It’s Official: Real Estate Agents Are in It for the Money

Do you think of realtors as chummy, altruistic home-buying experts whose main goal is to find the perfect house for you and your family to cocoon and live the American Dream? If so, think again.

A training manual inadvertently left in a New York City apartment by a broker shows that, without a doubt, real estate agents are salespeople, first and foremost. Clinching the sale is priority No. 1, and they may even engage in some tactics reminiscent of used car salesmen.

It's a living
The tongue-in-cheek description of the discovered manual -- which the author notes gives guidance on how agents should dress, as well as the fine points of dating clients – probably won't surprise anyone who has ever used a real estate broker to buy or sell a house. Right?

Not necessarily. After all, enough confusion reigned in the past regarding whose interests real estate agents represented that a new category of real estate professional, the "buyer's agent", has emerged.

These brokers act exclusively on behalf of the buyer, as the name infers, instead of the seller – whom the real estate agent usually represents. Some agents claim to be both – "dual agency" representation – but, according to some experts, the inherent conflict of interest embodied within those kinds of agreements is best avoided. 

Despite the fact that real estate brokers are generally not required by law in order to sell or purchase property, the industry has created a niche for itself, and many sellers and buyers consult agents to complete their real estate transactions. Like many other kinds of sales jobs, however, these brokers are working for a commission. Their job is to represent the client during the sales process, but ultimately, they are in the business to earn a living. 

Transparency can be variable
While most real estate agents are very likely honest individuals, there are some that are less so. Celebrity realtors interviewed last year outlined several common "tricks of the trade", as well as examples of disingenuousness:

  • Putting up expired or sold listings on the Internet just to solicit inquiries
  • Minimizing the negative aspects of a property through misleading advertising
  • Not mentioning issues that should be disclosed
  • Implying that open houses benefit sellers, when agents generally use them to market their services.

Apparently, agents also impersonate each other, to the detriment of clients. The National Association of Exclusive Buyer Agents recently posted a warning on its blog that described just such behavior. The group noted an uptick in the number of realtors claiming to be buyers agents only, despite the fact that they or their companies also took on sales listings – which means that they work for sellers, as well.

Bottom line? Look before you leap
While the piece on the realtor's handbook is quite entertaining, the fact that real estate brokers use common marketing tactics in order to pressure apartment and home hunters into using their services isn't all that shocking.

Similarly, there is no reason to be outraged about the fact that open houses behoove realtors more than sellers. Commission rates, after all, are agreed upon when the contract is first signed, and are not dependent upon open houses, or the number of showings required in order to sell the property. Only when the house is actually sold does the seller pay up.

For home buyers and sellers who choose to use a real estate broker to help navigate the sometimes complicated property transaction landscape, due diligence is in order, just as it would be with any large purchase or investment. Educate yourself about the process, and maintain control throughout. Doing so should keep transparency high, and surprises low.

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Read/Post Comments (8) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 26, 2014, at 5:15 PM, tiredofthecrap wrote:

    There are many tens of thousands of honest, hard working realtors throughout the country whose focus is to sevice their client and to place them into a house that is also a home

    Sadly your article is focused on the '1%' that are the 'celebrity realtors' who are admitadly husters, cons and self infatuation carnies - the same 'clowns' we see on A&E and other shows that are a discredit to our industry

    I have followed Motley Fool for a long time, but in this case I say that the 'Fool' is the author and the publisher who focus on the 1% and not the core of our industry

  • Report this Comment On July 26, 2014, at 10:21 PM, CharlotteRealtor wrote:

    First, Realtor is a registered trademark. It's supposed to be capitalized. Any "journalist" that doesn't have better spelling than me might want to consider another career. How 'bout becoming a Realtor? :)

    Second, yes, we use Jedi mind tricks into tricking adult folks into making stupid decisions. When speaking with a Realtor, the public should where a cross, eat garlic and bathe in holy water.

    Third, there are crappy people in all professions. This is not a news flash. The tactics listed in the article that are done by celebrity agents are against the Realtor Code of Ethics or outright illegal. Yes, we have a Code of Ethics. OMG! How many professions have that - not car salespeople, not computer programmers, not bankers, and not journalists.

    Fourth, why would you not list the name of the Company with the training manual. I suspect it some dinky little company that may not even be a member of NAR (that's the National Association of Realtors).

    Fifth, I work my ass off and have done so for 12 years in real estate. I work 7 days a week. I don't need any particular sale for a client. Any good business person knows, the people are the money. Treat the people right and the money comes. Not the other way around. You'd think that a website reporting about business would know this. Again, maybe another career might be the ticket. Come on, you can sell real estate, it's easy. Come spend a week with me. You will see how glamorous it is. You might break a nail AND a sweat. :)

  • Report this Comment On July 28, 2014, at 12:06 AM, YupYupMan wrote:

    This is quite simply the most baseless, ambiguous garbage article ever written about Real Estate Agents. I expect a lot more out of Motley Fool.

    As far as the "manual," I am hesitant to believe it actually exists since you or your colleague neglected to name the brokerage.

    At the very least it was some dated leaflet on how to close apartments from the 1960s. No reputable (or factual) brokerage would have a printed handbook of shady selling techniques. That just simply doesn't exist.

    Entertaining, perhaps, but definitely garbage.

  • Report this Comment On August 01, 2014, at 1:38 PM, NextStopParadise wrote:

    I, too, expected more out of Motley Fool. As someone who works very hard to make a living as a Realtor, I can attest that it is not easy money. Most of us are honest, caring people whose goal is to help our sellers get the most money for the least hassle in the least possible amount of time, and our buyers to find their ideal home. These are not mutually exclusive goals.

    First, there should be no confusion about who represents whom in any transaction, if a Realtor has clearly explained agency representation as their state regulations require.

    Second, why should we be excluded from using standard marketing practices to promote our services? One could even equate selling real estate to being a stock broker. Doesn't a stock broker (or financial advisor, or insurance salesman) get tips on how to dress to instill confidence in a potential client? These service providers require a depth of knowledge and the judgement that comes with experience in order to guide clients to the best decisions for their personal circumstances. Once a stock broker "clinches the sale," however, the trade is done and the broker gets paid.

    Once a Realtor "clinches the sale," signing the contract is where the REAL work begins. Seeing a contract through to closing is often a roller coaster ride with additional negotiations involved over repairs and appraisals. After we have already spent hours or days marketing a home or transporting a buyer to multiple homes for showings, we then spend hours and days of our time guiding our sellers or buyers through escrow. Once the transaction closes, we get paid, but when it is one of the 30% of transactions that do not close due to circumstances beyond our control, we get paid NOTHING for the days and weeks of work we have put in.

    There is nothing in this world like the feeling of handing a buyer the keys to their new home, especially a first-time homebuyer, or in shaking a seller's hand and congratulating them on moving on to the next phase in their lives. That's the main reason I'm in this business, but I am unapologetic for marketing my services, and I am not ashamed to say that I am also in it for the money I need in order to support my family. I work HARD for that money.

  • Report this Comment On August 02, 2014, at 2:00 PM, SGrovesDvr wrote:

    Duh - show me any person and the vocation they're in and I'll show you someone who is 'in it for the money'. What an idiotic, click-bait title that attempts to disparage an entire industry.

    If we, in our society, had easier to deal with government bureaucracies that we're designed to ease the transfer of property vs. obfuscating the process, we might be able to get away without real estate professionals - but alas, that not the reality.

    I really would expect better the fool that to use this tactic - traffic to the site is huge; you really do not need to do this kind of journalism and to disparage these professionals who help in a real estate transaction.

    Shame on you all.

  • Report this Comment On August 03, 2014, at 4:34 AM, nomorerealestate wrote:

    Wow Amanda, imaging striking a nerve with the real estated community! After 13 years in the business myself, I finally had to step away as this is an industry that will resist change until and with its last dying drop of in-sincerity. All to often was I a spokesperson for industry change, and even after retiring last year, am still pulling out the arrows. For many of my working years I achieved much success as a Top Producer with a completely different where the money was good, but it required volume (which meant more work) and is exactly why I experienced so much resistance (except from the public). Take away the commission model and everyone begins screaming because then the business of real estate becomes more like a real job and many would never know how to compete, let alone want to actually come to work. Below is a link to an article (one of many) that I wrote about 3 years ago that put forth my perspective of how the money SHOULD be flowing. Good on you for standing up against real estate tyranny!

  • Report this Comment On August 04, 2014, at 11:37 AM, bdthomas502 wrote:

    This is the most ignorant article I've ever read.

    As with any industry their are crooks, lawbreakers, and individuals that are not equipped for their job.

    I became a real estate agent because I love the real estate industry and I love making money.

    However is any career about the money? It shouldn't be. A meaningful career is about doing something meaningful. The more value you add to your industry the more money you can make. I believe this is the theory behind capitalism isn't it? Isn't capitalism the economic model that we have chosen for our country? Money is simply a yardstick for measuring how many and how well you have helped others achieve their goals.

    Fool for thought:

    1) For Sale by Owners generally sell their homes for 15% less than market value (agents get paid around 6%)

    2) Do you want to hire an agent that doesn't make money?

    3) Are the stock brokers listed at the bottom of this a page interested in making money too?

  • Report this Comment On August 06, 2014, at 6:21 PM, jasonbcrouch wrote:

    Amanda - Sorry to seem blunt and/or mean, but frankly, this is a poorly-researched article with a catchy headline, and it comes across as though you were simply upset because of a bad experience.

    Here is a rebuttal post that I wrote which garnered a good deal of attention in our industry:

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Amanda Alix

Foolish financial writer since early 2012, striving to demystify the intriguing field of finance -- which, contrary to popular opinion, is truly what makes the world go 'round.

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