Realty Agent refuses to show house. (Alto: condo, mortgages, brokers)
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Off-topic? The OP was choosing to contact listing agents directly. Presumably they have some reluctance to work with a buyer's agent. My suggestion is that the traditional compensation scheme is probably behind why many buyer's agents fail to work in the best interest of their clients. Proposing this form of compensation to agents as you are interviewing them is one way to screen those who like the standard scheme from those who've noticed this misalignment and take steps to work against it.
Also, I said nothing about overpaid. One of the agents I was talking to asked me whether I'd be willing to pay more than the standard scheme in certain cases, and I said yes. Saving me tens of thousands of dollars on a home is definitely worth paying an agent a few hundred more.
Indeed, an aligned compensation scheme strikes me as an effective way to create an invisible alien for your agent.
Last edited by perfectlyGoodInk; 09-03-2012 at 09:51 AM..
If the OP were to write a diary of the exact steps followed to purchase a home since starting, including this thread, would it represent, to most people who have been through the process, a recipe for success, or something else?
Steve
You have still refused to answer the question I asked.
Does your website have a web page to request showings?
With info like this on it?
Name: Email: Phone Number: Date/Time of showing request:
If yes, why??? Do you expect buyers agents to use it?
Have you advertised on Craigslist in recent years?
If yes, why??? Do you expect buyers agents to use it?
...the disdain and disrespect shown by the OP toward real estate industry professionals...
Steve
Your remark is not accurate. I simply stated that if the buyer was willing to work hard on his own with internet tools, a buyers agent was almost not necessary. Please explain your remark?
Who is being disrespectful? Buyers like myself have been called "flakes" here. Agents who dealt with me have been labeled "desperate and inexperienced".
I would agree with GoodInks comments, except his math is way off:
commission = 3% (maxPrice - salesPrice)
If max price was 240000 and sales price was 220000, commision would be 3% of 20,000 or $600??? Not sure how he would get any agent to go for that.
I would agree with GoodInks comments, except his math is way off:
commission = 3% (maxPrice - salesPrice)
If max price was 240000 and sales price was 220000, commision would be 3% of 20,000 or $600??? Not sure how he would get any agent to go for that.
You can set the bonuses part so that the commissions are comparable in size with the standard scheme. For example, if a buyer has a range of $300,000 to $500,000, the standard commission for a home would range from $9,000 to $15,000, where they get paid most for closing the $500,000 home. Under my formula, if bonuses was $0, the commission would range from $0 to $6,000 (yes, any agent who agreed to that is probably inexperienced and hungry). If, however, you set bonusesForHouseQuality to be a flat fee of $9,000, then the range would be the same, only the agent would be paid $9,000 for closing the $500,000 house and $15,000 for closing the $300,000 house.
You could also set the bonuses to be incentive bonuses (e.g. x% of the square feet, $y if there was a pool, or whatever criteria you valued most). One agent also suggested a term to include their time and cost, or a discount for the buyer which decreased as the number of homes viewed increased. That strikes me as sensible as well. However, note that there is value in simplicity as well. Without the incentive to maximize the sales price, they should then seek to find the best value home that you're willing to buy. They still want a deal to close or else they won't earn anything, so showing you homes too low in quality that won't pass inspection wouldn't help them anyways. So I think the flat bonus should probably work fine.
Note, the agent I am working with suggested the best way to structure this is for them to contractually agree to rebate me their commission under the old scheme and for me to then pay them under the scheme we agree upon. This way, you do not have to include an extra contingency and it looks the same as any other offer. But the key to the whole thing is the buyer and the agent agreeing upon a maxPrice and the bonuses.
You can set the bonuses part so that the commissions are comparable in size with the standard scheme. For example, if a buyer has a range of $300,000 to $500,000, the standard commission for a home would range from $9,000 to $15,000, where they get paid most for closing the $500,000 home. Under my formula, if bonuses was $0, the commission would range from $0 to $6,000 (yes, any agent who agreed to that is probably inexperienced and hungry). If, however, you set bonusesForHouseQuality to be a flat fee of $9,000, then the range would be the same, only the agent would be paid $9,000 for closing the $500,000 house and $15,000 for closing the $300,000 house.
You could also set the bonuses to be incentive bonuses (e.g. x% of the square feet, $y if there was a pool, or whatever criteria you valued most). One agent also suggested a term to include their time and cost, or a discount for the buyer which decreased as the number of homes viewed increased. That strikes me as sensible as well. However, note that there is value in simplicity as well. Without the incentive to maximize the sales price, they should then seek to find the best value home that you're willing to buy. They still want a deal to close or else they won't earn anything, so showing you homes too low in quality that won't pass inspection wouldn't help them anyways. So I think the flat bonus should probably work fine.
Note, the agent I am working with suggested the best way to structure this is for them to contractually agree to rebate me their commission under the old scheme and for me to then pay them under the scheme we agree upon. This way, you do not have to include an extra contingency and it looks the same as any other offer. But the key to the whole thing is the buyer and the agent agreeing upon a maxPrice and the bonuses.
Wait, I think I'm not understanding this. Your agent would rebate you their commission and then you'd pay them outside of closing and it wouldn't appear on the HUD-1?
I would have to ask my agent, as it was their idea. You probably have a better idea what does and doesn't have to go on a form (one of the reasons I'm choosing to work through an agent is exactly because I hate paperwork). Also, I'm buying with cash, so I'm not sure I need a HUD-1.
A lot of agents responded to my proposal with the objection that negotiating off the 3% "steps on" the contract between the seller and the listing agent. I disagree because that contract includes payment to the buyer's agent, and so that part ought to be negotiable (and many posters on this forum have talked about self-representing and negotiating that off, so it sounds like it is). But anything that makes an offer look nonstandard is going to raise eyebrows, so I think this scheme is sensible until and if the time ever comes around where it's the norm for buyers to pay buyer's agents directly so that sellers can't "step on" that agreement.
The posters on this forum who have talked about not using a buyer's agent and negotiating that part off are not parties to the contract between the seller and the listing agent and are talking about verging on, if not actual, contract interference unless they are negotiating with the listing agent, not the seller, to be paid part of his commission. The listing agent and seller have already negotiated how much the listing agent will be paid to get the house sold; that contract no buyer has any part of.
If a buyer wants to self-represent and ask the listing agent to, in essence, pay them part of his salary for him taking on more headache and more liability than he would if there were a buyer's agent (experience shows the ones who take this approach are ALWAYS more headache and more liability), they should ask the listing agent directly. To approach the seller in any way with this scheme is where contract interference (or the attempt to do so) comes in.
I would have to ask my agent, as it was their idea. You probably have a better idea what does and doesn't have to go on a form (one of the reasons I'm choosing to work through an agent is exactly because I hate paperwork). Also, I'm buying with cash, so I'm not sure I need a HUD-1.
A lot of agents responded to my proposal with the objection that negotiating off the 3% "steps on" the contract between the seller and the listing agent.I disagree because that contract includes payment to the buyer's agent, and so that part ought to be negotiable (and many posters on this forum have talked about self-representing and negotiating that off, so it sounds like it is). But anything that makes an offer look nonstandard is going to raise eyebrows, so I think this scheme is sensible until and if the time ever comes around where it's the norm for buyers to pay buyer's agents directly so that sellers can't "step on" that agreement.
You're talking here quite clearly about the contract between the seller and the listing agent including payment to the buyer's agent (not to the buyer, note), and the buyer is not a party in any way, shape or form to that contract.
I've yet to hear of one of these people suggesting going, NOT to the seller to try to get them to pressure their agent to give the buyer part of the listing agent's money, but directly to the listing agent to attempt to negotiate directly with the agent to give them, the buyer, part of that agent's payment. I'm pretty sure I know why (they stink at negotiation when up against someone who does it all the time professionally, but think they MIGHT succeed at negotiating with the seller, who hired a professional to assist in negotiations).
I would have to ask my agent, as it was their idea. You probably have a better idea what does and doesn't have to go on a form (one of the reasons I'm choosing to work through an agent is exactly because I hate paperwork). Also, I'm buying with cash, so I'm not sure I need a HUD-1.
A lot of agents responded to my proposal with the objection that negotiating off the 3% "steps on" the contract between the seller and the listing agent. I disagree because that contract includes payment to the buyer's agent, and so that part ought to be negotiable (and many posters on this forum have talked about self-representing and negotiating that off, so it sounds like it is). But anything that makes an offer look nonstandard is going to raise eyebrows, so I think this scheme is sensible until and if the time ever comes around where it's the norm for buyers to pay buyer's agents directly so that sellers can't "step on" that agreement.
Good grief. Another colossal demonstration of not knowing how things work.
In the beginning, a Seller wants to sell. He can go FSBO or hire a Broker to represent him.
Seller hires listing Broker and agrees to pay listing Broker x%.
100% of this commission is the Listing Broker's, nobody else's.
In the listing agreement, listing Broker discloses how much of his commission will be offered to cooperating Brokers via the MLS. It's also disclosed how much will be paid to non-MLS Brokers. We offer 1/2 of our commission to MLS member Brokers, and nothing to non-MLS members (such as a buyers sister/agent from Dallas).
If an unrepresented buyer comes along and wants to negotiate a cut commission, that negotiation is between that buyer and the listing Broker. My company policy is that we don't do this. I encourage the buyer to go get a buyer agent and cut whatever commission deal he wants directly with that buyer agent, off the buyer agents percentage.
It's not in my seller's best interest to get into a deal with an unrepresented buyer, and it's not in my best interest to try to work both sides of a deal, and I'm certainly not going to put my seller or myself into a higher liability situation while also giving a discount to a buyer who may or may not know anything about the transaction process. That would be, in a word, dumb. That said, I've done it in limited cases (selling a junker to an experienced flipper for cash, for example)
If a represented buyer wants to cut a commission deal, it's cut with the agent representing that buyer, not the seller or the listing agent.
So, for the bird-dog oriented do-it-yourselfer who wants to do all of his own scouting around and finding homes, I could envision the following scenario.
Quote:
Buyer: I've found a home at 123 Elm St that I want to see, and if I like it, I want to write an offer and have you represent me. Since you will only be showing me this one house, and managing the transaction, I'd like to discuss a discount off of your buyer commission, that will be rebated to me at closing, which I understand is legal because I will be a party to the transaction.
Buyer Agent: Yes, that's correct. I would be willing to discuss this with you further ...
Finally, your comment "I disagree because that contract includes payment to the buyer's agent," is incorrect.
The sales contract between a buyer and seller is completely silent on commission. Commissions are handled in separate agreements between listing agent and seller, and, in turn, between listing agent and buyer agent. The back page of the standard sales contract, "Broker Information" specifies who represents who, and the amount listing Broker is paying buyer agent, but none of that is part of the terms and conditions of sale between the buyer and seller. It's all completely separate and apart from the sales contract.
Make sense?
Steve
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