Typical Conflicts of Interest in Real Estate | Hauseit®

Typical Conflicts of Interest in Real Estate: http://www.hauseit.com/conflict-of-interest-real-estate

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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 counter party 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.

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