Are listing agreements legal when an unrepresented buyer is involved?

[wildonion773]

I have a question about the typical listing contract between a seller and a seller’s agent in the US. This question only applies when an unrepresented buyer is involved and no dual agent is involved.

In the typical home sale, the seller and seller’s agent write a contract agreeing to a seller’s agent commission and a buyer’s agent commission if the buyer has an agent.

If the buyer does not have an agent, the seller and seller’s agent agree in the contract to split the buyer’s agent commission for themselves. For example, the typical seller’s agent commission is around 3% and the typical buyer’s agent commission is also around 3%. If the buyer does not have an agent, the seller’s agent may take the original 3% seller’s agent commission and a 2% buyer’s agent commission. The seller gets to keep the remaining 1% buyer’s agent commission.

All of this is agreed to in a contract between the seller and the seller’s agent. A buyer does not have access to this contract which means it is essentially secret. Usually a buyer only discovers what the commission is after the negotiations are complete or at the closing because it is legally required to be disclosed.

As the buyer’s agent commission is split between the seller and seller’s agent, this creates an unfair bargaining situation. The buyer must include in his offer some or all of the buyer’s agent commission. By preventing independent buyers from competing for the buyer’s commission, the seller and seller’s agent are effectively overcharging independent buyers and eliminating any competition.

All of this seems to result in an act of collusion (as defined below) between the seller and the seller’s agent. Any thoughts on this?

collusion n. where two persons (or business entities through their officers or other employees) enter into a deceitful agreement, usually secret, to defraud and/or gain an unfair advantage over a third party, competitors, consumers or those with whom they are negotiating. Collusion can include secret price or wage fixing, secret rebates, or pretending to be independent of each other when actually conspiring together for their joint ends.