Selling a Home: Key Considerations on Commission and Dual Agency

Introduction

• Selling a home has evolved significantly due to changes in commission structures and dual agency practices.
• The National Association of Realtors (NAR) faced a lawsuit for inflating commissions.
• Real estate agents are using contract loopholes to earn more.

Real-Life Example

• A seller was bound to pay 5.5% commission, with 2.5% meant for a buyer's agent.
• The buyer had no agent; instead, hired an attorney for the transaction.
• Conflict arose over where the 2.5% commission should go.

Key Issues

• Dual Agency: Listing agents claiming commission through dual agency even if not representing both parties.
• Implied Dual Agency: Contracts may imply dual agency without explicit consent.
• Misrepresentation: Some agents falsely claim legality of buyer self-representation.

Understanding Contracts

• Listing Agreement: Know the percentage paid to the listing agent and buyer's agent.
• Buyer Agent Commission: Clarify where commission goes if a buyer lacks representation.

Legal Context

• DOJ lawsuit led to changes in commission transparency.
• Sellers were previously unable to negotiate buyer-agent commissions effectively.
• New laws demand clarity in transactions.

Recommendations

1. Review Contracts Thoroughly: Understand listing and buyer agent commissions.
2. Communicate with Your Agent: Ask questions until you fully understand your contract.
3. Know Your Rights: Be aware of state-specific laws on dual agency.
4. Seek Legal Advice: Consult an attorney for contract clarification.
5. Escalate Issues: Contact the managing broker if issues with your agent arise.

Conclusion

• The real estate landscape is complex, necessitating informed decisions on agent selection and contract terms.
• Dual agency remains controversial and requires clear terms from the outset.
• Transparency and understanding are key to avoiding complications in home selling.

Additional Resources

• Watch related videos on common mistakes when selling a home, emphasizing the importance of choosing the right agent.