I read this somewhere, I forget where:

With the residential market slow, builders and individual sellers are offering their agents more incentives than usual to move their properties. On top of standard commissions, agents may pocket thousands of dollars, travel vouchers, or other incentives. The buyer often remains unaware of these arrangements.

Um, yeah.

That’s bad. Sneaky. Shifty.

The agent, in his defense, isn’t doing anything illegal by taking a commission higher than the standard. I mean, it’s very few clients who have even asked me what I’m making on a deal. I don’t think they care.

And, as many have pointed out, it’s impossible for an agent to convince buyers to buy a home they don’t like.

Still, the whole situation seems a bit suspicious.

Possible solutions?

* Rebate all commission greater than the standard 2.5% to the buyer, in cash.

There actually might be a problem with this. Any money given to a buyer by his agent can be seen as the agent inducing the buyer to purchase one home over another. That’s against RESPA regulations, I believe.

* Reduce the negotiated purchase price by any commission greater than the standard 2.5%.

Problem? Same as above. Anything that looks like an agent tried to convince a buyer to take one deal over another, with the promise of cash, is against RESPA regulations, I believe.

* Let the agent have the extra money.

Doesn’t seem fair, does it?

Bottom line is, your agent should disclose his commission to you, upfront, well before the closing date. Perhaps when you first make your offer on a property. It’s not required, by law, but maybe it should be.

More: Do Real-Estate Agents Have a Secret Agenda? – By James R. Hagerty and Ruth Simon, The Wall Street Journal Online

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