Something Fishy Is Going On....Sudden Increase in Buyers Demanding Listing Agents Show Properties!

Real Estate Broker/Owner with EXiT Metro Realty


 At first I didn't think anything of it...but all of a sudden I notice a dramatic increase in phone calls from buyers to our office asking to have the listing agent ONLY show them a listing. It became more and more frequent. The buyers were stating one more things "We do not have an agent and we will not sign buyer agency." OK...but why?

The buyers tell me they are calling all the listing agents to see several different properties. Hmmmmm.....this just doesn't make sense. Until...I realized a particular online company was actually telling buyers to do that...and then call them when they want to write a contract so the buyer can get 2% commission rebated back to them.  Interesting.

 Why the heck wouldn't a buyer want a great agent, who was THEIR buyer agent, showing up, showing comparables and then taking them out? Good buyer agents can even show you neighborhoods you don't even know about. I mean, do you even KNOW you are seeing what there is to see?  Rarely do my buyers who started online even buy the house they called about.  Usually, it a concentrated effort that takes much dedication and energy to find that perfect house.  It's just not that easy, folks.

Why do buyers all of a sudden think buyer agency is a bad word. HELLO...the buyer agent is representing YOU. This is a GOOD THING. We worked really hard in the 90's to make buyers agency happen FOR you!  Prior to that time ALL agents were representing the SELLER and the buyers didn't understand that. Why would you GIVE that away?  Does that make ANY sense?


Listen, I have absolutely NO problem with commission rebates. What I do have a problem with is misrepresentation.  Why should listing agents drop everything they are doing (remember they are NOT sitting around twiddling their thumbs).  If one of these buyers wants to come through an open house, no problem. If their agent happens to be out of town and calls us to ask us as a favor to show a property to their client...we are more than happy to accomodate.

The issue I have here, and I think it may actually violate ethics, is to coach buyers to be dishonest. These buyers are NOT telling us they are working with another company as they are instructed to do from the sites I have visited.  A 2% rebate? Actually it's not a big deal. Most of our buyers who are experiencing buyers representation are getting 3% or more back in sellers subsidies.  If you get a 2% rebate and it fails to show up on the settlement sheet or your agent is violating HUD/RESPA laws.  All rebates and subsidies MUST show up on the settlement sheet. Why???

Lenders have a right to know just how much a buyer is actually putting down on a house. They have lending guidelines that must be complied with. Any money going back to a consumer not noted on the settlement sheet is considered a kickback...and kickbacks are illegal.

Let's skip the rebate issue for a minute. If I was a buyer, there is NO way I would want to not have buyers representation. The listing agent is representing the seller. Anything I say to the listing agent can and will most likely end up going back to the seller. How is that good for me?  Can I get a better deal by working with the listing agent?  I shouldn't be able to. After all, the listing agent is representing the seller and should be trying to get the very best possible deal for their seller. So who's taking care of me, the buyer if I don't have any representation?

You see, sometimes these "Rebate Companies" want to make you THINK no one else will take care of you, that you are getting a deal from them. Really? Hmmmm...I don't know any TOP agents working for such companies. Good agents know they deserve to be compensated. A top negotiator who is going to go to work for you, is going to get MORE than 2% back for you in this market. Good agents are well educated, experienced and know how to troubleshoot any and all of the issues that come up in a real estate transaction. That kind of knowledge does not come cheap. But YOU, the buyer, don't pay it anyway. The seller pays the commission AND pays the subsidy, usually at least 3%, for YOU. could argue that some buyer agency contracts say the buyer will make up any commission descrepancies. So? Have your agent strike that part and initial it. State that the agent will only be compensated by the seller. This isn't hard to do people.

Think about it, would you go to a doctor that told you to go to other doctors and ask questions, then come back to them when you knew what you had?  The old saying "Pennywise and pound foolish" more than applies here. make sure you have a good buyer agent who is working FOR YOU. You deserve to have the very best representation possible. Any agent who hides under a rebate as an excuse NOT to properly represent you isn't going to take care of you.  I mean really..what's in it for them?

Comments (8)

FRANK LL0SA Esq.- Northern Virginia Broker .:.
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

Great great great post. We gotta get you in the limelight for people to see your post.  Later we can work on posting your post to "groups." Look for an EXIT realty group, and if it doesn't exist, create one.


Nov 15, 2007 06:45 AM
John MacArthur
Century 21 Redwood - Washington, DC
Licensed Maryland/DC Realtor, Metro DC Homes

Shawn - Actually, all rebates do not have to appear on the HUD-1. The law in Maryland is very clear on this. If the rebate is being used to reduce the closing costs being paid by the buyer, it must appear on the HUD-1. Money paid to a party in the transaction if perfectly legal. It is not a kickback. A kickback is money paid to a non-licensed third party for services rendered. The buyer is not rendering any service.

Thank you for a timely post.

Nov 26, 2007 05:43 AM
Shawn Harris
EXiT Metro Realty - Alexandria, VA
Hi, Frank..Thank you :-)
Nov 26, 2007 02:21 PM
Shawn Harris
EXiT Metro Realty - Alexandria, VA

Hi, John:

Many lenders want to see everything on a HUD1. At least in the transactions I have been involved with. Most lenders will allow up to 3% in seller subsidies.  Anything else given back is illegal. One way to handle this is to apply any overage to a price reduction for the buyer. Perfectly legal.

Nov 26, 2007 02:23 PM


I agree that these buyers should be honest about working with a buyer's agent. It is simply disingenuous to do the things that are alleged in your post.

Important: A rebate that is included or not included on the HUD-1 is not a kick-back in any shape or form. RESPA laws are focused on rebates among the professionals in the transaction, not rebates to consumers.

Dec 18, 2007 06:08 AM

Regarding lender approval, that debate is up in the air right now. Some say a lender has the right to approve an agent's commission rebate, while others say that lenders have no say in what an agent does with his/her commission after closing.

Funds used in the closing are approved for the closing by the lender. They are called "sourced funds". However, I have a fundamental issue with any party to the closing approving what we do with our commission after closing -- except for referral fees. That is a RESPA violation.

Dec 18, 2007 06:14 AM
Shawn Harris
EXiT Metro Realty - Alexandria, VA

Most of the loan guidelines are set by Freddie Mac. Most loans have to comply with those guidelines. If Freddie, not allow more than 3% contribution to a purchaser's costs, then any additional rebate over 3% would not comply.  If the purchaser didn't want to follow those guidelines, they would have to get their loan elsewhere.

I don't think most lenders care where the subsidy comes from as long as  it complies with their guidelines, ie. 3% and the source of that subsidy is listed on the HUD1. Anything NOT on the HUD1 is not RESPA compliant.

Dec 22, 2007 06:10 PM


I admire your passion. Firstly, if HUD-1 disclosure is required, then way would the Maryland Commission say that only rebate monies used for closing costs must be recorded on the HUD-1? John MacArthur alluded to that in his post above.

Secondly, if we are using Fannie, Freddie, Ginny or Sally Mae's guidelines to assess our rebates, then all cash back for a purchase is illegal. And thus, this statement from the USDOJ is wrong: "rebates are typically cash payments from the broker to his/her client after closing".

When all this is considered, it looks as though maybe rebates don't require approval (except when used for closing costs), as rebate would never be "typically cash payments from the broker to his/her client after closing".

Merry Christmas!

Dec 25, 2007 06:14 AM