Conflicts of interest do exist and real estate agents are paid on commission, meaning their
focus is on closing deals. However, customer satisfaction is important
for most serious agents because referrals are their main source of business.
Listing Agent Conflict of Interest
Preference for a Direct Buyer Listing agents prefer direct buyers because they can keep
all 6% in commission without having to split it with a buyer’s agent.
Selling Faster for Less
Because agents are paid on commission, they are incentivized to sell a home faster, even
if they could have gotten a slightly higher price if they marketed it longer.
Laziness After Receiving an Offer
Agents might get lazy after finding an acceptable offer. Even though offers can fall through
at any time before contracts are fully executed, a listing agent might get lazy and stop showings
or actively pursuing other bidders.
Focus on Easier to Sell Listings
An agent might lose motivation if a listing is too hard to sell. If the property is priced
too high or otherwise lacks attractive features, a listing agent may lose interest or focus
and decide to spend more time on other opportunities.
Boycotting of Discount Brokers
A listing broker will likely resent a discount broker who’s openly offering commission
back to buyers. Given the option of working with a direct buyer or a traditional broker
who isn’t out to “disrupt” the industry, why would a listing broker cooperate with
a discounter?
Pro Tip: Fortunately for buyers at least, they can avoid the stigma of working with
a discount broker by signing up for a Hauseit Buyer Closing Credit. Hauseit’s partner
brokers are some of the most experienced, reputable traditional real estate brokers
in NY who never openly discount their services. As a result, you can discreetly save thousands
on your purchase without risking your deal.
Buyer Agent Conflict of Interest
Preference for higher priced properties Buyer agents tend to steer customers towards
higher priced listings so they can make more commission.
Preference for Listings with Higher Co-Brokes
Buyer agents steer their clients towards listings that offer higher co-brokes in the MLS.
Preference for Condos vs Co-ops
Buyer agents steer clients towards condos vs co-ops because they are dramatically easier
to close. Co-ops take not only longer to close, but take significantly more work due do the
co-op board approval process.
Preference for Easy Going Listing Agents Buyer agents prefer to work with easy going
listing agents. This makes a whole lot of sense because a difficult counterparty can
not only kill a deal, but can make it absolute hell.
Avoidance of FSBO listings Buyers’ agents will almost universally avoid
FSBO listings, which means the buyer might miss out on suitable properties just because
they are being sold by owner.
Avoidance of Discount Broker Listings Buyer’s agents may avoid sending listings
by discount brokers to their clients because there’s no need to help someone who’s
out there to “disrupt” the industry, especially when there are so many competing, traditional
listings available.
Pro Tip: Sellers can save money while avoiding this dilemma by signing up for an Agent Assisted
FSBO or Full Service for 1% listing through Hauseit. All of Hauseit’s partner brokers
are reputable, traditional brokerage firms who never openly discount their services.
As a result, other brokers won’t automatically know that you’re saving money on commission!
Conflict of Interest Real Estate Agent and Mortgage Broker
Conflicts of interest between real estate agents and mortgage brokers have decreased
significantly post financial crisis due to regulations like RESPA which prohibit kickbacks
for loan referrals.