Poll: Buyer's Agent Commission - Who pays for it?

[Zippyman]

Originally Posted by IShootNikon

I'm wondering if all these altruistic agents here would be in favor of a flat rate commission structure vs the current majority percentage based one, seeing as it's all about "helping people".

I think we already have a "flat rate" structure in the industry today - five or six percent, whether it's a $50,000 house in flyover country, or a $2 million house on a mountain..

"Flat rate" or "fee for service " isn't going to work very well when a substantial portion of buyers don't have any money to put down - lenders aren't going to approve a $x,xxx fee for locating a home being added to a mortgage.

I'd gladly pop locks for people for a fee similar to a mobile notary if I got paid right then, and that was my *only* responsibility & wasn't subject to getting sued because the seller stole the drapes or whatever irrelevant nonsense reasons buyers & sellers picked to fight over.

Buyers & sellers really need to pick a line of propaganda about agents & stick to it. As it is, agents are magical creatures who have no skills or responsibility at all, yet they're "persuasive" enough to "trick" them into all kinds of things.. if agents are experts at something & are worthy of being sued big for mistakes, then you need to pay them accordingly. If they're glorified lock-poppers, then pay them in cash, as you go, for *everything* you want them to do for you.

I can totally see a model not unlike uber- in fact, many uber drivers could probably add that "lock popping" service to their repertoire- but you wouldn't be able to sue them because of "xx" stupid reason for $50 k. They deliver you to houses & you pay them, then write your own contract (and deal with any mistakes yourself).

[TwinbrookNine]

In the end, the seller pays, as usual. The commission on sale is the same to the seller, regardless. It is established (for the seller) at the time they sign on to the listing (seller) agent. How the selling agent and buyer agent divide that commission is pretty much up to them. Sometimes it's 50-50, sometimes not, with the seller agent getting most of the commission. That's usually decided between them. Itself, it's not an issue for the seller or buyer.

[Brandon Hoffman]

Originally Posted by IShootNikon

I'm wondering if all these altruistic agents here would be in favor of a flat rate commission structure vs the current majority percentage based one, seeing as it's all about "helping people".

Wouldn't be opposed. How the rate be determined? When is it paid. Give me some specifics on your proposal.

I suspect it would hurt lower priced owners and help higher priced owners. FYI, there are already flat rate companies out there. I in fact offer a fee for service which is a flat rate. Over my last 100 or so listings I've had 6 people go that route. Y'all on here are the vocal minority.

[lvmensch]

Originally Posted by TwinbrookNine

In the end, the seller pays, as usual. The commission on sale is the same to the seller, regardless. It is established (for the seller) at the time they sign on to the listing (seller) agent. How the selling agent and buyer agent divide that commission is pretty much up to them. Sometimes it's 50-50, sometimes not, with the seller agent getting most of the commission. That's usually decided between them. Itself, it's not an issue for the seller or buyer.

Like many RE rules that is only true some places. Here the split is generally set with the listing agreement. The seller sets the split at that time. It is mostly 50/50 with some small variations.

[oldtrader]

Get away from residential home for personal occupancy, and there are different ways of being paid.

1: A percentage commission split between the buyers and sellers agents. I have done that before I retired.

2: Buyer pays a commission directly to his/her agent, and sellers pays his agent. This gives the buyers agent more power to negotiate the sale the way the buyer wants it to go. I have done this many times before I retired.

3: There may be several properties involved, and the buyers agent will end up with one of them in lieu of a commission. I have done this, numerous times before I retired.

4: One agent may act as a principal instead of an agent, when numerous properties and sellers/buyers are involved on a complicated exchange involving several states, and maybe even some in a foreign country. I have done this, numerous times before I retired.

5: Commissions are not a total of 5% or 6% in all cases. Harder to sell properties, land, and etc., often may be a 10% commission. I have done this many times.

6: An agent may buy the property himself/herself, and then resell it to a buyer. I have done this many times before I retired.

Example: An agent came to me with a 40 acre parcel just south of the city. I went out and looked at it. The first part was a narrow 10 acre parcel with a home and an old barn, with a big Alkali Pond near the road. Looked terrible. I drove to the end of that 10 acres and there was a beautiful 30 acre square property adjoining the largest new subdivision in town, with all utilities and streets stubbed into the property.

I offered I would buy it, with the 10 acres to be released to me at closing with the down payment paid, and the right to have the rest released 5 acres at a time, with paying 1/6th of the purchase price less payments already made. The offer was accepted.

I had a client that wanted a 10 acre place near town, who had a nice single family home. I exchanged the property to him, with the home being the down payment, and a new loan for the balance. This was enough money to me to close on the original purchase. I sold the home to an investor, with a 2 year lease to the biggest employer in the area, who wanted it for a person coming from Germany to be trained as a manager for a new factory to be built.

I had one year before a payment was due, and I had not invested one dime, having gotten the first contract for a $1,000 personal note.

I sold the 30 acres to a developer for $100,000 profit paid to me and he assumed the loan which had all the release clauses in it.

The broker that had the farm listed, had it listed for 3 years and no offers. He really did not understand my offer, and held it for 5 day before presenting it. The farmer took one look at it, and said that was the type of offer he expected to get, as he had already sold 3 farms as he was retiring and this was what they all were like. The farmer was happy, the home owner that traded into the 10 acres was happy having met his dream, the developer was happy, as the city wanted that piece of land to be brought into the city, and it was structured ideal for him, and I was very happy. Total time invested, was 10 days of a few hours a day involved, maybe a work week of time total. This was done 30 years ago, and at today's prices, I would have made half a million or more instead of $100,000.

These are just a few examples, of how an agent/broker may be paid. It is not all dividing 5% to 6% commission on a home.

The more creative you are, and able to handle the unusual such as the farm example above, the more deals you make. And the less competition you have, for the profitable deals. I have had properties as far away as Costa Rica and Belize, and many different states involved in my transactions before I retired. In all the years in the business, I only sold 6 homes for personal residences to friends I helped get a nice home as a favor, but sold 14 homes in one day (a 13 lot to be build subdivision selling the homes in advance of building plus one nice home offered at a great price for a fast sale) in one afternoon on the telephone to some of my client stable. I worked more like a stock broker than a real estate agent. I had a nice stable of clients, that I bought, sold, and exchanged property for time after time. Some lived as far as Libya North Africa when the Shaw ruled it, (American Oil Experts/Managers) and Malaysia.