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I don't understand your position on this as it's very much opposed to what your own industry body says. i'm not saying that you have to agree with everything that your industry body says but if you are calling me misleading, then you must also believe that your fellow agents and the NAR are misleading too.
Earlier in this thread, TexasHorseLady (a realtor) sums it up perfectly:
"...the listing agent pays the buyer's agent for bringing a buyer and chasing all the cats necessary on the buyer's side to get the deal to closing."
That's what buyer's agents are there for and that's perfectly aligned with what the NAR says (bolding is my own):
>>>>> They agreed to compensate other brokers who helped sell those properties, and the first MLS was born, based on a fundamental principal that's unique to organized real estate: Help me sell my inventory and I'll help you sell yours. Today, through more than 800 MLSs, brokers share information on properties they have listed and invite other brokers to cooperate in their sale in exchange for compensation if they produce the buyer. ...
The real estate market is competitive, and the business is unique in that competitors must also cooperate with each other to ensure a successful transaction. ... The MLS is a tool to help listing brokers find cooperative brokers working with buyers to help sell their clients' homes.
>>>>>
It's crystal clear that the purpose of the 'cooperative brokers' (e.g. the brokers and agents on the buyer's side) is to help sell the listing agent's client' home. How can that be interpreted any other way? That's what 'cooperation' means! The word cooperate or a derivative of it is used three times in the short statement above. It could not be clearer.
If you disagree that this is how it should work then perhaps we agree more than you think we do. However, I don't see how you can say I'm misleading people for simply saying that the buyer's agent is there to collaborate with the seller's agent to sell the house. Realtors probably learn this on day one of realtor school.
Although the NAR is clear as stated above, it's shocking that there is such a lack of understanding and clarity on how buyer's agents are really compensated, who they work for, who pays for them, what very fundamental things are conflicts of interest or not (working for 2 buyers at a time for example), what services they provide, how much those services are costing, etc. This is really a mess. You are looking at me like i'm crazy for simply repeating the principles set out by your own industry body. Is there anything about this that's clear? You would expect differing views on certain things but how is the consumer supposed to figure this mess out when nobody can even agree on the most fundamental aspects of this?
I stand by my comment and "crystal clear" assessment.
The consumer need only embrace truth over "fake news."
You can point me to tons of ethics codes but the simple point was about the purpose of the buyer's agent and that is made very clear by your own organization and is backed up by other agents here. Nobody is saying that they don't also help the buyer. But the purpose is clear as stated by your governing body. Not sure what 'fake news' has to do with any of this except I guess that you think it's still funny to go around labeling everything as fake news when you have nothing else to say. Or perhaps you think the NAR is dealing in 'fake news'. Who knows.
Seller lists their home for sale with a recommended (by CMA) listing price of $350,000. They have rolled the buyer's agent 2.5% commission into this listing price. Along comes a buyer and offers $343,000. The seller decides to accept this offer because he has bought a new home already and is anxious to move on. But oops, that cushion for the commission that was 'rolled in' is no longer there. Now who pays for said commission?
I was thinking the same thing.
We bought our house for significantly less than the price listed. We made our offer based solely on what we thought the house was worth, not on what the house was worth + a realtor commission. The offer was accepted, without any sort of counter to accommodate a realtor commission. At closing we were not given an extra bill for a realtor commission.
Therefore, IMO, Option A is correct.
It would be easier to argue that realtor commissions are built into the sales price if people bought houses for a set price (like they buy items in a store). Since real estate is bought based on offers made by the buyer, that makes it less likely
You can point me to tons of ethics codes but the simple point was about the purpose of the buyer's agent and that is made very clear by your own organization and is backed up by other agents here. Nobody is saying that they don't also help the buyer. But the purpose is clear as stated by your governing body. Not sure what 'fake news' has to do with any of this except I guess that you think it's still funny to go around labeling everything as fake news when you have nothing else to say. Or perhaps you think the NAR is dealing in 'fake news'. Who knows.
Did you not reply to my rebuttals of your incorrect statements because they are clear, concise, and refute your points so solidly you're just choosing to ignore them?
I think this is a funny argument, because a family member is listing his house in a couple of days (with me as his agent).. If the *buyer* is paying, there's no reason to drop the fees, is there? But yet, every day across the country, agents take commission-ectomies for family.
Did you not reply to my rebuttals of your incorrect statements because they are clear, concise, and refute your points so solidly you're just choosing to ignore them?
There you go...
Quote:
Originally Posted by Brandon Hoffman
Would said fee be paid up front or as soon as said service is done? Either way it opens up a new can of arguments about agent structure. It also has been proven time and again most buyers would rather pay more with no risk. What you're suggesting isn't new and novel but rather a model that most people don't want or like.
>>>this post is not about the fee for service model. I only raised it because Mike proposed another alternate model. That's another topic but in summary, I don't expect buyers to jump at a fee for service model as long as they are fed the line that their buyer's agent is free. So I agree with Mike on this. For example, the UK 'unbundled' advice charges from financial services products and moved to a fee for service model and some consumers were willing to pay for it and others weren't. Many weren't. But regulators wanted to get rid of the lie that the advice is free, the opaque nature of what those charges really were, and the conflicts of interest in getting paid by the insurer or bank and at the same time having responsibilities to represent the clients' interests. Very similar issues here. I know this general topic and the trade-offs very well, I can assure you.
Read the SC state agency disclosure and tell there isn't clarity. I think you'll find clarity isn't an issue in agency if you bothered to do one iota of research or listened to what you're being told with an open mind. These conflicts you keep talking about exist mostly in your imagination.
>>>>All agency relationships have conflicts of interest and the ones in this arrangement are egregious and not transparent to the client. It's a fact that the buyer's agent is there to help the listing agent sell the house (see NAR's statements). You (and Mike) may disagree that this should be the case but it's the fact of how the model is designed.
The buyer has choices! They can go with no agent, a fee for service agent, use the listing agent, require no dual agency, etc! The cost won't always be lower. Are you paying me overtime for nights and weekends? What about that buyer I showed 86 homes or the one I worked with for 3 years? The young first time buyers on a tight budget buying a foreclosure that had title issues that I invested about 10 hours in tracking down the original seller to get a quit claim deed signed before their rate lock expired? The commercial deal where I had to go door knock to get HOA signatures from a neighborhood that cost me about 6 weekends of my life? These choices are here but as I said before the buyers generally don't want to carry the risk. What anti-competitive practices? You're getting desperate and delusional with your arguments. I'll be glad when you buy your house and move on. Geez it gets old correcting you.
>>>>The point was that the cost of the buyer's agent is baked in - clearly there are shockingly different views on something so basic as who pays but no matter what you think, the cost is always there no matter what choice the buyer makes. It's a one size fits all model. Anyway, it's another topic but the costs are determined by the value that the listing agents assigns to the 'help' given to the listing agent to bring the buyer and to sell the house rather than the value of the services provided to the buyer. This idea is supported by the fact that the listing agent decides if he wants to sacrifice part of his commission and how much he wants to sacrifice. If the buyer needs 2 hours of services or 2000 hours of services, the cost is the same as the cost has nothing to do with what's provided to the buyer. By the way, that fact also gives support to the notion that the buyer's agent/broker works for the listing agent/broker.
1-NAR doesn't give a crap how agents get paid. It's not their role. They are lobbyist group for home owner and agent rights. Their mission to make the real estate profession more more professional. They aren't some large sinister group going after the public. They are there to try to make the publics experience better.
>>>>I don't know why this is a point of debate. I know the NAR is a lobbying organization. Lobbying orgs are a fact of life in every industry. No issues with NAR protecting the interests of realtors and I don't think that makes them sinister. This point is a non-issue. it should be clear that my reference to the NAR was as an authority on the industry. I quoted their text because they are an authority. If you want to disagree that they are an authority on your industry then go ahead and argue that if you wish.
2-You have this backwards. The sellers agent would become more valuable without a buyer agent but you're still mostly delusional about this concept.
>>>>I explained why I have that position. Fine that you disagree but you simply say I'm wrong and delusional. At least I backed up my view. Please explain to me why seller's agents would pay buyer's agents to help them if that makes them less valuable? That makes absolutely no sense. Let's see, I'll choose to split my commission with another agent when that's going to make me sell the house slower and for less money. Non-sense and the fact that sellers agents often/usually offer to split their commission bears out this view. It's just logic and frankly feels like debating with someone who's trying to say the earth is flat.
3-The buyers agent is getting paid to assist a buyer in purchasing a home they wanted.
>>>>See above. See NAR's statements. See TexasHorseLady. The buyer's agent is paid to: 1. Bring qualified buyers to the sellers agent. 2. Hold the hand of the buyer to enable the deal to get done.
Yes, they also assist the buyer in the process, obviously. But their purpose and what they are paid to do is clear from the NAR's own statements and is not controversial. You may not put it like that to a consumer but that's the model of your own industry. Other proof point of this, as already stated, is that the amount that the buyer's agent is paid is wholly determined by the seller's agent and therefore reflects the value to and need of the seller's agent, not that of the buyer.
4-I believe the seller does pay the commission. I recognize other viewpoints though I don't agree with them. Should a FSBO take less because they aren't paying a commission? The home is worth what it's worth. Commission is a seller expense if they elect to hire help selling a home.
>>>>>That's already being debated here so we should keep that one out of it. Mike says that the 'seller pays' is a big lie of the industry. I don't really think that the seller pays (although I'm somewhat on the fence as it's so convoluted). But I do agree with Mike that keeping the 'line' (I'll use that word instead of 'lie') that the buyer's agent is free is key to this all. In summary, my view is more aligned with the seller's agent paying because he determines whether he will pay and how much he will pay. He also adds value on top of the value that the buyer's agent provides to him so it's not just a pass-through expense. If the seller pays, it means it's a pass-through expense for the sellers agent and this does not meet the principles of a pass-through for many reasons. Pass-through is like a sales tax - paid by the buyer but physically paid by the shop (oversimplification but that's the gist).
5-Your statement tells me you have zero knowledge or understanding of real estate and you haven't tried to educate yourself. Buyers agents and pay structure evolved to where it is today because of buyer demand. I firmly believe it is the best system available for most people. If not buyers, as I said before, have a number of other options.
>>>>More insults rather than clear arguments. Anyway, buyer's agent commission cost (as stated above) has nothing to do with 'buyer demand'. There might be high consumer demand for buyer's agents (because they think it's sold to them as something that's free ---that's a separate point) but that has very little bearing on the costs that sellers agents pay for it. Obviously if buyer's agents had no buyers, there would be no model. But the value that the sellers agent is willing to pay is based on the value provided to him, not the buyer. There is also a strong relationship between the commission the sellers agent gets and the amount he pays to a buyer's agent (I think the concept that it's a 'split' is universally accepted) so another reason why saying that the buyer dictates the buyer's agent cost is simply wrong and illogical. Argued more extensively above under the 'choice' point so I won't repeat here.
3. Conflicts of interest are reduced. It's clear that the buyer's agent pays, therefore the principles of the model more clearly align with protecting the buyer's interests (today it's muddled because the seller's agent is 'hiring'/paying for the buyer's agent as part of a collaborative sales team (function and purpose at the end of the day is to bring a buyer and get the deal done for him)
The one thing that is clear is that you have little awareness of the history of real estate practices. It used to be that all agents were sub-agents of the Listing Broker, working on the Seller's behalf. Buyers were largely unaware of this relationship and, overall, Buyers were at a great disadvantage in the home buying process. The fact that most states have changed their laws to clearly define agency relationships is a good thing! Buyer's Agency reduces the inherent conflicts of interest--it certainly doesn't increase it.
The real answer of course is that commissions are paid by both the buyer and the seller. Money is fungible. The buyer pays as the source of all funds. The seller pays as the party losing a percentage of the funds paid.
The system is mildly absurd and is a fallout of prior practices heavily biased against the buyer as jackmichigan observed. It is however a substantial improvement on the historic system with respect to the buyer.
In the local system here the total commission and the split are both agreed to by the seller when the listing agreement is signed. So the seller has agreed to the buyer agent commission and it flows from the seller directly to the buyer's agent at the closing of escrow. So the only time the listing agent would be entitled to touch the buyer's agent commission would be in the case where the listing agent is dual and does both roles. Thus there is no actual payment to the buyer's agent from the seller's agent.
-Your statement tells me you have zero knowledge or understanding of real estate and you haven't tried to educate yourself. Buyers agents and pay structure evolved to where it is today because of buyer demand. I firmly believe it is the best system available for most people. If not buyers, as I said before, have a number of other options.
>>>>More insults rather than clear arguments.
That wasn't an insult. It was a fact though you may take it for an insult. Several people have tried to educate you but you just slough off the history and evolution of buyer agency with no regard for how you mislead the public. It is even more clear you have no understanding of fiduciary responsibility or simply choose to ignore it because FR doesn't support your viewpoints. It's a fact that most agents are helpers by nature and want to help their clients. It doesn't matter if the money is coming from X,Y, or Z as the agent gets about the same pay regardless.
I for one will be happy when you complete whatever transaction you're currently working on and take your trolling agenda elsewhere. I can't waste any more time on you but I wanted make sure you didn't misrepresent agency to the public that comes here to educate themselves.
you can parse it and carry on for 100's of words however you want. It's been said many times that there are a variety of business models in the real estate transaction, including fee-for-service, and Buyer-expressly-pays-their-own-way.
Go invest in one of those models (or heck, buy a bunch of Redfin stock).
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