Topic Objective: Provide home buyers an awareness of the illusions in the industry and why exclusive buyer brokers identities are not widely known by the masses.
Home buyers can not successfully purchase a home without understanding how the industry works. The sad fact is, most buyers don’t identify the illusions they must deal with. When a buyer learns that most real estate agents will tell buyers what they want to hear instead of what they should be hearing that buyer has reached a stage of awareness that most buyers never reach. Real estate agents are trained to be sales people. The process starts with the first phone call or meeting at a house. The focus is always on the good features of the house or what all the agent will do for you. This focus keeps the buyer from seeing any undesirable features of the house. The agent’s goal is to get the buyer interested and to quickly obtain a contract on the home. It is amassing how often these agent will inform the buyer that there is another offer pending. Oh, really? Do you wonder why?
While the history of the industry is interesting, what you need to know are the illusions. Most states have real estate laws that are quite similar. Therefore, this information will be general, applying to all states, however minor differences may exist. The National Association of Realtors (NAR) is heavily involved in the creation of laws. This involvement comes about through their leadership and funding (NAR has 1,000,000 plus members who pay dues of approximately $80,000,000 annually.) Real estate associations at the state level with NAR‘s funding lobby for legislative changes which have a negative impact on all consumers.. Is this involvement good for the home buying consumer? Definitely not!
Every real estate broker and agent that wants access to the services of multiple listing services must be a member of NAR and their state association, there are some exceptions brought about by court cases. The millions of dollars paid in dues gives NAR and state associations power to control the industry. The control benefit’s the major real estate brokers. Through out the country laws have been created which put home buyers at a disadvantage. These laws are driven by the desire of the brokers to want both sides of the commissions (listing and selling) the broker collects from the seller when a home is sold.
The history reveals that agents have always made buyers feel that they (the agent) was working for the buyer. A study conducted by the American Consumer Federation in the late 70’s showed that 75 % of the home buyers thought the agent helping them find a home was working for them, when in fact they were legally bound to work only for the seller.
In the mid 80’s a few real estate brokers started serving only buyers. These firms were known as exclusive buyer brokers. The major brokers knew this concept would be popular with home buyers and they began to push for legislation that would allow their firms to offer buyer agent service on in-house sales ( this is when their firm list the home and also secures the buyer for the property.) The legislation created what has been classified as a
