Let’s be honest—buyer’s agents had a pretty good run in real estate. But times are changing.  

Silicon Valley home prices have skyrocketed while technology has made it easier than ever for buyers to monitor the market and compare homes available for sale. Today’s buyers are well-informed, regularly browsing online resources like Zillow, Redfin, MLSlistings.com, and Realtor.com—often weeks before they even speak with an agent. Not to mention automated alerts that send each new listing that matches the buyer’s criteria directly to the buyer’s phone. To aid these increasingly self-directed buyers, most top listing agents now offer a range of consumer accessible resources, including narrated video tours, interactive 3D tours, high-resolution photography, and comprehensive floorplans.  

Once a buyer identifies a property of interest, they typically visit the open house and/or contact a buyer’s agent to initiate the next steps in the purchasing process.  

Despite home prices rising well beyond the rate of inflation—and significant technological advancements improving transaction efficiency –  commissions paid to buyer’s agents have seen little downward adjustments.  

Although current regulations restrict sellers or listing agents from publicly publishing the commission offered to a buyer’s agent, a study of the commissions advertised on the MLS just prior to this rule change revealed a striking pattern: approximately 95% of home sellers in Palo Alto, with properties priced between $2 million and $9 million, offered precisely a 2.5% commission to the buyer’s agent. This remarkable uniformity raises significant concerns, as it may indicate the possibility of price-fixing practices or even collusion.   

There is no question that a good buyer’s-agent—with a strong track record and extensive experience—can add tremendous value and significant protections for a buyer, especially for those unfamiliar with the local market. Some are clearly worth 2.5% or more to the buyers that they serve. However, not all buyer’s agents offer the same level of service or expertise, and the time and effort required for each transaction can vary significantly. This raises a critical question: Why should sellers be expected to pay a uniform commission to all when buyer’s agents, regardless of performance or involvement? Furthermore, why should sellers even have to pay anything at all if the buyers found the home on the internet or from the listing agent’s marketing. This very issue was the heart of the massive court case that the real estate industry ultimately lost. 

Price-Fixing is Illegal

Price-fixing is a violation of antitrust law, which was a key issue in the industry’s landmark legal defeat. After the court’s decision, most of the nation’s largest brokerages, and the National Association of Realtors, entered a settlement designed to address and eliminate practices that may facilitate commission price-fixing. Pursuant to the terms of the settlement, sellers are now restricted from publicly advertising the commission offered to the buyer’s agent. Additionally, buyers must enter into a formal agreement with a buyer’s agent agreeing to the amount of commission that the buyer will pay to their own agent before any professional services are rendered. The intent behind these changes is to foster greater competition—thus encouraging higher service standards among buyers’ agents and/or by reducing the fees they charge. 

Attempts at Price Fixing Continue

Almost immediately after the settlement some agents began speaking of ways to “work around” the settlement and attempted to convince sellers that nothing has changed. Recently, several homeowners contemplating the sale of their properties have reported instances where agents have either suggested or explicitly stated that many buyer’s agents will boycott listings that do not offer a minimum commission of 2.5% (even though these agents have agreements to be paid by their buyer). Some agents even go as far as to claim that any listing agent who deviates from the “standard” 2.5% commission may face boycott from buyer’s agents. The argument seems to be that buyers will not know of the listing unless agents tell them about it. 

To be clear, this conduct is not only illegal, but also fundamentally infeasible. Buyers now have unprecedented direct access to information about available properties. Nonetheless, the mere threat of boycott is enough to coerce some sellers into offering exorbitant minimum commissions, even though no “standard” commission exists. 

The results speak for themselves. Based on our research, we believe that the DeLeon Team sells more listings to buyers represented by outside brokerages than any other local team or agent. Undoubtedly, we also sell far more homes where there are multiple offers and more homes where there is no request for the seller to pay compensation to the buyer’s broker.  

Off-Market or Office Exclusive Listings − Higher Commissions and Lower Prices 

While it is virtually impossible for agents to hide listings from well-qualified buyers when those properties are advertised on the MLS, Zillow, and other popular platforms, these unlawful threats gain traction when listing agents convince sellers to withhold their properties from public marketing channels. By limiting exposure on the platforms buyers routinely use, agents can create an artificial barrier—giving agents leverage to demand higher commissions from buyers in exchange for access to their secret listings that are very likely to sell for significantly less than homes that receive full exposure and aggressive marketing.    

Although it may seem counterintuitive for informed sellers to accept such egregious restrictions on their home’s exposure, some unscrupulous agents or brokerages have crafted persuasive “scripts” aimed at convincing sellers to give them a window of time during which most interested buyers remain unaware that the home is even available.   

Despite the flawed logic that a buyer would offer a higher price knowing that they are facing less competition —and the reality that reduced exposure may eliminate higher offers from other interested buyers who are unaware of the listing —some sellers still agree to give agents a period of “exclusivity” to bring in their buyers. This raises an important question: Why would commission-based agents engage in practices that are likely to result in a lower sale price? 

The answer is simple: By orchestrating off-market deals, agents can often collect commission from both the buyer and the seller. This results in more money in the agent’s or brokerage’s pocket even if the final sale price is substantially lower. In these cases, their personal financial incentives directly conflict with their fiduciary duty to maximize the seller’s sales price. 

Why Do Agents Like “Hidden,” “Pocket,” and “Office Exclusive” Listings?”  

There are three main reasons why agents are drawn to “office-exclusive,” “pocket,” or off-MLS listings: 

1) More Commission — The agent and/or the brokerage significantly increase their chances of representing both the buyer and the seller when a property is kept off the open market. This dual representation allows them to potentially collect the full commission—or at least a substantial referral fee—on both sides of the transaction. 

2) Appealing to Strategic Buyers — Agents or brokerages can attract buyers seeking a lower price by offering access to exclusive, non-public listings that are hidden from a broader pool of qualified buyers. Reduced market exposure and limited competition usually translates into lower sale prices—an appealing prospect for buyers looking to secure a deal.    

These off-market opportunities allow agents to charge higher commissions. It is not uncommon for buyers to agree to pay buyer’s-side commission of 2%, 2.5%, or more if they believe these “hidden” listings could sell for 5% to 8% below market value due to the lack of competition. 

3) Reduced Costs — Under the MLS’s “Clear Cooperation Policy,” agents are prohibited from advertising a listing, or even informing agents from other brokerages of its availability, unless the property is on the MLS within 24 hours of the public dissemination of the information. By keeping listings off-market, agents not only increase their chances of earning a second level of commission—or at least a substantial referral fee—from the buyer’s side, but also save on marketing costs.

The California Association of Realtor’s (C.A.R.’s) Position 

While some agents resort to intimidation tactics or make disingenuous threats of group boycotts to pressure sellers into pre-committing to specific buyer-agent commissions—including commissions payable to the listing agent if the buyer comes to them directly—the California Association of Realtors has taken a much more client favorable and ethical position.   

Like DeLeon Realty, C.A.R. maintains that listing agreements should not include any pre-set commission offered to the buyer’s agent. After all, buyers are now required to negotiate and agree to the compensation they will pay their own agent. In fact, C.A.R. has even removed the section in its standard listing agreement that previously obligated sellers to offer commission to the buyer’s agent. Nevertheless, some agents seeking to preserve the traditional commission model, irrespective of the massive court loss and terms of the settlement, continue to use alternative forms, such as those provided by PRDS, which still include that outdated and potentially problematic line by which the seller pre-commits to a minimum commission to the buyer’s agent.  

DeLeon Realty’s Position

C.A.R’s position is also closely aligned with DeLeon Realty’s view that sellers should welcome all offers, most certainly including those in which the buyer requests the seller to cover some or all of the commission the buyer owes to the buyer’s agent. Like the price and contingency periods, this commission request becomes a point of negotiation. 

One might ask, what’s the difference? The key distinction is that buyers are unlikely to request more than they have already agreed to pay their own agent, unless the seller has pre-committed to offering a higher amount.  Additionally, DeLeon Realty is the only major local brokerage that always gives self-directed buyers the option of submitting an offer through one of our buyer’s agents with neither the buyer nor the seller paying any commission to the buyer’s agent. DeLeon Realty covers all the in-house buyer’s agent’s compensation.    

Clandestine Counter-Arguments

It is noteworthy that DeLeon Realty, along with the national press, have published numerous critiques of secretive “office exclusive” listings and agents pressuring sellers to commit to any minimum buyer’s agent commission in the listing agreement. However, other agents’ disingenuous counterarguments supporting these questionable tactics typically surface only in private conversations with clients. Tellingly, agents are reluctant or unwilling to put these positions in writing, or respond to press inquiries.

On multiple occasions, we have proposed that Compass’s Palo Alto office manager and I co-present a seminar on how the DeLeon approach differs from Compass’s approach. Unfortunately, to date, this manager has yet to agree to such a public discussion. However, the messenger is not important— it is the message that matters. If the Compass manager would feel more comfortable having a conversation about the services, marketing strategies, commission structure, and views on limiting sales only to buyer’s represented by a Compass agent with Ken DeLeon instead of me, we are more than happy to accommodate that request. Alternatively, if Compass would prefer a different office manager to participate in an open and candid discussion comparing Compass’s business philosophy with that of DeLeon Realty, we would gladly participate.  

The Take-Away

Withholding listings from the majority of interested buyers is inconsistent with the seller’s best interest and almost certainly the agent’s fiduciary duty to their sellers unless the seller is informed that the reduced exposure and competition will likely sacrifice sales price for privacy. 

Imagine that an agent or brokerage with a 15% market share knows of three buyers who would love a home just like yours. Irrespective of which agent the seller chooses to list with, all three buyers would know about the home if it’s placed on the MLS. However, by withholding it from the MLS, as well as websites like Zillow, Redfin and MLSListings.com, the seller would effectively exclude the other 20 potential buyers, those who are either represented by agents from other brokerages or who aren’t yet working with an agent at all. 

When you list with DeLeon Realty, your home will be featured on the MLS, Zillow, Redfin, and many other public-facing websites. Interestingly, it will also appear on Compass’s website, Coldwell Banker’s website, and almost all other websites that showcase properties for sale. Additionally, we regularly advertise our listings across multiple channels, including newspapers, this newsletter, direct mail, TV and streaming ads, social media, and radio. Plus, our extensive network of potential buyers helps us attract those who may love a home like yours, but are looking in a different area or are not actively searching at the moment. 

Personally, I would enjoy watching a spirted debate in which a Compass manager argues the alternative position.  Namely, that it is in the Seller’s best interest to withhold the listing from any buyer not working with a Compass buyer’s agent and to do no public marketing outside of their brokerage.   

Make no mistake: I firmly believe that agents who suggest limiting exposure to only buyers working with them or their brokerage are generally not concerned about your privacy or best interest—they’re focused on increasing their commission, even if it means a significantly lower sale price. 

Michael Repka | michael@deleonrealty.com | 650.668.3958 | DRE #01854880