When Commission Gets in the Way: Real Estate Ethics in Celina, Texas

Real estate shouldn't be a hobby. And it's definitely not a side hustle. It's in fact one of the biggest financial decisions you'll ever make. So if you're tired of the guesswork, the pressure and cookie cutter agents while you're in the right place, this is Celina Real Estate Talk, straight answers, real strategy and local expertise with your host Ron Lyons. Alright guys, I am your host Ron Lyons. And this is Celina Real Estate Talk, AKA, the Ron Lyons Real Estate Show. It kind of depends on where you're listening. If you're on an Amazon Alexa device, believe it or not, we're called the Texas Real Estate Show in so many places. We're still the Ron Lyons Real Estate show and in and around Celina, Texas, we're the Celina Real Estate Show. And I'll just tell you up front, this is the Celina Real Estate Show. We talk about Celina and the surrounding areas. And if you're not familiar with that, well, it's only the most amazing little city just north of DFW up here in Collin County, and it happens to be one of the fastest growing cities as well. And we're gonna have a little talk tonight. I'm gonna say tonight because it's actually dark outside. As I'm recording this, we're gonna talk about how people are losing deals because of their agent's greed. That's right. I've run into it a couple of times recently and it's very, very, very discouraging to me. And you know, I don't pull punches, I don't hold back. So I don't intend to do that now, but I will be, I will be careful. I'm not gonna name names, I'm not gonna give any particulars. I don't need anybody getting all upset hiring an attorney and coming after me. I don't need that. But I do want to share the information with you because if you're buying, selling, investing, et cetera, and you're putting trust in a real estate agent, then you need to know that this is a possibility. That's right. It could happen to you. All right guys, I am Ron Lyons, and this of course is Celina Real Estate Talk. And we're coming to you prerecorded not live. I wish we were doing live. We're not live. This is a podcast baby, which means that we do this recorded earlier. And as a matter of fact, by the time you're listening to this, this podcast could be several years old. That's very possible. Unlikely, but very possible. 'cause chances are that I've already got 3000 other episodes out there if we're two years after the date that I recorded this one. But let me talk to you about what's going on out there in the land of real estate, in the fairest land of Celina, Texas, where everything is gold and happy and good, or at least something like that. It's a little fairytale out there. There's a lot of property for sale, there's a lot of builders homes on the ground right now. There's a lot of, there's a lot of things for sale. And as we speak right now, we're in about the middle of February, 2026. And it is absolutely 100% a buyer's market. And so buyers agents are getting really, really spicy out there because they know they're the commodity builders have just absolutely caught up with inventory. There's an awful lot of spec homes sitting on the ground ready to go. And builders are getting so competitive with pre-owned homes right now that it's super, super hard if you own a pre-owned home to list it on the market and to get it sold because of that oversaturation of availability of all of these brand new homes. Now, there was a time in the not so distant past where you'd have to go into a builder and you'd be 5, 7, 8, 9 months out before they could get your home built. And that created demand for pre-owned homes. But the builders have caught up now, especially in our area in Celina, specifically in around Celina, you can go find a home from a builder, you can pick your elevation sometimes you can pick out, pick your finishes, you can just really set it up however you like, and then still be very competitive. Like you're not gonna pay a whole, whole lot more than a pre-owned home two years, three years, eight years old. So why in the world would you go and purchase this older home with all of the issues that come with that structural foundation? It's been lived in, it's already to someone else's taste. Those accent walls, the the way they've done the landscaping, you know, the wear and tear on the flooring, all of that stuff, it's already there. Life has already happened in the house. You go in and get one of these new construction homes and you're the one that gets to put all that wear and tear on it. You get to pick all of your finishes, you get to do all that. And oh, by the way, you've got a builder's warranty. So that makes it exceptionally competitive out there. That being the case, then it leads to exactly what I'm talking about right now. If there's an agent out there, a realtor, real estate agent who has a buyer, then they can kind of call the shots. They can kinda do whatever they want to do because they are the commodity. Tons of homes for sale, tons of availability, not enough buyers. And so what's happening right now is these agents are going out there, these buyer's agents, and because the market is shifted into the favor of the buyers, then these agents are getting really edgy. They're demanding higher commissions. They're being really, really just edgy. I'm gonna call, I'm gonna say edgy. This is a family show. But you can imagine what I'm really saying here. They're communication style. Their manners just have gone away in some cases, not, not across the board. There's still so much professionalism out there, and thank God for that. There's still so many professional real estate agents, but some of them, it's like when you see a security guard and they get the uniform and they get the badge and, and they're still, they're just a, they're just a security guard, they're not a police officer. Nothing against security guards, but I'm just saying there's kind of a, you know, there's a certain entry level into that sort of service security guards, and then there's the higher educational requirements and things like that to be a police officer. So you tend to get more people in security than you do into law enforcement. 'cause it's a lower bar of entrance. And at times you put a little badge and a uniform on a security guard and it all goes to their head, they go on a power trip. And that's essentially what we're seeing out there oftentimes with some of these buyer's agents. But this, none of this is the actual problem that I want to talk about. I just wanna kind of give you an idea of the atmosphere, the ecosphere, how it is, what's going on out there in that world right now. So you understand that it's a buyer's market. You understand that buyer's agents can kind of call the shots right now because they're in high demand. But let me explain to you how this is creating a critical problem, in my opinion for some of these buyers. So you may be a buyer, that means you're in high demand. Your agent has told you, Hey, the world is ours out there right now in Celina, Texas and surrounding areas, and pretty much across the country you are in high demand as a buyer. So we're gonna go in here and we're gonna be able to find you a really, really good deal. And I would agree with that, and I would advise my clients the exact same thing. But here's where the problem comes in. It's greed on the part of the agent because of this opportunity, because of this environment right now, you're seeing a lot of agents out there who are pushing for more commission, And that's not necessarily such a bad thing. It's okay for an agent to say, Hey, here's the commission that I want. Here's what I think I deserve. And then to negotiate that with the people that you're gonna represent, that is absolutely legal. That's the way it is right now. That unwritten standard of 6%, well, that's all gone. Everybody knows now that commissions are fully negotiable. You've probably heard about that on the news very, very recently. It's not too many months ago that all of this changed. There was a big lawsuit, the NAR, the National Association of Realtors settled this lawsuit and they've made all of these changes. An example would be back before the NAR settlement, the NAR settlement, we would be able to list on the MLS on the multiple listing service, what the commission split was gonna be, what we were offering as the listing side of a deal. And you can't do that anymore. We can't do that no longer is it legal for us to list the commission that we're willing to split or share with the other side on the MLS. So now you actually have to ask, there's gotta be communication between the agents on each side. So a common scenario is that a phone call or text messages or whatever come between a buyer's agent, They see a listing, they ask about showing the property or they set up a showing. And then early on in that conversation comes the what is the BAC, what's the commission, in other words that you're willing to pay on this. And traditionally, typically, whatever, you know, it's that old 3%, and now you're seeing commissions anywhere from 0% to as high as four or 5%. Usually it's somewhere around two or 3%. And I don't wanna get too complicated in explaining all of this, which is very, very easy to do because commissions and all of this discussion can just run into like a, you know, when you used to mix all the colors of the Play-Doh together and you came out with just the ugliest color in the world, you put all the pretty colors in, but when you mix 'em, it turns out to be this really disgusting color. Well, that's how this discussion about commissions can be. So the way that it stands is that commissions are fully negotiable, okay? There is still kind of the two and 3% being followed that's gonna be shared with the buyer's agent side. Remember, that can come from the actual seller directly to that agent, or it can be a split between the listing broker or agent and the agent for the buyers, essentially. Okay? So if you're following me on all of this so far, then you kind of understand how we've gotten into this big mess. NAR settled the lawsuit. The lawsuit was trying to make it so that there wasn't like a, a standardized commission out there and open it up for everybody to actually know that you can negotiate these things, that you don't have to pay a standardized commission. But what it's done is probably ended up hurting the average consumer a whole lot more. Because in these last couple of scenarios that I've had the agent ask me early on what the commission is, and if my person now, me being the listing agent, if my client, the person who I'm selling a home for is not paying at least a 3% commission, or if I'm not splitting a commission and getting at least 3% to the other side, you can hear it in their voice, you can get the vibe in their text messages, et cetera, that they are unhappy. You have to understand this, these buyers agents know that they're in demand, yet somehow they have found a home or a property or an investment where they're gonna get less than the old standard 3% commission. And that is the problem. Not that they're being offered a less commission, but that I've seen it now start to steer these agents taking their clients possibly in other directions specifically because they as the agent, are not gonna make the money that they believe they should. So imagine this on a $500,000 house, and you're gonna get 3% commission on the old standard. That means you're gonna make $15,000. You're in high demand as a buyer's agent and as a buyer. And so you come to a home that's $500,000 and lo and behold, the seller isn't exactly super motivated to sell. They know the market's slow, they're, they're only offering 2% to the other side, either through a 4% that's gonna be split between the listing agent, 2% to the buyer's agent or the seller or the homeowner's gonna just pay that 2% directly to that buyer's agent. But imagine now what, that's what that's done. So we're on our $500,000 house example, and now they're getting 2% commission from wherever it comes from, a split with the other agent or directly from the seller. So they're getting $10,000 now and not 15. So they're at a $5,000 deficit From what they believe they should get. Now, whenever you do these deals, and I'm just gonna complicate the heck out of this even more, hopefully I'll be able to untie this little knot that I've tied for you so far. But when you have the desire to purchase a home and you enlist the services of an agent, so you're getting a buyer's agent to represent you, that buyer's agent can negotiate with you for a commission on this deal. They can say, here's the amount of commission that I want to make. This is what I am expecting in their buyer's representation agreement with you. Okay? So that's the document that gives them the, the right, the responsibilities and outlines all of the expectations for representing you in the pursuit of purchasing a new home or property or investment. And so let's say that that agent put into the document that they wanted 3% of the sales price of the final property or home. So now they're expecting 3%. You happen to have fallen in love with this home or this property or whatever, where the seller's only offering a 2% deal or the, the agent's only gonna split 4% between themselves and the buyer's agent. So either way, this agent is only gonna get 2% through whatever scenario it is, But they wanted three. So now they've either gotta go to their buyers, the ones who they have charmed the socks off of, the ones who they've made believe you know, that they're some kind of special magical agent because they're out there and handling all these deals. When the reality is that as a seller, you're so eager to have buyers that you really kind, you kind of treat them special right now because they're few and far in between. And the more desperate your seller is, the better you treat the agent on the other side. And so the buyers think that their agent hung the moon, but now their agents coming back saying, we have a small problem. They're only paying a 2% commission on this deal. And well, you know, whenever we did that paperwork and I signed with you guys, I said, 3%, yeah, I need another 1% from you. I need $5,000 from you. And therein lies the problem because you've gotta go back. Now if you're this buyer's agent and try and collect 1%, remember in our example, it's a $500,000 house. So that's five grand you've gotta go back and ask your buyers for because the seller's not gonna pay it. The agent on the other side's not gonna split their commission and give you 3%. And So now you're stuck either accepting 10 grand or asking your clients to make up that difference, in this case, $5,000. Or wouldn't it just be easier to just steer them towards a different property where they can probably, hopefully be equally happy? And I'm gonna get my full commission on this next one. So if they're in that $500,000 price range, then I'm gonna make that extra five grand because chances are this next deal's gonna actually offer 3% and not two. And maybe this agent is willing to take chances. So they say things and do things that makes their clients decide against this particular property. It's happening. And it's unfortunate. It's absolutely unfortunate, but I have this little saying, I always say that you can't call a foul if you don't know the rule. And I think that's how a lot of these people operate is this happens, this all breaks down. The agent is not gonna get their commission that they want. And so somehow they find a way to poison the deal. They either go back and report that the other side's uncooperative, and we're not gonna get what you want. And after all, I've looked at all of these different things and I think that this is probably not the right property for you. And oh, look at this one that I found that I think might be a whole lot better, et cetera. And that is a huge violation of the code of ethics that every realtor is supposed to adhere to. We're supposed to follow that. It's supposed to be like our credo, our our document, our set of rules and stuff that hold us to a higher standard. So the way that I know this is happening is because when I have a conversation with these agents and there's just an obvious sense of dislike or disdain for that lower commission, you just know right away we're gonna have a problem. It ought to go like this. It ought to go, what is the commission that you're offering on this particular transaction for this property, for this house, for this piece of land, whatever. And when the listing agent says it's 2%, the buyer's agent on say, very good and then get on with their business, they can decide if they want to go back to their buyers and ask for that extra a little bit. Or they can decide if $10,000 is way better than $0 and adhere to that code of ethics, that little thing that says you're not gonna let your own compensation get in the way of doing your job, which is looking out for the interest of your client first. And that means even before your interest, you put their needs and their desires, the things that you're trying to help them with in real estate ahead of what you're gonna get paid. So if you're one of those clients out there of some agent and the commission wasn't what that agent wanted and they didn't have an easy way to resolve it, then guess what? You may have lost out on a deal that you really, really, really needed, deserved and should have had. So it's frustrating. And like I said, I've run into it a couple of times and it's just, it's a little unnerving. And of course if you draw this to their attention, which I have a habit of doing, because you can probably just imagine that being a former police officer, I'm not intimidated, I don't back down, I'm not a bully, I'm not ugly, but I certainly don't mind addressing situations and I certainly don't mind confrontation. I know what the rules are, I know how they're supposed to work. It's just like I used to know the law. You can't go out there and enforce the law unless you know the law. So you know these things. And when you confront one of these agents and you say, listen, this is not how this is supposed to work. You're not supposed to allow this to become an issue, that's when they go backing off. That's when you see backpedaling. Like you ain't never seen, you think they're in a little rubber raft and about to go over the waterfall. I mean, they start backpedaling like crazy. Like, oh, I was never concerned that was never gonna be an issue. I didn't this, I didn't that. I mean, they backpedal like crazy. And many times these conversations are happening over text or in emails, so there's actual proof that they did it, and yet they still sit there and deny it. What is that plausible deniability, . It's just crazy. And that's what's going on out there. Now, as realtors, real estate agents, we have to remember who we're working for. We have to remember what that oath is. We have to understand that sometimes these deals are not gonna work in our favor, meaning we may make less than what we thought, But we have a fiduciary responsibility they call it to our clients. And the compensation should never dictate our behavior ever. And here's the other side of the deal that, albeit I'm gonna say that, you know, it's a little less critical, a little less important, but still another casualty of the situation is the fact that there's a seller Who didn't get their home sold. So not only did the buyer who really wanted the property, the whatever it was, the land, the listing, not only did they miss out on it, but the seller missed out on a sell. Now it's a little less significant for them because they're the ones who decided to pay the lower commission. And that is a risk you take is that you know, you're gonna potentially run into some agent out there who's not following this, this code of ethics that we're supposed to follow. And you may get into a situation like this and you may not actually sell your property. That's, there's a slight risk that comes along with lowering that commission like that. But nonetheless, still very unfair, very, very wrong in so many ways that two different sets of people, two clients, two separate agents, two separate realtors, two separate clients, and everybody loses except for that greedy agent who's gonna take their clients on and find that next deal where they're gonna make more money. It's super important that if you are a real estate agent, you're listening to this. And I know that I do have quite a few real estate agents who listen to the show as well as people who are just, you know, non realtors, non-agent who are interested in real estate for, you know, any number of different reasons. But if you are a real estate agent, Then you have to remember that your agreement with your client is between you and that client. And if you set up something like a 3% commission and then there's a 2% on this deal, that is where that problem exists. And that is where that problem needs to be handled specifically between you and your client. You don't need to appear in any way, shape, form, or fashion to the other side of this transaction that that is concerning to you, that you're disappointed in that or frustrated that you're now gonna have to go pursue your clients for more money or whatever. You need to keep that professionally between you and your client. You have a document, you set it up for a certain amount, you either decide to pursue that with them and ask them to make up that difference as they agreed to do in your document, or go back to them and tell them they don't have to do that, that you're not expecting them to, and that you're gonna be extremely satisfied with the commission that's offered and you're gonna be graceful and move along your way. And I have a tiny little bit of advice for both buyers and sellers out there who may be listening to the show you're considering buying or you know, you will one day down the road, you're gonna list your home for sale. Whatever it is you need to know and understand how this commission stuff works. Because with the recent changes and the fact that now everyone knows that everything's negotiable, it may very well be that you have a agent working for you, representing you as a buyer, and you think everything's great because it's a buyer's market, so you should get everything you want, right? But in the event that you run into that one-off situation, and I don't know if it's really that one-off because I've had it a couple of times recently myself, you run into that situation where the other side's not paying the standard or the old expected 3% per se, that means that you're gonna have to come out of pocket for that or you're gonna have to negotiate that with your agent and it just gets really sticky and ugly and it's not fun, it's not fun for you and it's not fun for them. So my advice to you as a potential buyer with any agent that you should decide to hire, work all of that stuff out upfront. Find out and say, listen, I know we're agreeing to pay you 3%, but what if we run into a home that's only offering you a 2% commission? Is that gonna change how you represent us? Are you going to be disappointed? Are you going to expect us to pay the difference, et cetera, et cetera. Be very, very clear about that. On the other side of the deal is that if you're a seller, if you're listing a home for sale, then taking all of this stuff into consideration is equally as important because if you don't have a very strong agent representing you on the selling side, you could have a very strong agent come up on the buying side that says, Hey, you are offering 2% commission. My people signed on for a 3%, but I'm not gonna go back and ask them for that extra 1%. Or in the case of a $500,000 home, I'm not gonna ask them for that $5,000. So I need for you to go to the seller and tell them that they're gonna have to kick in another five grand for me. And if your agent, if you're the seller and you don't have a strong agent who can sit there and tell that agent on the buying side that that's simply not gonna happen and can, who can negotiate over even these little smaller details. You're talking about a $500,000 home and a $5,000 partial commission to one agent or the other is about to torpedo the whole deal, you better have a very, very strong agent on your side just to help you navigate all of this stuff. There's so much other nonsense and things that can happen. There's so, so much that can happen. You need a very, very strong agent on your side. Not an agent who just went to the classes or took the online classes and passed the state test and now they have their license. I used to say this about personal trainers. Anybody can be a personal trainer if you go find the right classes online and do that sort of thing. You too can be a personal trainer. But there were really good ones and really dangerous ones, ones that weren't that good. Same with real estate. Almost anybody can become a real estate agent, very, very few master their craft and are amazing at it. They're very robotic at times. There's kind of the standard ebb and flow of a deal and they kind of get into that routine. And it's like the personal trainer that has one workout that he gives everybody, and it's probably the one that he learned to do back in high school and unfortunately that doesn't fit most situations. So that's the deal. Know who it is that's representing you out all of these details and have very, very, very good understanding of how these commission situations work. Or else you may find yourself in a situation where you find what you believe to be the perfect fit in a property or a home or a piece of land or whatever. You may lose it because your little, you know, agent that you're starstruck with is really, really greedy and willing to tank a deal in order to get more money in their pocket and not looking out for your best interest. So that is what's going on out there, guys. It's uh, it's not a, it's not a huge, huge problem. Like it's not in every deal, but it is happening. And so I hope you are armed with more knowledge now so that you can be on the lookout for this sort of thing and hopefully never get yourself involved in this. Anyways, guys, I'm gonna call that a deal today. We're at like 33 minutes and I was gonna try and have this wrapped up in only 30, so I went a little bit long, but it's, it's okay. I enjoy hanging out with you. I enjoy talking real estate. And of course, as always, if you're interested in talking to me about your real estate needs, by all means reach out. It's Ron at Ron@RonLyons.com Or you can reach me at 214-783-5440. We're on YouTube, we're on Facebook, we're literally everywhere. Super, super easy to find. So look me up, shoot me a text, gimme a phone call, let's have a conversation and let's see if we can get you taken care of. Anyways, guys, that's gonna wrap it up for this episode and as I always say, until the next episode, stay safe and God bless.