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....So does this work the other way as well? If the agreement is for 3% and the seller's are offering 4% does the agent kick back or split the extra with the buyer?
Well, I can rebate in AZ. Yes, if the agreement called for a fee of 3%, I would rebate the excess back to the buyer towards closing costs. But that would be up to the the individual agent or their broker unless the agreement specifically said how the excess would be handled.
The problem is that real estate brokerages are in the agent recruitment business. They make their money off desk fees and such so some don't care about the quality of their agents. I've seen a few heinous agents over the years, but honestly most are just average. I say this as a brokerage owner.
Combine that with the fact that 64% of consumers hire the first agent they meet and you are in for lots of problems. The majority of consumers don't even attempt to make sure they are hiring a good agent.
It seems like there are more exceptions than rules sometimes, esp. when I read of others experiences.
This may sound naive, but I couldn't tell the difference between a good or bad agent. After interviews, they say exactly what you want to hear, only to find out they don’tt or can't walk the talk, however, I am not in the industry and can’t fit agents shoes, so my perspective/experience is limited to personal experience, 2x selling/buying, but when you hear about others going thru similar situations you can’t help but empathize.
I will also say that I appreciate as I am sure others do as well , all the pros in the RE industry that take the time to provide their invaluable knowledge and experience herein, in the end, we are all work in progress and have alot to learn from each other, even when we think we have it all figured out...
And for the record I can't fathom why any buyer would sign an agreement stating how much commission their agent was going to get.
Really?
Substitute different occupations for "agent."
"General Contractor"
"Endodontist"
"Mechanic"
"Insurance agent"
How many of these would you also allow to charge you without estimate or contract, but at their whim?
We are a little more enlightened in North Carolina, where there are protections for buyers against surprises and additional inducements to agents to show homes.
"Commission" has many facets.
Would it be OK for your broker to only show you homes with cobroke payouts of 4%, 5%, 6% or $10,000 or $20,000 bonuses in addition to commission, without you knowing?
Would it be OK for your broker to only show you homes from builders who offer cruises and/or graduated (higher) commissions for multiple sales in one neighborhood?
Or, as in the OP's case (assuming the story is accurate), would it be OK for your agent to bill you additionally in the transaction because you had no commission agreeement?
I think contractually setting the expected compensation, which the Buyer is paying anyway you slice it, is a great protection for the Client.
Mutually signing the agency agreement, client and agent, with an expected compensation level is how we accomplish and document that.
The bank is dictating the lower commission, they're not arguing values and ratios - it's not the buyer's issue... Even adding it into the mortgage is a joke IMO. You're still paying it - 10fold. No idea how it can become a "seller concession" when they already said they wouldn't pay it.
For those concerned about "working for free" and "it being such a small amount", we're talking 2.5% vs 3% per the OP - seriously?
I really think that agents depending on this situation becoming the "norm" (i.e. buyer's paying agents) are kidding themselves. You'd just force folks to go directly to the seller's agent and put up with dual agency. If I have to put out significant money (i.e. half a point) as a buyer I'd much rather pay a lawyer than an agent.
Do you really think buyers do not pay for commission for both sides?
Really?
It is overhead built into the deal, just like paying the freight to have the goods trucked to Walmart.
It isn't even greatly concealed, just shoved to the Seller side of the HUD1 where it is then deducted from the contract price prior to Seller proceeds being paid out.
Yet, the financing is inflated to cover commission, with appraisal comps selected from homes that have fees built into the contract sales price.
We Americans just like to believe we get something for free, and burying the fee in the Buyer's financing is one way to carry on the charade to consumers.
Do you really think buyers do not pay for commission for both sides?
Really?
If I had a dollar for every agent on this forum who has said something to the effect of "you may as well have an agent, you aren't paying for it" I would be a rich man.
I will be very curious as to the response to your statement.
Substitute different occupations for "agent."
"General Contractor"
"Endodontist"
"Mechanic"
"Insurance agent"
How many of these would you also allow to charge you without estimate or contract, but at their whim?
We are a little more enlightened in North Carolina, where there are protections for buyers against surprises and additional inducements to agents to show homes.
"Commission" has many facets.
Would it be OK for your broker to only show you homes with cobroke payouts of 4%, 5%, 6% or $10,000 or $20,000 bonuses in addition to commission, without you knowing?
Would it be OK for your broker to only show you homes from builders who offer cruises and/or graduated (higher) commissions for multiple sales in one neighborhood?
Or, as in the OP's case (assuming the story is accurate), would it be OK for your agent to bill you additionally in the transaction because you had no commission agreeement?
I think contractually setting the expected compensation, which the Buyer is paying anyway you slice it, is a great protection for the Client.
Mutually signing the agency agreement, client and agent, with an expected compensation level is how we accomplish and document that.
To each his own. There is no way as a buyer I would ever sign anything that dictated what the agent was going to make. I would move along to the next agent.
Do you really think buyers do not pay for commission for both sides?
Really?
It is overhead built into the deal, just like paying the freight to have the goods trucked to Walmart.
It isn't even greatly concealed, just shoved to the Seller side of the HUD1 where it is then deducted from the contract price prior to Seller proceeds being paid out.
Yet, the financing is inflated to cover commission, with appraisal comps selected from homes that have fees built into the contract sales price.
We Americans just like to believe we get something for free, and burying the fee in the Buyer's financing is one way to carry on the charade to consumers.
Mike - Yeah, I get that... that's why I kind of went off a little reading this. As a buyer I understand it's "built in" and accept it as a common practice. However, when I'm in contract on an accepted offer and the seller (or bank in this case) informs the agent they're getting less commission, I don't accept that being transferred to me via some legalese in a BA agreement.
As an "experienced", "knowledgeable", "good" agent you should be accepting the risk or very clearly communicating commission scenarios AS I sign the agreement... The bank is screwing you over, not the buyer.
To each his own. There is no way as a buyer I would ever sign anything that dictated what the agent was going to make. I would move along to the next agent.
You would prefer to be robbed rather than have clarity and a voice in payment level for your agent?
Interesting, and common for consumers who do not understand that the provisions I mention are more for their protection than for mine.
I like the law and the regulation in North Carolina, which offers protections and clarity to buyers and sellers regarding compensation. And it applies to all agents, who must have a written agency agreement in place prior to writing an offer. Realtors use the standard NCAR forms, which discuss compensation with buyers.
I know some agents who are uncomfortable with discussing their compensation, but it seems odd to me that a buyer might rather not know what is going on.
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