I wish I knew before contracting with a Real Estate Agent
9 things I wish I new before mistakenly signing on with an unscrupulous buyer's agent.
I have learned through harsh experience how much of a parasitic scam some buyer’s agents and Real Estate Brokerages can be. They operate largely at the expense and ignorance of those they purportedly serve. That is not the definition of an honorable profession. They will pretend to be your best friend, then take from you as much as you'll allow and have no qualms doing it.
Here are the things I wish I knew before engaging with a buyer's agent:
1) The National Association of Realtors lost an antitrust lawsuit in 2024 that changed everything! Full details here. Among other things, the settlement forced them to stop requiring set % for buyer's agents or to get onto MLS. Before, most sellers were commonly required to pay 6% of their sales, 3% to the seller agent and 3% to the buyer agent. While negotiations were possible, most people then and today did not and do not know that they can negotiate compensation and very few Realtors will tell you this is the case. They will just default to requesting the same 3% or 6% and rely on your ignorance to give them compensation that grossly outweighs the service they actually provide and provided in the past. Other changes that were required as part of the antitrust lawsuit include their requirement to sign at least a non-representation agreement with a prospective buyer before showing them homes so buyers know they aren't obligated to sign a mandatory 3 month non-compete exclusive contract with them or sign any obligatory contract at all. They will not tell you this though. Another thing they won't inform a seller is that they don't need to pay 3%, nor even 1/2% to get into the MSL database anymore, there are services online that will put your listing up on MLS for as little as $100. For instance, A quick Google search came up with this company . I have no association with this company by the way nor have used their service, just demonstrating how dishonest most traditional realtors are using our ignorance of the market against us. It is the equivalent of a restaurant asking you to pay $1500 for a hamburger because you didn't know you could get one for $15 at any number of other restaurants, no exaggeration on the mark up either. If you are a seller, you can easily find someone on the internet to put your listing up on MLS for $100 then just get a photographer to take some photos for a $200 and then find an a la carte realtor that will do the paperwork for a few hundred and avoid getting scammed out of 10's of thousands of dollars.
2) All broker requested compensation and fees are 100% negotiable. They might have this fact in the small print, but your dishonest agent will not point this out nor explain what that means. Again, most people don't have a reference for the market nor a good idea of what agents are actually proposing to do on their behalf. If you still want to use an agent after you have educated yourself, arm yourself ahead of time with what it is you are willing to pay for what they are actually offering and then present your terms boldly. If they don't agree to your terms, walk away and find someone who will. I personally now think it is much easier to just work directly with home sellers or their agents rather than use a buyer's agent as a middleman. Further, I'd recommend NEVER use percentages for compensation unless it is something you calculated yourself. For instance, if you are willing to give the agent $900 for their services, and the house you are buying is $400,000, tell them you are willing to pay .225%. Even better, tell them you are willing to give $900 and tell them to take it or leave it. Never accept 3%, 2% or 1% without knowing the actual dollar value of those percentages. They use these deceitfully small percentages as a means to obfuscate what you are actually paying for their purposely vague services. Figure out what you are willing to pay and stick to it when negotiating or walk away, there are so many agents out there that are willing to do services for reasonable set fees or fair hourly wages.
3) All Agents are required to have you sign an non-representation agreement before they show you any homes. This is to prevent them from buttering you up to feel obligated to include them via contract, if they fail to do this, report them. Don't let them con you into signing an exclusive broker-buyer agreement. You do NOT have to and never should, you have the right to see homes without any obligation on your part, don't be scammed! Also, as you see homes, your agent will be friendly and do everything he can to show you he has your best interest in mind. He will use this social leverage and use your good will to then shoot for the moon on what he asks you to pay. He will tell you that it is most likely the be paid by the seller which used to be the case, but is no longer due to the antitrust lawsuit. What he won't tell you is that you are on the hook for all his fees if the seller does not agree to pay. A big reason NAR was required to stop mandating sellers from paying buyer's agents was for this very reason, buyer's agents were telling clients that "hey, sign on with me, it is free for you because the sellers are paying for it". So of course, why wouldn't a buyer sign on with a "professional" for free to walk them through the sale. Agents were then forcing sellers to pay 3% for the privilege of them bringing their locked-in clients to them. It was a rigged game. Now sellers no longer are mandated to pay the buyer's agent fee so they no longer can lure buyer's in with the false claim that their services are "free" to them.
4) The exclusive buyer-broker agreement is 110% one-sided in favor of the agents. Their contracts are meticulously crafted to only benefit them and to lock you into paying no matter how badly they perform. There are no metrics to even define what "badly" is, it is a scam. Do not trust your friendly agent as he/she rushes you through the contract so “we” can get “our” offer in! Read EVERY WORD yourself and research what each section and phrase means, take multiple days if needed and phone a friend that knows something.
5) The only way to hold a bad agent accountable is physical proof such as audio or video recordings. When they present the contract to you, I’d recommend recording them with your phone. Heck, for me, I’ll never have another conversation with one without recording it. They will attempt to skip over anything they think you will object to. They will use a simple vague description of their services such as “locate and negotiate for the acquisition of a property” giving you zero metrics for success or failure and offering you zero options to fire them for any reason other than for fiduciary ethics violations which are impossible to prove unless you recorded them lying to you. They are supposed to act in your best interest but they will then claim that “ I know that silly buyer doesn’t recognize how amazing he has it, but paying me $24000 IS in his best interest because I’m self professedly better than the guy who will do it for $500”.
6) They purposely hide what it is they actually do so the trusting ignorant don't know what they are actually paying for. They hide behind how little they do for the compensation they request. What they actually do is largely concierge service which on the free market goes for between $30 to $75 an hour. They charge between 6 and 50 or more times that rate depending how expensive your home is. So what do they do? They are very adept at being personable and are usually good company. Beyond that they will make phone calls and arrange things, make a few calls to negotiate offers to sellers agents or sellers that you authorize, they will walk through houses with you and give you advice about the home and conditions of the home that should not be trusted per the fine print in their contracts, no joke. They will also give you referrals to services that they do not guarantee per the fine print in their contracts. They will work quite hard for you until they finally get you on the hook with an exclusivity contract (you never have to agree to exclusivity). In the past, they were helpful in finding homes but most people find what they want on Zillow now for free. That is basically all they do, they will say things like “but we bring 20 years of experience to help you avoid pitfalls!”. Use google, find someone who will do the job for a reasonable price of less than $1000 total and save yourself $20k. Or save yourself the $1000 and do it yourself. Seriously, you can easily learn everything you need to know to do it all yourself after a few weeks of research or have a more assertive friend do it for you for free or find an al la carte agent to do it for a small fee, but do not pay the “stupid tax” I just did and get taken for 3%. Use the lack of parasitic agent fee baggage to talk down the seller instead.
7) Never ever agree to pay a percentage value of the home sale as part of compensation as a buyer, never! Only do it as a seller if they throw a ton of value such as staging etc. As mentioned in learning point 2 above, they use % because the number looks small and it just as importantly it scales up in value for them despite them offering no additional service. No honest person would do this. They are attempting and have been maddeningly successful at obfuscating the real amount they are requiring you to pay for their service ($12,000 on a $300,000 home or if you are fool enough to accept it, $24,000 on an $800,000 home). You see, they give you the exact same vague and superfluous service regardless of the price of your house, but they dishonestly charge you more if your house happens to cost more. For perspective, a concierge would need to work 320 hrs at $75/hr to earn $24000. Most buyers agents likely do less than 20 hours of work, many less than 10 if you were the one who found the house. Ask me how I know. Who can sleep at night charging this you might ask? Realtors. On average, the US pays 6 times more for real estate service than they pay in the UK, that is 600% for you % lovers. They supposedly have fiduciary ethics requirements to include keeping the buyers best interest in mind, full disclosure, loyalty and honesty. The most important thing to tell a buyer if they truly had your best interest in mind is that their service is worth less than $1000 but I'm going to try and charge you $20,000. Good luck on holding them accountable on any of those conditions, again, we are talking about the individuals that perpetually con unwitting victims out of 10’s of thousands of dollars each and every day and don’t blink an eye.
8)They will try to lock you on the contract into paying them in the event that the seller won’t pay them the full amount they request because they can no longer demand it of the seller. Do not let them get away with it! Don’t sign the agreement! Do not allow the false pressure of faux obligation and pity to lure you into signing either. Again, they are not your friend, a friend will not steal the shirt, shoes, and pants off your body and smile the whole time. What you should do if you want one is to pay them yourself, if you have the seller pay them, they will say they work for you but their incentive is not to help the seller especially if their compensation is tied to purchase price.
9) EVERYTHING in the contract is negotiable, everything. If you don’t like anything and they won’t change it or remove it, walk away. If you are fear mongered into using an agent or I haven't convinced you they aren't needed. Go forward with extreme caution into a contract. Always negotiate the broker fees, know what you are willing to pay and present it and stick to it, use set fees or $/hr and lock in exits based on specific performance metrics that you define or gates of progression in the purchase. For instance, $100/showing, $50/hr negotiating and potentially offer a scaling bonus for how much they can talk DOWN the asking price etc. They are only of value if they bring YOU value, otherwise they are just a parasite. Use their greed to actually get value for what you buying. They say they have 18+ years of master negotiating skill, make them prove it and ensure they don't get paid unless they perform by bringing YOU value. They will try to get you to pay 3% which is insane at any current home cost as shown above. As mentioned before, you don’t get any more service for a more expensive house, in fact, if the seller pays the buyer’s agent fee, then your agent is incentivized to encourage you to make the highest offer as possible on the house you want because he/she will make more money, thus a scam. They say they work for you, but once they get the seller to agree to pay them, you have lost any leverage you had with them as they will get paid regardless of anything they do or don’t do for you unless you walk away and give up your earnest money, they have full control. Sure, they will tell you they work for you but there is zero, absolutely zero incentive to work hard or negotiate in good faith the house price or concessions. None. They pretend they are doing you a favor by having the seller pay their fees but that is just their means to an easy windfall at both your and the seller’s expense. Be wise and learn from my mistake and the mistake of every other unwitting victim.