Quote:
Originally Posted by perfectlyGoodInk
Sounds like your main objection is that you can't do rebates in Oregon.
|
No. It would make it easier, but my main objection is working with people who think an incentive like that matters to me. I'd prefer to work with clients that trust me.
Quote:
Originally Posted by perfectlyGoodInk
I still don't see the rationale of why the buyer's agent compensation is negotiated between the seller and the listing agent. Exactly what does this accomplish?
|
It accomplishes nothing, but it has to be done that way for many buyers. Here's why. The old system was that buyer's had no representation. All agents were agents of the seller. The listing agent was the seller's agent and the "buyer" agent was the sub-agent of the seller. So as a result, the seller paid for all of that since everyone was representing them. Some states still have sub-agency.
The problem came in, not surprisingly, when buyer agency came into play in the 1990s. Buyers wanted their own representation but they often couldn't afford it with their down payment, and closing costs. So the old system, which wasn't designed for buyer agency, stuck. The issue on why it hasn't changed is very simple. Lenders and buyers. First most lenders put a cap on the amount of closing costs allowed, or like in the case of VA, buyer agent fees is a non-allowable closing cost, which means the buyer CANNOT pay it and still get a VA loan. So, do we tell our military men and women, eh...sorry, no representation for you? FHA has a 6% cap on their closing costs. Most FHA buyers need full closing cost help which runs about 4.5% of that 6%. Not a lot of dollars left for paying a buyer agent a reasonable fee, considering how inexpensive FHA homes are. Even my 20% down buyers often have just enough to do their 20% down plus closing. They need to be able to wrap fees into their mortgage.
So, you are confusing a philosophical issue with reality. I think most agents think a buyer should pay for their own representation and a seller theirs, but the real estate industry has systems in place that make that difficult for buyers.
Quote:
Originally Posted by perfectlyGoodInk
This is exactly why referrals are less effective than the compensation scheme to align interests. There are those that care only about money. And everybody cares at least a little bit about money (after all, that's how you pay for food). Commissions are for-sure-right-now money. Referrals are maybe sometime far down into the future money. People just don't buy homes often enough in their lifetime for repeat business to matter as much for real estate as it does for other industries.
|
Then you are just looking for an agent that isn't interested in being in the business long term. It is that simple. Referrals are a much more important motivator than a commission scheme. For me personally, if I did your commission scheme it would be to placate you as a client. It would have zero impact on my services or cause me to align my interests with yours. I already make good money. $1000 isn't an incentive to me. I think you are placing too much weight on motivation for money. Successful agents just won't be motivated by your scheme because they already do well.
Quote:
Originally Posted by perfectlyGoodInk
That agents care about referrals is thus not an argument that any one of these schemes is better than the other.
|
It isn't a competition for which is better. They are both fine if adults agree to them. You are just placing too much emphasis on your scheme being an incentive. That is what the agents are trying to communicate to you.
I didn't realize we were having a conversation about which system was better. I thought we were having a conversation about whether or not your system would incentivize an agent to do a better job for you, than the 3% model. I think you are removing one bias and creating another. I stand by that opinion. Whether that is good thing or bad thing is up to you to decide since you are the one paying for service.
So here is what will happen. You are specifically looking for an agent that responds to monetary incentives. As such, you will find one. You will be happy, they will get paid, and you will feel that your system works better than the current system. The problem is that for agents, like myself, that aren't motivated that way, we will just pass on working with people that want to work that way. People that are so "money incentive" focused often assume that others are the same way when they aren't.
Just being good at what you do takes care of putting food on the table. No need for schemes.