The real estate market has more than a little bit of the Wild West in it, with realtors, buyers and sellers all looking to strike the best deal for themselves. There are a number of illegal real estate practices, along with those that are simply unethical. The ones you will likely encounter fall into 2 categories.
#1: Dual representation
It’s every realtor’s dream to represent both buyer and seller and collect a commission on both ends. The practice itself is legal but that doesn’t mean all the tactics are on the up-and-up.
An unscrupulous realtor might present a buyer only with offers that come from his sellers. This is a blatant violation of the fiduciary principle. Every seller has a right to see all offers. The same goes for buyers. Does your agent seem consistently negative about houses you like, only to find out the ones they think are perfect are owned by their own clients? Be skeptical.
Some states have gone so far as to say that if a realtor represents both sides of the transaction, they cannot participate in negotiations, inspections or anything else that might be controversial. Of course, this also means you’d be paying commission to someone while you and your counterpart did all the legwork.
#2: Using you for lead generation tactics
Open houses are common enough to be legitimate but how many people actually buy a home off an open house or schedule a follow-up tour? Did you buy your home that way? Did your friends? Do you actually know anyone who sold a house that way?
The open house does serve the purpose of the realtor though. They’re able to interact with prospects, find out what they’re looking for and perhaps sell them a different listing. You’re out of the loop even though you got the house ready for the initial meeting.
The point is not to get paranoid that your realtor has it in for you but to recognize that their interests don’t always coincide with yours and you need to be alert for these practices.
