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I wondered if you can tell me if this is a new trend (based on the economy) or is it a Wake County or North Carolina realtor custom?
One of my friends is listing her home and interviewing agents. One of the agents wants to charge her $450 upfront. The agent said if she sells her home she will get that back at "closing"... I have never heard of that! I am wondering if that is to cover her upfront costs of advertising, etc. We have bought and sold 4 homes in the past 10 years and not once has an agent asked us to pay him/her $ in advance.
My thoughts are that if you are willing to put your faith in that agent to market and sell your home (with a potential payout commission on a home priced well above $500K) they should be able to take the risk that they can sell it.
Is this something new trend, standard custom, local (Cary) thing or a scam?
I've moved twice in 2003 and 2006 and never heard of paying a deposit. I think your friend could find a good realtor in this area that wouldn't charge a deposit.
Why in this market would an agent ask for $ in advance? I know on the average it is taking longer to sell a home so more $ to market?
It just seems counter-intuitive in this market for an agent to ask for more when some agents are offering discounted commissions to get listings.
Thoughts?
I surely can't answer for the agent, but there may be various reasons.
Is there a low commission that doesn't reward the agent on the back end for upfront costs, or the risk of expense without a sale?
Is the seller pressing for a higher listing price than the agent thinks is realistic? Maybe compensation for some expenses upfront is how the agent will agree to take a listing that may not sell.
I don't see it as a scam, as long as all contracted services are provided under the agreement and fee structure.
I do think as pressure on agent compensation continues, you will see more opportunities for a seller to incur costs upfront when listing, to shift the burden of expense from the agent to the client, to justify compensation levels.
OTOH, some fees exist just because the agent can collect them...
There was a court case on "transaction fees," or "Paperwork fees," wherein they were ruled excessive and unjustified under RESPA if the agent cannot itemize value-added services for which they are collected.
Could be that the agent is under capitalized. I admitedly don't know what all the set ups for a RE Agent is but if they pay for all their own marketing and have 10 listings at $500 each thats $5k out of pocket with the possibility of not recouping a dime if they don't sell.
If you find this is the reason you might want to continue to interview agents.
Never heard of that but it's worth considering if the listing agent is willing to reduce their commision. It all depends on how the numbers work out. To pay a 6% commission and $500 up front would be nutty. If they were offering a 5% commission with $500 up front i'd go for it. Just make sure the home is priced appropriately and that the buyers agent gets their full commision.
Most sellers would object to an upfront fee because it isn't "customary" in our area.
In the buyer's agreement contract, there is a blank space that can be filled in where as the buyer pays a "retainer" fee for their Realtor. I jokenly told some clients of mine that "I usually put $1,000 as a retainer fee" and they agreed! I was kidding but I wonder how many agents do charge their buyers a retainer fee? I guess if gas keeps going up in price...maybe it will be a good idea!!!
Vicki
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I am wondering if that is to cover her upfront costs of advertising, etc. We have bought and sold 4 homes in the past 10 years and not once has an agent asked us to pay him/her $ in advance.
