selling a home has changed forever because there is a loophole that many many listing agents are really kind of taking advantage of and many agents are making more money now than they were prior to the N lawsuit the National Association of realtor liable for artificially inflating commissions this video is going to show you a real life story of one of my viewers that had this happen to and I want to educate you so this does not happen to you when you go to sell your home so a viewer reached out to me and asked me if this was a normal situation his listing agreement stated that he was supposed to pay 52% to the listing agent and out of that 2 and half% would be paid to the buyer's agent when they brought an offer so he actually did go under contract but here's the thing is that the buyer did not have an agent the seller knew the buyer personally it was a friend of a friend and the buyer said hey I want to come see your house so the seller opened the door for the buyer the buyer came into the house the buyer hired an attorney to write up the real estate contract presented the offer to the sell's agent and negotiated it themselves so the question becomes where does that 2 and a half% go that was supposed to be paid to the buyer's agent now the buyer thought that it was going to go back to the seller and that's why they came in with the offer that they did and the seller thought hey well if there's no buyer agent then that 2 and half% would come back to me but the listing agent said absolutely not because you signed a contract for 5 1/2% so 2 1/2% comes back to me now I'm really going to get in depth in this video today and that's because this is a very complicated topic that is affecting a lot of people and even real estate agents are not really sure about how to handle this they don't know how the law is working they don't know how to advise their Sellers and now what I'm finding is that many real estate agents out there are using a loophole basically a loophole in contracts right now to make more money than before the N lawsuit and if you don't understand these things that I'm going to talk to you about this may happen to you as well so going back to this real story this seller reached out to me because he was really confused because he thought hey that 2 and a half% should come back to me now when he talked to the agent about it she said no absolutely not I'm a dual agent on this deal and that means that I get the two in a half% now dual agency means that you're representing both the seller and the buyer and I'm going to get a little bit deeper into that later on in the video but the reality is that they weren't represented by her they hired their own attorney to write up the contract in addition the selling agent said that it's actually illegal for a buyer to represent themselves in a real estate transaction now that is completely not true anywhere that I have found you absolutely are allowed to represent yourself in a real estate transaction so when he reached out to me he had already sort of asked her about it and she came back and said you know this is legal this is fine yes and I'm do that 2 and a half% that's why I reached out to me and so I said okay here's the first thing I'm always going to tell any of you any of you out there who are having a question or an issue or a problem with your agent the first step is to go back and have an honest conversation with the agent I am telling you any questions you can ask me you should absolutely be asking your agent and if you don't understand the answers you need to keep pushing until you do understand the answers because I get so many people who reach out to me to say why is my home not selling my pictures don't look good is this normal and always I'm saying go back and talk to your agent about it so he did go back again and talked about it and she she kind of threw down and she said no I'm a dual agent now in order to be a dual agent you have to have both the buyer and the seller in agreement to know that you are a dual agent so I asked him well did you sign an agreement stating that you would be okay with dual agency what he said was in the contract it did look like there was implied dual agency now what that means is that he did not have to specifically agree or not agree to dual agency just by signing his listing agreement it basically states that he is implying that the sellers agent will always be representing any buyers that come through unrepresented so that would be considered to be implied dual agency which I think is kind of a scam and I'll talk about dual agency like I said later it's a big long conversation but I think dual agency really should be illegal I don't think it's a good thing in our industry so in this contract it was kind of stuck in there to say okay it was implied and he did sign the listing agreement so therefore yes he technically agreed to dual agency but in order to be a dual agent you have to be very clear with the buyer that you are also representing the seller at the time they're seeing the home so what should have happened is the selling agent should have met the buyers at the home with either one of two agreements The First Agreement should have been a dual agency agreement that says hey I'm representing both the seller and you or it should have been a notice of no agency which means hey I'm only representing the seller the listing agent didn't have either of those didn't even meet the buyers until after the contract had been submitted now the listing agent had to get that signed in order to get paid out by her brokerage and so she went to the buyers and said I need you to sign this dual agency form and they said but you're not a dual agent she said well I am because I'm the listing agent and they refused to sign the Dual agency form and they threatened to pull out of the deal because of this agent's actions now that to me is just stunning whenever there's an issue with agents or commission the agents need to back off and let the whole deal work itself out without any type of stress that there's any issue going on with the agents because you have to remember that buying a home is emotional and if those buyers started to feel like the least bit I don't know kind of freaked out about the whole situation they could pull out they didn't have to stay in the deal so they were mad real estate agents we've been dealing with this new commission structure you know realistically since I don't know March however we have known about this for a few years so we've known this is coming and I spent a lot of time educating myself and what I'm going to tell you is it's even complicated for me so when I'm going through it if I get into the weeds a little bit don't worry maybe watch the video again but I am telling you you need to understand this and you need to understand your contract so you don't get scammed because there are so many bad real estate agents out there I I hate to say that the barrier to entry is so low in this industry if the brokerage that these agents are with are not educating them on this new law suit they don't know they truly do not know so you need to make sure you are an educated consumer to make sure you are not being taken advantage of and to make sure that you are not being scammed and I also know I'm going to get probably a lot of hate from real estate agents that like this loophole you know there are many agents who feel like this is totally fine and I have Agents from across the country that I talk to on a daily basis and I did get a little bit of insight into this situation our listing agreements say total commission then how much they agree to possibly pay a buyer's agent if they are not repres Senate then the list agent would still get the total what's wrong with taking both sides of the commission for doing twice the work we'll get into that one why would brokerages decouple anything that they haven't been lawfully ordered to decouple the doj and consumer groups may have that intent but it's not been made policy always had that option don't judge people for playing within the rules of the game so as you can see these are agents who say hey this situation is totally normal and totally fine so let's go into what this is really about and how you can protect yourself so what is the real issue here the issue is that if you sign a listing agreement and you agree to pay out a buyer's agent in that listing agreement and the buyer comes with no agent where does that additional money go does it go back to you does it go to the listing agent and I'm going to give you a little bit of background on why we're in this situation if you haven't been following the news so there was a big lawsuit it was class action lawsuit that the doj intervened in and actually joined the lawsuits argued that n with its more than 1 million brokerage members violated antitrust laws by setting certain requirements that led to a standard commission the settlement now bans the N from making any set rules that would let a seller's agent compensate for a buyer's agent the norm had been the 5 to six% commissions although the N said in a call today that they vly deny that there are any set commissions saying they're always negotiable in addition they were saying and this is the key is that there was no transparency in how a buyer's agent was getting paid now typically in the past what would happen is the seller would agree to pay a percentage you know four 5 6% and of that they would generally split in half that amount to pay out to the buyer agent well sellers were never allowed to negotiate that payment out to the buyer agent now that's not really true because if the sellers have been educated they could have asked and they absolutely could have negotiated that but it's kind of been an Unwritten rule that that is not something that you really could negotiate but you really could now that consumers are much more educated they absolutely know that it is their right to start negotiating out that buyer commission so this is bringing about transparency this is bringing about clearer understanding of where the money goes so now we're getting back to this contract where there is a lot of ambiguity in this there's a lot of questions about where does that extra 2 and a half% go so as I said there's a lot of information here and I know I just updated my sellers Playbook last video I'm going to update my sellers Playbook again with a lot of this commission information in there so that you can have it and understand it and then you can ask your agents when you're signing your listing agreement where does this go what about this and here if you are in a contract right now and you don't know what is going on I want you to go back to your agent and I want you to keep asking the questions until you understand the answers so there's a key concept here now when you're going into your listing agreement you are going to pay your listing agent a certain percentage so there are three points you need to understand one how much are you paying your listing agent specifically how much money are you paying your listing agent what percentage what flat rate are you paying your listing agent to sell the house number two how much are you paying out a co-op buyer agent now I really do think it's in your best interest to pay out a buyer's agent in order to get your home sold that is really what we're seeing right now we didn't know how the lawsuit would affect things but we really are seeing that people who are choosing not to pay are really the ones who are not getting the showings and then point number three you need need to understand how much your listing agent will make if an unrepresented buyer comes to the table this is the scenario that the seller was in an unrepresented buyer came to the house and wrote an offer how much was that listing agent entitled so the reality is that the listing agent was claiming dual agency now the seller like I said had implied dual agency in your contracts you need to make sure you understand are you implied dual agency or are you agreeing to dual agency in my old contracts before the lawsuit the seller would actually agree or not agree with an initial if they agreed to dual agency but you need to understand is your signed or is it implied and is it legal in your state many states vary this is inherently just a bad idea in general and I've done it I mean I've done dual agencies and for agents it's a windfall because you're getting both sides of the commission you're getting the list side and the buy side and it can make a significant difference espe especially if you're not always working with that buyer now with the new laws in place this whole idea of transparency has come into place and I believe most brokerages are going to have to revise all of their contracts to kind of fall in line with this so like I said the reality is that she wasn't acting as a dual agent and it is imperative that dual agency is talked about before the buyer sees the home now that did not happen so she really could not get that buyer to sign that agreement because the buyer was aware and Savvy and knew that he was not in a dual agent situation and he did not want that money that money was supposed to go towards the seller and ultimately the real issue with dual agency is that nobody really feels good about it like the listing agent is not supposed to tell the buyers anything about the home they can't help them with pricing they can't help them with anything other than just being transactional writing up the contract presenting it and negotiating it and I know how I operate and I know how I operated in a dual agency situation and I know very much that I am ethical as far as what I would say and what I would not say but I have to judge myself I have to be accountable to myself there are many agents out there who are not ethical who would just go ahead and tell the buyers and the sellers everything between what they're saying and that is just not great which is why dual agency really really is very very tricky so now I want to make sure you review your real estate contract closely okay if you need to get an attorney involved before you sign the listing agreement you might be able to so an attorney can explain to you my listing agreements now which I'm going to show you are pretty easy to understand right now but don't feel uncomfortable if you don't understand what's going on in that contract and that agent should be able to explain the contract to you if that agent can't explain the contract to you move on to another agent so I want to go back to my real life scenario and let you know what happened how did it finish up so the seller was very upset by this point and now is telling all of his friends especially the person who referred this agent that this agent is not a good agent and now he's angry and the selling agent agent talked to them and basically knew that there was nothing she could do because she did not have a dual agency agreement signed now he did Elevate this to a managing broker so if you're in a situation where you feel like you can't talk to your agent and you need help don't talk to an attorney I want you to go to the managing broker of that agent so the managing broker while you may think is just their boss it's somebody who really it's very very important that they follow the rules and what I have found most of the time is that the managing Brokers will sign and air on the side of the consumer and that is because they do not want to lose their license and they do not want to lose their brokerage so don't feel like you can't elevate it to the managing broker that would be your second step so as they elevated it to the managing broker she realized she could not tell them that she was taking that other 2 and half% commission so they did a revision to bring that down to 3% now the problem with this contract like I stated is there was no area that said what if a buyer comes unrepresented or what if a buyer is not asking for commission now this is where it gets really really tricky and really sticky and this is where I'm going to tell you that I'm probably going to differ from a lot of agents that are out there is that I do not think as a seller you should be pre-negotiated your buyer agent commission okay that's going to be a little controversial but I want to tell you why you shouldn't do that because let's pretend you will pay out the buyer commission and of course I'm recommending that you pay out the buyer commission but there is zero reason you should pre negotiate that let me give you an example let's pretend that you pre-negotiate that you're going to pay out a 3% to the buyer's agent who brings a buyer and the buyer agent calls the listing agent and says are you paying a buyer's agent commission and the listing agent says yes we are it's 3% and the buyers say you know what we don't need that we're paying cash we're in a competitive market I'm going to pay my buyer's agent outside of the transaction and then they write an offer and there's no buyer compensation in there none because they're taking care of it on their own or what if it's a family member so now they're thinking okay one of two things could happen is that they could write up the contract with the 3% which they weren't going to ask for in the beginning because maybe it was a friend maybe it was a family member maybe the buyer was going to pay them outside but now they know hey there's 3% waiting there why don't we get it so they're going to write up the offer for 3% they'll bring it they'll get the 3% or they write it up for zero thinking it's going to go back to the seller and the seller doesn't get it the agent gets it so that's why this is so important that you understand that third point that I mentioned is that you have to know how much is the listing agent getting paid if there is an unrepresented buyer or if they are not asking for a buyer commission now I'm going to show you my actual real estate agreement that we use I am with exp and exp is a national brokerage this is all about what you say because it matters educating the consumer with options instead of fear what strategies and negotiations are going to be best for whether you're refering as a seller representing the buyer you know and and have empathy and Grace as we go through this transition I know there's still some pretty big pain points where the other side may not be willing to to entertain what you're saying the goal is to get the property for the consumer so if in any way the agent on the other side is being difficult don't get in the way of the transaction reach out to your broker team we'll jump in and help you get all the documents the way they need to be I'm not aware of really what a lot of the other brokerages are doing if they're smaller brokerages they're not National their real estate contracts probably don't look like this exp is one of the only brokerages in the whole country that has done what the doj has said which is decouple the listing payment from the buyer payment so let me show you what you're looking for in your contract you want to see in your contract that you are paying out the listing side how much are you paying the listing agent in order to sell your home then I want you to look and see how much are you paying an unrepresented buyer or a buyer that doesn't need the commission in the EXP contracts we have this in our agement so now you're going to say why should the listing agent get any money if the buyer is coming unrepresented well there is a lot of work when you have to represent also the buyer in the contract in the work you have to write up the contract you've got to do the negotiations youve got to coordinate with their inspection I mean there's a lot more work there how much are you willing to pay out that listing agent if a buyer comes unrepresented in our exp agreements that's negotiable that's something if a buyer comes straight to me and I negotiate how much additional am I getting paid now if you notice in our agreements it says that exp does not share commissions with the buyer broker this is really complic ated okay so in the past the way it's worked is that the listing brokerage would pay the buyer's brokerage that's how it would work now what's happening is exp other brokerages are different but exp the listing brokerage will never pay the buyer brokerage technically there are a few situations where that may happen but we are not paying out as the listing brokerage to the buyer brokerage the seller is paying the buyer brokerage so any compensation offer is coming in directly from the buyer broker to the seller that's a contract between the two of them and the listing agents are not involved in that now in the E agreement there is no place in here where you put in how much you are paying out the buyer's agent and that is kind of a philosophy across the country with exp is that you should not be telling the Buyer Agents how much you're paying out in commission I firmly firmly agree and believe that these sellers should be paying out the buyer agent and really kind of a rate because most likely that buyer is not going to be able to afford to pay that buyer's agent on top of the house it's all a negotiation now and that's how we want it to come in so on my listings what I'm saying is yeah they're paying a buyer commission bring it with your offer now what if somebody brings it at 2% versus a 3% that all works into the agreement it all works into the price of the home so that's what I really want you understanding is that should you be stating upfront how much you're willing to pay out a buyer agent I'm going to give you a warning you are going to get a lot of push back from listing agents here a lot because it's easier for them to say yes my seller is paying out a 3% yes my seller is paying out three and a half yes my seller is paying out a 2% it's easier for them and it makes them look better because now they are in the position where they have convinced their sellers to pay out a certain percentage but what happens and I had this happened with a seller who reached out to me she had agreed to pay out 55% to the listing agent and she was paying a buyer broker but the buyer broker was only paying out 2% to the buyer agent so now when the Buyer Agents were calling the listing agent the listing agent was saying yeah she's paying out 2% 2% was not the going rate so now the buyers are saying well we don't want to go to that house because we're going to have to cover an additional percentage to pay our buyer agent so that's the problem is because the 2% was not a going rate but the listing agent was able to get a 3 and a half% on the list side so you have to really really understand what you're talking about I know I've gone deep in the weeds and I hate doing that I mean if you are still here watching this video please I'm telling you I've got so much content I want to make sure that you subscribe to this because this is the type of stuff that I'm talking about all day long so as you can see this is a little complicated with our contract but the EXP contract is very very simple we have opened it up for any brokerage basically to steal it it is all open source anybody else is allowed to use it now there are some brokerages that have followed suit and also I believe California is also doing this as well so it's really up to you to understand what is The Brokerage that you're using what is their contract we refer agents everywhere in the country I mean we've referred out thousands of agents to our viewers and I cannot tell you for sure what their contracts look like so we may be referring you to somebody that might not have the same views the same philosophy but that's okay because now that you are understanding what we're talking about you're more educated and you can go in and talk to the agent and ask these questions it doesn't mean that the is trying to necessarily scam you it doesn't mean that they think that they're going to be able to get more money from you they may not know because their brokerage may not have educated them and they just might need to have those questions come out so it's completely clear for you in the contract so I'm going to tell you the four things that are most important that you need to understand the first thing you have to get a good agent now when I say a good Agent I mean somebody who has done their education on these contracts somebody who knows this somebody has gone deep in it I mean I do this full-time if I was not working full-time in doing this if I was a part-time agent there is zero way that I would know all this if I had another job and I was trying to be an agent no chance would I understand this now we are referring to agents across the country so as sellers we have had a lot of sellers reach out to us who want us to place them with two to three agents who are in their Town who know transactions and if you are like I really need to talk to somebody experienced you guys know you can reach out to us go ahead scan the QR code or we have a link below and we are working on finding agents that are really really experienced now they may not be exactly like me because I don't know exactly what's going on in their specific state with their specific contracts but that's okay because now you are educated and any agent that we give to you you are going to be able to have that great conversation with we know what makes great agents and now you are educated enough to negotiate that contract yourself so number two you need to review your contract you have to know what's inside of it you have to understand it number three communication with your agent I mean if you do not understand what is in your contract you keep going back to the agent until you do you have an open honest professional conversation with that agent and if the agent is getting a little emotional about it it's time to elevate it to the managing broker and finally fourth you can elevate it to the managing broker if you are not sure of what's in the contract if you not sure if the agent is being all on the up and up maybe the agent isn't super educated that is your first place to go go talk to that managing broker so I know there was so much in the weeds in this video and I I know this wasn't necessarily a lot of fun listening however there's a lot of great information I want you to save this one I also have another video that I want you to watch after this one and this video is going to talk about the biggest mistake that you can make when you go to sell your home now I'm going to give you the answer it's choosing the wrong agent I give a lot of reasons why and I'm not disparaging my fellow agents because there are so many good agents out there really really truly fantastic agents that I vouch for that I think are wonderful wonderful representatives for their Sellers and their buyers however you have to be very careful of the agents who are not doing their education all the time the agents who are not working full-time those are the ones who just aren't going to be able to educate you and guide you so I want to make sure you go and watch the on the biggest mistake that you can make when you sell your home