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You can keep claiming that the buyer pays the commission, and believe it if you wish. If you believe that, then the next time you sell a house, just remember that you aren't paying the commission (your belief), the buyer is. Then you won't feel bad when the commission is taken out of your funds, because the seller's paying for it.
You can keep claiming that the buyer pays the commission, and believe it if you wish. If you believe that, then the next time you sell a house, just remember that you aren't paying the commission (your belief), the buyer is. Then you won't feel bad when the commission is taken out of your funds, because the seller's paying for it.
That's not my contention. I said that the cost is split between the buyer and seller, the amounts depending on if it's a buyers' market or sellers' market:
Quote:
Originally Posted by perfectlyGoodInk
The market sets the price by balancing demand against supply. For demand, the factor is willingness to pay. For supply, the factor is cost -- all costs, including ones that the seller pays for instead of the buyer (e.g. sandwich shop paying the sign dude, farmer paying for cow feed, auto dealership paying for tires, home seller paying for buyer agent). Refer to my earlier discussion of elasticities (i.e. how responsive one is to price changes) to see how these are balanced, but in a seller's market, the buyer shoulders more of the burden of any such costs (and vice versa). But note, even in a buyer's market, the buyer is still shouldering a portion of the buyer agent costs unless sellers are perfectly inelastic, which never happens.
If one is lucky to seller only during sellers' markets and buy only during buyers' markets, then yes, they would be paying a small portion of the commissions. But one could easily be hit both ways if not so lucky. There really isn't a way to prevent this. Negotiating power is negotiating power, including when it comes to costs and commissions.
But agents could be clearer about this. Note, if the payment was changed so that the commission went directly to the buyer's agent from the buyer instead of through the seller, the amount paid by the buyer would stay the same, not increase. If one is confident in the value of their services and experience, why not just tell the buyer how much they cost and why they're worth it? All of this seems to make it confusing to both buyers and agents what the price (and value) of the service is. As I said, when you make it seem like your service is priced like free doughnuts, buyers will consume that service just like they would free doughnuts.
Last edited by perfectlyGoodInk; 09-11-2012 at 03:46 PM..
I'd just tell you no if I were approached with that idea. I have a better suggestion for you: Instead of sitting around trying to find ways to find a way to utilize money to motivate agents you should sit around trying to find agents that don't need to be motivated by money. Your system will attract those that will seek to take advantage of it/you. Instead use that time to go find a good agent that wants to work hard for you and the money will take care of itself.
I'd just tell you no if I were approached with that idea. I have a better suggestion for you: Instead of sitting around trying to find ways to find a way to utilize money to motivate agents you should sit around trying to find agents that don't need to be motivated by money. Your system will attract those that will seek to take advantage of it/you. Instead use that time to go find a good agent that wants to work hard for you and the money will take care of itself.
Earlier in the thread, I did mention that the proposal was quite useful to identify agents who had already realized that the standard commission worked backwards and in favor of the seller. The ones motivated by money probably wouldn't have noticed -- but more importantly they wouldn't care. I also considered the misleading claim that their services were free be a sign they only cared about money and not my interests.
Earlier in the thread, I did mention that the proposal was quite useful to identify agents who had already realized that the standard commission worked backwards and in favor of the seller. The ones motivated by money probably wouldn't have noticed -- but more importantly they wouldn't care. I also considered the misleading claim that their services were free be a sign they only cared about money and not my interests.
Well that's just an erroneous assumption and you're setting yourself up to get a poor agent. You've rejected advice from some of the most knowledgeable agents in the country here. I understand your goals but your solutions aren't getting you closer to the target.
Well that's just an erroneous assumption and you're setting yourself up to get a poor agent. You've rejected advice from some of the most knowledgeable agents in the country here. I understand your goals but your solutions aren't getting you closer to the target.
Maybe I shouldn't say this, but I had to laugh here. You're basing this statement on what exactly? I won't ask who qualifies and who doesn't.
This thread. To sum it up, the OP has a delusional idea that he won't let go and he's tried two different threads to try and convince people. He won't be swayed. I think it's time to give it up and let it go.
Maybe I shouldn't say this, but I had to laugh here. You're basing this statement on what exactly? I won't ask who qualifies and who doesn't.
This thread. To sum it up, the OP has a delusional idea that he won't let go and he's tried two different threads to try and convince people. He won't be swayed. I think it's time to give it up and let it go.
I make judgments about arguments based on the content and substance of the argument itself, not the person making it. I understand that you don't like it and that you don't like me (thus use of words like "delusional"). However, nobody has made a good argument why. As I've said, most of the arguments also apply to the standard scheme (e.g. buyer gets to decide commission because it's a formula based on sales price, or it creates incentives to push buyer to a certain part of the range).
Indeed, nobody has been able to articulate why x% * sales price is preferable to flat rate or hourly rate, which are the few compensation plans not susceptible to most of the critiques brought up on this thread.
Last edited by perfectlyGoodInk; 09-14-2012 at 03:10 PM..
I make judgments about arguments based on the content and substance of the argument itself, not the person making it. I understand that you don't like it and that you don't like me (thus use of words like "delusional"). However, nobody has made a good argument why. As I've said, most of the arguments also apply to the standard scheme (e.g. buyer gets to decide commission because it's a formula based on sales price, or it creates incentives to push buyer to a certain part of the range).
Indeed, nobody has been able to articulate why x% * sales price is preferable to flat rate or hourly rate, which are the few compensation plans not susceptible to most of the critiques brought up on this thread.
Personally I highly doubt many buyers or sellers would choose any kind of flat or hourly rate. Certainly not in a tough market where deals can fall apart or you may take a long time to find or sell.
Personally I highly doubt many buyers or sellers would choose any kind of flat or hourly rate. Certainly not in a tough market where deals can fall apart or you may take a long time to find or sell.
That's an argument against hourly rate, but not flat rate. In an easy market, it might make more sense. I wouldn't choose hourly either because it does nothing to narrow the principal-agent problem, which is why I preferred my proposal. At least flat rate does not exacerbate the problem like x% * sales price does. I'm not sure why any buyer would pick that unless they were under the mistaken impression that the buyer's agent was free to them.
Last edited by perfectlyGoodInk; 09-14-2012 at 04:40 PM..
That's an argument against hourly rate, but not flat rate. In an easy market, it might make more sense. I wouldn't choose hourly either because it does nothing to narrow the principal-agent problem, which is why I preferred my proposal. At least flat rate does not exacerbate the problem like x% * sales price does. I'm not sure why any buyer would pick that unless they were under the mistaken impression that the buyer's agent was free to them.
You realize how small the %'s are, right? Most agents are more motivated to do a good job in hopes of getting future referrals than they are to try to get you to pay an extra 10k to gross an extra $300 which nets them probably an extra $150.
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