The purpose of this content is to help buyers and sellers make informed decisions and better understand how real estate representation actually works. Whether you are buying or selling a home, or purchasing or selling land, it is essential to understand agency, fiduciary duty, who is paying whom, and who is truly being represented.

I have wanted to address Agency, Representation, and Fiduciary Duty for many years. A few years ago, I even created a video series on the topic. More recently, I was prompted to revisit this conversation due to the landmark lawsuit filed in Missouri involving the National Association of Realtors (NAR) and several large national brokerages, including Anywhere Realty (which owns Better Homes and Gardens Real Estate, CENTURY 21, Coldwell Banker, Coldwell Banker Commercial, Corcoran, ERA, and Sotheby’s International Realty), as well as Keller Williams, RE/MAX, and others.

Why does this matter?

Over the past several years, there has been growing confusion surrounding real estate representation, agency relationships, and who is actually working for whom in a transaction. Much of this confusion intensified following the lawsuits involving the National Association of Realtors and several major real estate companies and brokerages.

In my opinion, these organizations worked hand-in-hand to both fix commission structures and promote a system of agency that ultimately benefited associations and brokerages financially — at the expense of client representation.

At the core of that lawsuit was a simple but critical question:

Why is the seller paying for representation of the buyer?

Under the traditional model, listing agents affiliated with Realtor boards were taught—and pressured—to list properties at a “standard” 6% commission: 3% for the listing side and 3% to be “cooperated” to a buyer’s agent. The seller paid the full amount so the listing agent could compensate another agent representing a different party.

This structure did not arise to improve service. It arose to generate revenue—more agents, more dues, more MLS fees, and more money flowing to national, state, and local associations. Listing agents were effectively required to cooperate with buyer’s agents regardless of their experience, expertise, or actual contribution to the transaction. Meanwhile, NAR, state associations, local boards, and MLS providers profited handsomely.

A Seller’s Agent owes fiduciary duty to their client. In simple terms, this means the agent must act in the best interest of the seller—above their own interests.

In law, fiduciary duty requires loyalty, confidentiality, full disclosure, and the protection of a client’s financial and material interests. With that definition in mind, one fundamental question must be asked:

How can a seller’s agent justify offering monetary incentives to another fiduciary who represents a different party?

If that practice makes sense to you, this content likely will not. But for those who understand fiduciary duty, the conflict is obvious.

I have been in this business for more than 20 years and regularly work alongside attorneys and CPAs — professionals who also operate under fiduciary duty. Not one attorney or CPA I have spoken with believes the real estate industry has structured agency relationships correctly.

Apparently, a jury agreed.

National Association of Realtors, Anywhere Real Estate, Keller Williams Realty, RE/MAX, and others overwhelmingly lost the lawsuit, bringing national attention to serious concerns surrounding agency relationships, compensation structures, and fiduciary representation within the real estate industry.