Top 10 Worst Business Practices

Every day is independence day for home buyers and sellers. Every day more consumers are freeing themselves from the deceptive business practices that so often lead to uninformed and bad decisions when it comes to buying or selling a home. That means that more consumers are seeking out conflict free real estate professionals whose advice is not marred by secret incentives that undermine the very reason those professionals were hired.

In the spirit of independence, CAARE is releasing this list of the top 10 worst business practices and how to avoid them. It is CAARE’s mission to empower consumers to make intelligent and informed real estate decisions and free themselves from bad practices when buying or selling a home.

Free Yourself from the Top 10 Worst Business Practices

1. Dual Agency (click here for article). This is the most deceptive and anti-consumer practice – avoid at all costs. No one can serve two masters and when they do the conflicts are on the verge of absurd and usually insurmountable. Dual agency occurs when the brokerage firm represents the buyer and seller on the same transaction (even if different agents are involved). Dual agency arises with little warning and results in the abandonment of the services for which the agent was hired. In dual agency, the broker gets paid double and the buyer and seller forfeit their right to representation on such things as negotiation of price and terms (2 of the top 3 reasons consumers hire Realtors*).

Solution. Look for quality agents from small brokerages or from brokerages that exclusively represent buyers or sellers. Never call on real estate advertisements or visit open houses.

2. Controlled Business Arrangements with Title and Closing Services (click here for story). Title companies that are owned or affiliated with other real estate professionals destroy the integrity of this vital check and balance. In addition, they destroy the consumer advantages that are borne from competitive business practices such as good service and competitive pricing.

Solution. (click here for our growing list of independent title agents). Only hire a title company that is truly independent from your brokerage, builder, lawyer or lender firm. Never use an affiliated business in real estate.

3. Lawyers Who Sell Title Insurance. Attorneys cannot negotiate title coverage on behalf of their client when the attorney also represents the title underwriter providing that coverage. In addition, the commission paid to attorneys on the sale of title insurance is very large and is only paid if the transaction closes interfering with the attorney’s representation of the clients’ best interests.

Solution. Hire an attorney whose practice focuses on real estate and who will not sell you or your lender title insurance.

4. Lawyers Who Represent Home Buyers, Sellers, and Who Also Represent or Receive Referrals From Real Estate Professionals. Many of the worst business practices will not be disclosed to buyers and sellers if the attorney represents, seeks to represent or gets referrals from real estate professionals.

Solution. Only hire a real estate attorney who does not represent or get referrals from real estate professionals.

5. Marketing Manipulation That Fosters Dual Agency. Many real estate brokerages engage in market manipulations disguised as selling strategies. These practices usually involve limiting demand in order to collect a double commission.

a. Pocket listings (aka Sneak Peaks) (click here for story). Properties are shown only to in-house agents prior to being placed on the MLS. If the strategy works, the broker gets paid a double commission and the seller will have sold their property in a severely manipulated market situation in which demand was intentionally curtailed. In addition the seller and buyer forfeit their right to representation.

b. Internet Marketing Plan Manipulation (click here for story). Some firms have actually pulled their sellers’ listings from the top buyer frequented real estate websites in order to collect double commissions.

Solution. Walk away from any brokerage firm that encourages you to do a pocket listing or excludes third party internet websites from their marketing plan. Only use brokerage firms that offer a complete marketing plan that includes their listings on, Zillow, Trulia, MSN RealEstate, Yahoo Real Estate, and others.

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