Conflict of Interest in Real Estate

The title of this blog looks pretty serious. At the end of the day, when you’re buying a home, it’s important to be serious, so let’s break down the issue into individual parts.

In general, the conflict of interest is about the following topics:

  1. The buyer’s agent technically speaking receives the commission from the seller but is offering services to the buyer

  2. There are several aspects of the buying process that are not talked about (not disclosed) to the buyer

The buying process is quite complicated, you’re going to pay a huge sum of money, and throughout this process, there are several issues that have to be cleared. This all leads to a number of uncertainties. Those uncertainties can mean that buyers have the opportunity to walk away from the agent when they feel that there is a disconnect between the “ideal buying process” and the service that they're actually given. There are also a lot of buyers that are just shopping around and talking to a lot of different agents. This means that the agent needs to do something to lock in the deal and they can do that by instilling confidence in the buyer that they’ve found the right realtor.

What’s the solution?

Comment below, talking about your experience during the buying process and the times where you felt there was a conflict of interest.

A Partial Solution to the so-called Conflict of Interest

  • Although it’s not possible to eliminate all aspects of this conflict of interest, it is possible to alleviate a great portion of it by charging by services and rebating all of the commission paid by the seller to the buyer.
  • The good thing about this package is that it is very transparent and fair in terms of the amount of time that the realtor spends providing the services and the charge rate. Using this method, we can increase efficiency and save time. This is due to the fact that when a buyer has to pay for something, the buyer will be able to focus on the step-by-step process of buying a home. At each step, the input of the buyer becomes the only thing on the realtor’s mind.
  • For the agent, this process becomes simplified and they understand that they will be paid for their direct effort and time as it is allocated to a specific service. This ‘pay-as-you-go’ model reduces the need for realtors to spend so much time thinking about how to lock in the buyer and make them feel that the service they provide is the best. In the old model, people skills are the focus while in the new model results become the focus. 
  • In order to achieve the optimal results, the buyer will need to learn how to create an offer. That means that buyers should understand the factors that should be considered as the offer is created. The more the buyer knows about each step of the buying process can also be a benefit, but the first issue is the offer. 
  • Once you understand how to create an offer and all the relevant factors, we then return to the beginning of the buying process. Another step that is important to consider as you work with your realtor to reach the point of delivering an offer is that buyers can save quite of bit of money if they do some leg work. 
  • In addition, the buyer should read through all of the contracts before an offer is given. Rather than hoping and praying that everything is ok, this new model gives you the opportunity to learn about each element of the contracts that you will sign and which will be the legal basis for you to make a binding offer and eventually to take ownership of the property.


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