The Real Estate REplay
Host Wendy Gilch, and a rotating cast of expert co-hosts, break down the good, the bad, the unethical (and sometimes illegal) things other sellers and buyers experienced while buying or selling a home.
Learn what went right, what went wrong, what they would do differently and how to spot red flags before they become a problem.
The Real Estate REplay is powered by consumer advocate group, Selling Later.
www.sellinglater.com/resources
The Real Estate REplay
Part 1: Consumer Alert - The Truth Behind Brokerage Fees and Real Estate Contracts
If you are thinking of buying a home this year, you need to listen to this episode!
In light of the many antitrust lawsuits floating through the court system, the messaging now being pushed to agents is to get a buyer broker agreement signed with their client ASAP. Unfortunately, most of these broker agreements are not "pro-consumer," even though the industry loves to throw that term around like candy.
In this episode, real estate attorney and licensed broker, Doug Miller, joins us to expose who is writing these agreements and how certain contract clauses can undermine a fair deal for homebuyers. Additionally, the episode casts light on the subtle ways consumers end up footing the bill for brokers' business expenses.
Learn About Buyer Broker Contracts
Steve Brobeck's Report On State Commission Boards
Review Current Antitrust Lawsuits
State laws and regulations may vary.
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So what happens if you go on Zillow and you hit submit because you want to go see a home and Zillow pairs you up with an agent that's willing to pay out like 40% of their commission to meet you and before you even walk in the door they're saying hey, like for us to work together, I just need you to sign here, here and here not explaining it, not reading it to you and signing that could lock you in to work with them for like a year, with no way out, depending on what state you're in. Welcome to season four of the real estate replay. This season we're continuing to share the good, the bad, the unethical and sometimes illegal experiences that sellers and buyers have had to help you not get screwed over. But we're also going to spend time talking about the many lawsuits floating around the industry and how they can impact you, perhaps even sprinkle in a few episodes explaining how all these quote unquote helpful companies are making a crap ton of money off of you.
Speaker 1:In light of the many, many, many, many antitrust lawsuits flying around which I think were up to 16 in the US I'm not sure there are conversations and changes being made that can greatly impact home buyers beyond just who's paying commissions, and while in the past, most states did not require you to sign a contract when working with your buyer's agent with some exceptions being like Maryland and, I believe, virginia that's starting to change. The messaging sent to agents and even some changes in the states like Washington is that you should get your buyer to sign a contract with you ASAP. And while these contracts can be helpful to spell out what your agent expects to be paid and their duties owed to you when working with them, most of these agreements are written by state and local realtor associations or the local MLS, with some exceptions of states like Wisconsin, in which the real estate commission board creates this contract, but the commission board is also filled with industry people and we'll get to that. So these associations and organizations create a boilerplate contract that goes out to brokers, who can then make quote unquote modifications and, as you can guess, these contracts are not neutral and do more to protect the real estate agent than the consumer. So this episode is a big old warning to home buyers to explain what you might be signing, how some state associations created some incredibly unfair terms and how you can better negotiate for yourself.
Speaker 1:And so, to help me dissect these one-sided contracts, I've enlisted the help of my friend Doug, who is not only a real estate attorney but also a licensed broker.
Speaker 1:I've known Doug for four years, but just this last year discovered that Doug is the catalyst behind the molar lawsuit, which is the next antitrust case in real estate to head to trial this year. And so for all you conspiracy theorists, especially Anthony Lamaccia, that thought it was an institutional investor or Zillow behind these lawsuits surprise, it wasn't, it was Doug. He actually helped dismantle the title sham companies in the early 2000s, in which agents were referring their clients to title companies, pretending that they owned them and then pocketing the money. He's the founder of CARE, which is the consumer advocates in American real estate, and runs his own company, which is a hybrid model of an attorney and a real estate broker, to which he saves clients money by utilizing buyer rebates. So, Doug Miller, thank you for joining me and letting me do like five minutes of yapping to introduce you, because I think this is a very important topic and a very much a buyer beware situation we're entering into.
Speaker 2:Happy to do it. By the way, the one point of clarification on my what I do now I got kind of upset with how much realtors were charging for a lot of years and I set out sort of an experiment to prove that realtors were charging too much and so I wasn't doing this to start a new business and to grow it. I wanted to prove that you could hire an attorney to do everything a realtor does, plus give legal advice for about half the cost. And I've proven that concept and I still make way more than my hourly rate of 350. And so there's some problems here the fact that a realtor who's gonna provide less service than I do is charging twice as much as I am. And they think that's okay. And they claim that they're entitled to these fees because they're negotiable. So we can talk about that as we get started in the buyer agency agreements. So I think you have some questions you wanted to start with.
Speaker 1:Yeah, I think we probably have to do a disclaimer, so this episode is strictly educational purpose only. I'm not an attorney and Doug is not your attorney. To whomever is listening, it's worth mentioning that every state is a little bit different, with rules and regulations, and what we discussed here highlights things you should look out for and discuss is some of the worst clauses we've seen in broker agreements, cause some of them are pretty awful. Our hope is, by highlighting these sections, you're better prepared to negotiate your own agreement with your agent and not be trapped into some one year contract with no way out, no opportunity to negotiate with your agent, or end up paying some bullshit fee because they're everywhere. So before we dive into the crux of what's in these agreements and what you should look out for, I think it's important that we explain the different organizations involved in writing these agreements. So we have, like, the local realtor association, we have the state realtor association and we have the national association of realtors.
Speaker 1:And sometimes you have some regional ones too and some okay, regional too, right, so we got all these groups. Now the national association doesn't dip their toes in these individual state contracts. Usually that's the state or the local association of realtors and with that is also some MLSs, so the company that everybody puts their listing is into that then gets filtered to different brokers and Zillow and all the other website portals to find homes. And there's also the state commission board and the difference between the state commission board and the state realtor associations is that the state commission board is run by the government, correct?
Speaker 1:Well, I mean, it's not okay, it's under the umbrella of the government, but who calls the shots is maybe a different story, but it's technically a government entity, correct?
Speaker 2:Well, it's the commerce department it's called, in some states it's the board, in other states real estate division. They've got all kinds of names throughout the country, but for the most part I think Steve Brobek with the Consumer Federation of America did a study showing that most of the people that comprise those commerce departments and I'll just call them commerce departments sort of generically are realtors and they have a self-interest in the way they regulate their peers, cause they're probably doing the same things that their peers have been accused of, and so the likelihood of them enforcing any laws if the laws are actually written in the consumer's favor, but if the likelihood of them enforcing them is minimal, especially against big companies, if there's a new company with some sort of innovation that's come out, you can bet there'll be an enforcement action, because the commerce departments pretty much take their marching orders from realtors.
Speaker 1:And so it's important to say so.
Speaker 1:The commerce department, or the you know, in my it's the real estate commission board, but we'll just say commerce department for general term.
Speaker 1:There is supposed to be three consumer seats, and one of them has been empty since 2021 or 2020 in my state, and I have called the commission board and said, hey, I'm interested in this consumer seat, like do you know what I have to do? And the person that answered the phone had no idea, and so then I finally got a hold of an antitrust person that sits on this board and she said you have to be Basically, the government has to select you to be on this board. So then I'm like, well, shoot, okay. So then I called the attorney general's office and nobody answers their phone. So I'm like I don't know how you get on here. But that report, which I'll link to the podcast description from Stephen Burbeck from the Consumer Federation of America, shows that there are multiple, multiple states with empty consumer seats and those are the outside voices and opinions outside of realtors or realtor friends that are making these choices, or lack thereof.
Speaker 2:Yeah, filing a complaint with these organizations, these so-called government organizations among attorneys, it's just a joke and it's been that way for as long as I can remember. To file a complaint, you just would expect nothing to happen, and so that's why every year I file one or two, sometimes more, and I had a 30 years of doing this. I have yet to see a complaint, no matter how egregious, result in any kind of an enforcement action. The one time I had a success was when and you spoke about this earlier with the sham title companies and I went to the insurance division of Minnesota and very different makeup there and reported what was going on and they took me aside and said Doug, we're gonna do this enforcement action, but you have to promise us that you will not say a word about this, because if you do and it gets out to the real estate division, they'll shut us down.
Speaker 2:That's how bad it is. And so we got that enforcement action done. They find a bunch of realtors and of course then the real estate division leaked that it was Doug Miller that did this and that's when I owned a title company resulted in a huge boycott of my title company. So it's yeah, and then the enforcement people over there were absolutely horrible. One guy went out on the road and started teaching other commerce departments boards around the country sort of went on a speaking tour telling them what he had done and it was more of a self-promotion kind of thing than anything else. But it did result in a lot of other states going after these organizations that were largely comprised of realtors. But the thing that you have to remember is this did not hurt the big brokers.
Speaker 2:This helped the big brokers because the big brokers had their in-house title companies where they were using steering methods to sort of almost blackmail their agents into using their in-house title companies, and these sham title companies were taking business away from them, so that enforcement action actually benefited them, and that's probably the other reason we were so successful.
Speaker 1:Right and just to speed everyone up here. So what was happening was real estate agents were making an LLC title company and claiming it was their title company, but really they were funneling business to a different title company and then getting money for referring essentially to. They created a pretend company to get money, which sounds so very similar to the he's. I'm so mad about this. These mortgage companies that are asking real estate agents to spend 20 hours to get their loan officer license so that they can become an employee of the mortgage company and refer all their clients and they'll get half a point or up to a point or percent I'm sorry, half a percent or more if their client closes with that specific mortgage company that they quote. Unquote work for.
Speaker 2:And none of this would work if agents truly acted like agents, fiduciaries, representing their best interests above all others, their clients interests above all others, especially their own. This is called self dealing. When they do this, it's very illegal. It's considered the same as theft by swindle. When it's done in a fiduciary relationship, agents don't understand what this all means. They say, well, yeah, I represent my client's best interests. I say no, you don't have you steered anybody into your house title company. And if they have an in house title company, they have most of them, and so when they do things like that, it's a breach of the fiduciary duty. The problem is there's no enforcement of fiduciary laws against these realtors. They have figured out ways to exonerate themselves and it's almost impossible to go after these agents.
Speaker 2:I have a lot of ideas. I know what works and what doesn't, and there are some good cases that still like the case we did against oh God, I think it was first American for setting up those sham title companies. Maybe it was universal title I had to go back and look but in any case that case failed at the class certification level. It never got decided on the merits. And so when you steer somebody into your in house title company. I believe it's a terrible breach of fiduciary duty. The broker is encouraging their agents to prey upon their own clients. That's unheard of in these kind of relationships, yet it is done in almost every aspect of the transaction.
Speaker 1:All right. I think part of the problem is, you know, I've had the misfortune to meet a lot of really not so great people in the industry, but a lot of people that are really great that I think perhaps were never even really fully trained to understand what their duties are or like how deep this really goes. I feel like that kind of gets removed from a lot of training and conversation. But it's important because you're going to hear like fiduciary duty and exclusive agreement a lot now as a buyer or people saying for me to represent you, I need you to sign this contract and hence this is where the buyer broker contract is going to come and play. And I think it's really important. And I'm glad that you're able to dissect this with me, because I am not a lawyer. I've read like 30 different contracts and as a consumer, I can see some issues, a lot of issues. So I think it's really important that we kind of dissect, knowing that every state is different.
Speaker 1:There are going to be different state rules, but in general, you know, I think it'd be good if we just went like term by term or section by section to just explain what the heck you're going to be signing and what to look out for, because some of them, like my state specifically, are pretty bad.
Speaker 1:So what happens if you go on Zillow and you hit submit because you want to go see a home in Zillow pairs you up with an agent that's willing to pay out like 40% of their commission to meet you, and before you even walk in the door they're saying, hey, like for us to work together, I just need you to sign here, here and here not explaining it, not reading it to you and signing that could lock you in to work with them for like a year, with no way out, depending on what state you're in. It commits you to how much you're paying them. It removes your chance to negotiate what you're paying them if you just sign it without really looking at it. And I'm blabbering now so I'm going to stop yapping away, but I think it's really important that we just kind of go section by section.
Speaker 2:Yeah well, you're right, though the way these things are presented is really important. If they were in fact negotiable contracts. Instead, what they're called is a contract of adhesion there's no way to negotiate them. They won't let you negotiate them. If you try to, they'll say the broker won't allow them to, and so these are contracts that are not negotiable. Some of the most important terms you can't do anything about, and the brokers probably love this idea that they're going to get these things signed early on.
Speaker 2:In fact, in Minnesota we have a statute that says, before you perform any acts as a buyer broker, you have to have a buyer broker contract signed. Is it done? No, the agents don't do it, because they tell their clients they're going to do them a favor. And you know what I'm not going to make you sign that contract right now. I'll wait until we get a purchase agreement. Well then it's too late, and they've already earned the buyer broker commission from the listing broker, because that's how commissions are paid, because who decides if that buyer broker is entitled to that money? The listing broker. And if that's the only contact that the listing broker has had is with that buyer broker, it doesn't matter if somebody else comes in. They're going to pay that buyer broker and there's not a thing the buyer can really do about it.
Speaker 1:Right, and it's worth mentioning too that most of these, at least these state realtor association, local, even some of the MLS contracts are copywritten and you cannot get them until an agent gives it to you.
Speaker 2:So the purchase agreements it's wild.
Speaker 1:So I went through maybe 30, maybe 30 different contracts. My brain was spinning. But most of those I had to ask a real estate agent to send me them because there was no place online to look for them. So you don't even get a chance unless you're having a meeting and while you're interviewing your agent to be able to look at this, and some of them are so dense but you have no access to them. It still makes me mad that, like why doesn't the state at least my state provide a more neutral contract? I can guess it's because on that board sits a COO of a major brokerage in my state who probably doesn't want to add a general contract about rebates or how to get out of this contract. But we can, we'll get back to that. That's just my piece.
Speaker 2:And it's important to know too, like the way these contracts are used here in Minnesota and I've seen it throughout the country is they lock these buyers into these contracts and it entitles them to a fee if that buyer buys a house in the next year. And let's say they, what they'll often do is they'll put that buyer broker contract signature in an e-signing session combined with maybe 40 pages of a purchase agreement, but the buyer doesn't know they've signed it. They go ahead and the agent that they met with off the Zillow or one of these other websites says you know what? Let's just write an offer. Just so I can show you the process.
Speaker 2:I've got a case like this active right now and they sign the documents, put a low ball offer in, knowing it's not going to get accepted and then afterwards they decide they really don't like this agent. They're really kind of slimy, whatever the case may be. Or they've said something offensive, which I see happen all the time, and they try to fire them and they won't let them, the broker won't let them, no one will let them out of the contract. And then six months later they hire another agent, tell the agent about this other contract and that agent doesn't say anything, says, yeah, you're fine, help some buy a house. They get paid 2.7%. Then the other company sues the buyer, right, because they want it. Yeah, it's amazing how bad it is out there and these contracts all make it possible, Right, yeah, and so, yeah, I know you want to take into this All right.
Speaker 1:So let's talk about general terms, and so some, actually the one that's recently come out in Washington supposedly has like a preset 60 day term which you can change. Some people will put it in for a year and you can 100% negotiate what the term is, so when it starts and when it ends. And I think it's important to say also that it could be specifically for one house, so like, if you have to sign it and you don't know if you like that agent, it's fair to say, could you not just put, like, the address of the home and not the date?
Speaker 2:Great point yeah.
Speaker 1:The time. Wise like, I would never sign one of these for a year Unless it has a meaningful termination clause.
Speaker 1:Yes, let's move into that, because in my state association the only way out again we should remind home buyers this agreement is with the broker or broker in charge, depending on what your state calls them. So it's not even really with your real estate agent. So you could go to the broker and be like, hey, this real estate agent sucks In my state. The only way to get out of this agreement, how the state association has written it, is if the broker says sure, I'll let you out of this.
Speaker 2:Right, like my contract here in Minnesota says this contract may only be canceled by written mutual agreement of the parties. Well, that sounds fair, doesn't it? Except the broker has to agree, right? If they don't, you're stuck, right. That's.
Speaker 2:The other thing is when they wait to get these contracts signed. There's two really important points in time when these contracts are signed, before they form an agency relationship, or after, if they get it signed right up front. Well, there's no agency relationship at that point in time, so they don't have to explain everything to their client, they just can get them to sign it and there's no fiduciary duties owed If they wait until an agency relationship is formed to get it signed. So, in other words, the agent's been giving them advice and becomes what we talked about the other day, an implied agent, where the consumer becomes a client and they have a right to rely upon the agent's advice. Well, if that relationship has already formed, and then the agent presents one of these forms, well now the agent is in a pickle. They don't know it, but they have a duty to make sure they get informed consent, that they explain every aspect of this, but, more importantly, that they're representing their client's best interests above all others, especially their own, which basically says this contract you shouldn't sign it.
Speaker 2:This is the advice that should be coming out and on another topic that you started, the reverse of what you were saying before. That's also important to recognize. Let's say you sign one of these contracts, it is with the broker. And let's say it's your best friend who you've hired, and they're super agent, and that agent is falling out with a broker and leaves the firm. Guess what? You don't get to go with that agent. This contract does not entitle you to stay with your agent. You're stuck with that broker, the broker, and they can just assign you if somebody right out of real estate school, who may or may not have a kindergarten education and may know nothing, and you're stuck with them.
Speaker 1:Right. It's important to say too. A few of them I forget which states they were had a clause in there that said if the broker sells to another brokerage or goes out of business, you're being transferred to the broker either who bought that brokerage business or who assumed it. So you don't even get to if your broker goes out of business. In some of these contracts they will just sell your contract off and you are with that broker now and you agree to it. So you don't get to just leave Like you're now being passed on because you agree to it.
Speaker 2:Most people think, though, that the contract is for hiring that particular agent, and these agents want them to believe that, and it has nothing to do with that agent Right. Everything to do, like you said, with a broker, with a broker.
Speaker 1:And it's important too. So these are templates. I do know of brokers that do put a clause in there that say, if you're not happy, you can term with a certified letter without having them to agree to it. There are certain people that have made contracts that you can walk away, but they add a protection period in there, which I think is important to note. So that protection period is like 60 days, 90 days, 100 days a year out from when you termed that if you go back and buy a house that they showed you, that gives them right to come after you for commissions, correct?
Speaker 2:Yes, yeah, it's like that all over the country, and there are a couple contracts throughout the US where they do have meaningful termination clauses. I think California might be one of them. There was somebody else that had pointed out a contract as well where it actually had a legitimate termination clause in it.
Speaker 1:It's not my state. I can tell you that.
Speaker 2:Mine says they're rare.
Speaker 1:You can terminate with broker approval. That's it. So let's go to commissions, in which I think is incredibly important because of the 30-some agreements I have read, only two of them have stated that the buyer has an option to be credited excess commission. A bunch of them said, hey, I expect to be paid 2%. If the seller's offering less than that, then you're paying the difference, but if the seller's offering more than that, the agent just gets to keep it anyways. And so I think it was Northwest MLS and the California State Realtor Association had sections that said where the buyer can check off, they want to be credited towards their closing cost excess commission. My state ignores that whole subject and just ignores excess commission completely.
Speaker 2:We have a really fun clause in our contract and if the contract, let's say the buyer brokerage fee is 2.7% that's kind of what the fixed rate is here in Minnesota and I can say that because it is, it is fixed and it's terrible. I would say 90% to 95% of the commissions on the MLS are at 2.7% and I'd run numbers on that in the past, and so that essentially in the contract it creates a bottom and if they put 2.7% in there, that means that's the least amount of money they're willing to accept, which is a huge amount of money On a million dollar house. It's $27,000 for a house. They probably didn't even help. The buyer find it's outrageous.
Speaker 2:But here it says, let's say they put 2.7% in there and there's a box here that they get to check off If they collect that money. The 2.7% or shall not reduce any obligation of buyer to pay the compensation by the amount received by seller or seller broker. So in other words, if the listing broker is paying them 2.7% and they check off shall not, here they owe their buyer broker another 2.7%. And this is an optional negotiated clause, making the consumer think that they're actually being protected by this realtor because oh, we'll check shall on that one, because I'm not going to charge you double, doing them a big favor. I'm sorry that clause doesn't even belong in the contract. It's obnoxious what they can do.
Speaker 1:Who wrote that contract?
Speaker 2:This is the Minnesota Association of Realtors.
Speaker 2:In other words it's a group of competitors sitting behind closed doors colluding to come up with terms, supposed to be negotiated terms behind closed doors that give them a huge negotiating advantage. It's put out as boilerplate and they say well, that's the standard form and it's approved by the realtor association, so you should sign this and you should feel good signing it Right, and so I know you can't go knee deep into the commission conversations because you are the catalyst to these lawsuits, but I think it's important to say that section is negotiable.
Speaker 1:But if you are not rating and not paying attention, you could negotiate 2%. But in my state association it says nothing about excess commission. So if you don't bring that up and you don't have that written into your contract, if the seller offers more, I'd like it to be credited towards my closing costs per lender approval, like it doesn't matter. You didn't negotiate anything because it really doesn't matter, because you're agreeing to pay the minimum, but what you're being told to pay, you don't get anything over top of that.
Speaker 2:You know Absolutely. So let's say you put 1% in, here is how much is owed to your realtor. And let's say the real listing broker is offering 2.7. That 1% is meaningless because you're Down below. It says they can collect and keep whatever the list and broker is offering. So it's designed to mislead consumers. A lot of realtors will put the zero in there and say, see, you don't have to pay me, right, I work for free. You've heard that one enough times. I still hear that. And and now it's unethical to say that supposedly Doesn't matter.
Speaker 1:They still say some people did not get that memo. No, they did make sure to remind them. It's on tiktok, like once a week, like stop, do you're not free? You are not free. Your contract does not say you're free.
Speaker 2:So then they get to keep this colluded amount, this 2.7%, and they say, well, that's my fee, I'm entitled to that fee, I've worked for that. They've all got talking points how to defend this price fix 2.7%, except when it comes to well, did you negotiate that fee? I sure did with your client. No, it's negotiated with a listing agent.
Speaker 1:Oh god, don't get me started on that, so you're negotiating with the adversary to get paid for doing what?
Speaker 2:what service are you providing them? Are you providing the seller a service? You're providing your exclusive buyer agent. You know contract duty to your buyer, right, you know it's. It makes no sense. Their argument fails immediately when they start going down that road. But consumers don't know enough? Yeah, and you can't expect them to it. They're not trained in this area right.
Speaker 1:But you need but you need to know like whatever you are putting in that section, whatever you negotiate, is what you could end up paying. You know if the seller decides to not offer anything. So I think it's really important that you're paying attention to that and not letting someone just write in what is, quote-unquote, average in the market. You know you have a right to negotiate that. But if you do not negotiate, what happens to excess? It's waste. You didn't make a mistake.
Speaker 2:Yeah, and think about other consequences. If that number is in there, that 2.7 or whatever it is, and you put an offer in on a house and Something awful happens somebody dies, whatever the case may be, you need to move to another state. You can't go through with this deal and you're not only liable to the seller in that situation. This contract makes you liable to the buyer broker for that full 2.7%. And guess what? They'll sue you. They do it all the time and if you sign the arbitration clause that's often in these things they don't have to even sue you. They take you before their arbitration board, which is typically a bunch of realtors, right, as you know, as the panel of jurists who are going to decide your fate.
Speaker 2:I mean, it's secret, they're not. They don't publish the results of any of these arbitrations and it's part of the realtor associations code of ethics and, as a result, consumers get ripped off by this kind of stuff all the time. They get sued in arbitration, a kangaroo court of realtors decides sorry, you owe that money and it's an unappealable decision and the buyer has to pay that money. It becomes a judgment against them. So there's so many ways this these agreements work against right and, it's interesting, even the consumer friendly agreements.
Speaker 1:I sent you that video of a broker in California that was teaching their agents how to work through this contract right. And when it got to the point where it said if the buyer could be credited the excess Sorry, excess commission, he said in his training video Just skip that part, leave it blank, because what happens if you leave a blank? Then you don't really have to give that to the buyer, correct? If you don't have them check that off, it's just kind of like a lamp it doesn't exist if you're a fiduciary, you do.
Speaker 1:Right, but yeah, but like. So do not let people skip sections of your contract like please read them and it's worth noting in this section. In commissions You'll typically see Additional fees the transaction coordinator fee, regulatory compliance fee. It's all a bunch of garbage and I would like to read you. A broker who posted in a real estate group he wanted to ask how he could tell his agents he's going to start charging them this and then doubled down and said well, technically we're just gonna have the client pay the transaction fee, so that $200 that this broker is charging is paying for the agents. Crm Training, one-on-one coaching, a marketing admin would help you with technology, staffed admin in the office compliance, a nice office agent care gifts and commercial printers, because six percent isn't enough.
Speaker 1:Right. So here so on top of the commission, you, this broker, is going to have his agents pay him $200 and then tell his agents to Charge his clients $200. And now the consumer is paying for a nice office, a commercial printer and A staff admin in the office out here.
Speaker 2:It's typically $699, it's such a bullshit. It's been around for a long time. One company introduced it and they all followed Yep. It's almost like they sat in a bat in a back room and said look, if we want to avoid an anti competitive problem here, the way to do this is one of us is going to do it and then the rest of you copy us right. Don't all do it at the same time. It's almost like they coached them right. Couldn't ever happen, I'm sure.
Speaker 1:Oh, it just makes me bad, especially when they flat out and met in these real estate groups that it's the agents cost of doing business with their brokerage. But then it's just spun around and presented to the consumer as it's their cost. But last time I checked I didn't use a brokers commercial printer or their office admin. I didn't use their CRM for marketing. I didn't use any of that. So why is it? My cost as a consumer Makes me mad.
Speaker 2:It makes me so mad. Okay, the things this will bring up is I know you've met realtors that you trust and you feel are really good resources for you, and I have Yet to find one that doesn't engage in one of these kind of practices. They either you, it might, they might be super nice people and have really good intentions, but if they're using a forum like this, I'm sorry they're doing some really bad things. They may they may not have a choice because of the broker they're working for, and this is why I tell consumers you know what. What you need to do is you need to find a form which hopefully we can put together at some point, that right amendment to these forms. That will, you know, keep the state mandatory Terms in there, but maybe add some stuff that can help consumers. But we need to tell them you need to go with a small broker, somebody who can Meaningfully agree not to engage in dual agency, not designated agency, none of that stuff. They will only represent your best interest.
Speaker 2:Small brokers can do that. Small brokers also Typically don't have an in-house title company. It's a conflict that's been removed. There are. There's never been put with one of these brokers because they can't afford a title company and they think a lot of these small brokers think that's a problem, that they don't have it in-house title company because they can't offer One-stop shopping. I call it one stop robbing right man more money.
Speaker 1:Yeah, speaking of a speaking of dual agency, my state association form, which I sent to you, says that you agree to dual agency, not like with written consent, doesn't say anything about that. It just says you agree to dual agency. So dual agency is when one agent represents both sides. Represents is a very loose term because you really can't represent anybody. You're either gonna choose someone in the middle or you're basically a transaction coordinator at that point, and so you should have the option to decline dual agency in my state. Could you just say like I don't agree to that. How do you fix that? I don't agree to that well, the big brokers.
Speaker 2:If again, if you were the big broker, they won't agree. If you make any changes to this contract with a big broker, they were gonna say, sorry, it's our way of the highway. Their contracts of adhesion is what that's called. And so these buyers are so much better off going to a small broker. Some of these exclusive buyer agents, for example, that only represent buyers, they're not supposed to represent two buyers on the same property either. They know their big thing is they avoid dual agency. They still engage in all the you know referral fees and the and the fee problems that go on with these contracts. Almost all of them do, and their fees are not negotiated. So they're still engaging in bad conduct.
Speaker 2:But you have somebody that's only going to represent you. You're not going to be able to avoid dual agency with a big firm or even a mid-sized firm. And you know, and it just doesn't make any sense to you as one of these big firms, because all they do is they prey upon you for ancillary services. You know their title, their mortgage, their home warranties, all kinds of stuff that just puts money in their pocket. Now as an agent, they're not allowed to do any of that. That's preying on your own client.
Speaker 2:It's it's it's self-dealing, it's theft by swindle. Is what that means, what that translates to when a fiduciary engages in conduct like sales self-dealing. It's not like you're buying a car from somebody, it's like you're buying. It's like you're buying a procedure from a doctor and that doctor decides well, we've decided, we want to do a couple extra surgeries on you just for fun, to make. Put some money in our pocket and you could do far better going over here for that. You know that, that tooth extraction, but since we're already having an anesthesia, we're gonna, you know, take out, take out a couple teeth for you that you don't need.
Speaker 1:You probably know that happens somewhere. Well, yeah, there's such a mess tubs.
Speaker 2:This happens all the time with real estate every single deal, and so it's it's illegal to prey upon your own client. It's a very agency level services is the highest level of service you can buy in the US. It's it's like what an attorney is supposed to do. It's like what a doctor is supposed to do, and Agents have been taught and they don't understand it. But through the forms they're using, they've been taught to basically prey upon their own clients vulnerabilities. And I see it all the time. Sign the arbitration where my broker and the attorney at my brokerage firm tells me that it's in my client's best interest to sign that arbitration clause. Well, guess what? It's not. And and so the they're getting bad advice. They may be great people and may have really good intentions, but what's happening is they're being forced into practices that are completely Against their clients best interest.
Speaker 2:There are so many actionable Situations that happen in almost every single deal and that's why I tell people never hire a friend, relative or neighbor, even though everybody's got one who's a realtor because unless you're willing to sue them, I, because you it, if you put me, go south. If you show me all the forms you had your friend, relative or neighbor sign, mr Broker or Mrs Broker, I will show you how you ripped off your own client because it's just, it's a very rare case indeed where you're going to find a situation where a One agent has not ripped off their client in a transaction, and so that's why I say you know, I I meet a lot of really nice people out there who are realtors, but I know their clients are getting ripped off every single time. It's sad, and these contracts are proof of it.
Speaker 1:Yeah, I guess that's the hard part. And then I and probably some of them don't even realize it. You know they don't set out to like screw their client over, but perhaps they're not educated on it, or I mean they're told this is the form you use. Right like this is what we give to people.
Speaker 2:This is what you will use. You don't need a kindergarten education here to get a real estate license.
Speaker 1:In Minnesota, right what?
Speaker 2:Yeah, that's very common.
Speaker 1:You don't need a high school diploma.
Speaker 2:Oh God, no, that's. That's unusual. Oh, I have a high school requirement. It should be like two years of community college, post high school, right. But nobody's got that right. You know, you know. To get a hairstylist license it's what you know typically 1800 to 3000 hours of time. You know, and and real and and. That's a tough job too. But but to a real estate license, right, 30 hours of training and you're free to go meme the public. I'm sorry, but you know that that needs to change. That's why everybody has a friend, relative or neighbor who's a realtor, right?
Speaker 2:And that's why you have realtors doing one or two deals a year maybe Right, and you can't expect them to have any level of experience that's gonna help a client, right that you know Working that little yeah, shoot, I didn't realize what time it was.
Speaker 1:We don't have to do a part two on this because it's about to get really loud in my house, but because I think I wanted I need to talk about liability and types of agencies. There's so much to that it's.
Speaker 2:hopefully I don't come off too intense, but I know.
Speaker 1:No, I mean, but here's the thing like, your experience is Based on what you've seen right and you are 30 years deeper into this, or 26 years deeper into this than I am Right. You've seen way more.
Speaker 2:I'm all this shit. Yes, I get it now. I didn't know, I didn't mean it like that but I think you have.
Speaker 1:No, you've had more clients reach out to you with incidents and issues and more dealings with the state board I can't even get one to call me back. So I you know. I think your perception is based on what real life things you've had to deal with.
Speaker 2:Yeah, yeah, I don't mean any a will towards these people. I know that they are, you know, have been bamboozled just as bad as the consumers they're serving. Right, they have no idea. You know how bad this is and they have all received talking points from the broker. And how did how to combat, you know, an objection when it comes up?
Speaker 1:That's what sales right, I'm at your value. I need to see your value. What's your value proposition? I'm like, oh my god, using that word.
Speaker 2:Stop it and and we're pro-consumer and pro-competitive.
Speaker 1:Yeah, yeah, right, right, right, we just all charge the same thing. It's totally competitive, it's kind of like Trump.
Speaker 2:You know, it's like you know anything he says. It's the opposite. You know right. They are not pro-competitive and they're not pro-consumer.
Speaker 1:It's just, oh, it's so gross.
Speaker 2:All right. Well, let's do this again.
Speaker 1:Yeah, so we'll do a part two about Liability. I sent you the Louisiana one, right? But, where it says they have zero liability for any inaccurate or I think, you did send that night. Have a story or a question you want to share? Hit us up at the real estate replay calm.
