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If you're going to continue insisting that the buyer pays the commission, then you need add that the buyer pays the seller repair costs, the seller title fees, and the sales commissions. And you would still be wrong.
It depends what you mean by pay. If you mean, pays directly, then no. If you mean bears the cost of, then yes they do (partially, the amount depending on market conditions). All costs of the transaction are shared between the two parties regardless of who actually pays the bill.
And yes, car dealerships do include the cost of their salesforce when determining the price of the car. If they didn't, where would the money to pay them come from? The price also includes the tires, the windows, the stereo, the rent for the sales lot, transportation of the cars, testing, etc. Firms pay for operating costs out of revenues and run a loss if they cannot cover them.
Last edited by perfectlyGoodInk; 09-10-2012 at 04:57 PM..
It depends what you mean by pay. If you mean, pays directly, then no. If you mean bears the cost of, then yes they do (partially, the amount depending on market conditions).
And yes, car dealerships do include the cost of their salesforce when determining the price of the car. If they didn't, where would the money to pay them come from? Firms pay for operating costs out of revenues and run a loss if they cannot cover them.
No matter how you try to word it to get around the true fact; the buyer buys the house, and the seller pays the commission out of the sale proceeds.
It is no different from any other product. Any product, whether it is a house, car, hamburger, cup of coffee, airline ticket, ship cruise, etc., has all of the sellers costs and profit or loss rolled into the price.
The buyers buy the product; the sellers pay the expenses and enjoy the profit or suffer the loss from the sale.
It is no different from any other product. Any product, whether it is a house, car, hamburger, cup of coffee, airline ticket, ship cruise, etc., has all of the sellers costs and profit or loss rolled into the price.
Yes, that price takes all of the costs into account -- regardless of whether the seller's suppliers bill the seller or directly bill the buyer. A paying B paying C means money flows from A to C.
Yes, that price takes all of the costs into account -- regardless of whether the seller's suppliers bill the seller or directly bill the buyer. A paying B paying C means money flows from A to C.
That's logical. But to make a statement that a buyer is paying the Realtor commissions is not correct, unless the same statement is made of every other transaction.
Tell a car dealer that the buyer pays the sales commission, and he'll tell you that you're nuts. The dealer pays the commission.
I'm going to leave it at this, which I've said all along:
The buyer pays for the house.
The buyer does not pay the commission
The seller pays the commission out of the sellers proceeds.
It would be unethical for any car dealer to claim that the services of the car salesperson is free to the buyer. It would be more accurate to say that the cost of the salesperson's commission is already included in the price of the car.
It would be unethical for any car dealer to claim that the services of the car salesperson is free to the buyer. It would be more accurate to say that the cost of the salesperson's commission is already included in the price of the car.
It would not be unethical to say that a car salespersons service is free to the buyer. The buyer does not pay the car salesperson anything. The car dealer pays the salesperson, after a sale is made.
Unless the buyers agent charges the buyer a fee, then the services of the buyers agent to the buyer are free to the buyer. The buyers agent only gets paid if there is a closed transaction. At that time the seller pays the commission.
The buyer does not pay the buyers agent unless the buyer broker agreement specifies that the buyer will pay the agent. So the buyers agent service to the buyer was free. Not unethical at all. The buyer did not pay the agent. The seller paid both agents.
Is it unethical for a car dealer to say they offer free coffee and snacks? Fee car washes?
I would argue this is misleading, but on the order of a white lie. The customer is clearly presented with a car price, and is then given additional goods on top of that price, the value of them are very small compared to the good they are buying. This is kinda like a mint on the pillow. It is still technically bundling, and if asked whether or not the car price includes the cost of these things, the car dealer should still say yes.
Indeed, I have heard a salesperson negotiate over a car price using the fact that he needed to feed his family. The real reason used car salespeople have a bad reputation is that a salesperson will pretend to negotiate on your behalf with their manager.
Quote:
Originally Posted by Captain Bill
It would not be unethical to say that a car salespersons service is free to the buyer. The buyer does not pay the car salesperson anything. The car dealer pays the salesperson, after a sale is made.
Before or after is immaterial since the car dealer knows about the salesperson cost before the sale is made and thus plans for the payment by charging prices that will cover that cost.
This is like a hair stylist giving you a haircut, and then you pay the cashier, who gives the money to the salon, who then pays the stylist in a paycheck long after you leave the salon. And because of this arrangement of payments, the stylist claims that your haircut was free.
Last edited by perfectlyGoodInk; 09-11-2012 at 10:41 AM..
...This is like a hair stylist giving you a haircut, and then you pay the cashier, who gives the money to the salon, who then pays the stylist in a paycheck long after you leave the salon. And because of this arrangement of payments, the stylist claims that your haircut was free.
That's quite a stretch.
When a buyer works with a Realtor for a couple months and does not buy a home, who pays the Realtor? The buyer didn't.
And if RE Skeptic buys a home and is successful in getting the buyer agent to pay him a percentage of his earned commission, did Skeptic the buyer pay the buyers agent. Of course not.
The buyer paid for the house
The seller paid the commission
The buyer did not pay the Realtor commission
The buyers agent actually gave the buyer some money.
You can keep arguing this with all the silly analogies you want, but the fact is, the seller negotiates the commission during the listing agreement. The buyer has nothing to do with this. Then, out of the sale proceeds, the seller pays the negotiated commission.
Now unless you can show me where a commission is added on to the price of the home, and the HUD-1 reflects that the buyer is paying that commission, then you will not convince anyone, especially sellers, that the buyer pays the commission.
When a buyer works with a Realtor for a couple months and does not buy a home, who pays the Realtor? The buyer didn't.
This point was brought up by austin-steve before, and this was my response:
Quote:
Originally Posted by perfectlyGoodInk
In terms of those who don't buy, one of the costs of selling almost any good is going through all the nos to get that yes, whether it be cold-calling or letting people browse in your air-conditioned store, or driving clients around. Nobody is forcing you to do any of this. You could charge your clients by the hour instead. The reason you do not is because you expect a certain percentage of these people to pay you, and for this to pay off more in the long run. The people who do buy are subsidizing the cost of those who don't buy. This is really just the cost of doing business, because both you and the listing agent are in the service of matching buyers and sellers. Just like with the job market or the dating market, this involves a lot of dates/interviews between non-matches.
To consider this a service, well, if the client's real aim was to be driven around for free, then yes, I suppose this was a service and you should go into the taxicab industry. If the client's aim was to be guided through buying a house, then well, perhaps the reason they didn't pay you was because you failed to do this. They could be equally upset at you for wasting their time.
Now it's certainly possible that they never did want to buy a house in the first place and are wasting your time, but this ignores that there are other things that they could be doing with their time as well. Their time also has an opportunity cost, whether it be a day at the park with the family, watching football or a movie, listening to music, whatever folks do for fun. Being driven around by a real estate agent isn't exactly something folks tweet about to their friends to make them jealous of all the fun they are having. If you suspect you are being taken advantage of, then maybe you need to change the way you try to win business.
Of course, this wasting of your time is partly due to the misconception you are spreading to buyers that this service as free. Buyers will respond to this by considering within their rights to utilize that free service. After all, you're not getting paid by them whether or not they buy a house, right? So why does it matter to you if they buy one or not? The service is free. If you don't want to offer a free service, don't offer it. Nobody's forcing you to.
Quote:
Originally Posted by Captain Bill
That's quite a stretch.
Claiming a comparison is a stretch or is silly isn't quite as strong an argument as pointing out why the comparison isn't valid. Arguing that A doesn't pay C because A pays B who pays C is a stretch exactly because money passes through the hands of middlemen all the time without rendering the good or service free. This occurs without the charge appearing on forms -- the salon doesn't submit an itemized statement to the customer breaking down the cost of the haircut into how much went towards rent, how much went towards the cashier, how much went to the janitor, how much went to the stylist, etc. Note, the customer did not negotiate the salaries of the cashier or the janitor or the stylist either -- the salon did.
Last edited by perfectlyGoodInk; 09-11-2012 at 01:11 PM..
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