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Is the agent doing more work if they have both sides? Does the agent have more liability? (the answer to both is yes). If the agent has more work to do and more liability should they receive less pay for it? (I'd argue no.)
Real estate agents tell buyers about closing costs. Lenders give buyer good faith estimates of closing costs. I often say you will need 3.5% of the purchase price as a down payment and another 2% for closing costs. I pause, wait for them to do mind math and ask, are we good?
If the buyer can't get the money together, they have to wait until they get it.
Is the agent doing more work if they have both sides? Does the agent have more liability? (the answer to both is yes). If the agent has more work to do and more liability should they receive less pay for it? (I'd argue no.)
After reading and replying to a few of his posts and then reading his other thread I am convinced he will never get and we are only feeding into it by replying, he will never get it. I may come back to mock him within the TOS but I am done otherwise. He should fade a way soon.
A buyer broker could mean more work for the seller broker or a dead deal.
Quote:
Originally Posted by Brandon Hoffman
Is the agent doing more work if they have both sides? Does the agent have more liability? (the answer to both is yes). If the agent has more work to do and more liability should they receive less pay for it? (I'd argue no.)
Good point.
I can't answer if the agent's liability increases, but If that was my concern, I would ask a liability specialist, probably an insurance attorney on that and then buy extra liability insurance, not charge double. I am not sure how it works, but when you put extra liability on your car insurance so you can drive clients around, one policy covers them all. I guess the same would be with transaction insurance, since we are probably talking about one transaction.
As for doing more work, that part, let me take a different position from you.
The seller walks into the agents office. He wants somebody to sell the house to a buyer. When a buyer shows up, the agent has to sell the house to the buyer, that is what the seller wants and he is willing to pay.
If the agent thinks is too much work and is going to need help, then the agent should say so, but we are talking about hiring sub agents, not agents for the buyer. An agent for the buyer would probably make your work harder by negotiating in behalf of the buyer, asking for more things and offering to pay less.
The concept of the cooperating broker is introduced by the designers of the forms to include the MLS cash incentive into the equation.
The concept has to do with the seller wanting to attract all of the good buyers, for example the wife of the rich dentist, the wife of the out of town doctor relocating, that has hired (with a BRE) a buyer broker to handle the house hunting for them.
The seller does not want them guys to get away. So the seller does two things. First, offers a set amount up front that ought to cover the commission the buyer will have to pay and two, leave some extra that the buyer can do what ever. The idea is not to offer less than what the buyers already has in his contract with the buyer agent. 3%, the same as what the seller's agent is charging has to be adequate. If the buyer is paying more, tough luck.
That is what the cooperating broker concept is there for. To not let the big fish the good buyers that have hired a buyer's agent (using the forms) get away. As for the agent needing help to open an escrow and make sure closes, the agent does not get help with that. Today is 3% and it will never be that high again.
Going back to doing more work. The seller walks in an wants somebody to find a buyer and close the sale. If the agent needs help, like hire sales agents as sub agents or pay referral fees to sub agents, that is the seller's agent problem. Sure, the seller's agent should consider all this before setting a fee, but to charge twice so you can handle the buyer, when that is why you are hired has to be looked at.
What agents are doing is misinterpreting a mechanism found in the forms put there to benefit sellers and buyers that hire agents. It is not there so the agents can get other agents to help them with the work they get paid for. The forms are very clear about all this, specially the Joint Escrow Instructions found in the RPA, which the buyer and the seller never really pay attention to.
I don't mean to be confrontational and I hope you did not get that idea from me.
Thanks for your comments.
Real estate agents tell buyers about closing costs. Lenders give buyer good faith estimates of closing costs. I often say you will need 3.5% of the purchase price as a down payment and another 2% for closing costs. I pause, wait for them to do mind math and ask, are we good?
If the buyer can't get the money together, they have to wait until they get it.
Dear 2bin.
You are missing the point.
The buyer saves money for the down payment and the loan. Once they have the 20K they need and the two year job history, they walk into your office. That day, they find out they need 5% more.
So, as you stated, the have to wait until they get it.
The MLS incentive can take care of that and that would benefit the seller, because would make the sales possible.
It only works if the agent the buyers are speaking to is the agent for the buyer and knows how to use the forms and the incentive. The forms can do that.
Threads like this one are the reason you guys don't see me in the real estate forum very often anymore. Have fun arguing with this guy. He clearly knows this industry inside and out.
Good point.
I can't answer if the agent's liability increases, but If that was my concern, I would ask a liability specialist, probably an insurance attorney on that and then buy extra liability insurance, not charge double. I am not sure how it works, but when you put extra liability on your car insurance so you can drive clients around, one policy covers them all. I guess the same would be with transaction insurance, since we are probably talking about one transaction.
No such thing in real estate. Renders the rest of your argument moot. We have a yearly E&O insurance but it's more like a doctors malpractice, it's not some per transaction fee with limits and such.
You are a real estate agent and a buyer walks into your office.
You tell her that you will be her buyer agent but that she is not responsible for your commission.
You sign a agency disclosure form saying you are her agent and you give it to her. After the transaction is over you collect from the escrow company the 3% MLS money (is not an agency commission) from the seller and keep it? The buyer is entitled to most of it, but you never discuss that with her.
The real estate agency commission is the amount of money mentioned in the agency relationship agreement and is between the agent and either a buyer or a seller. On dual agency, the agent will need two separate agency agreements.
And agency disclosure form disclosing an oral agency relationship is invalid.
The MLS agreement, the cooperating broker fee is a sub agent fee and is the product of a unilateral broker to broker agreement
Not understanding this might mean that if you are a real estate agent and you are doing it this way, giving Agency Disclosure forms to buyers saying you are their agent and then collecting the MLS fee to yourself, you might be hurting people and not know it.
The USDOJ says it is 60 billion dollars per year problem, and I agree with them.
Some people are taking this very seriously.
But again, this is only the tip of the iceberg.
I'll be back when 1000 more people have visited the tread.
People everywhere are aware of the real estate commission issue. REAs and Realtors live in a closed off world and probably don't hear much about what people really think of their services as an industry or they choose to explain it away.
All one has to do is read this forum and find that a majority of the problems result when REAs or Realtors don't listen, pay attention, give attention or go about their work in a commission first basis. Not all, but most and the proof is right here for anyone to read. It isn't limited to this forum either, it is everywhere and why the industry has such a bad reputation compared to almost any other profession, including lawyers and car sales people.
While the justice dept should have no right or say in how much someone makes, the fact is they do and aren't too hesitant to pursue it.
The real estate industry does a horrible job of self policing. Which REA/Realtor can honestly say they haven't run across one of their own members (most are members of the National Association of Realtors) that hasn't worked in the best interests of their clients or have done a very poor job at doing so? Now, how many have done something about it?
The surveys done show REAs and Realtors are at the bottom of the rung when it comes to professional reputation, yet few of them don't have awards hanging all over their walls citing top this or that. Walk into a car dealership and you see the same thing, top sales or top dealer. That sure gives one confidence. Not.
All of that isn't necessarily the fault of REAs and Realtors but the organizations and agencies that regulate REA and Realtors. You spend a weekend studying and perhaps a few extra days and voila, you are now a Real Estate Agent. A little more and you are a Realtor. In many other professions there is at least some criteria that could be associated with experience. Apprentice, Journeyman, associate, partner and so on. In real estate there is nothing like that except what they choose to tell you.
The real estate industry could do a lot more than what little it does to improve it's reputation. So far, it has chosen to do nothing other than tell people that Realtors are somehow better than Real Estate Agents (they are not).
The problem is that there are too many REAs and Realtors. That means the bar isn't set high enough to gain entrance into the profession. Real estate agent courses and the certification process is nothing more than a certificate and license mill. For the impact they can have on such an important aspect affecting people's lives, they should be required to have far more training, stringent evaluations and get paid for performance.
I know that the REAs will pile on, that is expected and just does more to prove the points. They aren't all on the lower rung of their profession but most in it are. Most.
No such thing in real estate. Renders the rest of your argument moot. We have a yearly E&O insurance but it's more like a doctors malpractice, it's not some per transaction fee with limits and such.
So, it is not a per transaction policy.
More like continuous coverage? pay twice a year? four times?
People everywhere are aware of the real estate commission issue. REAs and Realtors live in a closed off world and probably don't hear much about what people really think of their services as an industry or they choose to explain it away.
Realtors don't live in a closed off world at all. They deal face to face with every client they have as a buyer or seller. The fact that the majority of buyers and seller use brokers for their transactions tell you that they prefer that approach over doing it themselves. All of your arguments go against what is really happening in the real world. I believe that you live in a closed off world and have no idea what you are talking about.
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A buyer broker could mean more work for the seller broker or a dead deal.
