Who is CAARE?
Consumer Advocates in American Real Estate is the only non-profit charity (501(c)3) dedicated to consumer protection in residential brokerage, title insurance and real estate related legal services. We empower consumers with information, tools, and advocacy. We have drafted consumer-friendly forms, instituted a world-class website (donated), alerted consumers to industry problems that directly impact consumers’ ability to buy or sell homes, and have helped educate housing non-profits and other consumer organizations about many real estate issues so that they can better represent their clients. Our website now receives nearly 130,000 visitors every month.
Here is a direct link to the IRS for our non-profit status (click here).
Most of the work that we do is completed by volunteers. And our annual expenses are very low. The money that we collect is spent on insurance, $500 per month stipend to our Executive Director, website hosting, and one or two trips per year to important non-profit consumer conferences and some other small miscellaneous expenses.
Where Did the Safeguards Go?
What good is an appraisal, home inspection, legal advice or title examination if the proprietors of those services are not impartial? Those professionals each provide key safeguards in residential real estate transactions. However, those safety roles conflict directly with those of the success fee-based professionals who refer them business. Worse, many of those safeguard providers are even under the same ownership and roof of these commission-based providers completely neutralizing any hint of impartiality. These misguided arrangements are actually marketed to the public as “One Stop Shopping” – a term intended to disarm people into thinking it provides a benefit. Consider these situations:
- A Realtor referred home inspector who advises a buyer not to purchase a home (the Realtor won’t get paid). Many home inspectors work in fear of boycott if they interfere with the commission of their referrer.
- A Realtor who wants to recommend an independent title company when his manager earns a bonus based upon using the over-priced and conflicted in-house title company. The consequences of guiding his client to an independent company that may cost less and provides better service could be a direct impact on the Realtor’s ability to earn a living.
- A Realtor referred attorney advising his client not to pay a real estate commission. Even attorneys work in fear of being boycotted from Realtors because they get most of their residential referrals from Realtors.
- An attorney negotiating with the title insurance company on title insurance coverage and cost when the attorney is issuing the title insurance.
Whether you are a consumer or an investor loaning mortgage money, you should take care to verify that your service provider is not conflicted. You should insist on impartiality in every step of the transaction.
The real estate industry spends an enormous amount of money misleading consumers about the services that they provide while at the same time lobbying for laws that eliminate more and more consumer rights in this area. While CAARE does not engage in lobbying, we are perhaps the most knowledgeable non-profit consumer advocacy group that can provide real answers and information on this topic. It is our goal to educate consumers, regulators, legislators and the media about these issues.
CAARE has examined the faulty reports and studies provided by the industry and submitted to regulators and legislators in support of eliminating the safeguards in residential real estate. The industry changed the legal name of these business interests from Controlled Business Arrangements to Affiliated Business Arrangements to avoid the negative connotations associated with the word “controlled.” No matter what you call these relationships, they are bad and lead to bad transactions.
PROJECTS (click here) Here is where we need the most help.