What Should Brokers Disclose Online?

Peter G. Miller
OurBroker®

When it comes to the matter of "disclosure" the topic usually hinges on the question of which broker represents which client and how much does anyone know about a given property. But a more basic disclosure issue has begun to emerge, the matter of how we tell brokers from non-brokers on the Internet.

This is not a minor concern. Many consumers do not understand how brokerage works. For instance, NAR's bi-annual buyer/seller survey shows that in 1999 a remarkable 17 percent of all buyers did not know if they or someone else paid buyer brokerage fees, an astonishing number given that such expenses can amount to thousands of dollars.

Also, not all consumers have a good relationship with their brokers. Among the six million new and existing home transactions which occurred last year, and the millions more to take place this year, there will be a small number of instances where brokers behave unethically and even illegally.

But unless a consumer knows where a broker is licensed, how is it possible to file a complaint or launch a claim?

It's not just consumers who should have licensure information. Brokers also need such data, otherwise they may wind up paying referral fees to unlicensed parties or to sales agents and associate brokers rather than brokers authorized to receive such funds.

If brokers should be identified on the Internet, the next question is how best to accomplish this task.

It's been suggested that "every web page" should include a broker's full business address, contact information, and licensure information.

The concept is good, but Internet mechanics may produce unintended results if there must be disclosure on every web page.

For example, many screens look like a single web page but consist of several "frames." Each frame is actually an independent web page, so an absolute obligation to publish disclosure information on each web page could result in a single screen showing two or more disclosures -- something not intended.

An alternative might work like this: Disclosure should be required on the home page and through the use of a large, clearly-visible link on each screen where services are offered and properties are listed. (State regulators will likely require a minimum size for text links and link buttons so there is no debate regarding what is or is not sufficiently "large" and "clearly-visible.")

For our purposes, "disclosure" should include the name of the brokerage, the physical address of the brokerage, the state or states where the broker is licensed, the license number in each state, the broker's work phone number, and the broker's work e-mail. Also, a link to each state regulator where the individual is licensed also makes sense -- the state name could be set up as a link to regulators in that jursidction.

The disclosure requirement thus becomes one notice or link per screen rather than one notice or link per web page. The result is that each screen will have a proper disclosure even if a given web page does not.

What about broker pages that are generic and informational -- perhaps a list of local government offices, photos of local attractions, or an album of the broker's family members. Such materials should be defined as non-marketing pages and thus not required to have either a disclosure notice or link.

It's sometimes suggested that licensees should also be required to post their photographs online, a suggestion which should be rejected.

Brokers are selling a professional service and real property. Personal appearance is not a measure of real estate skill, experience, or training.

As well, the Internet has enormous potential to be a "place" where race and color don't matter. If photos are required, the web then loses some of its impartiality.

No less important, posting photographs may raise privacy and security issues that could pose a serious threat to individual licensees.

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Question Of The Week

Q Are home inspections required before buying a house with an FHA loan? We are interested in a home and the disclosure statement states there are no problems. We realize the disclosure statement is not a warranty but don't want to spend the $300 for the inspection if we can avoid it.

A A disclosure statement of property condition is a state-mandated document which sellers must complete to the best of their ability and understanding. Alas, a home is a complex structure and many owners, in good faith, provide answers which they believe are accurate based on an incomplete understanding the home and its systems and mechanics.

Spend the money. Get a professional inspection. Attend the inspection, ask questions, and take notes. This is a unique opportunity to find out how the property really works, what needs to be replaced today, and what repairs are likely in the next few years.

Weekly Resource

Spanish is the most-commonly used language in the United States after English, and it follows that many real estate practitioners use Spanish as a first or second language and also to communicate with clients and customers. The National Association of Hispanic Real Estate Professionals (NAHREP) is designed "to promote the general success of Hispanic real estate professionals and to increase the percentage rate of home ownership amongst Hispanic-Americans." The organization maintains an excellent site which is worth visiting.

Published: June 27, 2000

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

Editor's Note: This article reflects the opinions of Peter G. Miller only and not necessarily the views of this or any other publication, organization or Website owner.

Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .