A homebuyer wonders why a broker is showing her only the agency's listings and not all of the properties available that would be best for her.

"I am trying to find an article or piece of advice etc. to support my feeling that Realtors are supposed to show you all houses that would be best for you, the client, not just those that they are the rep for," writes Realty Times' reader Erin Giglio. "Can you help me?"

Realty Times responds:

Erin, you've just asked a question that is at the heart of some of the biggest controversies surrounding real estate brokerage issues the industry and its consumers are facing today. So here's the long answer.

Real estate brokerage is being intensely examined by government agencies from congressional committees to the Department of Justice in an attempt to lasso and rein in one of the last truly independent and entrepreneurial businesses in the nation. It just so happens that this profession of largely independent contractors accounts for or impacts one-fifth of the Gross Domestic Product.

Some factions claim that real estate agents make too much money, ignoring evidence far to the contrary. If all the housing sales were evenly distributed among the nation's 2.2 million licensees, each agent would gross approximately $29,529 in commissions in a perfect world.

(average 2005 home price of $193,000 times Real Trends current estimate of commissions (5.1 percent) equals $9,843. With an anticipated 6.5 million transactions divided by approximately 2.2 million licensees, that yields a whopping annual production of three sales per agent for an annual gross income of $29,529.)

The reality for most agents is worse. If an agent spends even 10 percent of income on marketing, and remember that's one of the major things the seller is paying the agent to do, the gross drops to $26,576. Now take out the costs of doing business -- association, educational and licensing fees, office equipment and supplies, cars, etc. and you should be getting the idea -- there's not much profit for most agents.

On the other hand, for the agents who are good business people, real estate can be quite lucrative, especially if they can increase their number of "sides" per transaction.

One of the ways to insure more liquidity is to sell one's own listings -- representing the seller as a client (the seller pays the broker,) and a buyer as a customer.

This practice is not considered unethical because the listing agent has a contract with the seller to get the house sold. Unless the agent has a buyer's agency contract with you, then you are a customer. You only become a client when you have a contract.

When you enter a store, the salesperson has an obligation to help you find what you need so you will make a purchase, but ultimately, the salesperson represents the store. The same is true in real estate sales, but unlike stores which don't share their inventory, the real estate industry has figured out a way to make more sales and provide more inventory (choice) to consumers.

Over 50 years ago, independent real estate agents across the country banded together to create what's known as the multiple listing service (MLS). This unique business-to-business cooperative is unmatched in any other business vertical. The MLS is a voluntary community stockroom supplied by the listings of all contributing listing brokers for the benefit of other brokers to sell. To even the playing field, all brokers and agents with access to the MLS have to follow certain rules of cooperation, including announcing compensation to buyer's brokers. That means that the agreement between the listing broker and the seller allows the listing broker to share his/her compensation with the buyer's broker.

Everybody's happy -- sellers get more showings, buyers get to see all the listings, and both brokers get paid at closing.

There are over 850 MLSs in the nation, but many areas, because of technical costs, too much land, or the stubbornness of certain brokers, do not have an MLS, which means they have no means to cooperate except their word. So naturally, they want to show their own listings first, before they show a listing where it is a risk they won't get paid.

You may live in a place that does not have an MLS or cooperative agreements between listing brokers. If so, you're out of luck because the only way the broker will get paid is if he/she sells his/her own listing.

If you know there is an MLS, then the broker is trying to show you his/her listings first, hoping you will buy from his/her inventory. There's nothing wrong with that, as long as it is disclosed to you (via MLS rules) that he/she is working for the seller.

You want representation, too. If you don't have a buyer's representation agreement with the broker, she/he may not feel obligated to show you other brokers' listings until you have refused the agency's listings. The relationship to client changes dramatically when you have a contract, and even then, you must specify whether you want the broker to be your exclusive representative (which means he/she can't also represent the seller) or whether you are willing to work under non-agency representation such as transactional brokerage in which the broker facilitates the sale without representing either buyer or seller.

To find out how brokers work in your state, go to arello.org and you can see the licensing laws for your state which will describe what types of relationships brokers can have with clients/customers under state law, as they may vary from state to state.

Also view Realtor.com and find your local association. The association staff should be able to explain to you what types of relationships are available under state law.

Last, if you're uncomfortable with your broker's behavior, say something. Ask why your broker is showing you only the agency's listings when you want to see all listings that are appropriate to your needs. Insist on a more consumer-friendly relationship, and you'll get it. If not, change brokers.

Published: July 1, 2005

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.