True Estate Commission – A Corrupting Affect

Real estate commission is just how in which real estate agents are paid for the services they provide. They get a portion of the price received for the property. Properly, the real estate agent requires the seller of a property (the vendor) to sign over to the real estate agent a part of the property being sold.

Another way of looking at it’s to suggest that the real estate agent, through the wording of the listing contract, effectively has his name put into the title deed of the vendor’s property, so that the real estate agent becomes a part owner of the property. When the property sells, the real estate agent receives a payment that represents his share in the vendor’s property.

Most readers are going to be mindful of the arguments in favour of real estate sale commissions, so I won’t discuss those here. My focus is on the ways in which the sale process can be skewed against all parties involved, when the motivation to win a commission takes precedence over crucial considerations.

Commission is a “winner-takes-all, loser gets nothing” situation. This brings up the stress on the real estate agent to secure a sale. Time is additionally a problem. If the real estate agent cannot secure a sale within a time acceptable to the vendor, the vendor may take the property off the market, or even clear of the real estate agent’s agency. This will bring about a complete loss for the real estate agent.

Finally, the product owner becomes an obstacle between the real estate agent and his commission goal. To be able to receive payment for the share of his of the vendor’s property, the real estate agent should receive an offer to purchase within the available time, nevertheless the offer should be accepted by the vendor. If the vendor decides that the offer is not appropriate, then the real estate agent loses.

So as to win the gambling game which is home buying sales, the real estate agent may decide to tip the odds in the favour of his – and there are lots of ways in which this may be done.


At the listing stage the real estate agent may use improper means to win the listing contract. These include over quoting on valuation, and offering dodgy sales figures.

During the sale process the real estate agent might be tempted to tell potential purchasers things that are untrue. I have seen many sale contracts with clauses designed to protect real estate agents against the consequences of statements which are false. Identified as “porkies clauses”, they invariably state that the purchaser acknowledges that any info provided to the purchaser by the real estate agent is provided on the understanding that the purchaser won’t be relying on it for any job.

When a purchaser has submitted an offer, thus the purchaser can’t be convinced to increase her offer, the real estate agent might be tempted to pressure the vendor into accepting what would usually be unacceptable. Observations, including “the market has softened” or perhaps “the market has spoken to us” are used by real estate agents to convince vendors that the real estate agent’s high estimation of value can not anymore be relied upon, and that the vendor should now accept what the product owner believes is an unacceptably low offer.

For anderson park , I have been arguing that property services should be provided on a fee-for-service basis.

I will explore the replacement of home buying sale commissions with a fee-for-service structure even more in future articles.

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