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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.
You have not successfully argued that your proposal has any merit, and is not deceptive.
However, it has been explained on this thread that agents do offer:
flat rate,
fee for service,
fee by hourly rate, and
commission on contingency; and that
buyers and sellers invariably opt for the contingency based commission.
We don't have to defend the way we charge. We don't have to tell you how we charge. How we each individually charge is our business; not yours. Our fees are negotiable, and we only have to negotiate our fee with our clients.
You made a proposal to all the buyers agents here,
and you are the one who needs to justify your proposal, yet you have not been able to because it is, as has been said before, deceptive.
Therefore your proposal was rejected.
Now you're attempting to attack us as "resembles price fixing", (which is a ridiculous accusation as it has no basis in fact)
Then you tried playing the Ad Hominem card, that we were attacking you with fallacies.
This episode reminds me of a spoiled child who refuses to accept a parents instruction, and decides to accuse the parents of being mean: "my parents are mean". They won't let me do what I want to do.
x% * (max price + min price - max price) =x% * (min price)
So in the real world you are simply agreeing to accept the commission on the min price.
As you've said yourself, agent performance is finding what the buyer wants as low a price as possible. If the agent cannot find and/or negotiate a price any lower than the maximum the buyer was willing to pay, then the agent clearly has not performed well in that regard. So yes, if an agent knows beforehand that they are not good at finding values or negotiating, then yes, they are simply agreeing to the base commission with no bonus.
As you've said yourself, agent performance is finding what the buyer wants as low a price as possible. If the agent cannot find and/or negotiate a price any lower than the maximum the buyer was willing to pay, then the agent clearly has not performed well in that regard. So yes, if an agent knows beforehand that they are not good at finding values or negotiating, then yes, they are simply agreeing to the base commission with no bonus.
You continue to confuse price and value. The object is to get the house of the desired value at the lowest price. You continue to suggest the agent be rewarded for lowest price which is much easier to get by lowering the value.
You have not successfully argued that your proposal has any merit, and is not deceptive.
Your inability to answer the question why x% * sales price is better for buyers indicates to me that you realize that it does not have merit. I won't comment on its deceptiveness, but I've made it clear that I consider it to be backwards.
Indeed, I believe the pot roast story is a better parallel than you might think. Silverfall was talking here about why sellers pay the buyer's agent instead of buyers paying them directly, but I think it probably had broader implications:
Quote:
Originally Posted by Silverfall
[Sellers paying buyer's agents] accomplishes nothing, but it has to be done that way for many buyers. Here's why. The old system was that buyer's had no representation. All agents were agents of the seller. The listing agent was the seller's agent and the "buyer" agent was the sub-agent of the seller. So as a result, the seller paid for all of that since everyone was representing them. Some states still have sub-agency.
The problem came in, not surprisingly, when buyer agency came into play in the 1990s. Buyers wanted their own representation but they often couldn't afford it with their down payment, and closing costs. So the old system, which wasn't designed for buyer agency, stuck.
I assume this is probably why x% * sales price also stuck. It was a compensation plan designed for an agent of the seller, not the buyer. The seller, of course, wants as high a sales price as possible. As you know, the buyer wants the opposite, which is why it is backwards.
You, of course, can choose whatever compensation scheme you want. I merely think my suggestion is likely to be a competitive one to present to any buyers who realize that they don't want as high a sales price as possible and that buyer agency isn't really free. The Internet will make that happen eventually (and as you've said, buyers aren't naive), but it helps to be proactive.
Last edited by perfectlyGoodInk; 09-24-2012 at 03:20 PM..
You continue to confuse price and value. The object is to get the house of the desired value at the lowest price. You continue to suggest the agent be rewarded for lowest price which is much easier to get by lowering the value.
Making the commission contingent upon close means the agent must find a house the buyer likes. Referrals mean that the agent wants the buyer to be happy with that house years after the sale. Once that house has been identified, the inverse nature of the formula means the agent will be rewarded (rather than punished) for negotiating well on the price. Note, the confusion of price with value is exactly why many buyers often buy at their maximum, and the current structure rewards agents for encouraging this confusion rather than clarifying it.
Earlier in the thread, I mentioned had considered a term in the formula for house quality, but decided the above was better than complicating the formula.
More importantly, note that x% * sales price does not ensure quality either -- unless you confuse price with value.
Last edited by perfectlyGoodInk; 09-24-2012 at 03:27 PM..
...Your inability to answer the question why x% * sales price is better for buyers indicates to me that you realize that it does not have merit. I won't comment on its deceptiveness, but I've made it clear that I consider it to be backwards..
That you consider it to be backwards is your opinion, and you're entitled to that opinion. I don't need to sell you on anything. The current methods have plenty of merit, which is why it's been around for so long, and why buyers and sellers choose it over a pay as you go.
This is your thread where you asked agents to accept your proposal. It's up to you to sell us on why your scheme is better than the current method. So far you've failed, but don't seem to want to admit defeat.
That you consider it to be backwards is your opinion
If it were not backwards, then flat fee would clearly be worse than x% * sales price, so it would be pretty easy to answer the question: what purpose does x% * sales price serve for the buyer? That everybody dodges this question is the basis for my opinion.
What is the basis for your opinion? Merely that the current system been around for so long -- just like cutting off the ends of a pot roast.
A system that self-perpetuates isn't necessarily good. A two-party political system handicaps third parties, which is why we've had it for so long. This is not an argument that the system is good. Mostly, systems don't change because people don't like change nor ask hard questions about why things are the way they are.
Making the commission contingent upon close means the agent must find a house the buyer likes. Referrals mean that the agent wants the buyer to be happy with that house years after the sale. Once that house has been identified, the inverse nature of the formula means the agent will be rewarded (rather than punished) for negotiating well on the price. Note, the confusion of price with value is exactly why many buyers often buy at their maximum, and the current structure rewards agents for encouraging this confusion rather than clarifying it.
Earlier in the thread, I mentioned had considered a term in the formula for house quality, but decided the above was better than complicating the formula.
More importantly, note that x% * sales price does not ensure quality either -- unless you confuse price with value.
You are suggesting replacing one system that does not reward good performance with another somewhaat more complex one that does not reward good performance.
There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries … and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it.
– Niccolo Machiavelli
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