Originally published at: Expose on real estate agents who won't take clients to homes unless they're getting a big commission | Boing Boing
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Expose on real estate agents who won't take clients to homes unless they're getting a big commission
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Probably legally. Ontario is a single-party jurisdiction.
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Steering is illegal, but an agent for the buyer still makes their commission (if that’s negotiated), even on a for-sale-by-owner. I’m not sure I get the motivation here?
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The sellers (in the sting, at least) are only offering 1% instead of the 2-7% typically offered through sellers’ agents. So what’s happening is buyers are saying “we want to buy this house!” but their own buying agents are steering them away. They don’t want to get out of bed for 1%, even on multi-million properties, when they can get much more by steering their clients to whatever shacks are listed at 7%.
The commission system thereby subverts the buyer agent relationship. It effectively turns buyer agents into sellers’ agents.
One scene has a realtor who spends the whole time while in the house they want trying to show them a different house on her phone. It’s basic scammer brain behavior, the kind of thing you either spot immediately or fall for completely.
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For buyers, this is where independent research helps a lot. I terminated my contact with an agent once over this, but I’m not sure where the line is between illegal and unethical in the US vs. Canada. Most FSBO homes are listed on different sites here, and there’s no way I’d let an agent talk me out of seeing one. I’ve experienced the bad-mouthing tactics, though. Hopefully, news stories like this help people to set expectations about dealing with agents, and to understand what motivates some of them.
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Years ago, long before the ability to research stuff online we sold a house. We were very naive as to how it all worked and very young. We signed a 90 day listing contract for 6 or 7% commission. That realtor did nothing to sell the house but we were locked into the contract. After the 90 days he wanted to relist, not a chance, by this time I was better educated.
We got a new agent but we said 30 days and 5% or no deal. They agreed, I suspect they had a buyer.
The thing that ticked me off was whenever a realtor would show the house they would leave a business card. I left the cards on the kitchen table, one day all the cards were gone, the listing agent took them. I said give them back.
A few years later we sold a house on our own without an agent still no internet so we were winging it. You can not believe how many realtors called and claimed they had a buyer but I would have to sign a listing agreement.
I said nope, I would sign a commission agreement for that particular buyer but why would we need a listing contract if you have a buyer?
Ended up selling that house completely on our own right down to the closing but I did have a lawyer look over the contract.
Point is, this does not seem like new information, realtors have been all about their commission and making the most money for themselves for years. I’m sure there are plenty of ethical realtors who do just fine being honest but you really have to do your homework to find them.
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"Accusations of collusion among real estate agents is by no means unique to Canada. Brokerage costs in the U.S. are [wo to three times higher than in the rest of developed world, according to REX, a digital real estate startup based in Texas.
“In terms of commissions, the industry functions as a cartel. They enforce on the entire industry a certain high and relatively uniform commission level,” said Stephen Brobeck of the Consumer Federation of America, a Washington, D.C.-based nonprofit.
Brobeck said that commissions should not be negotiated between seller and buyer agents. He said “decoupling” commissions could save consumers billions of dollars a year."
Here in the US the DoJ is up to something in regards to high fees:
(Paywall)
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FSBO is where buyers agent has to do extra work to make the transaction happen bc seller is ignorant and uncapable. then get paid low by cheapass low percentage seller is offering. That percent is then split with the agents broker and likely also the referral service that sent the buyer. If you dont play along and close a deal, you get $0 for all the time you’ve spent hunting with the buyer. Those high broker comissions show you where the grift is, agents have an industry built on their backs. Still, you DONT lie to your buyer.
Fsbo losers fake savings… a lawyer can look at your contract, but does he know seven local lenders who can get it across the line when rocket mortgage fails to launch again? Agents ftw
Source: SO is agent, I might be biased
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Let’s put an acute above the final “e” in expose, shall we?
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I dunno, seems risqué to me…
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His point is that most buyer’s agent contracts stipulate that the agent will get a minimum commission percentage, say 2.5%, and that the buyer is responsible for making up the difference if the seller doesn’t pay it.
I’m not saying that being a realtor doesn’t take some skill and knowledge, but the amount of money some of them make for the work they do is just ridiculous.
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It’s been a while since I bought a house but are you saying as a buyer I need a contract with an agent?
I get if I have specific needs and I want to pay someone to search for specific houses for me but if I seek out houses to look at on my own don’t I just make an offer on my own?
If you want an agent to work for you, yes you need a contract with them.
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They’re so passe
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Touche.
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Here in the land of insane real estate prices RE agents are making money for practically no effort. Ten years ago we sold our apartment in Vancouver for about 20% over asking to the first person to walk into our open house.
For the 15 minutes of negotiation involved the selling agent received about $12k in commission. The second the deal was signed he stopped answering calls of any kind, we had to pursue him, and go to his office, to finalize the paperwork.
In every home sale I’ve been connected to there has been a moment where our interests do not perfectly align with those of the RE. Every single time the RE has tried to bluff or bully us into the decision that helps them rather than ourselves. Not only for money things, even little details that would be slightly inconvenient to them and massively inconvenient to ourselves.
In another life my company was hired to build and maintain some websites for a few realtors. Fucking nightmare, we ended up walking away from them.
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They actually only offered to pay $0.01 (a penny) in commission not 1%: Monday Morning Quarterback: 'That' CBC Marketplace Episode
The sellers made numerous mistakes on the listing. Seems like the sellers believe in Schrodinger’s real estate agent: simultaneously an idiot and at the same time a mastermind manipulator. Realtors can’t be both totally useless and not worth the commission, yet at the same time also be an intelligentsia cabal that forces poor sweet widdle innocent buyers and sellers to spend money.
There are plenty of shady and just plain awful realtors out there. Don’t hire them. Buyers and sellers need to do their homework to find a good agent. Or, If you’re going to decide that you can do the job without a real estate agent, make sure that you can actually do the job.
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After a lifetime of experience in this area, I have one piece of advice, but it is absolutely essential:
Whether or not it is required in your state/municipality, make sure a lawyer who is specifically knowledgeable about real estate in that area verifies all documents up to and including the closing documents on the day. The cost is a mere fraction of what a real estate broker gets paid, and is worth EVERY PENNY.
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Your experience is the same as mine in Florida, the original home of real estate hucksters. We sold a property this summer and the agent did a great job marketing and promoting the property and brought in a buyer. Once the price was agreed upon, and the usual due diligence period was underway with inspections and dickering over who would pay for what started, the agent stopped responding to calls and emails. She refused to offer any advice or information to help us finalize the deal.
It was clear that she was working only to realize her initial commission, and not to help us solve the issues. If we had made an additional $2 or $3,000, her percentage would have been too small to make it worth her effort.
She didn’t bother to attend the closing, and we never heard from her again. I tell the story to everyone I know who might be looking for an agent, so perhaps there will be consequences somewhere down the line.
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