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from Banker & Tradesman

Nader Group Gives Boost to Cause of Buyer Brokers

Massachusetts' growing ranks of buyers' agents have a new friend in consumer advocate Ralph Nader.

Backed by Nader's Real Estate Consumer Network and the U.S. Consumer Federation of America, the National Association for Exclusive Buyer Agents is targeting the Bay State, along with Pennsylvania, for a three-pronged campaign on behalf of buyer agency.

On one front, the groups have mounted a consumer crusade to alert home buyers to what all three consider the benefits of using a buyer's agent rather than a traditional seller's agent. To that end, they have called for a clearinghouse of contract and real estate abuses against consumers to keep the public informed.

In addition, within the next month, consumer fact sheets will be made available to home buyers and sellers throughout the state, said Leda Huta, project coordinator for the NRECN's umbrella organization, the Institute for Civic Renewal. Both NRECN and ICR are based in Oil City, Pa.

The Nader / NAEBA alliance is also campaigning against what it calls anti-consumer regulations in Massachusetts - namely the National Association of Realtors' procuring cause guidelines voted in at last November's meeting, said Torn Early, president of the Evergreen, Colo. - based NAEBA.

Procuring cause is when an agent or broker "causes" a buyer or seller to purchase or list a property for sale. For example, if a customer who attends an open house decides to buy that home, the agent holding that open house can claim the commission.

In cases where three agents are involved in a transaction, the third agent, not under contract to the buyer or seller, may go to the buyer's agent for part of the commission.

NAEBA has submitted a statement taking exception to the revised rules. Early maintains that NAR's guidelines directly target incomes of buyer brokers and that their contracts with home buyers are being disregarded.

Targeting Massachusetts
NAEBA has spearheaded the growth of buyer agency on the national level, as more agents have chosen to quit listing homes and instead represent buyers exclusively.

Nader's NRECN is working with NAEBA to advance the rights of consumers who are buying or selling real estate. Nader has charged that consumers are overcharged more than $10 billion a year because they are not adequately represented in real estate transactions.

Citing figures compiled by the Consumer Federation of America, which does public advocacy and education on consumer issues, Nader said that 'real estate is difficult to get organized from a consumer point of view because there's a lot of money at stake."

On the subject of procuring cause, Nader called NAR's requirement of mandatory arbitration to resolve commission disputes as opposed to litigation a way of "forcing people to give up their constitutional rights."

Stephen Brobek, the Consumer Federation's executive director, said Massachusetts is ideal for the group's efforts because the cornmonwealth is known as being pro-consumer. Brobek also said that the state's agency disclosure laws are a model for the rest of the country in their clarity.

However, legislation that is supposed to clarify the duties of brokers - House Bill No. 2465 - has stagnated. The bill, which would definitively outline the relationship between a client and agent, was remanded to study by the House and Senate last August, according to co-sponsor Arthur J. Broadhurst, D-Methuen.

The answer may be in the numbers. With 38 members, Massachusetts ranks second behind California in the number of NAEBA-mernber brokers, according to NAEBA Public Relations Representative Kathleen Chiras. The two-and-one-half-year-old organization has approximately 450 members nationwide.

Buyer brokers in Massachusetts are also more organized than in other states, said Brobek.  The Massachusetts Association of Buyer Brokers has between 200 and 300 members, estimated Milton Attorney Frank Barry, the association's treasurer. Moreover, MABA recently joined five other states to form the New England Association of Buyer Agents.

Indeed, the buyer agency business seems to be humming along. Leo Berard, a founder of NAEBA and owner of Buyer Brokers of Cape Cod, said his revenues have doubled annually and is opening a new office in Martha's Vineyard next month.

Leo Berard

Leo Berard
Revenues have doubled

Ronn Huth

Ronn Huth
Four new offices

For Ronn Huth, owner of Buyer's Choice Realty in Hamilton, business has been so brisk he opened four new offices in Winchester, Melrose, Peabody and Andover in the past year.

Bob Sirnone, president of a 16-office federation of buyer agents in Canton, said that one reason buyer brokers are getting more business than they can handle is that buyers are more educated when choosing their representation.

Which seems to be Huth's objective.

"We're joining with trade organizations to make real estate a more level playing field for the consumer," said Huth.

Source: Kim Savage, Banker & Tradesman,     October 6, 1997