The Minnesota Association of Realtors’ Listing Contract and local firms’ iterations of this contract are anti-consumer and anti-competitive. At a minimum, here is an incomplete list of things you should consider changing:

  • Pledge of loyalty? The Realtor’s contract omits this. Make sure to add this language. Even the Realtors Buyer Representation Agreement says this: “Broker shall use professional knowledge and skills to assist in negotiations for the sale of the Seller’s property. Broker shall assist Seller throughout the transaction. Broker shall act in Seller’s best interest above all others, especially their own.” Here’s what my fee agreement says, “At all times the Firm will represent the Owner’s best interests above all others, especially its own, and provide legal services in the negotiation, transactional, closing, and post-closing aspects of the Owner’s transaction as desired. The Firm will provide the Owner with its undivided loyalty and owe all the fiduciary duties that an agent owes its principal under Minnesota state law. The Firm will use its best efforts to help the Owner advertise, market and sell the Property for the best price and terms.
  • Dual Agency. Their listing contract excludes the most important warning that is contained in their licensing law: “Dual agents may not advocate for one party to the detriment of the other.” You should NEVER agree to dual agency. Dual agency in an adversarial relationship is illegal for every other profession and it should be illegal for Realtors. It is illegal for attorneys to practice dual agency in the same circumstances as Realtors and we’re trained in how to manage conflicts of interest.
    • Dual agency incentivizes your broker to limit the marketing of your house. They get a double commission if they keep other brokers out.
    • Single Agency and Exclusive Buyer Agency. Brokers who provide these forms of representation pledge to never subject their clients to dual agency. They are willing to forfeit their fee and step aside if a dual agency arises. This is how things should be. This is the form of representation I offer my clients and what you should demand.
    • Realtors have all kinds of dishonest talking points to trick you into agreeing to dual agency. Do not believe them.
    • Use a small brokerage to avoid dual agency.
  • Cancellation. Any professional, especially a fiduciary, should make it easy for you to cancel if you are not happy. A fiduciary should not use their fee agreements to hold you hostage. However, based upon the complaints I receive from consumers, Realtors often use their fee agreements to hold hostage buyers and sellers. Here is a cancellation clause from my fee agreement: “Either the Owner or Firm may terminate this agreement prior to its expiration date by giving 14 days written notice to the other party, expressing the new termination date. If terminated, then neither of us will be liable for any obligations under this contract except that an early termination shall not affect the Owner’s obligation under a valid purchase agreement and shall not affect any compensation that might be payable to the Firm upon the successful closing of such purchase agreement.”
  • Office Exclusive “Services.” If your Realtor offers this service, RUN. This is an offer to severely limit the marketing of your house. They may present it to you as a way to test market your home to their highly trained agents or provide you with some other rationalization. This is really a way for the broker to have a better shot at collecting a double commission and subject you to dual agency. What they are really trying to do is solicit an offer from an in-house agent during this time that puts you in the stressful situation of having to decide whether or not to take the offer in hand or see what the open market brings.
  • MLS Data Feed Options. Click “Yes” to all of the options. If you click “No” your property might be excluded from Zillow or one of the other buyer-frequented websites. Some large local companies actually defaulted their fee agreements to “No” and kept their clients’ listings off the major websites. According to the CEO of one of these local companies (in the national news), they did this to improve the Search Engine Optimization of their web pages. In other words, it increased the chances that they might collect a double fee.
  • Broker’s Compensation. The Realtor’s compensation section is intentionally misleading and beyond repair. For example, their contract will likely say this, “If before this Contract expires Broker presents a buyer who is willing and able to buy the Property at the price and terms required in this Contract, but Seller refuses to sell, Seller shall still pay Broker the same compensation. Seller agrees to pay Broker’s compensation whether Broker, Seller, or anyone sells the Property.” Here are some pointers:
    • Successful Closing. Compensation should only be due upon a successful closing. If you default with the buyer, you should not be held responsible for the commission.
    • Unrepresented Buyers. Your Realtor should be willing to show your house or allow you to show the house to unrepresented buyers.
    • No Buyer Broker = No Buyer Broker Fee. If the buyer has no broker, then there should be no payment to buyer brokers. That money should be a windfall to you, not your agent. My clients get the windfall, not me. Don’t let your broker “hog” (their term) the commission. The Realtor’s listing contract automatically allows them to hog the commission and does not open this up to negotiation.
    • Compensation to Cooperating Brokers. This is perhaps the most anti-competitive section of the listing contract. Why should the seller broker offer money to buyer brokers? They shouldn’t. And will this offer of compensation to someone else’s fiduciary be a secret hidden fee that only buyer brokers can see? If so, it’s more like an illegal bribe. If you want to try something different, consider having the offer of compensation be from the seller directly to the buyer to be used towards their own Realtor, closing costs or whatever legal use is permitted.
    • No Junk Fees. Look closely and you will likely find that the Broker has inserted an extra $300-700 junk fee in the boilerplate of the agreement. It’s sneaky and it’s wrong. Don’t ever agree to these junk fees. I don’t charge them…
  • Closing Services. You do not want to be steered into an over-priced title firm with loyalties to your broker. This section omits the most important choice which you can add: “Seller directs Broker to use their due diligence to shop and compare independent and unaffiliated title companies and make recommendations to client.