Beware of Deceptive Business Practices If Listing Your Home for Sale!

By
Real Estate Agent with First Weber Group Realtors

If you are seller that previously had your home listed with an agent that has now expired or you are trying to sell your home on your own, you need to read this!  I don't list homes for sale, so I don't call expired listings or for sale by owner homes for the purpose of securing a listing.  I understand that the real estate business is very competitive and each agent is always looking for an edge.  It really doesn't matter to me what an agent chooses to do to try to add to their tally of listings, as long as it is ethical and honest.   If an agent calls/writes you and tells you any of the following, be sure that you are smart about things before you sign any type of agreement. 

1)  If an agent tells you that they are working with buyers that are looking for a home just like yours, be prepared to ask a lot of questions before you sign anything.  In Wisconsin, we must have a signed listing contract, spelling out the duration and commission, among many other things.  Perhaps this agent will ask if you would be willing to do a "One Party Listing", even offering you a reduced commission.  This still must be in writing, have a duration, state the commission terms and state the potential purchaser's name.  This needs to be done prior to there being any type of showing of your home.  Don't be afraid to ask the agent questions about this purchaser before you agree to anything.  Some things that you might want to ask are:

  a)  Can the agent supply you with a preapproval letter for this buyer prior to you agreeing to a showing?

  b)  How long have they been working with this buyer?

  c)  What are some of the other homes this buyer has previously looked at with the agent?

  d)  What type of paperwork would you need to sign?

  e)  What commission is the agent asking you to pay?

  f)  How long would you be in any type of contract with the agent?

If the agent can't, won't or simply chooses not to share any of the above information with you, then this may not be a good arrangement for you, the seller.

2)  If an agent calls you and tells you they are willing to list your home for x% commission (an amount that seems to be significantly less than you have ever heard of before) for 30 or 45 days, you need to be cautious.  In Wisconsin, listing brokers and their agents are required to put directly into the listing contract the commission rate potentially owed to them, as well as any variables in that commission.  The listing broker/agent is also required to state in the listing contract how much commission they will be offering to other offices that may bring a buyer to your home.  This is called a cobroke- when one office lists the home for sale and another office brings a buyer through.  You, the seller, have the right to tell the listing office exactly how you want that commission shared.  If you want your listing agent to get x% and the agent that works with the buyer to get y%, then tell them that and get it in the listing contract.  Here are some things to be consider when someone offers to significantly discount their commission:

  a)  Does this discount only apply to a situation where the listing agent also has the buyer?

  b)  What is the commission amount that will be offered to other offices/agents?  A good way to handle this is to tell the listing agent what % you want to pay the listing office and what % you want to offer to the agent that brings a buyer through your home.  Have them put this in the listing contract and then there are not any questions.

A recent situation I was told about was an agent that called a listing that had expired and stated they had a buyer looking for a home just like theirs.  The agent said that there wasn't anything else on the market within the price range they were previously listed for, so could the agent bring a buyer through the house.  The sellers agreed.  That buyer, shockingly, wasn't interested in the house, but the agent would be willing to list their home for half of what the agent normally charges for 30 days.  The sellers agreed.  Interesting, right?  The multiple listing service does not show that house as being a reduced commission, nor does it show that there is a variable commission if the agent sells the home.  Both the amount of commission being offered to a selling or buyer's agent, as well as whether the commssion is variable, are required to be stated in our multiple listing service here in Central Wisconsin.  The concern becomes whether this agent is being deceptive to the seller, other agents, or both.  Deceptive business practices are unethical and if you are going to be listing your home for sale with an agent, I would certainly believe that you want the most ethical agent possible representing you and giving you advice.  Please be very cautious and remember that sometimes, if something seems too good to be true, it probably is!

 

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Don Spera 07/08/2010 01:09 AM
Topic:
Home Selling
Groups:
Active Rain Newbies
Real Estate Rookie
ActiveRain Rockstars
Bananatude
Tags:
for sale by owner
listing agents
marshfield
wi real estate
wi home selling
paying commission
misleading business practices

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Rainmaker
248,047
Matt Grohe
RE/MAX Concepts - Des Moines, IA
Serving the metro since 2003

Jen: It's not always possible to tell the full commision from the cooperating split. It does not have to be evenly divided.

Apr 03, 2010 04:48 PM #1
Rainer
133,195
Bryan Watkins
LRA Real Estate Group - Mesa, AZ

Jen, thanks, good post. There are some out there to be aware of and avoid. How can you tell the good ones from the bad ones??

Apr 03, 2010 05:50 PM #2
Rainer
20,780
Jen Olson
First Weber Group Realtors - Marshfield, WI

Matt-  You are correct.  In fact I am in a market that the commission are rarely evenly divided.  The point of the post is that the agent has to be being less than upfront, whether it's to the sellers or other agents.  I also think that sellers really need to know that they can and should ask a lot of questions before signing anything with an agent, especially one that approaches them out of the blue.

Bryan-  Thankfully most of us are good ones, and I think that consumers just really need to take time to interview and ask questions of agents before jumping into contracts with them. 

Thank you to you both for taking time to read and comment!

Apr 05, 2010 01:50 AM #3
Rainer
157,124
Tom Boos
Sine & Monaghan Realtors, Real Living - Grosse Pointe Farms, MI
Providing the very best of service to Sellers and

Good advice for the owners of  Expired listings.  Often they are so very anxious to sell their homes that they "fall" for the first agent who makes contact suggesting that they have a potential buyer.

Apr 05, 2010 04:40 AM #4
Ambassador
1,189,372
Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
Luxury service in Howard County & Catonsville

I just call them ambulance chasers. Sadly every industry has one.

Apr 07, 2010 11:23 PM #5
Rainer
20,780
Jen Olson
First Weber Group Realtors - Marshfield, WI

Hi Tom-  You are right!  Sellers need to really check into things before signing any paperwork.  Thanks for stopping by!

Hi Ellie-  Sad, but true!  Thanks for stopping over!

Apr 08, 2010 05:06 AM #6
Rainer
478,183
Not a real person
San Diego, CA

Part of the problem out here is that many brokers reward the "top listing agent" with various perks, including cash, prime parking spot, tickets to the Zoo, etc. There are some top listing agents who never sell any of their listings because they "buy" the listing, but the brokers love it!

May 20, 2010 09:26 PM #7
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Rainer
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Jen Olson

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