For Realtors, broker reciprocity just has to be the best thing since sliced bread. As a listing agent I know that other agents are looking at my listings and they will be paid if they find buyers for them.
When I am acting as a buyer’s agent I know I have access to an inventory of homes that I can show my buyers and I will get paid for my work if they decide to purchase and if the sale closes.
As for other agents finding buyers for my listing, will they seek out buyers for it? Should they? That really is kind of impractical, yet we talk about it all the time. I used to get those notes from other agents advising me that they have a new listing and I should "show and sell."
When I read our state agency disclosure it looks like I am supposed to be representing buyers and/or sellers, and the buyer’s contract reads the same way. I am supposed to be acting on my client’s or clients’ behalf and with their best interest foremost on my mind.
My job is one huge conflict of interest. The more they spend the more I make, yet most buyers would like to spend as little as possible. Also, I am a salesperson and I am compensated only if I sell something.
In our multiple listing service there is a kind of standard payout on the listings for buyer agents. I have no idea who thought up that number or why it stuck, but it is consistent. I know it is not the same in every market, but that isn’t the point: It is consistent in my market.
Some listings have a payout that is higher than average, and the lowest-priced foreclosures have a lower-than-average payout. I have asked listing agents why they have a higher payout and they tell me that it is an added incentive to the buyer’s agent.
If I have a buyer who is looking for a home in an average to above-average price range and they choose one where the payout is higher — I have to admit I like the extra money, but I am focused on finding the right home for the buyer instead of the payout.
Where I have a problem is with the idea that I would show them one home before another or in some way encourage them to buy one home instead of another because I could make more money. …CONTINUED
If I am acting on my client’s behalf, how is it in the client’s best interest if I make more money? If I want to make more money I should sell higher-priced homes or more of them.
I think it is unethical to recommend or try to sell a home to a buyer because the payout for the agent is higher. No wonder some people think real estate agents are crooks. Some already think that it is our job: to get them to spend as much as possible.
If an economic incentive is needed so that someone will buy a home, why not give it to the buyer? The buyer is the person spending the money and making the decision. Agent incentives are not listed for the public but incentives for buyers often are, and buyers are influenced by those.
In Minnesota, our agency disclosure law states that we owe clients loyalty and fiduciary responsibility and more. They owe us whatever we write into the contract as a fee and legally they owe us nothing more.
Is it ever in our best interest to not act in our clients’ best interest?
Do we really gain anything in the long run from those buyer’s agent incentives?
Are there agents who steer buyers toward houses where the payout is higher?
Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog.
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