I recently tried to make an offer on a home in Pennsylvania, and after reading the contract, I noticed what seem to be several massive glaring conflict of interests for the buyer's realtor.
- Realtors are paid mostly by percentage of final sale, so ALL realtors benefit from higher property values, which they can dictate.
- Realtor is legally obliged to take a bid, in secret, to the seller's realtor. This can result in a bidding war, if strategically positioned against another secret bid.
The buyer is prevented from knowing another bid, so they can't avoid a bidding war. If this "secret information" is still presented to the seller, the seller only suffers from this secrecy.
- Buyers can be pushed into exclusively looking at open houses, or new construction, which naturally would have the most competitors, ergo more bids, and would inflate the value of newer homes, and also mean the buyer will then have the most to lose when the house is sold again in the future.
- The buyer's realtor is paid by the seller. This seems like the most textbook conflict of interest, as it immediately suggests that the realtor is, in no way, beholden to the buyer.
I understand there is plenty of legislation involved in dictating how these interactions are performed, but I've also now witnessed enough secrecy that if there were any kind of price-fixing or intentional inflation of home prices, the average consumer could be none the wiser.
Given the possible conflicts I see at every turn, I find it hard to believe it wouldn't be industry standard to raise prices as high as possible for every consumer in the US.
Is there perhaps some impartial third-party privy to every back room discussion, to prevent price-fixing or cooperation? Should I be asking to be involved in these conversations? I was led to believe it's actually illegal in PA to be part of the realtor-to-realtor negotiations.
I am looking for ways to mitigate these conflicts of interest, as a buyer.