WHY does everyone think we should work for free?? (house, buyers, mortgage)

[casper324]

Sorry I didn't read all 13 pages of responses but would like to add my two cents.

I am self employed and handle the sales/marketing for my company. When we pick a profession like sales we take the risk and we also reap the benefits of choosing the profession when sales happen. Realtors are certainly NOT the only profession that can do tons of work all for free, every single sales person out there does the same thing. So cry me a river when a house doesn't sell and you loose the dollars you invested in advertising, I lost a nice deal yesterday that I worked on for four months, it stinks but that is sales. How about the home owner who probably also invested in upgrades/repairs that were told would help sell the home. What about the home owner who cleaned and scrubbed on a moments notice for showings? The real problem is the Broker/realtor agreements. It isn't sellers or buyers fault that brokers have enjoyed having employees that pay their own advertising, rent a desk in the office, pay their own telephone bill, internet bill and car and then get paid 1.5% of the 3%. I find it almost funny that many realtors feel paying to advertise in the brokers advertisements, can't the brokers even give that to you as a way to promote their business?

Someone broke down the problems with the Broker/Realtor traditional relationship on CL, I wish I had saved it, it made tons of sense.

I would be more then happy to pay a full service commission for a full service. That would mean if there is a showing, the broker sends office staff to make sure the house is tidy (yes showings can be scheduled after we've lready left for work), Staged if needed, the listing realtor is at every single showing after all who knows the house better, the listing agent or showing agent.

When we were looking at selling one of my questions to realtors was a graduated commission. If the home sold in the first two months, 6%, second two months, 5%, last two months of the contract 4%. NOT ONE REALTOR WOULD DO IT? Sales is typically an incentive based career, what better incentive then more commission for a quick sale.

[Captain Bill]

Originally Posted by casper324

I would be more then happy to pay a full service commission for a full service. That would mean if there is a showing, the broker sends office staff to make sure the house is tidy (yes showings can be scheduled after we've lready left for work), Staged if needed, the listing realtor is at every single showing after all who knows the house better, the listing agent or showing agent.

When we were looking at selling one of my questions to realtors was a graduated commission. If the home sold in the first two months, 6%, second two months, 5%, last two months of the contract 4%. NOT ONE REALTOR WOULD DO IT? Sales is typically an incentive based career, what better incentive then more commission for a quick sale.

Casper, you're asking for house cleaning services to be thrown in That's a new one. I've got to hand it to you, that's original

But let's examine that. I see several options:

1. Ask our receptionist, office clerk, accounts payable, or billings clerk to go out and tidy up a few homes for showing today. We have 20 showings scheduled and we will have more throughout the day. I can visualize the face followed by a "take your job and shove it".
2. We could contract with a reliable bonded cleaning service, and out here that would probably cost about $65 per hour plus travel time. More overhead and liability.
3. We could start our own cleaning business to just clean our homes for showing each day. A greater overhead and liability.

How much is that going to add to our overhead that we have to pass along to our customers in the form of higher commissions? It is an extra service, and no one that I know of who offers full service includes house cleaning services.

Ocassionally someone will want the listing agent to be at every showing because they know the house better. That request is misguided.

The listing agent does know the house better, and s/he should write a description that sufficiently describes the property. However, remember that the listing agent is the marketing arm of the transaction. It is his/her job to market the home to get buyers to show up. It is the buyers agent that sells the home.

The listing agent only becomes involved with a buyer if that buyer contacts the listing agent to view the home. Then the agent becomes a dual agent, and an agent cannot represent both buyer and seller without written permission on a dual agency disclosure form signed by both buyer and seller.

S/he does of course show the homes during open house, because people will walk in without an agent. If the person discloses that they are working with an agent, then the listing agent must back off and do nothing more than answer questions about the home.

The buyer agents know their clients. The listing agent does not. When the listing agent tries to get involved in pointing out features, she just may emphasize a feature that the seller doesn't even want. The buyers agent knows what their clients want and there may be another feature that can outweigh the undesirable feature.

With the listing agent trying to get involved without having a clue as to what the buyer wants, she can be trying to emphasize the wrong feature and kill any chance of a potential sale. The buyer agents need their space and privacy so they can discuss the home, out of hearing range of the listing agent.

The listing agent cannot "sell" the home to someone who is the client of another client. The buyers agent has every right to ask the listing agent to stay out of the way and the listing agent must comply. The buyer is the client of the buyers agent, and the listing agent must not interfere with that agency relationship. Getting in the way can turn the buyer away, lose a sale for the seller, and can be a violation of the Code of Ethics and get the listing agent fined.

The features of a majority of homes under 1 million dollars in our area are very easy to learn from the description and by spending a few minutes in the home. Agents do this all the time. I preview homes in my farm area and know most of them, so that if I take a buyer there I already know about the home.

When I work with relocating clients from out of state, I preview homes that fit their criteria so that I know the home before going there with the client. I do not want the listing agent to interfere because if that agent comes on trying to give a sales pitch to my client, he could turn my client off, and I would file an ethics complaint against him.

The exception to all this is when we're talking about a 2 million dollar plus home that has features that no one would be able to discern from looking or from reading in the description. There may also be security issues and the owner may not wish to have a lock box. Then it is reasonable and desirable for the listing agent to be present for all showings.

The agent would point out the important features of the home that the buyer agent would not know about, and especially the cost of some of these amenities that add to the value of the home. All of this would also be on a spec sheet. But the agent still needs to back off and give the buyers and their agent some space.

The sliding scale is something to consider, so let's discuss it:

There is a problem with this because if we're dealing with an agent who has a good marketing plan the home will sell. If the home takes longer than the ADOM for homes that sell, there is something wrong. It's the location, the condition, or the price. So the sliding scale when it gets out there can be unfair to the agent who has done her job properly. However, I'm willing to negotiate a sliding scale with you so that we make it a win/win situation.

Here is my counter offer:

Listing contract is for 6 months
If it sells...

1. within 30 days 4% to the listing agent and 3% to the buyers agent
2. 31 to 60 days 3% to the listing agent and 3% to the buyers agent
3. 61 to 120 days 2% to the listing agent and 3% to the buyers agent
4. 121 to 180 days 1% to the listing agent and 3% to the buyers agent
5. If it does not sell by contract end, the listing agent gets 0.5% of the listed price.
6. The 0.5% is paid up front as a non-refundable retainer fee, but is credited back to seller at close of escrow.

Explanation:

1. Within 30 days in today's market is exceptional. A 1% bonus is in order.
2. Within 60 days is above average. However, standard fee is ok here
3. Within 120 days is average (ADOM here is 101.26) Although this is average, I'm willing to concede this 1% penalty in exchange for the bonus of 1% in number 1
4. Over 120 days indicates something is wrong with the property. However, I'm willing to concede this further reduction of 1% in exchange for the retainer fee of 0.5% in number 5 and 6.
5. Over 180 months (when the listing expires) means something drastic is wrong with the property. If we renegotiate a new listing agreement, we would need to examine the reasons for it not selling and make the necessary changes. (In reality, we would be reviewing this about every two weeks)

Would this sliding scale be acceptable to you Casper?

[AnthonyB]

Captain Bill - You make a fair point regarding retainers. At the moment I am about to start looking for a new buyers agent. The area I am looking in, for environmental issues and other reasons is a bit of a pain in the behind (lots of rules and regulations) so I am being very particular about the agent I use, I need someone with a LOT of experience in this area. THAT is where an agent can really earn his/her keep. A retainer is a possibility, although I will prefer to take them for a "test drive" first as I like to see how people are outside of an interview situation.

I think a lot of my frustration comes from the silly excuses I see posted upthread, at least in regard to addresses. As a salesman, and as a sales trainer I know full well that Sales 101 says to get in front of and stay in front of the prospect, and any savvy RE agent who has been properly trained knows that too. Forcing a prospect to be in touch with the realtor constantly achieves that goal, but to pretend it is for the benefit of anyone but the realtor is just hypocracy.

[Captain Bill]

Anthony, what you can do is talk to the broker at various companies. Explain exactly what you're looking for. The broker will know which agents specialize and can point you to one or more.

You can do this with several brokerages to get a bunch of names to interview.

You can make your first cuts on the telephone, and decide who to do a sit down interview with.

At the sit down interview you'll learn whether they have the expertise that you're looking for. Here you can narrow the field down to a couple. Let them know that you want to see and discuss a couple of properties with them as a further part of the interview process.

If you think it's going to take a long time to locate what you're looking for, then discuss a retainer fee and buyer broker agreement with the agent of your choice and go from there.

I refer agents to clients in other states fairly often. If I don't already know an agent in their area, I first look at the web sites of brokerages, not the individual agent yet. At the brokerage, they'll usually have their agent list, and show their designations and their specialities.

If I'm looking for a relocation agent for a senior then I may look for an agent that holds a SRES designation. Then I know that this agent has taken the time to study the special needs of relocating seniors.

I'll look for other designations such as the GRI, ABR, or the CRS. If I'm looking for a commercial realtor then I'm looking for different designations. When I pick out a few, I'll look at their web sites to get a glimpse into their personality. From there I'll narrow the list down to some to email. I want to see how fast they respond to me, and how they communicate. Then I'll do some telephone calls and get to know them better.

It takes time to research agents, but the time spent pays off. You'll need to spend some time finding that right agent for your project, and you'll be able to do it.

[casper324]

Originally Posted by Captain Bill

Casper, you're asking for house cleaning services to be thrown in That's a new one. I've got to hand it to you, that's original

Bill, you must not be a working Mom! The option is for the seller to leave work to make sure the house is showing worthy. Think about this........a real estate office the offers nothing more then some advertising or a true full service company. This is an excellent business opportunity if nothing else since most sellers "issues" are getting the house ready for showings.

But let's examine that. I see several options:

1. Ask our receptionist, office clerk, accounts payable, or billings clerk to go out and tidy up a few homes for showing today. We have 20 showings scheduled and we will have more throughout the day. I can visualize the face followed by a "take your job and shove it".

Why not partner with a cleaning service who for 50.00 would insure the Buyers agent and sellers agent are getting the most of the opportunity to sell?

1. We could contract with a reliable bonded cleaning service, and out here that would probably cost about $65 per hour plus travel time. More overhead and liability.

When you look at the larger picture with commissions in the 20,000 range is 65.00 too much to invest in making the sale?

1. We could start our own cleaning business to just clean our homes for showing each day. A greater overhead and liability.

I am not saying a daily cleaning service, I am saying that someone gets into the home prior to a showing and will clean out the sink of breakfast dishes if the home owner is working and not available. No toilet cleaning, just making sure the home is in showable condition.

This could be a new business model in real estate, I am willing to bet you'll see more "full service" firms in the future. Of course the traditional compensation plan will go through an over haul and lean more to a retainer based fee structure.


Ocassionally someone will want the listing agent to be at every showing because they know the house better. That request is misguided.

I disagree........My house had lots of stairs, for a realtor to bring in a elderly couple was stupid and a waste of everyones time. Did this buyers realtor consider their clients needs, I think not.

The sliding scale is something to consider, so let's discuss it:

There is a problem with this because if we're dealing with an agent who has a good marketing plan the home will sell. If the home takes longer than the ADOM for homes that sell, there is something wrong. It's the location, the condition, or the price. So the sliding scale when it gets out there can be unfair to the agent who has done her job properly. However, I'm willing to negotiate a sliding scale with you so that we make it a win/win situation.

Here is my counter offer:

Listing contract is for 6 months
If it sells...

1. within 30 days 4% to the listing agent and 3% to the buyers agent
2. 31 to 60 days 3% to the listing agent and 3% to the buyers agent
3. 61 to 120 days 2% to the listing agent and 3% to the buyers agent
4. 121 to 180 days 1% to the listing agent and 3% to the buyers agent
5. If it does not sell by contract end, the listing agent gets 0.5% of the listed price.
6. The 0.5% is paid up front as a non-refundable retainer fee, but is credited back to seller at close of escrow.

Explanation:

1. Within 30 days in today's market is exceptional. A 1% bonus is in order.
2. Within 60 days is above average. However, standard fee is ok here
3. Within 120 days is average (ADOM here is 101.26) Although this is average, I'm willing to concede this 1% penalty in exchange for the bonus of 1% in number 1
4. Over 120 days indicates something is wrong with the property. However, I'm willing to concede this further reduction of 1% in exchange for the retainer fee of 0.5% in number 5 and 6.
5. Over 180 months (when the listing expires) means something drastic is wrong with the property. If we renegotiate a new listing agreement, we would need to examine the reasons for it not selling and make the necessary changes. (In reality, we would be reviewing this about every two weeks)

Would this sliding scale be acceptable to you Casper?

YES and I think top producers would LOVE it and deserve it.

[Captain Bill]

Originally Posted by casper324

YES and I think top producers would LOVE it and deserve it.

Now all we have to do is get this paperwork out of the way and start work on marketing your house. I appreciate your confidence in me and I promise to give you 110% of my efforts.

[casper324]

Do you still think my suggestions were off the wall or are you considering a new business model?

[ttessmann]

To the guy who said he would never pay more than 3%, does he realize that an agent would have to offer only 1.5 percent to the other agents showing the home. What agent is going to have any incentive to show that house. Right now in California, a lot of sellers are offering 4% just to the buyers agent, not counting what they are paying their listing agent. And yes, the houses have doubled, which means if you paid $100,000 for your home and you sell it for $200,000, we would earn an extra $6000, but you have made $100,000. Hmmmm, talk about greedy! And all the work we do for free and money we spend isn't the only thing, who do you think gets blamed and sued for anything that goes wrong after the deal? We take on a huge responsibility and liability every time we complete a transaction. And it is usually the ones who don't want to pay a commission and haggle over every cent that end up suing somebody so if I have a client who has that attitude, I say no thank you to THEM because it isn't worth 20%. That's just the way I feel. I know there are agents out there who ruin it for the good ones, and that's why we are perceived as overpaid, sleezy salespeople. If you have the right agent, their work is priceless.

[Captain Bill]

Casper I'm going to think seriously about the cleaning aspect, and this is just an off the top of my head here. It has some merits and it also has some obstacles.

I personally offer services that many don't offer, and I discuss these with the sellers when I first meet with them. I have some staging skills and will roll my sleeves up and help. I pay for a color coordinator if one wants to consider redecorating.

I studied photography for several years and consider myself an advanced amateur photographer. My photos are good. I take them myself using a pro-sumer Nikon camera with high quality lens and professional lighting. There are other things that I do, and prefer to keep close to my vest. I don't want to give away all my secrets to my worthy competitors.

I separated the "tidy" up subject from the other subjects so it can be discussed by itself. This way others may be able to offer some viable suggestions

Sometimes there are calls to make an appointment for the next day. That could work.

Some of the time it's a call around 10am that wants to see the home now because they're sitting in front of it;

and sometimes they are giving a couple hours notice. Both of the two latter would be difficult to work.

We have no idea when the next showing will be. It could tomorrow, or it could be next week.

Cleaning services usually need some lead time, so it could be very difficult to get someone out to wash dishes on a very short notice.

It could be the very day that a good buyer comes, that the cleaning service can't be there on time and the kitchen is still in disarray.

Obviously, I couldn't pay $50 per day to have someone come every day.

These are the obstacles that I see. I'll try to think of how these obstacles can be overcome, and hopefully others will take this seriously and offer some practical solutions.

So many people just want to down grade the real estate profession yet don't offer suggestions as to how to improve the service. Some want all of full service and more, but still at a small fee for service price.

I appreciate the fact that you've taken the time to offer reasonable suggestions and have discussed them in an intelligent manner. You agreed with the sliding scale as countered, which demonstrated your sincerity in having a win/win situation.

And you're offering up the suggestion of added value where it is needed. So thank you for the great discussion.

[Captain Bill]

Originally Posted by casper324

Do you still think my suggestions were off the wall or are you considering a new business model?

I am considering the sliding scale and I've posted a follow up to the "tidy" up. As I mention in the post, it is an excellent idea, and needs ways around the obstacles to make it work.

Thanks again for making the suggestions in a positive manner. We need more people like you to make good suggestions. If we can all have meaningful dialogues like this, then we can learn from each other.