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Old 09-09-2019, 05:42 PM
 
119 posts, read 22,783 times
Reputation: 194

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Quote:
Originally Posted by Pyramidsurf View Post
So that means the buyer is paying it.

You might have a leg to stand on if commissions were an entirely separate transaction outside of closing. However, it is not. Commissions and closing costs are skimmed right off the top of the buyers money and go into the agents pockets.
Ok you win .. you aren’t pickin’ up what I’m layin’ down. I can tell you never haunted a finance or economics classroom in your life. Good luck!
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Old 09-09-2019, 05:52 PM
 
536 posts, read 228,967 times
Reputation: 688
Quote:
Originally Posted by Spokaneinvestor View Post
The buyer only pays the commission if they pay above market. If they pay market value, then the seller pays the commission. I can tell you this, I would never lower a price on a property I was selling because I negotiated a lower commission - that would be incredibly stupid.
Actually what happens is it forces the agents to drop their commissions if they are not too good at sales and are unable to show value to the perspective buyer, to get the deal done.

I don't negotiate sales commission when selling. If the agent puts the amount I want in my account, I could could care less if the commission is 3% or 10%.

Their commission is theirs depending on their abilities.
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Old 09-09-2019, 05:58 PM
 
1,657 posts, read 2,396,396 times
Reputation: 1947
Quote:
Originally Posted by Spokaneinvestor View Post
Ok you win .. you aren’t pickin’ up what I’m layin’ down. I can tell you never haunted a finance or economics classroom in your life. Good luck!
If you took finance or economics classes at the college level then you should ask for a refund. No competent professor would ever claim that the seller is paying for the commissions in a transaction.
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Old 09-09-2019, 06:08 PM
 
119 posts, read 22,783 times
Reputation: 194
Quote:
Originally Posted by movedintime View Post
Actually what happens is it forces the agents to drop their commissions if they are not too good at sales and are unable to show value to the perspective buyer, to get the deal done.

I don't negotiate sales commission when selling. If the agent puts the amount I want in my account, I could could care less if the commission is 3% or 10%.

Their commission is theirs depending on their abilities.
I think you are missing a key point here by focusing only on your net on the sale. As a seller you should always negotiate commission rates on the front end of the sales agreement. Then negotiate give backs to the buyer if the agent wants the deal to close. If you focus only on your net and that plus your costs of sale including commissions puts you above market, your property will sit there unsold until either the market catches up (a big if) or you lower your price in an attempt to catch the market (also a fool’s errand). Focus on market value first and foremost. My first two questions to a potential LA are what do the comps show the market value at and how much inventory is on the market right now in the price range I am selling into. My net has no impact on that analysis.

Last edited by Spokaneinvestor; 09-09-2019 at 06:19 PM..
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Old 09-09-2019, 06:16 PM
 
119 posts, read 22,783 times
Reputation: 194
Quote:
Originally Posted by Pyramidsurf View Post
If you took finance or economics classes at the college level then you should ask for a refund. No competent professor would ever claim that the seller is paying for the commissions in a transaction.
Talk to your friendly accounting/finance expert or professor - he can explain the concept of debits and credits and why the commission is always shown as a seller paid debit on a balance sheet. It comes out of the market value of the home. If the seller uses a flat rate $400 per listing service, do you think he is going to price the home 6% lower because the buyer no longer has to pay the additional commission (using your logic anyway)?

Why don’t you try this on your next RE transaction? Offer a price on the property and then negotiate independently with the agents on how much commission (since you claim to be paying it) you will pay them on the transaction. After all, since you are paying it, you should be in control of how much you pay. Please report back with your results.
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Old 09-09-2019, 06:20 PM
 
536 posts, read 228,967 times
Reputation: 688
Quote:
Originally Posted by Spokaneinvestor View Post
I think you are missing a key point here by focusing only on your net on the sale. As a seller you should always negotiate commission rates on the front end of the sales agreement. Then negotiate give backs to the buyer if the agent wants the deal to close. If your net plus your costs of sale including commissions puts you above market, your property will sit there unsold until either the market catches up (a big if) or you lower your price in an attempt to catch the market (also a fool’s errand). Focus on market value first and foremost. My first two questions to a potential LA are what do the comps show the market value at and how much inventory is on the market right now in the price range I am selling into. My net has no impact on that analysis.
I understand you may have been trained that way. I'm not missing anything you are trying to say. I just handle my business the way that works for me.

I never negotiate a commission up front. If the agent is able to sell, they deserve Full commissions and will earn a fantastic living and I have no qualms with how much they earn for their efforts. If they can only bring me a message from a perspective buyer with the buyers wishes, then, Not so much.

Our last house sold for well over market in less than 60 days. Oh, as a seller you should always ask to see the comps presented..many are not really true comps. just a negotiating tool to fool.
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Old 09-09-2019, 06:26 PM
 
Location: San Angelo, TX
1,801 posts, read 3,028,839 times
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The buyer pays for everything. Please. As a seller, I don’t care what the commission is as long as I get the amount that I want.
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Old 09-09-2019, 06:28 PM
 
119 posts, read 22,783 times
Reputation: 194
Quote:
Originally Posted by movedintime View Post
I understand you may have been trained that way. I'm not missing anything you are trying to say. I just handle my business the way that works for me.

I never negotiate a commission up front. If the agent is able to sell, they deserve Full commissions and will earn a fantastic living and I have no qualms with how much they earn for their efforts. If they can only bring me a message from a perspective buyer with the buyers wishes, then, Not so much.

Our last house sold for well over market in less than 60 days. Oh, as a seller you should always ask to see the comps presented..many are not really true comps. just a negotiating tool to fool.
I am glad your approach works for you. Most folks that buy or sell a house as personal property every few years use that approach. Those of us that buy and sell multiple investment properties every year negotiate everything. Comps are useful and not a “tool to fool” when presented to an experienced RE investor. Another data point that builds the mosaic of price point.
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Old 09-09-2019, 06:29 PM
 
1,657 posts, read 2,396,396 times
Reputation: 1947
Quote:
Originally Posted by Spokaneinvestor View Post
Talk to your friendly accounting/finance expert or professor - he can explain the concept of debits and credits and why the commission is always shown as a seller paid debit on a balance sheet. It comes out of the market value of the home. If the seller uses a flat rate $400 per listing service, do you think he is going to price the home 6% lower because the buyer no longer has to pay the additional commission (using your logic anyway)?
That's funny. I have a degree in finance and work as a professional financial analysis. You're conflating multiple things and trying to use them to make your point.

First off, the commission is not shown on a balance sheet. Just because it's displayed as a debit doesn't mean it is equivalent to how accounting debit and credits works.

Second, your trying to compare individual transactions such as one person paying a flat rate to an entire market that is subject to the anti-competitive practice of the MLS. If the MLS went away you would see a change in market prices.

Quote:
Why don’t you try this on your next RE transaction? Offer a price on the property and then negotiate independently with the agents on how much commission (since you claim to be paying it) you will pay them on the transaction. After all, since you are paying it, you should be in control of how much you pay. Please report back with your results.
Try this. Learn how markets work and how anti-competitive practices affect market prices. Please report back on your results.
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Old 09-09-2019, 06:40 PM
 
119 posts, read 22,783 times
Reputation: 194
Quote:
Originally Posted by Pyramidsurf View Post
That's funny. I have a degree in finance and work as a professional financial analysis. You're conflating multiple things and trying to use them to make your point.

First off, the commission is not shown on a balance sheet. Just because it's displayed as a debit doesn't mean it is equivalent to how accounting debit and credits works.

Second, your trying to compare individual transactions such as one person paying a flat rate to an entire market that is subject to the anti-competitive practice of the MLS. If the MLS went away you would see a change in market prices.


Try this. Learn how markets work and how anti-competitive practices affect market prices. Please report back on your results.
I would posit that you are no financial analysis (to quote you above) or analyst (which is probably what you meant) or anything related to finance or you would understand a sales transaction balance sheet. The commission is mostly certainly shown as a seller paid debit on a sales transaction balance sheet or HUD-1.

You are simply angry because you think the MLS is has an anti-competitive practice (to use your words) when it comes to setting commission rates. The MLS does not set commissions rates, that is illegal in all fifty states, individual brokers and agents set their commission where ever they want them to be based on their individual business model. See the flat rate commission example above - if the MLS controlled commission rates, the flat fee model would not exist. If the MLS went away, you would have total market disarray and prices would likely move all over the place.

If I am wrong about you having a degree in finance, please ask the community college you attended for your money back. The only way your limited understanding of finance could work is if you work for the government.

Last edited by Spokaneinvestor; 09-09-2019 at 06:51 PM..
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