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Correction 3%. I'm of the mindset that you get what you pay for.Want to pay nothing? Sure you can do it but you are on your own because nobody (yes NOBODY) works for free....
Hello?! You did pay nothing that was my point.
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Originally Posted by Outdoorfanatic1
Besides based on your argument I could have walked in there and asked for 3% off since no compensation is being paid OR ask for it to be paid to me (assuming that is legal) which is the SAME net result for the seller...
I have no idea what this even means. Why would any commission be paid to you? In any event, you completely evaded answering my question about you paying the total commission.
But I find your post amusing because I doubt many of us would find much of an "issue" with service we get for free - paid for by someone else. That's human nature.
So we'll change the compensation rules and the buyer now pays the commission. So now take that full dollar figure out of your own wallet.
Please be honest. She may have been very helpful, but would you have been so eager to write that check?
Before you read this post, you might want to open the attachment and read it.
It is human nature to jump at not paying anything. That is why the anomaly works.
The option for a buyer hiring an agent is not about deciding whether to write a check to pay for the agent's commission or not.
The choice is about deciding how much 3% all properties come with is going to be the buyer's agent commission and how much the buyer gets to keep (credit),
That is the choice and happens before the buyer and the agent even begin looking for properties.
You tell me if that is not what the attachment says.
Everybody knows the seller's agent is paying the buyer's agent because it is a MLS requirement.
The forms allow the buyer to deduct a negotiated commission from that MLS money, which is usually 3% and the rest goes to the buyer.
Today, buyers jump at the idea or choice of not paying anything, (more than human nature, is a reflex) but that is not the real choice and the agents never give the buyer a chance to negotiate the credit.
Ask yourself why is that?
The buyer does not get a chance to negotiate the credit (you yourself probably did not know about it until now), not because the buyer does not want it, which would be against human nature, but because the explanation the buyer got from the agent in front of him, of how the MLS works is bogus.
The forms are well written for the buyer to have an incentive to want to hire an agent to represent him and if the buyer were to do that, the buyer would get money to pay for the agent (the buyer does not pay the agent, that does not change) and the buyer would receive a cash credit for the rest of the 3%, money the buyer can use to cover transaction costs. The forms are written with that purpose in mind. We'll read them together eventually.
The anomaly works because it prays on human nature. Is that simple.
All fraud prays on human nature, either greed, or fear, wanting something for nothing. The buyer hears "you don't pay" and he bites.
If a rich dumb buyer would insist on personally paying his agent and having a valid written agency agreement, the one with the paragraph attached to this post, which is a legal requirement (California Civil Code 1624) the buyer would not only not have to write a check. The dumb buyer would get money from the deal to cover closing costs and the agent representing him would get a negotiated from that buyer.
Today, the agent get's paid by the other agent according to the mechanism set for the MLS with out a buyer's contract, and that makes him a sub agent for that seller's agent and therefore not the buyer's agent. The buyer does not care, because he pays nothing, gets the house and does not miss the credit because he does not know is there.
If you are afraid that signing a buyer agreement will force tie you to that agent for many months and risking paying double commission, don't. I can explain it, in black and white. The buyer agreement is there to protect the buyer, but it depends on who explains it to you and how.
Read the following paragraph in the attachment and I'll explain it once I get my make believe buyer and go through the process.
I'm going to take the opposite. I just bought a new home (I'm in escrow right now) and while I understand the 6% my agent gets I believe my particular agent deserved it. She did a great job helping me through the process, shuttling me from listing to listing and helping me with the contracts etc. I have ZERO issue with her taking 6% from the seller. I feel she did a good job, got me the right place and earned her compensation
Just my 2 cents...
Thanks for you input.
The truth is that your agent was not really your agent.
But that is just a technicality, so don't worry about it.
I know you signed a agency disclosure form saying that she was your agent, but unless she had you sign an agency agreement first, the agency disclosure is bogus.
See if you can find the Agency disclosure form and the agency agreement and we can take a look at it.
The agency needs to be in writing to be valid. I explained it earlier in one of my "ad nauseaum" post I am getting a reputation for writing. the one about California Civil Code 1624.
Had she used the agency agreement all agents have access to, you would have had a choice to make about how much she would get and you would have had a shot at getting extra money for your transaction costs. She did not gave you that choice and that was her gain and your loss.
We are talking hypothetical. If you have a Buyer broker agreement with her and it does look like the rest of the forms, then I am wrong. If it looks like a letter she wrote at her office, then I am not wrong.
What does it matter?
She received 3% from her principal, the listing agent, while she made you believe you were her principal.
If she was your agent, she would have had to discussed how much of that 3% she got to keep, and how much you kept. There is nothing wrong in letting her keep the full 3%. The agency agreement allows for that but you have to authorize it. You simply never knew.
You would have had a chance to negotiate the commission, and that is why there is a warning on many forms that says that the commission is negotiable, but how could you? You were happy it did not cost you anything out of your own pocket and she was working so hard.
No big deal, it happens all of the time and you did get the home you wanted.
But if you want to look into this for the next time, for when someone in your family wants to buy a home later on, we can talk about it in detail.
Other than that
CONGRATULATIONS!!! (no matter how crazy this world is, you did score big, you must be thrilled with your new home. I really mean it sincerely)
BB
Well, ok...
Since he is the buyer, it's his funds ain't it? It ain't like the seller took money from his pocket to pay the fees...
My other question is how many alts you have?
It's the buyer's funds? You can't be serious. That is one of the poorest spins I've ever heard. How could you even attempt to spin that it is the buyer's funds?
I'll make it very basic for you: The seller sells a product, the buyer pays for it. The money now belongs to the seller to do with it as he/she chooses. In this case, probably pay off a mortgage and pay brokerage fees. Anything left over goes into the seller's pocket.
In your analogy, the seller should pay 100% real estate sales commission and not complain because it is all the buyer's funds.
"It ain't like the seller took money from his pocket." Yes, of course he/she did
I'm going to take the opposite. I just bought a new home (I'm in escrow right now) and while I understand the 6% my agent gets I believe my particular agent deserved it. She did a great job helping me through the process, shuttling me from listing to listing and helping me with the contracts etc. I have ZERO issue with her taking 6% from the seller. I feel she did a good job, got me the right place and earned her compensation
Just my 2 cents...
Dear Out door fanatic.
Don't mind the real estate professionals comments. They did not get that you made a boo boo.
You did not mean your buyer agent received 6%, you meant 3%, although you probably bought one of her offices' listings. In that case, your agent did received 6%.
It's the buyer's funds? You can't be serious. That is one of the poorest spins I've ever heard. How could you even attempt to spin that it is the buyer's funds?
I'll make it very basic for you: The seller sells a product, the buyer pays for it. The money now belongs to the seller to do with it as he/she chooses. In this case, probably pay off a mortgage and pay brokerage fees. Anything left over goes into the seller's pocket.
In your analogy, the seller should pay 100% real estate sales commission and not complain because it is all the buyer's funds.
"It ain't like the seller took money from his pocket." Yes, of course he/she did
Right. And if the seller did his work right the money he transfers to the agent originates from the buyer. And the seller functions as the middle man, basically. The fungibility of money...
Or else the seller is crazy and didn't factor in the cost of the commission in his sale, or is short saled perhaps.
Follow the money. It is all the buyers funds that end up paying the agents....
Am no fan of the standard 6% commission, even if I'm not the seller. But the reality is that the property often ends up actually being sold by another agent... you know, someone who actually makes the effort to get folks to buy that particular property among many others competing on the MLS. And if you're an agent in the business of selling stuff, frankly which property are you more likely to pitch... the one with the standard higher commission, or one with say, a negotiated lower one (especially if you gotta split it)?
Mateo 45
You have to pitch them all of the properties and let the buyer decide. That is how it really works today.
Not understanding this is one of the reasons we have a bubble. It does not have to be that way because it does not make sense economically or strategically.
Actually, if agents would follow their own rules with the MLS and the forms, the seller could offer more than 3% to the buyer's agent to entice who ever buys his property with cash directly. This can only happen if the seller was sure the agent for the buyer was using the buyer broker representation agreement. If the agent for the buyer had the contract they have to use and the seller knew the buyer could put a cap on how much the agent for the buyer was getting, the seller could make his property stand out by offering cash directly to the buyer. That is how the MLS works and as soon as I get my pretend buyers and sellers, it will be easier to understand.
The model you are talking about, where the more money you give an agent the more likely your property will sell is really not the way the system is intended to work, plus does not work in real life.
Imagine two homes, in the same street. One pays the agent 4% the other 2%. The buyers will obviously look a the 4% first but then, they will still look at the 2% one and the buyer decides which one to buy. The buyer is not going to buy a home so the agent can make better money.
Now, if the first home came with 10% commission and the second one with a 3% commission, but agents had signing contracts like they are supposed to and would have a cap on the commission before the buyer begins looking at homes, then the home with the 10% commission would be looked at more carefully. The buyer would not mind paying a little more if he gets 8% back at closing, that way he can get equity out of the home and have cash when at the time he is moving into a new home.
That is how the MLS is supposed to work, but today, us agents we grab what ever the seller puts out and the buyer gets nothing, with the excuse that the more you pay me, the more I will show you home, when you and I know that the buyer will buy what the buyer wants and if the buyer finds out that an agent did not show you a property because the agent put his interest above yours, there would be hell to pay.
You have brought up an important point and hopefully we can come back to it soon, after all of the real estate experts, expertise us with their expertise.
The buyer agrees on a purchase price with the owner. The commission gets funded by these proceeds "out of the purchase price the buyer and seller agreed upon".
If the buyer wants to take off 3% off their offer, they can do so. Doesn't mean the seller will accept. Either way, the owner has agreed to pay a portion of THEIR proceeds to an agent. Even if the price got reduced $100,000, the owner is still going to pay the commission with the proceeds from the home. The buyer can ask whatever they want but doesn't mean they will get it.
Also, good luck with commission bargaining for entry level home buyers in THIS market. There is practically NO inventory in the entry level market for most of L.A and O.C.
You're approved for $250,000 FHA loan in a $325,000 entry level market and and you want me to do what? LOL!
Good luck with that!
Last edited by behindthescreen; 03-12-2013 at 12:16 AM..
If the buyer wants to take off 3% off their offer, they can do so. Doesn't mean the seller will accept. Either way, the owner has agreed to pay a portion of THEIR proceeds to an agent. Even if the price got reduced $100,000, the owner is still going to pay the commission with the proceeds from the home. The buyer can ask whatever they want but doesn't mean they will get it.
You're absolutely right. (And I can't imagine what either the listing agent or the buying agent would do with an offer like this...probably run the other way).
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Also, good luck with commission bargaining for entry level home buyers in THIS market. There is practically NO inventory in the entry level market for most of L.A and O.C.
Exactly.
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Read the Attachment
You had a boo boo
