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I started out my house search this year just contacting listing agents and I learned pretty quickly that was a mistake. I thought they liked an unrepresented buyer because it's one less hand in the seller's pie, but they acted like I was a pain for them to deal with, with few exceptions. Some were outright offensive and many were just dismissive.
Now I'm with an agent of my own and it's been terrific to have someone to give me advice and help me navigate things, even though I do all the MLS searching myself. My last two house sales/purchases have been either agentless entirely or me selling FSBO but paying a buyer's agent, so I thought it'd be all good. But it seems to be a different world lately.
If this agent continues being what you feel is squirrely, I might test out if the buyer really won't take that price with a buyer's agent involved, unless it's too late for that. Maybe you could find an agent to do it for 2% so that's only a 1% incremental hit to the seller (over the existing 4% that's been guessed), seeing as you don't need search help.
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6% is the norm..you pay less you get limited service and your property stays on the market EVEN longer-
I think the vast majority of homes are sold solely based on the fact that they are on the MLS and showed up in a buyer's search. You can get a home MLS listed for less than 3%. I don't think there's any positive correlation between the commission size and the speed of sale. Actually, I expect it would be strongly inversely correlated due to high $$$ properties selling slower and generating higher commissions, just due to the smaller market for them.
Last edited by ReadyFreddy; 12-19-2011 at 04:46 PM..
That was my thought too, that the seller was getting a commission discount without another agent involved. But, as you said, could be different issues involved we don't know about.
Yes, the seller is getting a 2% discount, which I believe to be standard when there is not another agent. The agent told me this so I suspect she is doing a 4% for her.
Technically, I guess we are still an Unrepresented Buyer but will be under Limited Dual Representation as soon as we get all the contract paperwork tonight and sign and return it. It would not be right to bring an additional agent in at this point as the 2% appears to make a big difference to the seller, according to the agent, but we just want fairness....plain and simple.
The agent said today that she "will not do this unless we sign the paper for the BAC", which is estimated at $695. Her and the seller's daughter are BFF's so I don't know if the seller agreed to this or she is just bluffing. If the agent wants to, I know she can push this through due to the fact that the first contract did not come with a BAC but the next night she made contract changes and sent it along with...so I do not like that.
We are torn because it is not worth losing a good property over a measley $700 but the principle of the thing has really gotten us hot under the collar, so to speak, and sometimes you have to give in to not lose a good thing but sometimes you must simply walk away with nothing but your ethics and self-respect.
We're going to sleep on it. Thanks to all and especially Captain Bill as you are always very thorough in your explainations.
On a different note, I have not yet read the inspection post in it's entirety but since you realtors see them come and go and the ones that do a thorough job, do you have any Home and Pool Inspector names that you can throw out there that will come to Fountain Hills in the event we choose to eat the $700 just to get this going?
I think the vast majority of homes are sold solely based on the fact that they are on the MLS and showed up in a buyer's search. You can get a home MLS listed for less than 3%. I don't think there's any positive correlation between the commission size and the speed of sale. Actually, I expect it would be strongly inversely correlated due to high $$$ properties selling slower and generating higher commissions, just due to the smaller market for them.
Fact of life: Homes are going to be sold by agents, not just because they are in the multiple listing book especially in the current market conditions. The homes with full commissions are going to be pushed by the agent, not the short commission homes. Just getting a home listed in the MLS, does not get them sold.
Why should an agent work to sell a home that pays a low commission when there are other similar homes in price and quality that pay a full commission.
It is funny how people want to be paid a full wage for their work, and will only work for employers that pay them fair wages. But when they want to sell a home they want someone to work for much lower wages than they should be paid.
I remember a course I took back in 1972 on real estate on Real Estate Counseling and Client Management, taught by the best man in the business to teach it C. Charles Chatham. He was a nationally recognized trainer. He said that a lot of properties are listed, and placed in what he called the morgue file, placed in the MLS and are waiting for the listing to die and go away. No one puts any effort to get them sold. They are not advertised. They are very rarely shown. It is almost a miracle when they are resurrected and sold. About the same chance as people waking up in the morgue while waiting for burial. He said this includes, over priced property, lower than normal commission property, property in below average condition that the price has not been set to reflect the condition, etc., etc.
A good article on those principals on listing property is the one below, published first in Real Estate News and Observer Magazine (later called Creative Real Estate Magazine) which I was also a regular writer for the magazine and published here by the Society Of Exchange Counselors which we were both members of from the start:
Most people do not realize, that 80% of the people that enter the real estate business will fail out of the business and leave because they cannot earn a living. The good ones, will remain in the business for many years until they retire. They are the ones that sell nearly all of the property that is sold. Those are the ones that don't work for cut rate commissions. The ones that do, don't last in the business and don't get the sales made.
A huge number of sales are never sold within the first and often many listing periods after. You hear the average days on market which is for the properties that sell. You don't hear how long the property has been on the market and how many listing periods it has gone through for a lot of the property on the market.
I lasted over 30 years in the business till I retired, working as a commercial real estate broker. Not many people in the real estate business, last that long. I never listed a property, I did not feel I could sell rapidly. I never listed a property at cut rate commissions, as I knew they would not sell as I would not work on them nor would others. Only desperate agents will. Over 90% of the property I ever listed, sold within the listing period, most in less than 30 days. So I know a little about what I am talking about.
Fact of life: Homes are going to be sold by agents, not just because they are in the multiple listing book especially in the current market conditions. The homes with full commissions are going to be pushed by the agent, not the short commission homes. Just getting a home listed in the MLS, does not get them sold.
So if I am a buyer and see a home on MLS and ask to view it, you you would not want to show it to me or you won't "push it" because you won't profit as much? Nice!
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Originally Posted by oldtrader
It is funny how people want to be paid a full wage for their work, and will only work for employers that pay them fair wages. But when they want to sell a home they want someone to work for much lower wages than they should be paid.
The buyer of the services (the seller) offers you the opportunity to profit for helping them sell their home, you have the right to say no. Currently, people are getting paid less for doing more all across America. If the going rate to mow your lawn is $75 a week and half the people are willing to do it for $50, what do you do? Pay $75 a week?? Who defines what is "fair" wage?
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Originally Posted by oldtrader
I remember a course I took back in 1972 on real estate....He said that a lot of properties are listed, and placed in what he called the morgue file, placed in the MLS and are waiting for the listing to die and go away.
Back in 1972, they didn't have the internet! If a client (me) researches for hundreds of hours and flies down on a weekend to buy a home (which I did), why should that warrant the same wage as someone who is a massive time sink? That's a philosophical question.
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Originally Posted by oldtrader
[b]No one puts any effort to get them sold. They are not advertised. They are very rarely shown. It is almost a miracle when they are resurrected and sold. About the same chance as people waking up in the morgue while waiting for burial.
Really? So I'm a seller. In two months, I'm going to put my main home up for sale in MN. I am in the process of putting in hundreds of hours and lots of money to make my property shine. I'm getting rid of clutter, painting, cleaning the carpets etc. 2 years ago I knew we were selling and I replaced ceramic to travertine, replaced the gold lights to a current design, replaced the faucets to newer designs etc. It's going to be staged perfectly. This fall before we close the pool, we took perfect pictures with the right evening lighting knowing it would be listed with snow on the ground (March). I'm also going to price it to sell and will mean under the market a little. I don't want one open house and don't expect the listing agent to advertise anything other than listing it on the MLS and showing the other agents in his office.
So do you think I should pay the same 7% rate as the guy who wants too much money for his house, wants 10 open houses, doesn't understand anything about RE and is a time sink ("why isn't it selling")? You think my approach will take the same amount of service level as others? I put the time and money to stage it and am pricing it to sell. Why should any agent get their 3.5% automatic commission when I did a lot of the prep work? I'm not willing to pay that because as a seller, I think it's too much. Rest assured, I will have a line out my door of interested and talented RE sales people.
Generally speaking, unrealistic people want too much for their home and don't want to pay enough to sell their home. Stupid desperate agents will take that bate. But every so often, realistic people come along and do a lot of the work to sell a property. Then occasionally unrealistic RE agents think one price fits all and say no to a realistic seller. Everyone has a right to pass on a profitable sale.
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Originally Posted by oldtrader
So I know a little about what I am talking about.
Me too. I've bought and sold 15 plus homes over the past 15 years. When I list them in this fashion, I pay 5.5%. The listing agent gets 2-3 weeks to find a buyer before it hits MLS and they get all of the commission. That has happened a couple of times; good for them! After 2-3 weeks, it's structured 2% to the selling agent and 3.5% for the buyers agent. On this $400K home, I'm offering $8K (2%) to the listing agent to answer some listing agent questions, and attend the closing. If they have the right buyer, then they get $22K. If history repeats itself, I will get a discount and the properties will sell. Additionally, all of the agents that I have used are top producers and are still in the business. Without question, some people will say no to my offer. While I might think they are crazy, everyone has a right to turn down money. It's not like I'm taking away time from their super busy schedules.
On average, it takes the same amount of time and work to sell a $95K home as it does a $250K home. Yet the commission is well over double for that $250K home. A $1M dollar home will require more expensive marketing than a MLS listing so I get the need to charge more in several situations.
Independent of everything else, the reason RE people exit the market is because they are not any good or they split their commissions too long with the broker without selling enough and they starve. Rest assured there are plenty of smart people taking skinnier deals and they are incredibly successful. If you were selling RE today, the internet would force you adapt or you would starve for a different reason. People don't call out of the telephone book like they did in 1972 and they are not willing to automatically pay 7% fees. Also, the internet drives traffic to selling agents and can only imagine that is an art all buy itself. Therefore great marketers are now the "best" agents. I diverge...
Last edited by MN-Born-n-Raised; 12-20-2011 at 04:43 AM..
We are torn because it is not worth losing a good property over a measley $700 but the principle of the thing has really gotten us hot under the collar, so to speak, and sometimes you have to give in to not lose a good thing but sometimes you must simply walk away with nothing but your ethics and self-respect.
We're going to sleep on it. Thanks to all and especially Captain Bill as you are always very thorough in your explainations.
On a different note, I have not yet read the inspection post in it's entirety but since you realtors see them come and go and the ones that do a thorough job, do you have any Home and Pool Inspector names that you can throw out there that will come to Fountain Hills in the event we choose to eat the $700 just to get this going?
Thank you for the compliment.
If the home is worth the price you're paying, and if you really want the home, then my suggestion would be to agree to the fee, and move on and work through a mutually agreeable transaction.
Treat this as a business decision and don't let your emotions get in the way and cause you to lose what may be a great buy for your family.
The market has been changing, and prices are increasing. Finding a different home that will be as good as this one may not be easy.
However, if you had a backup home that you would also be willing to buy, then you may consider that one.
I'll DM you with a home inspection company that I refer. They are very thorough, proficient and honest.
Yes, the seller is getting a 2% discount, which I believe to be standard when there is not another agent. The agent told me this so I suspect she is doing a 4% for her.
Technically, I guess we are still an Unrepresented Buyer but will be under Limited Dual Representation as soon as we get all the contract paperwork tonight and sign and return it. It would not be right to bring an additional agent in at this point as the 2% appears to make a big difference to the seller, according to the agent, but we just want fairness....plain and simple.
The agent said today that she "will not do this unless we sign the paper for the BAC", which is estimated at $695. Her and the seller's daughter are BFF's so I don't know if the seller agreed to this or she is just bluffing. If the agent wants to, I know she can push this through due to the fact that the first contract did not come with a BAC but the next night she made contract changes and sent it along with...so I do not like that.
We are torn because it is not worth losing a good property over a measley $700 but the principle of the thing has really gotten us hot under the collar, so to speak, and sometimes you have to give in to not lose a good thing but sometimes you must simply walk away with nothing but your ethics and self-respect.
We're going to sleep on it. Thanks to all and especially Captain Bill as you are always very thorough in your explainations.
On a different note, I have not yet read the inspection post in it's entirety but since you realtors see them come and go and the ones that do a thorough job, do you have any Home and Pool Inspector names that you can throw out there that will come to Fountain Hills in the event we choose to eat the $700 just to get this going?
I am sorry you are getting beaten down so much. Apparently, you have not obtained legal advice which will relieve the pressure to have to pay what ever anyone demands for nothing.
Please do not use just one inspector to push the sale through. Use one for electrical and a general contractor who will are not part of the food chain.
We are torn because it is not worth losing a good property over a measley $700 but the principle of the thing has really gotten us hot under the collar, so to speak, and sometimes you have to give in to not lose a good thing but sometimes you must simply walk away with nothing but your ethics and self-respect.
We're going to sleep on it.
Potentially you are showing too much of your hand. If this agent knows you want a bigger home in the same neighborhood she may assume she has you (and hence the slipped in of the $695 fee).
I'd play the good cop bad cop. Tell your agent that Hubby says "no way" out of pride. Tell the agent that if she meets you 1/2 way, you can convince him. The agent will know pride makes people to illogical things. Because if you spilled your guts to this dual agent, she figures she has you.
Remember, people react to a sense of urgency. You feel it because the price is right and it's in your neighborhood. The agent doesn't feel it until she is worried you will walk. The home owner doesn't feel it until she learns there isn't a deal.
Reality check. Unless she has another offer in the works, chances are the house will sit for a while. You can always comeback and offer $695 less (and pay the fee). But until you give the other people in the deal a "sense of urgency" to sign or risk upsetting the hubby, she knows she is in the driver seat.
You are getting the shaft. I don't know all of the details but you are in the driver seat (you have the money and they all want it). Hold your ground.
Curious. How long has it been on the market? How much is your offer under asking?
Mn-Born-n-Raised has described a good strategy that can work under certain circumstances. However, that strategy cannot be used in all cases.
I don't know enough details, such as condition of home, price range, specific location, inventory of like homes, competition, time on market, comps, etc., to suggest that strategy in this case.
A good buyers agent weighs all of those factors, including seller motivation if it can be determined, and the probability of another offer coming in before we get an acceptance, and then suggests a strategy based on all known information.
From what we know now, the buyer is happy with the price and wants the home. The only kicker is the $695, and she has stated that it is not a question of the money. It's the principal.
So is it really worth it to risk losing a home they want over a principal? That is a question only the buyer can answer. From what I'm hearing, the money is not an issue. Therefore, they appear to be at a point where they should remove the emotions and determine for certain if the price, including the $695 is a good deal. If so, then it's probably a good business decision to proceed and execute the contract rather than risk losing the deal.
I know from experience in working with a couple of buyers in that area, that the inventory in Fountain Hills is not high, and for certain homes it is very difficult to find a home that meets all the criteria. It's a very popular area for families and retirees.
Also, any time we delay in making an offer in today's market, we risk another buyer coming along. When we as buyers or sellers make a counter offer, we also risk another offer coming along before the counter is accepted. Our counter offer can be rejected and the new offer accepted, without warning. Ask me how I know!
So a good buyers agent needs to have a good handle on the local market, have a good feel for the target property, and develop a strategy that fits the market and that specific property. That strategy can vary with every transaction.
Potentially you are showing too much of your hand. If this agent knows you want a bigger home in the same neighborhood she may assume she has you (and hence the slipped in of the $695 fee).
I'd play the good cop bad cop. Tell your agent that Hubby says "no way" out of pride. Tell the agent that if she meets you 1/2 way, you can convince him. The agent will know pride makes people to illogical things. Because if you spilled your guts to this dual agent, she figures she has you.
Remember, people react to a sense of urgency. You feel it because the price is right and it's in your neighborhood. The agent doesn't feel it until she is worried you will walk. The home owner doesn't feel it until she learns there isn't a deal.
Reality check. Unless she has another offer in the works, chances are the house will sit for a while. You can always comeback and offer $695 less (and pay the fee). But until you give the other people in the deal a "sense of urgency" to sign or risk upsetting the hubby, she knows she is in the driver seat.
You are getting the shaft. I don't know all of the details but you are in the driver seat (you have the money and they all want it). Hold your ground.
Curious. How long has it been on the market? How much is your offer under asking?
Makes good sense to me and well said!
I wish all buyers/sellers understand that they are the ones in the driver seat.
Mn-Born-n-Raised has described a good strategy that can work under certain circumstances. However, that strategy cannot be used in all cases.
I don't know enough details, such as condition of home, price range, specific location, inventory of like homes, competition, time on market, comps, etc., to suggest that strategy in this case.
You are correct. We don't know enough about the specifics to firmly comment on the exact technique to get the $695 fee removed. $695 is definitely on the high side even when firms attempt to charge them. I will say this, any agent who has the kahunas to systematically charge both sides a (high) $695 BAC fee is use to buyers pushing back and has her shtick down pat. Makeitagreatday, you may be dealing with a shark and she knows that you are not.
If makeitagreatday is paying cash, that boosts her bargaining power versus someone who has a contingency sale. A flexible close also boosts a buyers bargaining power especially for a newly widowed seller. The lists goes on and on. All of these factors will help a buyers agent know how firm to be and how realistic their offer is. The goal is to be realistic. A $695 BAC isn't realistic IMHO.
The double $695 fee IMHO is unethical. The agent is getting an extra 1% (4% now versus 3% on a typical split sale). She is probably bitter because she didn't get the whole 6% but that's what she agreed on for initially.
The psychology of negotiating on ANY major sale is to place a sense of urgency on the other party. In the back of their mind they need to know that you have options. There are times to show you want it (big down payments, fast close) but you always are hesitating because you have other options. Every single major sale that I have ever sold or bought in will have a certain element of that "sense of urgency". I roll though several in my mind before I place on in the head of the other party. Most times it is presented softly and very subtle. Good buyer and seller agents will do the same but most are not good. You have to be likable every step of the way when you negotiate. If makeitagreatday butted heads with the agent that isn't helpful.
Personally, I do everything in my power to meet the sellers (or if I am selling, I like to meet the buyers) because I don't trust people to negotiate for me. That would be a bad idea for most people and with homes, it's unconventional.
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I've bought and sold 15 plus homes over the past 15 years. When I list them in this fashion, I pay 5.5%. The listing agent gets 2-3 weeks to find a buyer before it hits MLS and they get all of the commission. That has happened a couple of times; good for them! After 2-3 weeks, it's structured 2% to the selling agent and 3.5% for the buyers agent. On this $400K home, I'm offering $8K (2%) to the listing agent to answer some listing agent questions, and attend the closing. If they have the right buyer, then they get $22K. If history repeats itself, I will get a discount and the properties will sell. Additionally, all of the agents that I have used are top producers and are still in the business. Without question, some people will say no to my offer. While I might think they are crazy, everyone has a right to turn down money. It's not like I'm taking away time from their super busy schedules.
Also, the internet drives traffic to selling agents and can only imagine that is an art all buy itself. Therefore great marketers are now the "best" agents. I diverge...
