Washington, D.C. – On February 28 and March 1, Inman News published opinion pieces by realtor Cara Ameer that criticized a recent Consumer Federation of America (CFA) report on Florida’s undisclosed transaction brokerage.[1] Transaction brokers are considered by law to be facilitators, not fiduciary representatives. On March 9, Inman published a response from Stephen Brobeck, a CFA senior fellow and the report’s author. Brobeck’s response is below:
We agree with Cara Ameer that Florida transaction brokers are committed to serve their customers, provide 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 price 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 Multiple Listing Service (MLS), one-fifth of listing agents still do.
[1] Watchdog Report Misrepresents Transaction Brokerage, Florida Broker Says Consumer Watchdog View Of Compensation ‘Has No Basis’
Contact: Stephen Brobeck, sbrobeck@consumerfed.org