According to Florida statutes, “It shall be presumed that all licensees are operating as transaction brokers unless a single agent or no brokerage relationship is established, in writing, with a customer.” The statute goes on to explain that “ transaction broker provides a limited form of 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.”Īs a transaction broker, the listing agent no longer has a fiduciary responsibility to get the highest price and the best terms for the seller in exchange for the 6 percent real estate commission. That means the agent is a facilitator of the transaction and does not represent either party. Florida is one of two dozen other states to have a “presumption of transactional brokerage” clause. In Florida, a real estate licensee may no longer operate as a dual agent, disclosed or undisclosed. Ralph Nader, the AARP, the Consumer Federation of America, the Federal Trade Commission, Money magazine and other media advocated that buyers should seek out and work with buyer’s brokers to assure that their interests were truly represented. Regardless of the conflicts of interest, many states still allow the practice of dual agency. The lawsuits were successful the buyers and sellers prevailed. Many customers on both sides said they felt rushed to close, despite problems with the transaction. Buyers claimed they should have paid less sellers claimed they should have received better prices for their properties. Both buyers and sellers sued over the inherent problems that arise when the same firm represents both sides of the transaction.
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Consumers got the worse of both worlds, accountability without loyalty, while brokers continued to collect both sides of the commission.Ī series of costly class action lawsuits in the mid 1990s, most prominently three lawsuits brought against Edina Realty of Minneapolis by more than 20,000 claimants, highlighted the problems with the practice of dual agency. By “disclosing” that they were double agents, they argued that they had fulfilled their legal responsibility. Brokers circumvented the spirit of disclosure with the practice of “disclosed dual agency.” Dual agency was as blatant as when the same agent acted as both the buyer’s agent and the seller’s agent in the same transaction, or as subtle as when any agent who claimed to represent buyers was working for a firm that also listed properties (and therefore favored those properties). But the real estate industry didn’t like that and found a way around it. But buyers were never represented in a typical transaction.īy the early 1990s, 80 percent of state legislatures had passed laws requiring real estate brokers and agents to disclose, in writing, whom they represented - buyers or sellers. A 1983 study by the Federal Trade Commission found that 82 percent of buyers surveyed believed their conversation with an agent was confidential, and 57 percent thought the agent represented them. Unfortunately, that fact was not clear to the buyer. So if you told your agent that you would offer $500,000 for a home, but were willing to go up to $650,000 if necessary, your agent had a fiduciary responsibility to pass along your top price to the seller. Both agents were legally bound to secure the highest price and best terms for the seller. The agent who brought the buyer was considered a “subagent” of the listing agent. When I first became licensed in 1977, every agent - even the agent helping you house hunt - had a fiduciary responsibility to the seller. Historically, Florida real estate agents represented the seller. How we got to this precarious place is a case study in the enduring power of greed. But clients don’t always know that, creating a situation fraught with legal peril, which will be discussed later.
Presumption of transactional brokerage “presumes” all Florida real estate clients know their agent is merely a facilitator and is not working for them. The “presumption of transactional brokerage,” which is now the law in Florida, has left the consumer as clueless as ever. Twenty-five years after we fought to protect home buyers with disclosures about whose side their real estate agent was working on, the Florida real estate industry is worse than it has ever been. The more things change, the more they stay the same. Transactional Brokerage Leaves Consumers as Clueless as Ever
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