The "Exclusive Agency" Scam

If you are selling or buying your house, you have basically two options; hire an agent or do it yourself. (Ah yes, just when you “real estate agents” thought you may be excluded from this group of wrong doers…think again). Selling or buying your house on your own has its pros and cons, as does selling or buying with an agent. We won’t address that in this post. I would like to specifically address selling/buying with an agent and signing the “agency agreement” as it is called. Whether you have hired an agent to buy or to sell, you will at some point, typically early on, be asked to sign some “papers”. These papers, as the agent will tell you, assures them that they will get paid when the transaction is complete. This is completely fair and reasonable. The agent should get paid for what they have done. Well, the devil is in the details as they say. There is a clause in here that sometimes has a little “check box” in front of it as well that indicates that your are hiring this agent as a “buyers representative” or a “sellers representative”. This can also be referred to as an “exclusive agency agreement”. If you see this, regardless of whether you are buying or selling RUN!!!!!!!! You are falling victim to a MASSIVE SCAM! Do you know what it means if you sign this exclusive agency agreement? It means that your agent gets paid on the purchase or sale of your house regardless of whether they had ANYTHING to do with the transaction other than getting you to sign that agreement! Sure they may have put it in the multiple listing service if you’re selling (which carries virtually no expense), or showed it to a few potential buyers if your selling, but 9 times out of 10 the agents make a “Goal” of getting as many “exclusives” signed as they possibly can! From then on it’s just a numbers game! Sooner or later a house will be bought or a house will be sold.. and they’ll be in the middle. Be sure to check back on this post to see how many agents defend this.. it’ll be a show!

Here’s how to protect yourself against this huge scam:

• NEVER sign an exclusive agreement with an agent.. you want a non exclusive. Let me ask you this to prove my point; Do you think an agent should be paid if they sell your house or find a house that you buy? Your answer should be yes. Do you think said agent should be paid if they do NOT sell your house or DO NOT find a house that you buy? Your answer would obviously be no. So why would you pay them?
• Make sure you do not enter into any “timelines” with an agent. If they work, they get paid. If they don’t work, they don’t get paid. The good agents will have faith that they will provide you a great service, and be paid for that. The bad ones will want an exclusive. It’s that simple.
• Non-exclusive agreements give you the freedom to find a buyer simultaneously. In this case everyone is motivated, and paid for the service they provide when they provide it.
• Remember, listing your house is not a service. Advertising a property is part of an agents job or “tools” in order to earn their commission by completing the transaction. Don’t let them tell you otherwise.

Watch out for “dual representation”, where an agent represents both the seller and the buyer. The fiduciary duty of an agent is to look out for the best interests of the party they are representing. If the goal of an agent is to get a buyer to “pay as much as they can” and to get the seller to take as “little as they can” then how can this work. There’s a bonus tip for you… never enter into a “dual agreement” as it is called…where you as a buyer or seller is represented by the same agent that is representing the party on the OTHER end of the transaction!