Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
So I think the 3% comes more out of necessity than greed.
You seem to be under a misconception. Economists don't consider utility maximization to be greed. We consider it rational. This is why aligning institutional incentives are so important.
Also, costs are as likely to vary as anything else, and isn't strongly correlated to house price. Note that spending a lot of time negotiating down the price increases the cost to the agent (time has opportunity costs) but lowers their commission. This also doesn't affect the odds of 11 bids being identical. Also, you still haven't answered the question of how this serves the buyer.
You seem to be under a misconception. Economists don't consider utility maximization to be greed. We consider it rational.
Also, costs are as likely to vary as anything else, and isn't strongly correlated to house price. This also doesn't affect the odds of 11 bids being identical. Also, you still haven't answered the question of how this serves the buyer.
Sure I have. Economist think any number of things are rational - which however does not make them so.
Certain cost are pretty well fixed. They vary only incrementally with volume or the dollar velocity.
If the flow drops low enough you cannot cover your nut.
The buyer gets a useful service...as opposed to not getting a useful service. That simple.
A bogus question, particularly in light of the deceit in the proposed pricing scam, is still a bogus question.
The value to the consumer is the service rendered by the agent, not in a pricing model. Any model is not sufficient in the lack of service.
Building an odd pretense pretending to be concerned with "aligning incentives," from a basis of empowering buyer deceit, does not render the questions legitimate.
Economist think any number of things are rational - which however does not make them so.
And as you can probably tell from my reference to behavioral research, I agree. My point is that we do not view greed like the general public does. Most people think the way to address greed is to change people. Economists think that you will never be able to get rid of greed, because it has useful evolutionary biological purposes. It makes sense and is rational to maximize your income. The way to address "greed" is to make it work for you by aligning incentives.
Quote:
Originally Posted by lvoc
Certain cost are pretty well fixed. They vary only incrementally with volume or the dollar velocity.
Quite simply, this is an argument in favor of flat fee and an argument against x% * sales price. You also ignored the second question.
1) What purpose does x% * sales price achieve for the buyer?
2) What purpose does an industry pricing standard achieve for the buyer?
There is no need for a pricing standard in order for individual agents to price in costs. Stores price in costs without a pricing standard all the time.
Last edited by perfectlyGoodInk; 09-24-2012 at 12:16 PM..
The value to the consumer is the service rendered by the agent, not in a pricing model.
This is true no matter what the pricing model. It is valid for me to counter attacks upon my proposed model by questioning your defense of the standard model, which I don't believe was picked for any good reason but is instead a holdover from the time before buyers agency. If there were actually good reasons behind the current structure, my questions would be easily answered instead of being avoided or dismissed as "bogus."
How does x% * sales price serve the buyer? As someone else put it:
Quote:
Originally Posted by lvoc
Performance is finding the correct house for the client and then buying it at as low a price as possible.
The x% * sales price is clearly at cross purposes to that.
Last edited by perfectlyGoodInk; 09-24-2012 at 12:19 PM..
This is true no matter what the pricing model. It is valid for me to counter attacks upon my proposed model by questioning your defense of the standard model, which I don't believe was picked for any good reason but is instead a holdover from the time before buyers agency. If there were actually good reasons behind the current structure, my questions would be easily answered instead of being avoided or dismissed as "bogus."
How does x% * sales price serve the buyer?
Why would anyone put in an effort to answer a bogus question or to offer it respect when none is indicated?
But, JFF...
x%*sales price is a method of compensation calculation.
Compensation translates to "Pay" for some people.
"Pay" converts to a medium of exchange which the agent uses to cover obligations such as personal bills, business overhead, feed the family, take vacations, afford health care, and offer service.
Without "Pay," most agents cannot afford to be in business and provide excellent service.
The buyer is served best when the agent stays in business and provides excellent service.
That is about as good as it will get, regarding the bogus questions posed.
x%*sales price is a method of compensation calculation.
...
Without "Pay," most agents cannot afford to be in business.
The buyer is served best when the agent stays in business and provides excellent service.
Under both flat rate and x% * ($YYY,YYYY - sales price), the agent still gets paid, can set the rate to cover the cost of staying in business, and is still as able to provide excellent service.
What is the purpose to the buyer of designing the commission rate specifically to be the format of x% * sales price?
Under both flat rate and x% * ($YYY,YYYY - sales price), the agent still gets paid (and can set the rate to cover the cost of staying in business). What is the purpose of designing the commission rate specifically to be x% * sales price?
Why not?
We are 248 posts in and no honest new plan has been presented to this time.
We are 248 posts in and no honest new plan has been presented to this time.
Flat rate is an honest old plan. 248 posts in and nobody here has even tried to argue that x% * sales price has any advantage to the buyer compared to flat rate.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
