Friday the 13th – 13 Reasons to talk to your attorney BEFORE you select a Realtor.

You could make some big mistakes if you hire your Realtor first. Realtors don’t like attorneys. They consider us to be commission killers and often discourage clients from seeking legal advice (its illegal for them to do that). In reality and realty, we often save our clients far more money than we charge. Let us help you avoid these common problems and more.

First, almost everyone has a friend or relative who is a Realtor (there are that many of them). Unless you are willing to sue them and lose that relationship, don’t use them. Few Realtors understand or are willing to admit what they are doing is wrong – plus, they are trained this way. Large brokers have used their Realtor Association to lobby for laws lowering the entry standards for these so-called independent contractors. Brokers call this the “masses of asses” business model. Realtors are “free employees” for brokers who might sell to a friend or relative. The more the better. Compare the number of Realtors to the handful of residential real estate attorneys in a given marketplace.

Second, real estate licenses are easy to obtain. Minnesota doesn’t even require a high school education. Realtors take a few hours of training on how to pass the licensing exam and they’re free to provide real estate advice and even write contracts to buy and sell houses. Realtors are not attorneys – not even close.

Third, if you are buying or selling a house For Sale By Owner, don’t use a Realtor to write the offer. Use an attorney. Realtors exist to help you market your house or help you find a house. If you’ve already found a house or a buyer, use someone who is trained in negotiating contracts – an attorney.

Fourth, real estate licensing laws protect Realtors, not you. The Realtor Association is the largest industry lobby in the United States. Licensing laws have stripped consumers of many rights and expose them to practices that are illegal in every other profession. Licensing laws are supposed to protect consumers from licensees. This is the exception.

Fifth, Realtors ONLY get paid if you sell or buy a house. An attorney gets paid to protect and serve your best interests. The Realtor is committed to the commission and the attorney is committed to protecting you. See the difference? Note – Realtors may be entitled to get paid even if you don’t sell or buy a house (see next paragraph).

Sixth, Realtor fee agreements unnecessarily expose you to a terrible amount of liability and subject you to price-fixing. I can’t overstate the importance of this problem. Their forms bind you to pay their commission even if your house doesn’t sell! They also fail to disclose how much is being offered to buyer brokers. There’s so much more. Don’t sign them!

Seventh, large real estate firms are the worst. Dual agency, “coming soon listings,” open houses, concealed fees, excessive fees, affiliated business arrangements and deceptively limited marketing exposure are just a few of the terrible practices employed by mega-firms. Avoid large brokerage firms at all costs.

Eighth, arbitration protects your Realtor and strips you of important rights. They insert an arbitration agreement into every purchase agreement that strips you of your rights and forces you to use the arbitration firm they have recommended. I pity the arbitration firm who rules against the Realtor.

Ninth, the Realtor “Code of Ethics” is unethical. For example, did you know that it is “ethical” for a Realtor to tell a buyer that their services are free because they get paid by the seller? This misleads buyers into believing that the buyer brokerage fee is not negotiable.

Tenth, Realtors give illegal legal advice. It is illegal for Realtors to give legal advice to their clients. It is especially illegal when that advice is self-serving. Should you agree to dual agency? Should you sign the arbitration agreement? Should you buy title insurance?

Eleventh, Realtors routinely betray clients for profit. Real estate licensees and their brokers are supposed to be representing your best interests above all others, especially their own. That’s the legal standard for fiduciaries. A fiduciary legally requires the highest standard of conduct required by any legal relationship. Unfortunately, there are numerous “disclosure” forms that consumers sign allowing the broker to violate these important duties.

Twelfth, Realtors steer clients into over-priced title companies. There is a reason title companies charge so much – Realtors don’t comparison shop on behalf of their clients. They use their relationship of trust and reliance to get paid kickbacks and recommend title companies that are focused on protecting the Realtor’s commission, not you. To make matters worse, some large brokers even own title companies. A title company should be independent of these relationships and forced to compete on price, product, and service. Look for an independent title company that competes on price. That is usually an indication that they are a more consumer-oriented firm.

Thirteenth, Realtors may steer you towards properties that pay them the highest commission. The Realtor Association, MLS and their forms are all designed to keep you in the dark as to how much is being offered to your agent. It’s bribery.

Bonus, extra hidden fees. Brokers often insert an extra fee into the boilerplate language of their agreement that often is in excess of $300. Don’t pay it.