduciary homebuyer representation but the traditional real estate industry ramped up their opposition to what they were doing and settled in on deception instead. There are fewer true fiduciary brokerages today then even 10 years ago. The traditional real estate industry through its national, state and local trade associations, has been able to control how real estate has been bought and sold for the last 100+ years. Thirty years ago, REALTORS® believed in true agency and providing true fiduciary duties to the home buying and home selling consumer. Back in 1986 – From the NAR, National Association of REALTORS®, Publication, “Who Is My Client? A REALTORS® Guide to Compliance with the Law of Agency”: “The legal concept of Agency with which this booklet is concerned is, however, beyond question the most fundamental of all the legal concepts applicable to the real estate profession and professional. It is the very nature and function of the real estate broker, appraiser and manager to be an agent. The law of agency literally defines the species and gives real estate practitioners their identity.” I believe that this was in direct response to the revelations of how deceived home buyers and home sellers were back in 1983. But today the law of agency has been abandoned and deception has become the norm. Driven by large multi-office real estate companies the trade associations have abandoned true fiduciary representation and instead has embraced, for financial gain and greed, fake representation concepts that mislead real estate consumers into believing that they have a true fiduciary agent when they don’t. These fall under the names, “facilitator”; “transaction broker”; “dual agent”; and “designated agent” for the most part. These are all disguised to hide the truth that the home buyer or home seller isn’t being truly represented. The state trade associations have been able to infiltrate the state governing entities for the real estate industry as well as influence state legislators through large PACs to do their bidding. State real estate consumer disclosure laws have been watered down under the guise of being consumer friendly when they are anything but. The point of this is that home buyers in particular are being misled and taken advantage of. That has been the evolution over the last 20+ years since the FTC’s Study noted above. Buying a home is generally the largest purchase anyone will make. And, for many people their home is the largest financial asset they have when they go to retire. So, it would make sense that helping homebuyers find and use true fiduciary loyal agents vs real estate licensee/salespeople would make huge financial sense for the home buying public. But the real estate consumer doesn’t know what they don’t know and thus the deception continues and increases, all to provide the opportunity for the in-house sale and double-dipping of commissions. And, at whose expense? The real estate consumer. Just as there is a push for true fiduciary representation in th investment arena it is time to take a look at the real estate industry as well. As noted above, the largest asset that many people have upon retirement is their home. They should have the opportunity to use the services of a true fiduciary agent and not a salesperson. Please consider doing a new survey of buyers and sellers to expose the deception and open up new avenues for real estate consumers to receive true fiduciary representation.