Could Better Representation Have Prevented the Foreclosure Crisis?

The National Association of Exclusive Buyer Agents recently did a study that revealed that the foreclosure rate among buyers who used traditional agents was significantly higher than that of those who worked with an exclusive Buyer Agent.

Here’s the full release:

AVONDALE, AZ – August 3, 2009 — It is not just 20-20 hindsight that shows that the foreclosure crisis could have been avoided if consumers were properly represented by their real estate agents. The results of a survey conducted by the National Association of Exclusive Buyers Agents (NAEBA) and subsequent study found, among those responding to the survey, only 15 foreclosures out of 1,849 closings; that’s a foreclosure rate of just 0.8%, compared to the nationwide rate of 1.84% in 2008 (the last year for which there are complete numbers).  Clearly, respondents to this survey have found that transactions in which the buyer is adequately represented tend to result in much fewer foreclosures than are found in nationwide averages.

It is easy to find a story of a home buyer who was told by “their agent” that a house was a good deal, and some special financing will make their dream come true. But among the exclusive buyer agents of NAEBA, foreclosure stories are rare. According to John Sullivan, President of NAEBA,  “Our agents offer full fiduciary duties provided under the Common Law of Agency. Doing so protects the buyer from committing to financing whose terms they can’t afford after the first adjustment or when the teaser rate expires.  Common law duties require the disclosure of agency representation, affiliated services owned by the agency and compensation paid to the agency for use of these affiliates. Given this information, our clients were able to make the right decisions thus, avoiding foreclosure. I’m proud of our members for adhering to their higher standards during the real estate boom.”

NAEBA surveyed members about their closings over the past three years, then verified those findings with public records. Of the 1,849 closings, there were 15 foreclosures.  President John Sullivan says “These survey results show what I have always known, NAEBA members take their fiduciary duties to their clients seriously. Troubled times have revealed that the higher standards provided by the Common Law of Agency provided better results for consumers.”

The National Association of Exclusive Buyer’s Agents (NAEBA) is a non-profit group of licensed real estate professionals who have agreed to an ethical standard which avoids conflict of interest by representing only buyers. NAEBA’s high quality of buyer representation now proves to be successful in guiding consumers during risky housing markets.

This highlights the importance of having an agent that represents your best interest when you are buying a home. Be sure you know who your agent works for.

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God cares about honesty in the workplace; your business is his business. Proverbs 16:11 (MSG)