Regardless of how you access the MLS, did you know that real estate agents can see every property you view on their website? Seen by the right eyes, that's a powerful tool; but what if your "click stream" is seen by a listing agent negotiating against you? That "privacy violation" could undermine your negotiating position -- think that conflict of interest should be disclosed upfront?
It’s been nearly 20 years since agency disclosure regulations were updated in Massachusetts, but less than 20 days since the White House called for a Consumer Privacy Bill of Rights. What are the implications for real estate? In this era of participatory democracy online, we'd like YOUR idea starters. Here are two of our own:
IDEA STARTER #1: Create "Smart Disclosures" to guarantee informed consent
Past studies and a "sting operation" 15 years ago this week in Massachusetts revealed that real estate agents routinely ignore their obligation to inform buyers of whether they are acting as a buyer's agent, seller's agent, or facilitator. On the seller's side, listing contracts seek permission to engage in a conflict of interest BEFORE agreeing to represent a seller, but some fail to present a second disclosure (see Mass.gov) at the actual time of conflict so both buyer and seller can avoid the conflict of interest and be represented by their own adviser / agent / advocate. Think "smart disclosures" and mobile technologies can improve on that?
IDEA STARTER #2: Require digital disclosures online
Existing regulations required disclosure at the first personal meeting to discuss a specific property. Because that language was written twenty years ago, it does not protect DIY home buyers online and their privacy rights are routinely ignored. If a listing agency is trying to get the highest price for their seller clients, and as a DIY home buyer, you're trying to buy at the lowest price, do you think that conflict of interest should be disclosed UPFRONT BEFORE that breach of confidentiality undermines your negotiating position?
A decade before the White House called for a Consumer Privacy Bill of Rights, the Real Estate Cafe and fellow real estate consumer advocates called for a Real Estate Consumer Bill of Rights in Congress. Unfortunately, not only are existing agency disclosure regs functionally obsolete and non-compliance widespread, but residential brokerage practices are outside the existing regulatory scope of the Consumer Financial Protection Bureau. So don't look to them to protect you.
What can YOU do to protect yourself NOW?
New technologies have the potential to create “Smart Disclosures” which could have profound implications for day-to-day business. The Real Estate Cafe is excited about conversations were having with others about new product to protect DIY home buyers and sellers. Until those are ready, we'll simply invite you to empower yourself by presenting your own "Terms of Service" to potential buyer agents and listing agents.
- Download the Pledge of Allegiance form below, developed nearly twenty years old ago to see what's possible when a regulatory agency is serious about protecting real estate consumers.
- Don't wait until your first meeting offline ask a real estate agent to sign it. Email the document or contract language to an agent BEFORE you sign-up to use their web site or visit their listing -- particularly "luxury listings" -- on any real estate portal like Zillow.com, Trulia.com, or Realtor.com, etc.
- See what happens when you exercise your right to their "undivided loyalty," and please share your story with us and your social network!
If both the real estate agent and their brokerage firm agree to sign this Pledge of Alligience, then you've protected both your right to privacy and ability to save money! Congratulations!
If mega-broker Edina Realty pulled their listings from Realtor.com and Trulia, despite the fact that both real estate portals are have millions of site visitors each month, will other mega-brokers, like Coldwell Banker, Century21, RE/Max, and Keller Williams follow? If listings are disappearing from Realtor.com and Trulia, will Zillow be next? Thanks to CAARE.org, a nationwide, non-profit consumer advocacy organization based in Minnesota, for raising those questions in our guest editorial.
This isn't the first time the Real Estate Cafe has exposed how listing practices can harm home buyers and sellers. In 2003, we organized an informal coalition of real estate consumer advocates to launch an iPetition to protect access to MLS listings.
It's too early to argue that any other listing agency is practicing undisclosed dual agency by sending buyer leads directly to listing agents via their web site, but it's not too early -- in fact, it's overdue by more than a decade -- to demand that industry regulators to develop "smart disclosures" and require that they be embedded into real estate portals and brokerage sites alike. If pop-up screens warn home buyers about conflicts of interest and loss of their ability to work buyer agent of their choice, fewer buyers will inadvertantly become victims of undisclosed dual agency, designated agency, and other forms of counterfeit buyer agency. Regrettably, surveys show that majority of agents don't see anything wrong with dual agency, so it's essential that industry regulators develop smart disclosures that automatically warn home buyers online!
What's a stake? Not just the ability for individual home buyers to have their own advocate to negotiate for the lowest possible price and best terms, but a massive cost to society as seen in the aftermath of the housing bubble.
Home buyers and sellers, if you are confused by broker babble and fine print about dual agency, designated agency, and other forms of counterfeit buyer agency, use this Pledge of Allegiance developed by the New York Department of State more than 20 year ago to reveal who’s really on your side! If "YOUR" agent won't sign this form or include the loyalty guarantee in their buyer agency agreement, walk away!
