Guest Post: Fair Play & Agent Liability

A well-written open letter from Greg Hague

The following is a guest post from Greg Hague, CEO of 72Sold. I have converted it from a letter with permission. Other than minor formatting changes, and removing introduction and farewells common to letters, I have not edited anything from what Greg sent me. There is no music video at the end, since Greg did not provide one.

I do not necessarily agree or disagree with anything in here; I just thought his letter deserved wider exposure. You may determine what biases Greg may have yourself.

FYI, for the spammers constantly assaulting my inbox about how you can write a post about some random-ass topic or another to promote your business or product, please note the quality of writing and reasoning from Greg. I am happy to use this platform to promote other voices and alternate views, but guest posts have to add something to the overall conversation in the industry.

If you would like to present a counter-point, please make the writing good.

This is a public post, since guest posts should always be public to the whole community.

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I’ve been in the business for over 50 years, have sold thousands of homes, was once ranked #19 in America by Realtor Magazine, and I’m also an attorney who scored #1 on my bar exam. I’ve seen this business from many angles...selling homes, practicing law, training agents, and building firms...and I always look forward to reading your insights, as they provide perspective across all these domains.

I just finished your piece on Fair Play in Real Estate. It was spot-on. I especially appreciated your observation about whether consumers expect fairness from each other in real estate or in any other industry. The answer, of course, is no. As you noted, no buyer feels guilty about negotiating a seller down $50K, and no seller feels morally obligated to tell a buyer they’re desperate. That’s not how this works. It never has been.

Consumers don’t expect fairness from the other side. They do expect and deserve strong advocacy and absolute transparency from their side, which in real estate means their agent. They want and have a right to a fiduciary, which goes well beyond fairness.

Yet, under the guise of fairness to consumers, our industry is robbing consumers of fairness and of a fiduciary. By stripping away agents’ discretion to provide unhandcuffed advice and apply a mutually agreed marketing strategy as true fiduciaries, NAR, the MLSs, and Zillow are removing the freedom professionals in other disciplines possess and potentially creating both legal and tax liability for agents and their brokers.

This is packaged in the warm, fuzzy language of “equal access” and “consumer protection.” But you and I both know that the Clear Cooperation Policy was designed to protect the MLSs, and the 24-Hour Rule was designed to protect Zillow’s listing flow, which fuels their lead flow to pay-to-play agents… and their profits.

By robbing agents of their judgment, these institutions are robbing sellers of the results that judgment could produce. The result? Consumers are being harmed under the guise of being “protected.” And agents are being placed in legal peril.

Agents are Independent Contractors.

Most agents have independent contractor agreements with their brokers, yet the marketing discretion they should have is being overridden. The IRS makes clear: independent contractors must control the “methods and means” of their work. These rules violate that standard, and if brokers support them, they risk agents being reclassified as employees with burdensome tax implications for everyone involved.

Agents are Held to a Standard of Care.

Under the law of negligence, real estate agents are held to a heightened standard of care as licensed professionals. Clients have the legal right to expect more knowledge, more skill, and more discretion from a professional licensee than from someone without one. A home marketing plan isn’t fluff. It’s a core part of professional judgment. It can affect how fast a home sells and for how much. Yet the home marketing rules imposed by Zillow, MLSs, and NAR rip away the freedom and discretion licensed agents are required to possess and exercise as legal professionals.

Agents are Fiduciaries.

NAR’s Clear Cooperation Policy and Zillow’s 24-Hour Rule strip away agents’ ability to exercise professional judgment, or even think about it, because the rules provide no flexibility. They impose a one-size-fits-all strategy on a profession that demands nuance and customization based on the specific home, market conditions, and client priorities. This could have legal consequences.

Lexology, a respected legal risk resource, puts it plainly:

“Professional negligence can be based on acts, errors or omissions and very often results from the failure to provide sufficient information that allows the client or patient to make informed decisions regarding a course of action.”

In other words, if an agent fails to explain the risks of Zillow and MLS marketing—and fails to disclose that their hand is being forced to use those platforms if they engage in any public marketing—aren’t they violating their fiduciary duty?

How many agents are actually telling sellers this?

How many sellers understand that hiring an agent who is a member of the MLS is agreeing to mandatory marketing through Zillow and MLS, platforms with serious home-selling disadvantages?

If they knew the disadvantages of listing with an MLS member, would some sellers choose to first work with a non-member and use the MLS member as a backup?

Or, would some opt to sell on their own, even list on Zillow directly as a FSBO, knowing that Zillow now displays FSBOs alongside agent listings in many major markets?

I suspect most agents are reluctant to raise these issues. After all, it could cause sellers to reconsider the traditional path, and agents might lose listings. But if agents are fiduciaries, aren't they legally required to disclose these things?

The Myth of Buyer Exposure.

As for buyer exposure, most sellers don’t want their homes hidden from buyers. They want strategy. They want options. They want to understand the advantages and disadvantages of various marketing platforms and marketing paths. Yet the “Private Listing” label has become a PR sleight of hand. It implies concealment, when in reality, it’s usually just a different marketing approach, perhaps one more aligned with how luxury brands like Ferrari, Hermès, and Rolex create a feeling of exclusivity, a sense of privilege with early access, often leading to buyers acting faster and paying higher prices. Sellers and their listing agents should have the right to explore this kind of marketing strategy.

An Unfair Buyer Advantage.

When real estate agents are prohibited from experimenting with various home marketing strategies that avoid the disadvantages of platforms like MLS and Zillow, sellers lose options. And because of that, buyers gain an unearned and unfair advantage.

I’ve talked often about how Zillow’s platform harms sellers in measurable ways:

• It shows accumulated days on market.

• It highlights price reductions.

• It permanently archives failed attempts to sell.

• It places FSBOs beside listed properties, implying better deals.

• It routes buyers to pay-for-leads agents who may know nothing about the home and may actually have a fiduciary duty to steer those buyers to their own listings.

• And now Zillow is testing “offer strategy” guides encouraging buyers to bid below asking price.

Sellers deserve to know all this. And agents should be free to tell them, as well as offer alternatives. But they cannot without being fined or having their listings banned from Zillow’s website.

So, here’s the irony: while our industry eliminates mandatory offers of buyer agent compensation, it reinforces and increases mandatory rules on how agents must market their listings, regardless of whether that’s in the seller’s best interest. Why isn’t this more widely recognized by agents?

Sellers ultimately fund the commissions that support our industry. Even with the elimination of MLS uniform offers of buyer agent compensation, sellers typically pay both listing agents directly and buyer agents through contract concessions. Sellers’ homes are the product around which our entire industry revolves. And yet they, through their listing agents, are not allowed to determine how their homes are marketed? That’s not consumer protection.

NAR, the MLSs, and Zillow exist because of listing agents, yet they now dictate terms to those same agents. It’s like we are feeding a dog that bites our hand. These institutions have flipped the balance of power, and they’re selling it as “fairness.” But fairness to whom?

As you pointed out, buyers don’t expect fairness from sellers. Sellers don’t expect fairness from buyers. They expect and are entitled to individual representation. Advocacy.

We’re being led to believe this is progress. It’s not. It’s like the frog that stays in gradually boiling water until it’s too late. Sadly, that is what’s happening to professionalism in real estate.

I’ve spent my life in this business, and I respect how thoughtfully you write about it. I just wanted to share how I see things going astray, with agents losing their independence, sellers losing their advantage, and buyers gaining something they were never supposed to have: the upper hand.

In this fight over what’s “fair,” I believe agents and their clients deserve a seat at the table.

Greg Hague

CEO

72Sold