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And what possible motivation would there be for Sara to do a "set up"? She would have been better off keeping the buyer for herself and getting 4% instead of setting up a phoney open house encounter. The way it played out, she likely only got 3%, with the other 3% going to the selling agent from her office.
Sara and her 'friend' work for a broker and they all split the commission. 6% is better thatn 4% every way you look at it......
Last edited by Pugetsoundman; 09-11-2011 at 11:56 AM..
Reason: spelling
You missed my point about the broker. The broker always gets a cut. The broker's cut comes off the top before the agents get to split the difference. Who can say what the arrangement between the agents is? Your formulas are too simplistic for the reality of the splits involved. No matter what the splits are, the agents and broker would prefer to split 6% everytime. Especially, the broker would prefer a 6% commision to split. Remember, the broker gets his share off the top and the agents work for the broker. 6% is ALWAYS better than 4%!
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Originally Posted by Pugetsoundman
You missed my point about the broker. The broker always gets a cut. The broker's cut comes off the top before the agents get to split the difference. Who can say what the arrangement between the agents is? Your formulas are too simplistic for the reality of the splits involved. No matter what the splits are, the agents and broker would prefer to split 6% everytime. Especially, the broker would prefer a 6% commision to split. Remember, the broker gets his share off the top and the agents work for the broker. 6% is ALWAYS better than 4%!
Actually, the broker does not always get a cut. Many licensees would not even consider working at a firm that always takes a cut.
6% is not relevant to the conversation. No commission amount was specified.
A buyer is an asset to a broker, future receivables, whether buying the subject property or another property, so jumping through hoops to close a sale in dual agency is not sensible, if it even actually happens.
Grabbing for nickels in dual agency is one definition of embracing unnecessary risk.
Last edited by MikeJaquish; 09-11-2011 at 03:09 PM..
Actually, the broker does not always get a cut. Many licensees would not even consider working at a firm that always takes a cut...
Right, I don't give my broker a cut - he gets a flat transaction fee no matter the size of the commission. Therefore, 4% in this situation would be better than 6% that would be split between 2 agents. Agents are concerned about their income, not their broker's or other agents.
I also agree with Mike that in any case, I'd try to avoid dual agency and would rather have another agent representing the buyer, preferably not from my own firm.
Mike - this discussion sub-topic was related to this post where commission was discussed.
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Originally Posted by rjrcm
Right, I don't give my broker a cut - he gets a flat transaction fee no matter the size of the commission. Therefore, 4% in this situation would be better than 6% that would be split between 2 agents. Agents are concerned about their income, not their broker's or other agents.
I also agree with Mike that in any case, I'd try to avoid dual agency and would rather have another agent representing the buyer, preferably not from my own firm.
Mike - this discussion sub-topic was related to this post where commission was discussed.
Yeah, that's what happens when I try to keep up on a thread on my phone...
You obviously haven't ever encountered a great RE Attorney.
Like mine.
REA's are jacks of all trades, masters of none.
I've been investing for years....I'm still teaching my REA (#1 producing REA in the state I live in - for at least a decade now) what's up. He doesn't want to get his Gucci shoes in a little dirt....so he hangs back and yells "looks good to me"...while the foundation of home he's showing me is bowing and you can smell the septic system from a mile away.
Your attorney schedules and attends inspections, does CMA's, shows homes, etc?
So all REA are the same according to you? No real estate agent could ever be a master at something?
I think those statements are so irrational that I don't even know how to respond. Either way, I doubt I would get a rational discussion on this thread on the subjects. BTW, I have had to explain the real estate contract to attorneys so buyers shouldn't assume every attorney is better than every REA (or vice versa).
Also, many buyers that think they got a deal without an agent could have ended up getting the house for the same or even a lower price with an agent. Some of the worst cases of overpaying I have seen were by buyers that "saved" money by not having an agent.
A friend of mine listed his house for sale with realtor (we will call he Sara). Sara's deal is if I list and I sell it then the commission is 4%. If another agent gets involved it goes to 6%. This is very typical.
Open House scheduled. Sara calls my friend and says she has a family situation and cannot cover the Open House but she will arrange for someone else from her office to cover it. My friend says fine.
Some can see where this story is going......LOL
Lo and behold the person that covered the Open House was a fellow agent and one person that came through the open house, calls that agent a few days later and want to makes an offer. Sara says they have to got to 6% commission and as she has to split it with the other agent.
Of course my friend wanting to sell goes along, but to this day he accuses Sara of setting it up so they got his 6%.
No set up at all.
An agent can only work with one broker. Therefore, when a listing agent has someone else do an open house for them, it MUST be an agent who works for the same brokerage. However, it is a different agent.
Typically, very busy agents will not do open houses. The ask newer and less busy agents in their office to do it. The new agents do it so they can get Buyer leads.
In this case the Buyer happened to want to buy this house.
If this were in Arizona, where we have dual agency, this would have been a dual agency situation because it is the Brokers listing and both Agents work for the Broker.
Both the buyer and seller would have had to sign a form authorizing the dual agency relationship.
It doesn't really matter who pays the commission, or even who bears the cost of the commission. The point is that when only 4% of the deal price is being extracted for real estate commissions instead of 6%, there are thousands of dollars available for the buyer and/or seller to come out ahead. The parties will never have perfect information about whether the other party would have been willing to give more ground in negotiations or not, but the buyer might know that he is only willing to pay $250k, and he has a better chance of making that happen if only 4% of the purchase price is going to end up in the pocket of a real estate agent.
We just had a home inspection this morning. The inspector said he doesn't even want to work with some agents because they only care about their commission check and expect him to overlook or minimize things like roof leaks, etc!
We bought this home in summer 2010. We went through 4 supposed buyers's agents before finding one. Here's how it played out:
We were ready, willing, and able to buy and needed to buy RIGHT AWAY. You would think agents would be ready to help us and get a quick commission. Wrong.
We started out with one guy who quickly passed us to his "junior" partner. Jr drove us around a few times and never ONCE asked us anything about "So are you approved for a loan? Can I help you with that?" It was so RANDOM. I had to constantly call him to get any kind of service. Finally, I had to call him and say "This isn't working out, sorry." (we never signed a buyer's agency agreement and he never asked)
Agent #3 was a lady who was referred to me by a friend. She took us to 3 places one day. We fell in love with one place and told her we wanted to write an offer right THERE (we needed to move very soon). She made a quick call and came back to the car to tell us it was already under contract. What a waste of our time. She didn't even have an e-mail by the way, in 2010!
She worked a snail's pace and days and days went by with only a few e-mails from her of homes that weren't even finished and were way over our price range.
So I finally just found our current home in the internet by myself! (It was sitting right there and met all of the criteria that we told these agents. Yes, it was listed at $174, but I knew (based on my OWN market research) that the price should be lower.
So I called agent #4 out of the blue (I liked the features on his website) and said "Take us to this house and unless there is something majorly wrong with it, we will buy it." So we did.
Boy did we get shafted. As our supposed buyer's agent (it was not his listing), he lied and told us that all purchase offers in FL were using "As is" contracts now. Then he only gave us a 5 day inspection period, and said we should put down $5,000 earnest money ($1,500 is more like it for this price, I found out).
In hindsight, he was 100% concerned with his own commission.
We just sold the same home and of course, the purchase offer that we accepted was NOT on an "as is" contract. Also, they put $1,500 down and asked for a 15 day inspection window.
The funny thing is, they missed their 15 day window by about 2 weeks! Another example of a very poor buyer's agent.
Next time, I'm inclined to go with a lawyer and be done with it. Too many times, agents are just going behind the scenes and telling the other side all about your situation, so you lose your leverage. In FL, many agents are operating as merely "transaction brokers" which is basically worthless IMO. (even the listing agreement we used for this home sale says our listing agent is just a "transaction broker")
I'm very disgruntled at this point.
I do have to say that the agent I used to sell my last house in a different state was a pleasure to do business with. I felt like she had our best interests at heart and she was spot on with all of the details, not all loosey-goosey.
Oh and I still remember the buyer's agent we started out with in Georgia - she got lost driving us around and my husband had to tell her how to get back to the main roads. Then she took us into a home that had a note saying "Day sleeper!" She and my husband walked in on the person sleeping when they opened the bedroom door!
So when she presented us with the "buyer's agent" form to sign, we declined.
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