I’m working on a rebuttal, but I wanted to bring attention to this article at Wharton’s blog. That perhaps the top Business School in the Country is putting forth such garbage is shameful and sad.
Choice quotes from the article:
“The (Realtor), 99% of the time, is the agent of the seller, so the broker doesn’t have any duty to the buyer,” said Wharton real estate professor Georgette Chapman Phillips.
At the heart of the matter is the way agents are paid — traditionally through a commission, paid by the seller, of 5% or 6% of the home’s sales price. Nudging buyers toward subprime loans, or keeping mum about the risks, means more sales go through. Also, the low teaser rate on a subprime loan allows the buyer to borrow more, helping to boost sales prices and commissions. “You can’t lie,” Phillips said of the agents. “You cannot intentionally mislead somebody. But you work for the seller.”
“It is my experience that real estate agents have been pushing people to buy more expensive homes than they were initially qualified to buy under 30-year, fixed-rate [loan]s,” said Smith of the National Fair Housing Alliance.
Only a minority of buyers hire a “buyer’s agent” whose primary responsibility is to them. In most cases, an agent, even if he or she has been working with the buyer, is still paid by the seller, usually by splitting the commission with the seller’s agent.
“You work for whoever pays you,” Phillips said, adding: “Should a broker tell a buyer, ‘You realize that you’re in completely over your head here?’ — when the mortgage company has already said to the buyer, ‘Sure, you can have the money.’ Why would the broker ever do that?”
“Realtors care about only one thing — making the sale,” added Kenneth Thomas, a lecturer on finance at Wharton, adding that if the buyer needs a subprime loan for the deal to go through, the agent is likely to keep silent about the hazards.
It’s almost as if they are taking every stereotype from fifteen or twenty years ago and applying them to today’s market. About 90% of all Buyers (and 100% of the ones I work with) in the Charlottesville market use Buyer’s Agents. In the past six years, I have yet to work with an unrepresented buyer when I have been representing the seller.
For more on Exclusive Buyer Representation, read this story from earlier this year. (this one too, as well as this one – Top 5 Questions Home buyers ask). If time allows, a full post will come later today, or tomorrow at the latest.
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