New Website Exposes Unethical Real Estate Practices and Explains How Buyers and Sellers Can Keep Their Agents Honest

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A new website, http://www.KeepAgentsHonest.com, helps buyers and sellers ensure that their real estate agents behave ethically. Written by an economist, the website describes the top ten ways in which agents put their own interests above those of their clients. It then explains how buyers and sellers can keep their agents honest with careful monitoring and a few simple rules. The website also provides a discussion forum so that users can share their experiences.

A new website that helps real estate buyers and sellers defend themselves against unethical practices by real estate agents goes live today. The website, http://www.KeepAgentsHonest.com, was written by economist Lori Alden, who became a real estate agent a few years ago after a career of teaching university economics.

As a broker, Alden learned that what’s good for agents often isn’t good for their clients—and that agents sometimes put their own interests first. Many buyers’ agents, for example, steer their clients towards homes that offer higher commissions, while sellers’ agents who have found buyers for their own listings sometimes discourage offers from other agents.

Alden also found that agents sometimes exploit their clients for referral fees, withhold useful information from their clients, or share their clients' confidential information in order to give their brokerages a competitive advantage.

It’s hard to measure what these and other questionable practices cost consumers, says Alden, since most of them result in lost opportunities that are hard to quantify. But she argues that a 2008 study by economists Steven Levitt and Chad Syverson sheds light on what these kinds of practices are costing sellers alone. The study examined 100,000 home sales and found that agents who were selling their own properties got an average of 3.7% more for them, or about $7,600 at the median sales price.

The website recommends practical ways for buyers and sellers to combat bad agent behavior. Buyers, for example, can prevent steering by insisting that their agents rebate to them any commissions or bonuses that exceed a fixed percentage of the sales price. Sellers can prevent their agents from capitalizing on their access to inside information simply by insisting that all offers be sent directly to them—not their agents.

The website offers advice on how to select a real estate agent, and argues that some commonly recommended interview questions (“Are you a Realtor®?” “How many homes have you sold in the past year?”) don’t do a good job of screening for honesty.

The website also features a discussion forum so that users can share problems they’ve had with agents.

Alden has developed other public-interest websites for real estate buyers and sellers, including http://www.CapturetheCommission.com, which tells buyers how to negotiate buyer rebates, and http://www.FSBOPrimer.com, which explains how sellers can sell “For Sale by Owner.” She lives in the San Francisco Bay Area.

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LORI ALDEN

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