The Most Common Lie Agents Tell Buyers,
February 10, 2021
You’ve Been Told A Lie
Last month, the Department of Justice and the National Association of Realtors entered into settlement negotiations about the NAR Code of Ethics and policies involving agent commissions or compensation. One issue the Department of Justice raised is with agents who work with buyers and describe their services as “free” or “no cost.” Admittedly, it is a common practice for buyer agents to solicit buyers by explaining that the seller pays the agents compensation and therefore, the buyer agents services are “free” or “saves the buyer money” or “gives the buyer more buying power.” The jest of the DOJ argument was that sellers build that cost into the home price, and therefore, both home buyers and sellers bear the expense. The DOJ made this argument, and they accused buyer agents who make such claims as engaging in misrepresentation. Here in Tennessee, this allegation is even more egregious when you consider that our State requires buyer agents to have signed representation agreements that outline their compensation in writing.
Required By Law
A Tennessee agent is required by law to have a representation agreement in place before they identify themselves as the buyer’s agent or acts as the buyer’s fiduciary representative. The representation agreement must outline the agent’s compensation. Many buyers do not read, do not know, or were told incorrectly that the seller paid both agents. Suppose the agent is using the Exclusive Buyer Representation Form from the Tennessee Association of Realtors. In that case, it states, the buyer is required to pay the agent the agreed-upon compensation if the seller does not offer to pay. Let me be clear here. If the agent has a signed representation agreement, the buyer and the buyer’s agent have already agreed to compensation terms long before they ever look at the first house.
Did You Find Your Property
Now consider that most buyers do not use a buyer agent to find their home but instead search the same database the agent has access to through syndication sites like Realtor.com or Zillow. Consider the role the internet has had and the many helpful articles, blogs, and free advice through trusted nationally recognized sites or award-winning apps, and homeowners can be left wondering, “Why even offer to pay a buyer’s agent anything?”
Get A 5-Star Agent Without a 6% Fee
In the past 24 months, I have represented 36 homeowners who have offered nothing more than a $1.00 (One Dollar) buyer agent compensation. Every single home closed spent no more time on the market than our competitors or historical norms. Out of those 36 homeowners, only five buyer agents asked the homeowner to pay their compensation. Of those 5, the homeowner negotiated substantial savings. The average discount off the buyer agent fee was 85% off market norms. The market has changed, and the only reason a homeowner pays 6% anymore is that they want to.