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What are you responding to? I dont' see that quote on this thread.
Anyway, that quote uses extreme language but it's not incorrect. In the typical arrangement, a buyer's agent is most certainly incentivized (rewarded) for a higher purchase price - i.e. he gets more money when the purchase price is higher. Does this mean agents are going to hold guns to every client's head to make them buy more expensive houses? we should be able to have a grown up conversation about incentives knowing that nobody is implying any wrongdoing.
If someone is paid by the hour, it's not incorrect to say that they are incentivized to work the most hours possible.
Does this mean they will work 24 hours a day? No, of course not. Maybe your husband incentivizes you with a hot dinner when you arrive home by 6pm.
if a cop is incentivized to give so many speeding tickets a day, does this mean he will singly focus on that and give tickets to people who don't deserve them? There should be no assumption that this is the case. Maybe he can go to jail if he does that so his incentive not to do that is to stay out of trouble.
You people seriously don't understand what 'incentive' means. There is a difference between behavior (which is influenced by a variety of incentives and other forces) and the incentive itself. You should not be afraid to openly say how you are incentivized without getting all defensive that you are not a crook. Your inability to have that conversation undermines your credibility as does your apparent misunderstanding of what an incentive even is.
No one misunderstands any of what you post.
That is where you are bumping into issues.
We just don't subscribe to a deplorable ethic that connects temptation with entitlement to inability to resist or to properly do the job at hand.
No one misunderstands any of what you post.
That is where you are bumping into issues.
We just don't subscribe to a deplorable ethic that connects temptation with entitlement to inability to resist or to properly do the job at hand.
That's part of it, but I really Bo nailed it. Just_Because confuses cooperate with collude. He/she can't separate the 2 because he/she would shirk fiduciary responsibility for personal gain and can't understand as a result why others wouldn't also do that.
That's part of it, but I really Bo nailed it. Just_Because confuses cooperate with collude. He/she can't separate the 2 because he/she would shirk fiduciary responsibility for personal gain and can't understand as a result why others wouldn't also do that.
Yeah.
Bo did.
My post just rephrases it because JB doesn't believe in fiduciary duty for buyers agents.
Lemme tell ya... If he did business as he sees business, a litigating attorney of the Commission would elucidate in no uncertain terms.
As already discussed, most buyers seem to prefer the system because they it's sold as it being free. You can be a PHD or a rocket scientist and you still like 'free'. Even if you are smart enough question that, the idea that you pay the same whether you use it or not kind of helps with the decision.
Are you seriously trying to say that sales people are not incentivized to close deals? You say I'm incorrect when I say that buyer's agents are incentivized to close deals, then in the next sentence you say they are incentivized to close a deal. I'm confused. Or are you trying to say that because they are both incentivized to close a deal and to make a buyer happy they are not incentivized to close a deal? That's not how logic works. If A and B are both true, then A must be true. The fact that you sometimes 'blow up a deal' does not change the fact that you are incentivized to close deals. Basic stuff.
If you tell a buyer that you are not incentivized to close the deal then he has a very good case against you for misrepresentation.
lawyer for your ex-client: when do you get paid?
lymensch: when the deal is closed
lawyer for your ex-client: Do you get paid if the deal doesn't close?
lymensch: No
lawyer for your ex-client: how do you get paid?
lymensch: a percentage of the deal purchase price
judge: case closed. next...
Let me help you understand what would really happen.
lawyer for your ex-client: when do you get paid?
lymensch: when the client is happy with his home purchase and the escrow closes
lawyer for your ex-client: Do you get paid if the deal doesn't close?
lymensch: Mostly yes on the next home given my client is happy with my performance
lawyer for your ex-client: how do you get paid?
lymensch: A percentage of the selling price if my client choses to buy a home.
judge: So why are we here? Case dismissed
A sophisticated lawyer with significant RE experience is not in the least lulled by "it's free".
He knows better. He also understands why we do it this way. And in general most of the more sophisticated clients understand the nature of the transaction.
if a person gets paid a set % whether it's $1 or $1MM, there's not the incentive you wish to describe. Only if the % is higher the higher you go is there an incentive.
A salesperson for Widget Company has a "quota" or perhaps a "budget goal". He gets paid a commission on those sales. His incentive is to sell even MORE that quota/budget, if he often gets a higher % on those extra sales.
Realtors don't have ANY sales quotas. Perhaps that's one other area you're confused.
And to claim a $300 change in compensation is INCENTIVE if the Buyer willingly signs a document saying they agree to a $10,000 higher price is ... inane.
If you allow your behavior to be influenced by a marginal change of 3% in your result, it's your problem.
If your boss came to you and said, "I'll give you a 3% raise, but only if you take advantage of your customers." - you'd take it?
In the typical arrangement, a buyer's agent is most certainly incentivized (rewarded) for a higher purchase price - i.e. he gets more money when the purchase price is higher.
You seem to believe that money is the primary motivating factor--that it trumps everything else. As a Buyer's agent, I get much more satisfaction at getting someone a good deal. Heck, if money were my primary motivation I would never rebate any commission to my Buyers.
Now, I will admit that there are some agents out there who may be short-sighted in their thinking and will push a sale just so they'll get a paycheck. I find that those people are more often Seller's agents--especially on properties which may have been listed for sale for a long time. Sometimes I can use that to my Buyer's advantage...but, more often than not, most Seller's agents are still trying to get the best price for their clients so that they can continue to stay in business through referrals.
if a person gets paid a set % whether it's $1 or $1MM, there's not the incentive you wish to describe. Only if the % is higher the higher you go is there an incentive.
>>>>You say a 'set %' and then you give examples of $1 or $1MM. That makes no sense as your examples are static numbers, not %s. So i really have no idea what you are trying to say. For the last bit...no, you don't need a % 'accelerator' for it to be an incentive. If your commission is 6% of sale price (and always 6%), that's an incentive for selling at a higher sales price since your pay goes up when you do so. Simple.
A salesperson for Widget Company has a "quota" or perhaps a "budget goal". He gets paid a commission on those sales. His incentive is to sell even MORE that quota/budget, if he often gets a higher % on those extra sales.
>>>Irrelevant to talk about higher % on extra sales. Regardless, he's incentivized to sell/close deals/accumulate and maximize total contract value. Whether he sells $0 TCV or $50m TCV, he's still incentivized to sell/close deals.That's how his plan works. Simple.
Realtors don't have ANY sales quotas. Perhaps that's one other area you're confused.
>>>>No confusion. you don't need a quota to have an pay based incentive. You're just complicating something that's very simple.
And to claim a $300 change in compensation is INCENTIVE if the Buyer willingly signs a document saying they agree to a $10,000 higher price is ... inane.
>>>>He's incentivized to maximize the price - that's the simple fact and all I'm claiming. That's how his plan works. Simple. He earns more the higher the price is. Whether he advises the client to raise his offer by 10k or decrease his offer by 10k, does not change the fact that he's incentivized to maximize the price. Let's not confuse behavior and incentive. incentive is there to drive behavior obviously but they are not the same. $300 might not be enough incentive for someone to do something but that doesn't change the fact that the incentive is in place. If your boss said he'll buy you pizza on Friday if you close $1m of business over the week, that's probably not enough incentive to motivate people to sell that much but it doesn't change the fact that this is how you are incentivized. It's really quite simple. The pizza is an incentive.
If you allow your behavior to be influenced by a marginal change of 3% in your result, it's your problem.
>>>>Yes, agree. If it's the wrong thing for your client, you likely will have other consequences, depending on the situation. If it's bad advice to raise the price and you have absolutely no justification for that advice then I suppose your client can sue you. So you have an incentive to not offer bad advice (avoid liability claims). It doesn't mean that you don't also have an incentive to maximize the sales price! simple and basic stuff here.
If your boss came to you and said, "I'll give you a 3% raise, but only if you take advantage of your customers." - you'd take it?
>>>>Now you're really confused. Why are you jumping to 'would I take it'? What does 'would i take it' have to do with whether or not it's an incentive? Or are you jumping around to another topic? If your boss created a compensation plan for you that gave you more money to take advantage of clients then he is absolutely incentivizing you to take advantage of clients. It doesn't matter if he gives you 0.0001% or 400% bonus or raise. Simple. Whether you take it or not is also irrelevant. Are you trying to say that if I didn't take it, it's not an incentive that's in place?
You seem to believe that money is the primary motivating factor--that it trumps everything else. As a Buyer's agent, I get much more satisfaction at getting someone a good deal. Heck, if money were my primary motivation I would never rebate any commission to my Buyers.
Now, I will admit that there are some agents out there who may be short-sighted in their thinking and will push a sale just so they'll get a paycheck. I find that those people are more often Seller's agents--especially on properties which may have been listed for sale for a long time. Sometimes I can use that to my Buyer's advantage...but, more often than not, most Seller's agents are still trying to get the best price for their clients so that they can continue to stay in business through referrals.
Huge lack of understanding here. See my response to Bo as you have the same misunderstanding.
almost every definition I find for incentive includes something like this:
something that incites or tends to incite to action or greater effort, as a reward offered for increased productivity.
we make around 3% whether it's a $1 house or a $1MM house. that's the $1 or $1MM figure. sorry if not putting "house" in the first sentence confused you.
by your silence, I suppose that's acknowledgement I've clarified collusion vs cooperation for you.
And a salesperson w/quotas very well does NOT bust their ass to exceed quota if they're paid at the same rate, because next year's quota is always increased toward's this year's production. They'll just book those extra sales the next year, towards next year's quota, and the same rate.
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