LAS VEGAS -- Fewer than 10 percent of Massachusetts' real estate agents fully comply with agency disclosure law, according to a study by the state's real estate regulatory agency, the Board of Registration of Real Estate.

Likewise, John Pinto, a real estate broker and expert witness in San Jose, CA says nearly all real estate agents violate California's disclosure laws by not fully disclosing to consumers who they represent -- the buyer, the seller or both.

And the Washington,D.C.-based Consumer Federation of America says because many consumers aren't even aware they have a right to know by whom and how they are represented, they are under represented to the tune of $10 billion a year in higher home costs.

"This issue is a big one and that's making sure consumers have a right to know up front they can get somebody on their side in the home buying transaction," said Leo Berard charter president of the National Association of Exclusive Buyers Agents (NAEBA).

NAEBA is an independent alliance of exclusive buyer's agents founded in 1995 to educate the public about exclusive buyer agency and related consumer rights.

During its annual convention, the association today challenged the traditional real estate industry to live up to its responsibilities to consumers and more adequately disclose agency relationships in real estate transactions.

Most agents do little more than tack an agency disclosure form onto the pile of paper work consumers sift through during the home buying transaction, according to Pinto.

Pinto and others suggest a face-to-face disclosure, in addition to what's required in writing.

"The emphasis of the message should not be the lip service. You are supposed to go over agency disclosure as soon as practical, like the first time you sit down with a client," says Pinto.

What's the difference?

Generally, consumers who engage the services of a listing broker to sell property,become the broker's client. Sometimes called the "listing agent" or the "seller's agent," that broker represents the seller and owes him or her certain fiduciary responsibilities, including undivided loyalty, confidentiality and accountability. In negotiating the best price, the seller's agent must put the client's interests first.

Likewise a buyer's agent works exclusively for the buyer. When it comes to negotiating prices and terms, the buyer's interests come first. "If you have a choice and there is an exclusive buyer's agent available, that's the way to go," said Berard, who along with his wife owns Buyers Brokers of Cape Cod, MA.

In many cases, however, a buyer and a seller negotiate about a property held by the same broker in a relationship often called "dual agency". This scenario includes the buyer and the seller working with different agents, but the listing is held by the same broker under whom both agents work.

In virtually every state, the dual agency relationship must have the consent of both the buyer and seller and it must be disclosed in writing.

The broker theoretically owes both the seller and buyer a duty to deal with them fairly and honestly. The dual agency has it's insider-track pluses, but critics say the role comes with a built-in conflict of interest because it's logistically impossible to represent both a buyer and seller equally.

Stiffer disclosures sought

Ten years ago, studies showed most consumers believed the agent who drove them around house shopping was working for them. That prompted today's disclosure laws, but Berard and others say the laws don't go far enough.

"NAEBA intends to enlist the support of organized consumer groups throughout the United States," said Merrill Ottwein, the association's outgoing president.

NAEBA also said it plans to call upon state legislatures and regulatory agencies to strengthen laws requiring more detailed disclosure of agency relationships.

"But I don't want to put it all on the real estate industry. Some consumers have their own problems. There is a reluctance among consumers to any type of commitment and they prefer to be free agents. Not only should the agent be committed to representing the buyer, the buyer needs to be committed to the agent. It's like a lot of people who want all the benefits of a marriage without the commitment," said Pinto.

Published: February 18, 1999

Use of this article without permission is a violation of federal copyright laws.

Broderick Perkins parlayed a 30-year career in old-school journalism into a digital-age news service offering editorial content and related consulting services. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based content provider specializing in residential real estate, consumer news and consulting. An open house for news that really hits home, the DeadlineNews Group includes the umbrella website DeadlineNews.com the flagship blog Deadline Newsroom, and three Examiner.com outposts -- Real Estate News Examiner; Consumer News Examiner; and Offbeat News Examiner. Along with a decade of work here with Realty Times, Perkins also provides content for Silicon Valley based ERate.com and the new AOLNews.com, where now "You've got news....that really hits home." His current work can also be found in Californian publications, the San Jose Mercury News, San Francisco's The Registry and the Salinas Californian. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News, before launching DeadlineNews Group. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Nolo.com among more than four dozen publications. In addition to managing the DeadlineNews Group, Perkins served as chief editorial consultant for "Nolo's Essential Guide To Buying Your First Home."