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Simply put a seller is hiring an agent for a set price, normally a percentage of the sales price to sell the home. The sellers agent then offers a portion of that commission to other agents if they are able to produce a buyer that closes on the home. It's not really separate fees so much as one fee that the sellers agent then chooses to share to help sell the home. The Ex. Right to Sell is the contract between the seller and the sellers agent, the MLS is the contract between the 2 real estate companies.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,957 posts, read 22,309,298 times
Reputation: 6471
Quote:
Originally Posted by bubbleboy
I believe that if the commission agreement was signed first, the listing agreement would not need to be interpreted so narrowly by agents who are really not in a position to explain listings homogeneously, meaning the same explanation for the same situation. Besides, agents negotiating a commission has nothing to do with imputing the property on to the MLS. I can go on for hours on this.
I only use the commission agreement when I have a buyer for an unlisted property.
If everyone would like to read section 4 of the CA RLA specifically section D, it is pretty easily understood that the listing broker is authorized to split commissions with other brokers. I do explain to my clients how the MLS system works and I've never had a client have the slightest interest in the explanation.
So in item A. I enter the agreed upon percentage, then in item D, I put in what I will offer a cooperating broker in the MLS.
No conspiracies, no confusion, and up til now, no problem.
Because a commission agreement is just that. Seller wants to know how much will cost to buy the services of the agent. How much is it going to cost the seller to have the home sold? Agents do what agents do.
As for description of services rendered and what not, that can be discussed before negotiating the commission, not during. The seller can swing by the office, pick up a brochure saying, "This is how we sell homes". The seller can then go home, compare to other brochures from other offices (they will probably all offer the same services) and if he likes what he sees, he can come back and agree to pay.
Besides, all listing agreements promise the same, right?
Too much information
How much to be my agent to sell my home, in writing.
No explanations please. Let the document speak.
The commission contract is required by law to be in writing.
The description of the services is not.
Sellers get this explanation while all they want to know is how much is going to cost them. Agents think that the more they talk the more the seller will be convinced to pay more. I don't think it works that way. The seller will pay anything, and they do, with out complaining. They are worried about selling the home and believe all agents do and charge the same.
"How much do you charge to do your thing and sell my house, upfront"
I think is the state of mind of the seller.
The commission agreement I linked is there only to comply with the California Civil Code 1624.
Most states have the same law because it is a derivative of the Statute of Frauds.
It does not call for a description of the services or a home inspection or background checks.
The State and the Judges know what real estate agents can and can't do. (see case law)
It only asks that the person paying the fee, signs the paper with the fee the agent will receive and that the agent signs the same paper. Put a date on it and that is it. The seller is covered.
That is not the case with the listing, because at the time of signing the listing, neither the seller or the agent really knows how much money the agent will receive. It could be 3% if he exposes the property to other buyers or 6% if the agent sell it himself before anybody else gets a chance to make an offer.
One might argue that the listing agreement is a lousy commission agreement because it does not determine the amount the agent will receive, only how much the seller agrees to pay, only the seller does not have access to the MLS rules, the same way the agent has, so the seller has to trust this person to explain the MLS and the listing rules to him, and this thread shows that some agents don't really master the MLS rules.
What you propose is to discuss the commission while the agent is explaining a marketing plan, a share of commission, putting on a sign, etc.
To ad insult to injury, and as I said before, at least in California, the listing agreement is not the commission agreement mentioned in the Joint Escrow Instructions. According to the Joint Escrow Instructions, the escrow company is not empowered to pay agent's commissions out of the listing agreement but they do it anyway.
Carefully reading the RPA (offer) one can see that both buyer and the seller pay their agents out of two separate commission agreements and that the listing is mentioned in a separate box, after the signatures and clearly states that the box is not part of the transaction. The Listing only makes it into the offer so the seller can pass money to the buyer via the agents, and not, never, nunca, jamas, neverinthelife, is it to pay the seller's commission. I can show it. That is what is causing the 6% bubble.
I have a RPA (offer) that I can pull and post, but I am sure the RPA for NC is the same way.
If you have a link to a Res Purch Agreement and Joint Escrow Instructions from NC, let me take a look at it to see if my explanation works with it. If not, we can use the California RPA. I can probably find the NC form myself.
Thanks again and I promise that from now on, my post will have no more than a set number of words. This post has almost 900 words. From now on, I will stick to 300 words or less.
I am really sorry about writing too much. I'll do something about it in the future.
"How much will you charge to sell my home?"
compares well with,
"How long is a piece of string?"
The services are certainly described in the listing agreement and the marketing methods are checked off. Further, I offer a written marketing plan, sign it, and add it as a condition of the listing contract.
How can a consumer possibly assess value without any value proposed, but only a price?
"How much will you charge to sell my home?"
compares well with,
"How long is a piece of string?"
The services are certainly described in the listing agreement and the marketing methods are checked off. Further, I offer a written marketing plan, sign it, and add it as a condition of the listing contract.
How can a consumer possibly assess value without any value proposed, but only a price?
Mike
The seller wants to know if he has the money or how much is going to cost him
so a better comparison would be "how much would you charge me for that piece of string"
We are following the money, and right now, before the seller has signed anything, the money is still in the seller's pocket (the equity of the home). Once he signs the agent, that money is on the table.
I understand what you say about giving the seller the opportunity to assess value. Sounds good and hold on to that concept.
Like Dmensha said "I do explain to my clients how the MLS system works and I've never had a client have the slightest interest in the explanation".
I don't want to put words on Mr. Dmensha, but he is right. All the seller wants to know, the only information he really needs is how much the agent is going to cost. The seller knows well that he won't be talking to a second agent who probably will give them the same explanation and probably charge the same, perhaps more. Sellers don't know. Once they hear the fee, they figure if they can pay it and after that, the seller wants the agent to take over the selling of the home.
But all of you already know all this
I really want to thank you for your input. You are professional real estate brokers doing a good job.
I agree with everything you have said so far. But we need to focus the attention on the principals, the two people that make every transaction possible. We also need to see how the money flows. Please follow the money.
Let's move up the tread a bit.
The property was listed by an agent and sold. The seller accepted an offer presented and now any agent (you choose which agent) goes and opens escrow. That agent takes the RPA form (the offer) to the local Escrow company and gets an escrow number. Escrow is opened. (yes, we need much more documents than that and we will get them)
We are going to take a look at the Escrow Instructions on an RPA (offer). Before we look at the latest version of the RPA (Revised 4/10) I want to look at the RPA Revised 4/06 or any before 4/10 for that matter. All of the RPA will work for my explanation, only the ones prior to 4/10 really shows the detail I want to point out. I'll get the forms and come back tomorrow.
For those non agents reading this thread, who don't know why Escrow is important, is because Escrow writes the agent's checks. Thanks for reading and if you have any questions, either jump in or send me a message.
Mike
The seller wants to know if he has the money or how much is going to cost him
so a better comparison would be "how much would you charge me for that piece of string"
We are following the money, and right now, before the seller has signed anything, the money is still in the seller's pocket (the equity of the home). Once he signs the agent, that money is on the table.
I understand what you say about giving the seller the opportunity to assess value. Sounds good and hold on to that concept.
Like Dmensha said "I do explain to my clients how the MLS system works and I've never had a client have the slightest interest in the explanation".
I don't want to put words on Mr. Dmensha, but he is right. All the seller wants to know, the only information he really needs is how much the agent is going to cost. The seller knows well that he won't be talking to a second agent who probably will give them the same explanation and probably charge the same, perhaps more. Sellers don't know. Once they hear the fee, they figure if they can pay it and after that, the seller wants the agent to take over the selling of the home.
But all of you already know all this
I really want to thank you for your input. You are professional real estate brokers doing a good job.
I agree with everything you have said so far. But we need to focus the attention on the principals, the two people that make every transaction possible. We also need to see how the money flows. Please follow the money.
Let's move up the tread a bit.
The property was listed by an agent and sold. The seller accepted an offer presented and now any agent (you choose which agent) goes and opens escrow. That agent takes the RPA form (the offer) to the local Escrow company and gets an escrow number. Escrow is opened. (yes, we need much more documents than that and we will get them)
We are going to take a look at the Escrow Instructions on an RPA (offer). Before we look at the latest version of the RPA (Revised 4/10) I want to look at the RPA Revised 4/06 or any before 4/10 for that matter. All of the RPA will work for my explanation, only the ones prior to 4/10 really shows the detail I want to point out. I'll get the forms and come back tomorrow.
For those non agents reading this thread, who don't know why Escrow is important, is because Escrow writes the agent's checks. Thanks for reading and if you have any questions, either jump in or send me a message.
word count 454 (getting better)
BB
Your suppositions about the seller's position and interest are hugely in error from my experience.
Sellers have endless questions about how the agent will execute his responsibilities.
How many listing presentations have you made? I have made enough to have real experience at the kitchen table with assessing the seller's concerns, and almost all of them want tremendous detail as to what I will do, and how I will do things.
The money is only a component in that broader conversation.
This guy suffers very badly from verbal diarrhea. He has found what he thinks is a conflict in the CA regulations and is trying to make a book out of it.
He is hopelessly incorrect and is just beating the dead horse until it gets up.
Why help?
I really like these kinds of discussions as I am personally very down on the profession.
But I can't imagine why we continue the discussion with someone who is quite unable to understand the issues.
Inputting data into a garbage disposal extrudes what? .
For those non agents reading this thread, who don't know why Escrow is important, is because Escrow writes the agent's checks. Thanks for reading and if you have any questions, either jump in or send me a message.
. . . or perhaps the deposit money is there to protect the seller in case the buyer defaults on the contract.
Quote:
Originally Posted by MikeJaquish
Your suppositions about the seller's position and interest are hugely in error from my experience.
Sellers have endless questions about how the agent will execute his responsibilities.
How many listing presentations have you made? I have made enough to have real experience at the kitchen table with assessing the seller's concerns, and almost all of them want tremendous detail as to what I will do, and how I will do things.
The money is only a component in that broader conversation.
How does that old saying go? Don't judge a man until you've walked a mile in his shoes.
Honestly, I'm not sure why you keep responding. There are just some people that will never see the truth only what they want to see. Clearly, there's a conspiracy going on here and real estate agents are at the heart of it!
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,957 posts, read 22,309,298 times
Reputation: 6471
Quote:
Originally Posted by bubbleboy
For those non agents reading this thread, who don't know why Escrow is important, is because Escrow writes the agent's checks. Thanks for reading and if you have any questions, either jump in or send me a message.
The Escrow company does what their instructions are from both buyer and seller, nothing more, nothing less. We provide them with a copy of the purchase agreement and any other addenda that may develop after the initial acceptance. If the buyer has inspections billed to escrow, those bills are paid at closing, just like commission checks. It's what they do. If the escrow fails, those bills are paid from the buyer's deposit and the agents don't get paid at all.
In my area (and I suspect everywhere else) the buyer's agent opens the escrow as they have the earnest money deposit check.
I'm still trying to figure out if the OP doesn't have any experience in this, (although he claims he is a broker) or if he doesn't really understand the process. One can write a book based on a premise, but if the premise is faulty, the conclusion has no chance of being supported.
I don't have time to read all the posts but there's a lot of misinformation from the original poster that I've been able to see by just glancing at his ramblings.
First of all, what's with this presumed 6% commission? In our area, like most others, there are all sorts of discount brokers offering fee for services type of arrangments. So a seller can easily find someone to assist them with fees from as low as 2% up to about 6%. Buyers can enter into a buyer's brokerage agreement at a variety of fees too, and are unlikely to have to pay any cost out of pocket.
Our listing agreements, for both buyer and sellers, list the services that are provided for the fee being charged. I have my own brokerage company, so I can easily edit the listing agreement to accomodate any special requests that a client might have and/or add more detail so that they're satisfied that the agreement reflects the understanding that we both have of our intended relationship.
The first post also quotes someone who says that brokers are 'making so much money'. First of all, it's not for the government to decide how much money a person makes. But what's most ridiculous is that the statement is just false. I don't have time to look the figures up again, but the average broker grosses somewhere near $30K. If you take out expenses then they are barely making any money, and certainly not 'a lot' of money. So the whole premise of the poster's original argument is false to begin with.
This sort of agreement is what anyone would expect when entering into an agreement with any business. Fees are negotiable, a variety of services can be chosen, and a market exists among competing brokerages. What exactly is the problem?
Last edited by yousah; 03-06-2013 at 10:09 AM..
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Listed and sold. Time to open Escrow.
