The ineffectiveness of state disclosure laws has harmed many consumers in the following ways, according to CFA:
• Home buyers and sellers who think their subagents or transactional agents are fiduciaries have mistakenly believed that their agent is seeking, respectively, the lowest or highest house price.
• Home buyers who think subagents are working for them often have disclosed information about their finances and house price ceilings that the subagents are legally required to share with sellers.
• Home sellers working with fiduciary agents may face pressure to allow dual agency when buyers are interested in working directly with those agents. They may not understand that, under dual agency, their fiduciary interests are no longer being represented. They also may not understand that a 5 percent to 6 percent commission captured by just one agent usually represents very generous compensation for limited services rendered.
These are some of the reforms that the reports said would greatly improve the content and timing of disclosures to home buyers and sellers:
• Dual agency should be prohibited; it is allowed in eight states.
• There should be a clear written and verbal communication from agent to consumer at the first substantive contact about whether the agent will function as a fiduciary agent, a subagent or transaction agent/facilitator.
• State real estate commissions should work with consumer and industry representatives to develop an effective disclosure document then enforce its use. If they refuse, state attorneys general should take on this responsibility.
• These commissions should also develop rules to minimize conflicts of interest when the same real estate firm represents both a seller and a buyer.
"These reforms would benefit both consumers and real estate agents," Brobeck said. "More informed home buyers and sellers will make better decisions. They will have a higher regard for, and complain less about, real estate agents. And agents will not face the risks and ethical dilemmas of dual agency and undisclosed subagency."