5 ways homebuyers are kept in the dark (© Paul Edmondson/Corbis)

Buying a home is complicated. You can't possibly understand all the rules and procedures, so you depend on trusted professionals to guide you through decisions worth hundreds of thousands of dollars.

But as the subprime debacle vividly demonstrated, those professionals sometimes put their own interests ahead of homebuyers' needs. Flaws in the system — including hidden incentives, complicated rules and confusing disclosures — let opportunistic agents, lenders, inspectors and others profit at your expense.

Even worse, you may be completely unaware that you're being victimized. Here are five murky areas where you should pay close attention, along with 21 tips for protecting yourself.

1. Home inspections from agent-referred inspectors
Home inspectors typically get their work from real-estate agents, and homebuyers seldom consider the problems with using an inspector recommended by an agent. This relationship, however, is one of the darkest corners of the real-estate business.

Read:  Home horrors: Lessons from home inspectors

Why you're in the dark
Some agents — by no means all — pressure home inspectors to turn in a "good" report, says Barry Stone, a home inspector in San Luis Obispo County, Calif. In his syndicated column, "The House Detective," he has called the agent-inspector relationship "a clear conflict of interest."

Here's why: Real-estate agents don't get paid unless a home sale goes through. A pre-sale home inspection that uncovers problems can be the kiss of death to a sale. At the least, the sale is slowed down.

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"Realtors constantly make these hints. They'll say, 'It really matters to me to close this deal,' " Stone says. "They won't come right out and tell you that they don't want you to disclose everything, but they'll hint at it."

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Salespeople may complain that an inspector is "too nitpicky" and stop sending him business. "Or they just won't use you for a real long time and then you'll run into them and they'll say, 'I'd like to use you but you really scared the buyers,' " Stone says.

Although agents have told Stone he's a "deal killer," he says he ignores the pressure and discloses everything he finds, keeping in mind that the buyer — his client — has lots to lose by purchasing a home with hidden problems. And he keeps a sense of humor. His van's new license plate reads "DEALKLR."

How to turn on the lights:

  • Look for someone who takes his time. A thorough inspection takes three hours or more. Stone does only two in a full day's work. One inspector, who didn't want his name used for fear of reprisals to his business, says he's heard a few colleagues at conferences say they do 30-minute inspections. They apparently expect to make enough additional money to more than cover the costs of fixing any problems that homeowners discover later and ask them to pay for, he says.
  • Shop around. Stone suggests calling several agents' offices, asking each who the pickiest inspector in town is. Read "4 tips for finding the best home inspector."
  • Speak up. Home inspection is not science; even great inspectors can miss defects. If you think your inspector made an error, call and ask him to re-evaluate. With smaller defects, "if the home inspector has integrity, he will take it on himself to offer to pay," Stone says. For major errors and omissions, licensed inspectors carry professional liability insurance.

It can be hard to legislate solutions to such systemic conflicts of interest. Similar concerns about appraisers — that lenders were pressuring them to inflate home-value estimates — recently led to rule changes. But these moves created an unanticipated new set of problems as appraisal-management companies sprang up to assign and broker appraisals. Now critics (many are appraisers) complain that the companies encourage slapdash appraisals. A consumer's best insurance, Stone says, is to find a competent, ethical inspector.

Read:  5 nasty surprises that can stop your home purchase cold

2. Dual agents
Most states allow a real-estate agency — sometimes even the agent herself — to represent both buyer and seller in the same transaction. This is known as dual agency.

Why you're in the dark
Many real-estate agents with great integrity insist they can give both sides their loyalty and confidentiality. Or, if a conflict arises, they’ll step aside and ask a colleague to assist you.

But critics call it a conflict of interest. What happens when a buyer instructs the agent to get the lowest possible price and the seller of the house tells the same agent to get the highest possible price?

Also, confidentiality is at risk. That risk exists even if real-estate agents simply work in the same agency, says John Sullivan, a Realtor and president of the National Association of Exclusive Buyer Agents: "You're using common fax machines and office equipment. There are just too many instances where your information is subject to being disclosed."

Traditionally, real-estate agents worked only for sellers. Today, state laws, which vary widely, govern agent-client relationships. (Find your state's real-estate commission and read the laws and rules at the Association of Real Estate License Law Professionals.)

Read:  Do you need a buyer's agent?

The National Association of Realtors' code of ethics requires full disclosure from agents and informed consent from buyers when a member represents both sides. Also, states usually require agents to disclose that they are working for both sides and to get your consent in writing. Nevertheless, in a 1997 sting, investigators from the Massachusetts Office of Consumer Affairs found that every one of 45 offices they visited violated the state law requiring disclosure.

How to turn on the lights:

  • Watch your tongue. Don't discuss your financial position, negotiating strategy, moving timetable, reasons for buying or other confidential information unless the agent works for you alone.
  • Ask questions. Before agreeing to be represented by a dual agent, ask, "How will you represent my interests if you also represent the seller of a house I want to buy?" Carefully interview agents before hiring. If you agree to dual agency, you're giving up your right to your agent's undivided loyalty. Learn about types of agents here and read "Find a superstar real-estate agent."
  • Use an exclusive buyer's agent. There's a small but growing movement of agents who work only for buyers. One place to look is the National Association of Exclusive Buyer Agents, a trade group whose ethics code requires members to be loyal to buyer clients only.
  • Consult a lawyer. If a problem arises, consult a real-estate attorney. Call your state or city bar association for a referral or use FindLaw's locator service.
  • Negotiate a commission reduction. Since you're getting less service — dual agents, for example, are often prohibited from advising you on price — it makes sense to pay less.
  • Switch agents. Many agents will release a truly unhappy client from a contract, but if your contract covers the possibility of dual agency, you may be stuck. You can, however, request to be assigned to another member of your agent's team, lessening (but not eliminating) the problem.

3. Agent incentives
With the flooded home market these days, some sellers are offering to give agents incentives — cash, cars, trips and other prizes. They figure that agents are more likely to show their property when there's something in it for them. Also, agents often can earn a bonus from their own agency for selling one of the agency's listings.

Why you're in the dark
The trouble here is not bonuses, but the lack of disclosure. You deserve to know your agent's motives in selecting properties to show you and giving guidance on what to buy. The NAR ethics code requires agents to put clients' needs ahead of their own. But agents aren't required to disclose bonuses and incentives until the last minute, on your HUD-1 statement. Noncash prizes and trips need not be disclosed.

How to turn on the lights:

  • Demand disclosure. Ask your agent to agree to tell you if a property has incentives or bonuses attached.
  • Craft an agreement that benefits you. Write a clause into your agent agreement that any bonuses or incentives attached to a property you buy go directly to you.