Yes, Realtors Are Guilty of Steering

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The not-so-secret secret is out. Business Insider reports that realtors are in fact guilty of steering.

Their article is mostly talking about steering buyers away from homes that offer low buyer commissions.

But this isn’t the only way realtors steer buyers!

Unfortunately, as long as buyer agents are paid by commission, the agent has a financial conflict of interest with their client.

The more money a buyer spends on the house, the more money the buyer agent will be paid.

So yes, buyer- you need to be aware this does happen. Even though every realtor will deny it.

Buyer agents will show you their own brokers’ listings first (especially their own listings- where they get double commission).

They will try to convince you to buy as much house as you can and go for the top of your budget.

Buyer agents will ignore the cheapest homes and tell you they’re awful decrepit pieces of shit- whatever it takes to scare you away.

They will steer you away from homes that are listed by agents that they don’t get along with.

When you finally put in an offer, buyer agents may steer you toward putting in a higher offer than is necessary.

Of course not all agents are this way. But there are plenty that are.

My point is- the system sucks.

Buyer agents shouldn’t be paid using the current commission model.

It isn’t necessarily in your best interest to only see certain homes, to pay as much as possible, or to buy at the top of your budget.

Instead, it is in your best interest to find the best home for your needs. A home you love. A home in the right location. Even if it’s a fixer and offers zero buyer commission.

So what’s the best way to pay your buyer agent? What’s your ideal way to pay?

Because as long as a buyer agent makes a commission- their incentives are self-aligned, not client aligned.

I still think agents should be mediators.

My preferred choice still stands- one agent acts as the mediator between the buyer and seller. But I realize my opinion is probably unpopular.

People cry – “What if there’s a conflict of interest because the agent is the buyer’s mother, for example?”

Well- at least there is only one conflict of interest here instead of like 3+ conflicts happening. Besides- if it is disclosed, I don’t see how its that big a risk. But then again, I’m not someone who tries to milk every dollar out of the person sitting across the table from me.

Being fair and reasonable has never been more unpopular…

Thanks for reading,

HouseRat Zero

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