Previously, bicoastal broker Cara Ameer wrote a two-part response to a report by the Consumer Federation of America titled “Does Transaction Brokerage in Florida Serve the Interest of Home Buyers and Sellers?” Stephen Brobeck, Senior Fellow of Consumer Federation of America, outlines his thoughts on Ameer’s response.
We agree with bi-coastal broker Cara Ameer that Florida transaction brokers are committed to serving their customers, providing useful services and deserve to be paid adequately for these services. Yet, Ameer did not address the two central questions raised by our report:
- First, why aren’t transaction brokers required to disclose this role upfront to their customers? There are important differences between transactional and fiduciary relationships that are clearly spelled out in Florida law. Why are only fiduciary agents (and non-agents) required to disclose their role? Transactional brokers in all other states are required to make this disclosure.
- Second, why shouldn’t there be differences in compensation received by transactional and fiduciary agents? Legally, transaction brokers have fewer responsibilities and less liability than do fiduciary agents.
As Florida brokers explained to us, to give just one example, it is virtually impossible for an aggrieved Florida consumer to successfully sue a negligent or dishonest transaction broker. CFA believes that differences in compensation should be determined by a free, price-competitive marketplace.
As our report explains, the sharp legal differences between transactional and fiduciary brokerage are commonly ignored by transaction brokers. In violation of Florida law, many brokers give advice about home sale prices and conditions that can potentially disadvantage the other party in the sale. While this advice may well help their own customers, it is given illegally.
So why not re-establish the 1998 law that required upfront disclosure of transaction brokerage? And if agents want to fully represent customers, why can’t they agree to serve as fiduciaries (“single agents”)? According to data from the Jacksonville MLS, one-fifth of listing agents still do.
Stephen Brobeck has been researching residential real estate brokerage issues since the early 1990s. Initially he focused on subagency. More recently, he has researched issues related to agency, agent compensation, and state regulation. Brobeck earned a Ph.D. in American Studies from the University of Pennsylvania and has taught at several universities. From 1980 to 2018 he served as executive director and CEO of the Consumer Federation of America. Since then, he has held the position of senior fellow.