Realtors charging fees to find homes ! (Phoenix: bank owned, flat fee, short sale)

[S. Chris Webb]

Wow, all this talk about agents being sleazy because they don't want to work for free. They need to get paid somehow. Unfortunately the commissions aren't what they used to be. That said, the amounts the OP mentioned seemed a bit outrageous to me, but there is nothing unethical or illegal about it.

I recently put in about 40 hours researching, visiting, examining, and taking videos of $30K condos all over the Valley for some people who live out of town (crazy, but it was a favor for a relative to help out her friends). After several unsuccessful offers, eventually won a contract for them on a short sale, (which I had warned them may not close), and after 4 months of waiting it foreclosed - no sale. The buyers wouldn't even respond to my emails afterwards, let alone allow me to look further for them. As if I had done something wrong (they were thrilled with me prior to the sale not going through). I understand their disappointment and frustration, but it's frustrating for the agent as well. I really wish I had asked for a retainer. 40 hours of wasted time and not a penny to show for it.

Real estate agents are not anything like customer service workers in a mall. They are occupational professionals. They do a heck of a lot more than provide you with MLS listings and open doors for buyers. They do a lot of work in the background that buyers and sellers never see.

If you're unhappy about an agent asking for high up-front fees, find one who doesn't. But be very honest and up front with the agent if you are going to expect to have a bargain under contract in three days or you won't buy this time around (I'm not saying this is your plan but there are a lot of "buyers" who work that way). The agent needs to weigh the risk whether they will be researching, making calls, and wasting 3 days driving around without much chance of ever making anything for doing so. I sincerely wish you the best of luck with your potential investment purchase.

[Burning Madolf]

Since most listings are on the MLS and open for buyers to see (unlike many other states, where brokers guard all info like gold), along with so many public records at the city, county, and state level, buyers can and should do as much leg work themselves from the convenience of their home via the internet.
I'm not one to defend brokers in general, but if I were asked by an out of town investor to drive them around when they come to visit, I would first refuse and then offer to do it for a fee.

[fennec2009]

I don't think I agree with realtors charging the buyers fees should they actually purchase a property, as the commission would be their compensation. However, it seems perfectly reasonable to ask for the money upfront and return it upon successful closing. I certainly wouldn't expect someone to do all that work for me for free, and if they felt that the commission from my price range wasn't worth their time, they are free to decline to take me on as a client, though I don't know why they would unless they had too many other clients..My realtor worked with us for 5 months, putting offers on three different condos. The first two fell through for reasons that were not her fault, and at the price we paid for the third one, she only made just over $2000 on the deal...then proceeded to take us out to lunch and buy me housewarming gifts! However, when we decide to sell and buy another (more expensive) place, she will be the first person I call. So by working hard for us, even for a commission that many realtors would find too little, she will benefit in the future.

[S. Chris Webb]

"Since most listings are on the MLS and open for buyers to see (unlike many other states, where brokers guard all info like gold), along with so many public records at the city, county, and state level, buyers can and should do as much leg work themselves from the convenience of their home via the internet."

In the Phoenix area, a very large percentage of listings on the MLS are short sales that are already under contract, which makes it a waste of time for buyers to do most of the leg work. I prefer to set up an MLS Portal for my clients, which sends them new or changed listings that meet their criteria (and aren't already under contract). The clients let me know which listings will work for them, and I will research those in depth.In most cases when a client brings up a property they saw on the MLS that I didn't already send to them, there is some good reason - it is under contract, not taking more offers, my clients' financing won't be accepted, has hoops my buyers would never agree to like paying off a $30K lien, etc. This is one of the values of having a dedicated buyers' agent working for you.

[Bummer]

Originally Posted by S. Chris Webb

Wow, all this talk about agents being sleazy because they don't want to work for free. They need to get paid somehow. Unfortunately the commissions aren't what they used to be. That said, the amounts the OP mentioned seemed a bit outrageous to me, but there is nothing unethical or illegal about it.

Who is to blame for this fact, Chris?

Definitely no one individual or group is totally responsible for the current dismal real estate market, however, there's little doubt that real estate agents contributed their fair share.

[AZPam]

I think Capt Bill and S Chris Webb have given great explanations from a Realtor's view. Certain price ranges in certain areas are next to impossible to get an offer accepted on with multiple offers being received. Now I am seeing listings come on the market and go straight into pending so a buyer can't even do their own research.

I will have to agree with Capt Bill that I will decline to work with investor buyers as it's just not usually worth my time. Gas being what it is today has to be a consideration on who I choose to work with and how I spend my time.

[lvoc]

And the other thing to remember is that it is the busy agents who either want payment up front or won't do the business. That often, though not always, is the better agents. .

[S. Chris Webb]

"Unfortunately the commissions aren't what they used to be."

"Who is to blame for this fact, Chris?"

In most ways, various banks. Most of our inventory in the last few years since banks have stifled financing options have been short sales and REO's. Many lenders and/or Servicers/Investors forced commissions down - yes banks dictate what the commissions will be on REO's and short sales, not necessarily the listing brokers. I've seen as low as $500 being offered to buyers' agents. Agents now have to work 10 times as hard to get a deal closed. Many agents have left the business.

[Dakster]

This just adds to the negative perception of realtors... Granted, when I have needed one I have always 'bought' and 'sold' a house. I pre-qualified for the range I was buying in, so I was ready to go.

FWIW, It would be better to just screen your clients and not represent the ones you feel are hoky.

I also don't see you complaining when you spend 40 hours of your time and sell a $1M house...

Sounds like the good people of Arizona need to regulate this industry a little more.

[S. Chris Webb]

"FWIW, It would be better to just screen your clients and not represent the ones you feel are hoky"

Most good agents do. It's a given that buyers must be pre-qualified or have proof of sufficient funds before they can make an offer. However, it doesn't matter how good a buyers' agent is, if the bank refuses a short sale, the house doesn't appraise for asking price, or something unexpected hits the buyer's credit at the last minute. This kind of thing is expected on most deals these days.

"I also don't see you complaining when you spend 40 hours of your time and sell a $1M house..."

I certainly would be if it were that $1M house for which my clients have been lookingfor the last three years - and the commission offered is $1K. Ran into that one last spring. The vast majority of my buyer clients in the last few years have been looking for a home for under $125K though.

Don't get me wrong - I love my job, I love most of my clients, and I get great satisfaction (if not great pay) when a deal closes.