Some real estate specialists see conflict in buyer-seller law
A new law set to take effect July 1 that affirms the legality of a single real estate firm representing both the home buyer and seller drew sharp criticism yesterday at a real estate forum.
The law passed in 2004 after it was attached, at the last minute, to the state budget. While opinion is sharply divided, both sides agree the law will change the relationship between agents and home buyers, who may already be confused about the current laws governing agents.
Currently, if a home buyer is interested in a house that happens to be listed by the firm they are working with, the agent is required to disclose to the buyers that a potential conflict exists and allow the buyer to go to another firm for representation. If the buyer decides to stay with the firm, the agent has to maintain neutrality in negotiating the price of the house and other terms of the transaction.
Under the new law, the real estate firm listing the property can instead select an in-house agent to legally represent the prospective buyer, if the buyer signs a consent form.
The Massachusetts Association of Buyers Agents said the law sets up a clear conflict of interest: ''You have one company trying to get the highest price for one customer" -- the seller -- ''and the lowest price for the other," the buyer, said Casey Crane, spokeswoman for the association, which hosted a panel of real estate specialists yesterday at Suffolk University Law School in Boston.
''It's the same reason we don't allow law firms to represent both sides of a divorce," she said.
But David Drinkwater of the Massachusetts Association of Realtors, which supported the legislation, said it gives customers more choices. If home buyers find an agent they like, that agent can represent their interests, even if the house the buyers want is listed by the same firm.
''A consumer can make a conscious decision to choose to work with a particular individual in the firm, and that agent can help from start to finish and be their representative," said Drinkwater, a Scituate real estate agents who also co-chairs the task force assigned to help association members interpret the law. ''That's a choice that wasn't there before."
Others said the new law reduces the agent's fiduciary responsibility simply by having the consumer sign a form.
Real estate agents will have new protections, and ''used car salesmen don't even have this protection," said another panelist, Suffolk University Law School professor Charles Rounds. ''This is going to be litigated until the cows come home," he said.
Crane said her organization may propose new legislation to strengthen informed-consent provisions ''to protect the consumer."
Kimberly Blanton can be reached at blanton@globe.com. 