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I'm both investor and experienced home buyer. Iv' done both of it enough times to know that a signed contract has to be honored which is something no one can seem to get through to you.
It is through to me. If you choose to do business that way its your call. If I have to hire a listing agent I will hire someone like Silverfall who will not try and pocket that extra cash. If you were the listing agent and refused to play ball then I would just get a buyers agent to rebate me a portion of the commission which is what I suggested on page 1.
If I were the buyer I would actually prefer that it went to the seller. Its the same things anyways. What are you going to take a 500K offer with a 6% commission netting you $470,000 or a 488K offer with a 3% commission netting you $473,600. Sellers aren't stupid.
This is where you're confusing things. In your example, you're sharing the savings with the seller. The net is slightly more to the seller but really this is the way most sellers will see it:
$500K offer with 6% commission netting $470K
or
$500K offer with 3% commission netting $485K
In the end, the seller doesn't know you and I'm sure most sellers won't care to share any savings with you. I can assure you as well if they were represented by me that we would blow the dust off your wallet, break the padlock off it as well, and then we'd pry every red cent possible out of there. Why? Because it's my job to get the best deal possible for my client. If you're unrepresented, then you're not my client. You just showed up at a gun fight with a knife. This is why my client wants you to show up unrepresented and why he's going to after I'm done with you insist that I take the extra commission.
I'm not trying to be a jerk here. The fact is most unrepresented buyers don't have a clue. They think they know what they're doing because they read the FAQ section on Zillow but unfortunately they don't know what they don't know.
I'm a she, but it is my brokerage policy to not do dual agency so that money is never going to be mine to begin with. My fee is my fee, and a certain amount is set aside for a buyer agent. If there isn't a buyer agent, I wasn't planning to have it anyway so I don't care if a buyer wants to negotiate closing costs or a price reduction with that. I just care about getting a good net to my seller.
Wow! Well said SF. There is hope for the RE profession after all!
I'm a she, but it is my brokerage policy to not do dual agency so that money is never going to be mine to begin with. My fee is my fee, and a certain amount is set aside for a buyer agent. If there isn't a buyer agent, I wasn't planning to have it anyway so I don't care if a buyer wants to negotiate closing costs or a price reduction with that. I just care about getting a good net to my seller.
I think I made this mistake as well when I first joined C-D.
I've said it ad nauseum that I like you have one priority in my business and that's to get my client the best deal possible. Maybe it's because I work in a vastly different market than you, but I find that getting the best deal for the client doesn't mean I can't get my commission as well. In my market, there is sufficient demand that sellers make few if any concessions. I have on occassion used my commission to make a deal happen or to keep it moving. I'm not opposed to that. Unfortunately, those are usually the tough transactions where I really deserve extra pay and not reduced pay. Often, I'm only representing one party in the transaction as well.
It is through to me. If you choose to do business that way its your call. If I have to hire a listing agent I will hire someone like Silverfall who will not try and pocket that extra cash. If you were the listing agent and refused to play ball then I would just get a buyers agent to rebate me a portion of the commission which is what I suggested on page 1.
I think I made this mistake as well when I first joined C-D.
I've said it ad nauseum that I like you have one priority in my business and that's to get my client the best deal possible. Maybe it's because I work in a vastly different market than you, but I find that getting the best deal for the client doesn't mean I can't get my commission as well. In my market, there is sufficient demand that sellers make few if any concessions. I have on occassion used my commission to make a deal happen or to keep it moving. I'm not opposed to that. Unfortunately, those are usually the tough transactions where I really deserve extra pay and not reduced pay. Often, I'm only representing one party in the transaction as well.
MA and NY real estate is a totally different ball game. I don't think I could do real estate there. Especially in NYC.
It's kind of funny because I have had sellers pay me a bonus on top of my regular fee and it was always with unrepresented buyers. I guess I think if you do a good job, it all works out in the end. I just spell it out in my listing agreement how much the buyer agent gets because there were some issues here with agents offering crazy low compensations on the MLS to a buyer agent and the seller wasn't aware of the low offering. I followed some of those unsold listings and sellers were appalled when they saw that. I started writing it in so they could see that I'm not shady like that.
I get peeved when agents ask me to reduce my commission so I get that other agents are peeved when consumers ask.
A few weeks ago I offered on a condo for my client. The unit was listed for $200,000. We negotiated until the seller came back with his take-it-or-leave-it number which was $180,000. My client declined. Shortly afterward another buyer went directly to the listing agent and purchased the condo. Selling price; $190,000. I don't know if the listing agent reduced her commission since she had both sides but that buyer paid $10,000 more than he needed to. The listing agent was precluded from telling the buyer that the seller would take $180,000. As a buyer's agent, I don't have that hindrance. Had he come to me for representation he would have saved $10,000 without any commission concession. I think this is one area where an active buyer's agent brings value to the table. I don't reach agreement on every listing that I offer on for my clients but I walk away from every failed negotiation with knowledge about the seller's number and/or situation. A buyer who is focused on just reducing the commission and determined not to use a buyer's agent may be making a mistake.
What RE Skeptic, Hindukin, and others fail to understand is that the commission rate agreed on by the seller and listing agent is the pay to that listing agent to sell the home. "Owner agrees to pay Broker xx%". The language is very clear.
No matter how the agent sells the house, the full agreed on commission is payable to the listing agent.
There is also a place in the new AZ listing agreement with fields which states Broker intends to cooperate with all other Brokers, except when not in Owners best interest: and Broker will offer xx% to a buyers Broker who represents the interest of the Buyer.
Note that it is the listing Broker who agrees to pay the buyers Broker (out of the listing brokers commission)
In no way does the listing agent or the seller agree that the listing agent will cooperate and pay a fee to an unrepresented buyer. The listing agent and seller have only agreed that the listing agent will pay a cooperating Broker xx%.
If the listing agent and seller both agree that the listing agent may work as a dual agent, then they will normally negotiate a fee that the listing agent will receive in that event and place that in the additional terms section.
I'm sure there are many agents who will agree to a reduced amount to act as a dual agent. (I will act as a dual agent in some circumstances, depending on the attitude of both buyer and seller, and provided that both clearly understand that my role changes due to the inherent conflicts in fiduciary duties.)
There is no provision in the listing agreement, nor should there be, for the listing agent to pay a commission to an unrepresented buyer, because the buyer is not a licensed agent and is not entitled to a commission. Nor should the listing agent have to negotiate a lower rate for an unrepresented buyer, because there is too much risk.
Here's something that Sellers should consider:
If an employee of any company goes into the office one day and the employer says I need to make a deal to buy this building for our company instead of continuing leasing it, so I need to renegotiate your contract and pay you 50% less money. but I'm also going to increase your responsibility which will increase your risk of being sued. Would that employee have the incentive to continue working hard for that employer Likely not.
A seller should realize that if he comes back to the listing agent and says, you need to reduce your commission so I can sell to this unrepresented buyer to save him money and put more in my pocket. I understand it's increasing your risk and work load, but if you don't agree, then I'll bad mouth you to all my friends. So if the agent reluctantly accepts this cut, how much incentive will that agent have to negotiate hard to get the seller a better deal from buyer. Probably not much. So the seller may end up netting a lot less.
In addition, the agent may have a vendetta against this unrepresented buyer who interfered with his third party contract, and there are lots of legalways he can cause damage to that buyer during the transaction. The only thing the agent owes that buyer is honesty and fair dealing. And that does not mean holding his hand during escrow. So the buyer better have more knowledge about real estate law and transactions than most of the people who think that because they can search on Zillow to find a house that they are real estate experts.
I'm a she, but it is my brokerage policy to not do dual agency so that money is never going to be mine to begin with. My fee is my fee, and a certain amount is set aside for a buyer agent. If there isn't a buyer agent, I wasn't planning to have it anyway so I don't care if a buyer wants to negotiate closing costs or a price reduction with that. I just care about getting a good net to my seller.
Silverfall - I also would use you when selling a home.
What most realtors dont seem to grasp is that sometimes a Buyer wants to do things the way he wants to do them. If its not the exact same procedure every single time many of the agents/brokers throw their arms up and say its not worth their time.
If Hindukid is comfortable buying without an agent and wants to negotiate his 3% why not let him?
If the seller agreed to a 6% if represented, why not take your 3% and credit him 3% its no skin off your back....the additional work IS negligible, despite what everyone says, and the additional liability can EASILY be contracted away. None of it is hard.
If the listing agents are so good at getting the best price for their seller when the buyer comes unrepresented , which is their fiduciary duty anyway, why not be happy about that and give the other 3% away - Especially if it nets your Seller more money in the end? Your DUTY is to the principal, even if that comes at your expense....that is specifically spelled out in the statutes of Texas, and I am sure it is the same in every State.
The bottom line is that a buyer and a seller should both be viewed as customers....The listing agent is offering to sell a property for his client (Customer 1) - its the listing agents job to be sure that the buyer (customer 2) is happy with the transaction or he wont buy.
If your seller would go down 10% but you are able to please your customer by just giving in 3% then everyone won! Your Seller got more money, you received your expected commission of 3%, and the Buyer walked away from the transaction Happy.
Instead of buying/selling being confrontational and as huge a pain to deal with as it currently is, a simple attitude adjustment such as Silverfall has made will most likely net you the Agent more money, and your Customers - Buyer & Seller will have good things to say about you....if instead you rigidly stick to your I keep 6% come hell or high water, then well you certainly angered the buyer who will in turn bad mouth you and your agency to all of his friends - thus alienating you from a group of 20 or more potential future clients....
I personally have a list of near 20 realtors/brokers who I tell everyone who asks me who they should use to sell their home to avoid. With the number of transactions and referrals I give to employees & friends I can assure these Agents/Brokers lost future listings by being rigid jerks in their dealings with me.
One of the things this discussion has done is prompt me to develop an office policy regarding unrepresented buyers that any agent in my office will be required to follow. The policy will be in the Risk Management section of my policy manual.
It'll probably take a month or so because I'll be seeking advice and recommendations from other brokers as well as my attorney. I'll also be consulting with some of my sellers to get their feedback.
If any agents and brokers on the forum would like to have a private email discussion to exchange ideas on developing such a policy for your office also, contact me and we'll exchange email addresses. Note that we will only be discussing a policy of how to deal with unrepresented buyers and what to include in the listing agreement, if anything. We will not discuss commission amounts, as that would be illegal.
I'm also open to receiving suggestions from non-agent forum members. Please make your suggestions on the thread. It should be understandable that the email exchanges need to be with agents and brokers whom I can identify in order to know who we're communicating with.
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Likely not. 