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Home Sellers Who Haggle To Lower Broker's Commission Usually Win (http://www2.tbo.com/content/2008/aug/05/bz-home-sellers-who-haggle-to-lower-brokers-commis/?news-money - broken link)
So don't believe right away when realtors are stating that they get more than 6%....These numbers are very clear!
On another thread some one proved that realtors in Florida get a license after 63 hours of taking a course and a hairdresser needed 1500 hours....compare the income of a hairdresser and how intensive their work is and how long they are standing on their feet and had more education.
Both professions have risks, and IMO it is only fair to negotiate the high commission, JMO!
Not one agent in our town was prepared to discount a penny of "Buyer's Agent" commission.
I called a discount broker in a neighbouring town who usually acts as a flat fee sellers agent and asked him if he would be prepared to act as our buyer's agent for a discount. He happily agreed and we had 50% of his fee offset against our closing costs.
If we ever sell in the distant future we'll probably use him again.
Our local agents seem to have basically "clubbed together" and agreed not give any discounted buyer's agency deals. We would have preferred to use someone local but in the end we just took our business elsewhere.
Times are changing and I for one have made sure I enlighten everyone I speak to about negotiating - unlike our local agents, our broker was prepared to take 50% of something instead of 100% of nothing. Their loss.
The UK model is far more competitive - sellers agent gets 1-2%.
Buyers choose the homes they want to view and arrange viewings direct with listing agent. There is generally no such entity as a "buyer's agent" in UK residential property sales/purchases.
Buyer finds, views, makes offer on home.
When offer price agreed buyer gets survey (home inspection) done and maybe negotiates further from there if there are any issues with the property.
Solicitors (attorneys) prepare legal documents, title search etc - buyer and seller usually pay their solicitor between $1,500 - $2,000 for the paperwork.
So, on a property worth, say, $350,000:
UK
Seller pays (if fee 1.5%) $5,250 - let's add $2,000 solicitors fees in -$7,250
USA
Seller pays (if buyer's agent involved and average 6% fee) $21,000
Of which 3% goes to buyer's agent: $10,500
Despite everyone saying "Oooh, oooh but the buyer doesn't pay his/her agent - the seller does" - well doesn't the seller have to charge more in the first place to accommodate that extra 3% for the "buyer's agent" ($10,500)? And who has to actually provide that money? Ummmmmm......the buyer does.
So, UK/USA on seller's commission $7,250 against $21,000?????
Very, very greedy IMO.
Last edited by London Girl; 08-05-2008 at 10:22 AM..
UK and US have different models and liabilities so it is not comparing apples to apples.
The best agents typically won't negotiate on commission. So if you get an agent willing to negotiate commission with you, you probably aren't getting the best. If you're alright with that, then that is a consumer choice that is perfectly acceptable. Much like the best attorneys, doctors, inspectors command a certain fee, so do the best agents.
If an agent can't negotiate their own commission, how hard do you really think they will negotiate for you? While it might feel like you're saving up front, typically you give it away on the back end without ever realizing it.
UK and US have different models and liabilities so it is not comparing apples to apples.
The best agents typically won't negotiate on commission. So if you get an agent willing to negotiate commission with you, you probably aren't getting the best. If you're alright with that, then that is a consumer choice that is perfectly acceptable. Much like the best attorneys, doctors, inspectors command a certain fee, so do the best agents.
If an agent can't negotiate their own commission, how hard do you really think they will negotiate for you? While it might feel like you're saving up front, typically you give it away on the back end without ever realizing it.
Hi Brandon - could you explain the differences, as you see them, between the US and UK in terms of the liabilities you mention?
UK and US have different models and liabilities so it is not comparing apples to apples.
The best agents typically won't negotiate on commission. So if you get an agent willing to negotiate commission with you, you probably aren't getting the best. If you're alright with that, then that is a consumer choice that is perfectly acceptable. Much like the best attorneys, doctors, inspectors command a certain fee, so do the best agents.
If an agent can't negotiate their own commission, how hard do you really think they will negotiate for you? While it might feel like you're saving up front, typically you give it away on the back end without ever realizing it.
Brandon says it best in that last paragraph. If an agent will easily and habitually give up some of their own paycheck, are they really going to be any better at negotiating for your money?
Not one agent in our town was prepared to discount a penny of "Buyer's Agent" commission.
I called a discount broker in a neighbouring town who usually acts as a flat fee sellers agent and asked him if he would be prepared to act as our buyer's agent for a discount. He happily agreed and we had 50% of his fee offset against our closing costs.
If we ever sell in the distant future we'll probably use him again.
Our local agents seem to have basically "clubbed together" and agreed not give any discounted buyer's agency deals. We would have preferred to use someone local but in the end we just took our business elsewhere.
Times are changing and I for one have made sure I enlighten everyone I speak to about negotiating - unlike our local agents, our broker was prepared to take 50% of something instead of 100% of nothing. Their loss.
The UK model is far more competitive - sellers agent gets 1-2%.
Buyers choose the homes they want to view and arrange viewings direct with listing agent. There is generally no such entity as a "buyer's agent" in UK residential property sales/purchases.
Buyer finds, views, makes offer on home.
When offer price agreed buyer gets survey (home inspection) done and maybe negotiates further from there if there are any issues with the property.
Solicitors (attorneys) prepare legal documents, title search etc - buyer and seller usually pay their solicitor between $1,500 - $2,000 for the paperwork.
So, on a property worth, say, $350,000:
UK
Seller pays (if fee 1.5%) $5,250 - let's add $2,000 solicitors fees in -$7,250
USA
Seller pays (if buyer's agent involved and average 6% fee) $21,000
Of which 3% goes to buyer's agent: $10,500
Despite everyone saying "Oooh, oooh but the buyer doesn't pay his/her agent - the seller does" - well doesn't the seller have to charge more in the first place to accommodate that extra 3% for the "buyer's agent" ($10,500)? And who has to actually provide that money? Ummmmmm......the buyer does.
So, UK/USA on seller's commission $7,250 against $21,000?????
Very, very greedy IMO.
We had our agent commision in Europe negotiated from 1.5% to 1.25% and true they do more work for that and I never heard these complains as I have heard over here. As far as the liabilities goes...we didn't hear as much issues as over here and how come realtors over here make statements all the time "we are not a lawyer", just to get rid of the liability so that at least told them over and over during the 63 hour realtor course.
And to Brandon Hoffman: Discount doesn't mean worse advise and losing out in the end....IMO the agents who aren't willing to negotiate are going to lose out in the future....people have more knowledge and more info since the internet is providing a lot and when people search for their dream home them self they aren't so willing to pay the same, and true the buyer is also paying since it is in the price that they pay....if you don't believe that than you don't know much about business....we all pay for advertisement, income of employees and benefits, etc...when we buy any article in a store or a car.
But I guess the 63 hours course doesn't incl. this information.
I buy a lot of items with discount and have great quality and even personal advise for less money doesn't mean bad advise...it depends on the person and his integrity. Some people rather do more work for less money and build up a great name and are very good in what they do. Pay a lot of money doesn't mean you get better things, it proofs that the person can be an easy catch.
Nothing in life is free. When you hear a commercial offering "no closing cost" mortgages or "I'll do your loan for free", I hope consumers are smart enough to realize they are paying for it in interest rate and sometimes in service/advice.
Should you make sure you are getting a fair price? Absolutely. Price is important and there are those in ever field making overcharging customers. But is it more important to save 1% on one of your biggest financial transactions and get less advice, service and protection?
For those that have sold homes a few times and know the ins/outs of the market, maybe it is. But what you save in money you many times have to put in work. For example your business model in UK, in the UK homes take MUCH longer to sell than even in the US now. Many homeowners also charge a "viewing fee" for buyers to get in the door. So a buyer does have to pay more fees, do the legwork of looking at homes and take on more liability. Its not just 2% versus 6% and done. There are actually some UK offices adapting the US model as some clients prefer it.
Again, its a matter of personal taste and there will always be a market for discount and full service brokers. Much as there is a WalMart and a Nordstroms. Some people would rather pay less, others would rather pay more for what they view as quality. This is even more important when it comes to professional services. You can go to a free clinic for all you needs, but some people still pay for insurance and want to go to the high end hospitals. Why is this, if a doctor is a doctor and anyone can give you treatment?
Because there is a difference in service, education and standard of care. The problem with real estate and the mortgage industry is there is no good measure to determine this standard. There are lazy, greedy, uneducated people at all levels and sometimes you pay more and get less. We need higher standards and better disclosures so clients know what they are getting for their money. Much of what we do on the lending side is "behind the scenes" so client's don't realize how a good person can protect their financial interests while a salesman is selling them a product.
Just see all the complaints from people that were lied to about ARMs, Option ARMs, credit scores, loan terms, pre-payment penalties and refinance options. Ask them if they would have rather paid $500-1000 more upfront to get good advice that could have saved them from foreclosure. Cheaper doesn't always mean lower quality or worse, but cheaper is also not always better.
[quote=TexasHorseLady;4738776]Brandon says it best in that last paragraph. If an agent will easily and habitually give up some of their own paycheck, are they really going to be any better at negotiating for your money?[/quote]
I can see where you're coming from but would ask you whether it's more astute to get 100% of nothing or 50% of something - the local agents we spoke to were actually the worst negotiators of all when it came to getting or losing our business!
Nothing in life is free. When you hear a commercial offering "no closing cost" mortgages or "I'll do your loan for free", I hope consumers are smart enough to realize they are paying for it in interest rate and sometimes in service/advice.
Should you make sure you are getting a fair price? Absolutely. Price is important and there are those in ever field making overcharging customers. But is it more important to save 1% on one of your biggest financial transactions and get less advice, service and protection?
For those that have sold homes a few times and know the ins/outs of the market, maybe it is. But what you save in money you many times have to put in work. For example your business model in UK, in the UK homes take MUCH longer to sell than even in the US now. Many homeowners also charge a "viewing fee" for buyers to get in the door. So a buyer does have to pay more fees, do the legwork of looking at homes and take on more liability. Its not just 2% versus 6% and done. There are actually some UK offices adapting the US model as some clients prefer it.
Again, its a matter of personal taste and there will always be a market for discount and full service brokers. Much as there is a WalMart and a Nordstroms. Some people would rather pay less, others would rather pay more for what they view as quality. This is even more important when it comes to professional services. You can go to a free clinic for all you needs, but some people still pay for insurance and want to go to the high end hospitals. Why is this, if a doctor is a doctor and anyone can give you treatment?
Because there is a difference in service, education and standard of care. The problem with real estate and the mortgage industry is there is no good measure to determine this standard. There are lazy, greedy, uneducated people at all levels and sometimes you pay more and get less. We need higher standards and better disclosures so clients know what they are getting for their money. Much of what we do on the lending side is "behind the scenes" so client's don't realize how a good person can protect their financial interests while a salesman is selling them a product.
Just see all the complaints from people that were lied to about ARMs, Option ARMs, credit scores, loan terms, pre-payment penalties and refinance options. Ask them if they would have rather paid $500-1000 more upfront to get good advice that could have saved them from foreclosure. Cheaper doesn't always mean lower quality or worse, but cheaper is also not always better.
I've never heard of a "viewing fee" being charged in the UK!!!!!
I'm not talking about the overall markets here in the US & UK - all markets will slow and heat up. In slow markets agents should be more competitive - hence my irritation at the local agents who felt it was better to have no business than to rebate some commission.
And what "liability" exactly is the buyer taking on that he doesn't take on here in the States????
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