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Old 01-14-2014, 05:56 PM
 
9 posts, read 10,341 times
Reputation: 10

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Hi all, please give me your 2 cents...

I am a builder and real estate broker, and I am starting a subdivision in California. We started marketing homes before we started construction of any of the homes, to get some pre-sales and generate interest. We got a few of the homes sold, but the few we had available weren't getting offers, much because I believe folks were looking to see us start the building.

We started out with just non-MLS marketing, and I talked the owner into putting the homes on the MLS and offering a referral fee to agents.

The usual way of doing things wasn't possible since we didn't have a model home on site, so I made it easy for agents to register, by emailing me.

The exact words in the MLS listing were:

***
Commission is a referral fee. Agents must register all buyers with listing agent by email at xxx@xxx.xxx. Please contact me by email with name and city of residence of buyer, and wait for a return confirming email, then a second email with buyer's phone and email will be required to register buyers.

Buyers will need to show proof of funds to close, or get pre-approved with our preferred lender Xxx Xxx before being able to enter into contract.

The first qualified buyer who wants this house will get it, but any referrals will be applicable for future homes as well.

Information website: XXX.xxx - Official .XXX Directory
***

The other day I got a couple that came to me, we spent a couple hours together going over the details, and in the discussion, they said they got knowledge of our subdivision from agent Z, but that he was very unhelpful, just gave a list of homes, said he was very busy, no specific information at all. And that they had seen a bunch of homes with agent Y, but agent Y didn't tell them anything about our project.

They ended up making an offer for one of the homes.

Agent Y is saying that he did indeed tell them about our project. The client said specifically that he didn't, and it was possibly because they said they didn't want any home that had an HOA, and that he actually listened. They ended up being fine with the structure of our HOA. The clients did say that agent Y was really helpful and felt badly that he didn't show them the neighborhood.

Agent Y is also saying that he definitely would have registered them ahead of time if he knew that was the requirement. He says it isn't clear that he was required to register the client before any contact with me.

The owner is wanting to stick to the rules, and he feels it's clear (and so do I) that registration needed to happen before these folks contacted me.

So what do you guys think? Is what I posted in the MLS clear enough? Is the fact that builders everywhere require registration on the first trip to the neighborhood pertinent here? Should the owner pay this agent (or any agent) a referral fee?

By the way, I don't get the fee if another agent doesn't, so I'm not benefitting from the lack of a referring agent.

Come back to me with your opinions. Thank you.
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Old 01-14-2014, 06:03 PM
 
Location: Inman Park (Atlanta, GA)
21,569 posts, read 11,897,899 times
Reputation: 13225
And the Buyers have a Exclusive Buyer's Agreement with which Agent?

Why are you offering a referring fee rather than the traditional Buyer's Brokers commission?
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Old 01-14-2014, 06:40 PM
 
Location: Salem, OR
13,077 posts, read 28,907,002 times
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We don't have this in our area. We don't register our buyers anywhere. Personally I think it is weird, but I agree with Agent Y that it isn't clear that you need to register your buyers prior to viewing the property to get the referral fee.

Does your MLS allow conditional fees like that? Ours has to be unconditional. Your comments would get your listing deleted in our MLS.
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Old 01-14-2014, 07:40 PM
 
9 posts, read 10,341 times
Reputation: 10
Quote:
Originally Posted by George Chong View Post
And the Buyers have a Exclusive Buyer's Agreement with which Agent?

Why are you offering a referring fee rather than the traditional Buyer's Brokers commission?
George, I don't know if the buyers had such an agreement with agent Y. They don't with me but I am not able to represent them since I'm the builder.

We're doing a referral fee because it's important that I communicate directly with the buyer during construction. The communication through another agent is too cumbersome.
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Old 01-14-2014, 07:44 PM
 
9 posts, read 10,341 times
Reputation: 10
Quote:
Originally Posted by Silverfall View Post
We don't have this in our area. We don't register our buyers anywhere. Personally I think it is weird, but I agree with Agent Y that it isn't clear that you need to register your buyers prior to viewing the property to get the referral fee.

Does your MLS allow conditional fees like that? Ours has to be unconditional. Your comments would get your listing deleted in our MLS.
Hi Silver fall, would you elaborate about "conditional" fees? I'm not familiar with that term.

Are you saying builders don't do this type of procedure? Do they offer commission to agents?
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Old 01-14-2014, 08:51 PM
Status: "Realtor, Mediator, Property Tax Arbitrator" (set 20 days ago)
 
Location: Austin
6,624 posts, read 15,172,647 times
Reputation: 8238
Listing a property in the MLS is a contract between Realtors for payment. The MLS states what you're willing to pay a cooperating agent. The fee cannot be conditional. The offering fee is the offering fee, period. It's not 3% if you bring me full price and 1% if you bring me something less. It's X% or $X, but it's not a "referral fee", it's a BAC, Buyer's Agent Commission.

And your instructions are ridiculous. Who is going to sit around for 2 separate emails to register a buyer before they can even drive out there to see if there's interest, or ask questions to know if they're interested?
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Old 01-14-2014, 11:38 PM
 
Location: northern va
1,315 posts, read 1,667,407 times
Reputation: 1014
Quote:
Originally Posted by bischbubba View Post
Hi Silver fall, would you elaborate about "conditional" fees? I'm not familiar with that term.

Are you saying builders don't do this type of procedure? Do they offer commission to agents?
every new construction property I've helped a client purchase has paid a commission from the builder.
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Old 01-15-2014, 07:15 AM
 
Location: Inman Park (Atlanta, GA)
21,569 posts, read 11,897,899 times
Reputation: 13225
Quote:
Originally Posted by bischbubba View Post
We're doing a referral fee because it's important that I communicate directly with the buyer during construction. The communication through another agent is too cumbersome.
Quote:
Originally Posted by kww View Post
every new construction property I've helped a client purchase has paid a commission from the builder.
I too have always been paid a commission from the builder on brand new construction. To me, the potential Buyers are being unrepresented so no one is looking out for them.

One time I had to Terminate and Release on a new construction property because the builder changed the floorplan of the kitchen despite all parties signing off on a specific floorplan. I have also attended every meeting in selecting finishes for new construction with my Buyers too. There was never anyone from the Builder at those meetings - we were at a showroom that the Builder directed us to.
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Old 01-15-2014, 08:59 AM
 
4,204 posts, read 7,008,031 times
Reputation: 5815
Quote:
Originally Posted by FalconheadWest View Post
And your instructions are ridiculous. Who is going to sit around for 2 separate emails to register a buyer before they can even drive out there to see if there's interest, or ask questions to know if they're interested?
I agree. I've never heard of such a thing. As a buyer, I would see no houses started or finished by you, ridiculous requirements..... I probably wouldn't even bother with your development. As a realtor I would only receive a referral fee of 0.25% on the sale, I wouldn't show that house to anyone. I would rather get 3%-6% by selling the buyer a normal house.
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Old 01-15-2014, 11:00 AM
 
Location: Salem, OR
13,077 posts, read 28,907,002 times
Reputation: 10430
Quote:
Originally Posted by bischbubba View Post
Hi Silver fall, would you elaborate about "conditional" fees? I'm not familiar with that term.

Are you saying builders don't do this type of procedure? Do they offer commission to agents?
Your fee is conditional on the registration of the client. Can't do that here. I thought most MLS's were unconditional. Out here, you have to give the fee regardless of registration or not. So builders that go on the MLS know that and offer a commission.

I totally understand builders that want to meet with clients. We do that here, but I go because we put everything in an addendum and both parties sign it. I also pay for an interior decorator to consult with my new construction buyers over color choices so that they get a nice looking home. I'm at all meetings to make sure my clients are being taken care of properly.
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