Reasons why it is so Easy to Hide Fees

There are too many ways to kickback, massage, induce, compensate, refer, contribute, cajole and scratch backs in this industry because:

1) there are so many players involved in the transaction and each are vying for business (substitute $$$) with their own agendas. Although the home buyer or seller is supposed to be the focus, the hub through which decisions are supposed to be made, the players' real mission is to make the deal happen while maintaining their fiduciary duty to their client. (Figuratively speaking, the "client" could also be the realtor)

2) kickbacks happen two degrees of separation away from the client. In a referral based business, costs are just plain higher with kickbacks (example) happening far away from the transaction.

3) deals are now being packaged turnkey. Once upon a time, a home buyer or investor had to work closely with an agent or lender for long periods of time to close a deal. Of course, this is still standard m.o., but the internet, the rise of the amateur real estate investor and the literal land rush of investment companies catering to these new investors have spawned the "turnkey" or "plug and play" deal. How can any investor understand any of the hidden costs associated with an investment in South Carolina or Panama when they are literally making the purchase after listening to a 15-60 minute pitch? It amounts to trust in the punter.

Paradoxical, no? - the supposed "transparency" of today's real estate deal provides enough comfort to an armchair investor to induce him/her to close in a matter of hours, yet the deal itself is far from transparent. Yes, the armchair investor can do the due diligence, but have you ever asked a "plug and play" investment salesperson for a financial analysis, let alone a prospectus? (Try that at any Real Estate Expo) These deals are packaged for marketing and quick sale and not for leisurely perusal with a fine toothed comb.

Well, here's another "hidden fee" permutation on ways buyer side agents can compensate themselves behind the buyer's back. Today, Greg Swann at the Bloodhound Blog posts a detailed informative treatise on hidden buyer side agent compensation I hadn't seen before, and frankly, didn't even think about until I read it. The moral is, and I use Greg's very apt quote: "Buyers need to learn the five little words that sellers mastered long ago: How much do you charge?". By extension, you need to learn and ask those five words with every player who is working on your transaction...

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