Consumer rights groups take issue with exclusive buyer brokerage agreement

By Dawn Brotherton | Jun 30, 2016

ORLANDO – In January, the National Association of Exclusive Buyer Agents (NAEBA) sent a letter to Florida Realtors requesting changes to the exclusive buyer brokerage agreement form that is used in the state, but almost six months later the NAEBA said there hasn’t even been any discussion on the topic.

NAEBA believes “real estate consumers in Florida are not being protected when they are presented with misleading, non-disclosing forms such as this one.” 

NAEBA is not the only organization concerned about buyer agents in real estate. Doug Miller, executive director of Consumer Advocates in American Real Estate (CAARE), spoke with the Florida Record about the Exclusive Buyer Brokerage Agreement the Florida Realtors uses.

“First, the form is promulgated by the (Florida Realtors), not by the licensing agency in Florida, which regulates licenses of brokers and agents,” Miller said. “The form is extremely misleading, because it gives the impression that the firm only represents the buyer.”

After looking at a sample form, Miller agreed with NAEBA that the form should be updated for clarity and transparency. Section 12 on the form discusses the brokerage relationship, giving four options to check: a single agent of buyer, transaction broker, single agent of buyer with consent to transition into a transaction broker, and nonrepresentative of buyer.

According to Florida statute, single agent means a broker who represents as a fiduciary either the buyer or seller, but not both in the same transaction. Transaction broker means a broker who provides limited representation to a buyer, a seller, or both, in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent. In a transaction broker relationship, a buyer or seller is not responsible for the acts of a licensee. Additionally, the parties to a real estate transaction are giving up their rights to the undivided loyalty of a licensee.

“Dual agency is illegal in Florida, but state law allows for transaction brokers, which blur the line between the broker’s allegiance to sellers and buyers," Brad Ashwell, legislative director for Florida Alliance for Consumer Protection, told the Florida Record by email. "While the notion that these brokers can play a neutral role is good in theory, it probably isn’t the best scenario for consumer who are likely unaware that they don’t have the full loyalty of the Realtor.”

Miller called the exclusive buyer brokerage agreement form "a fraud on the face of it."

"There’s a 6-7 percent cost to sell a home," he said. "Unlike sellers who can save a commission by selling their house on their own without a Realtor, there is no such option for buyers. Buyers are forced to pay a buyer broker whether they use one or not. But buyers do not understand this. Buyers should always negotiate the commission and walk away from buyer agents who tell them not to worry because they work for free.”

Consumers need education and protection against the real estate industry in transactions, Miller said.

“The real estate industry is one of the most powerful lobbyists in the nation,” Miller said. “If a lawyer attempted to represent both the buyer and seller in a real estate transaction, they could lose their license.”

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