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Unpublished Paper
Trust, Expert Advice, and Realtor Responsibility
ExpressO (2011)
  • Brent T. White, University of Arizona
Abstract
The general legal rule that a homebuyer may not reasonably rely upon his real estate agent’s opinion as to a property’s value or investment potential is at odds with psychological propensity of individuals to trust perceived experts. This discrepancy creates a genuine moral hazard in which real estate agents benefit from the trust associated with portraying themselves as real estate experts, yet avoid responsibility for the advice that they give. This moral hazard fueled the housing market bubble and contributed to the suffering of homeowners whose real estate agents encouraged them buy as the market began to burst. In response to this problem, this article proposes a new regulatory regime requiring real estate agents to choose between two paths: (1) accept legal liability when they negligently, recklessly or intentionally make inaccurate or misleading pronouncements about a home’s value or investment potential; or (2) embrace their role as “salespersons” and refraining from offering advice or opinions about the real estate market to their customers.
Keywords
  • real estate,
  • trust,
  • expert advice,
  • broker,
  • agent,
  • regulation
Disciplines
Publication Date
February 6, 2011
Citation Information
Brent T. White. "Trust, Expert Advice, and Realtor Responsibility" ExpressO (2011)
Available at: http://works.bepress.com/brent_white/4/