Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Agreed. But since so many buyers can barely afford the downpayment, and those who do have the extra cash would not want to pay it out of pocket anyway (my assumption - I could be wrong), it seems the only way to work it into the deal would be for the seller to offer to pay it. Then it's not part of the contract (at least not in Texas).
Steve
I've said it before, Ill say it again. Commissions in real estate are very similar to W-2 withholding....People dont mind it until they see how much it really is. Buyers never care, unless they are trying to extract a concession, and sellers are annoyed by the high cost. Its never going to change until more people actually realize the costs involved.
Each person should have to pay their own agent - that would make complete sense. On a side note - I also think the only way this country is ever going to see tax reform is if every person in the US has to write a check to the government on April 15....even if they end up getting a refund - I want each/every person to have to actually feel the pain of writing the check..even if its from an inaccessible account to the individual...I still want them to have to write the numbers on that check and think about what they could have bought with that money if our government were not so corrupt.
I get the enjoyment of quarterly payments on top of withholding, and I feel sick to my stomach at my individual tax burden 4 times per year.
Oh all that would happen is that it would be a line item on the buyer side and the amount of closing costs that buyers would ask for would be higher. It would get rolled into the transaction as it is now, BUT I do think that if that legally the agent compensation were the responsibility of the buyers, like lender closing costs, they would think long and hard about whom they hire. I think because buyers think of agents as free, some don't spend time hiring a good one. If you were required to sign a document that said my fee is $20,000? I think most buyers would be asking a lot of questions. As it should be.
The lenders would have to increase the 6% cap on closing costs and VA would have to make it an allowable closing cost.
Like they think "long and hard" about the 1% of loan + junk fees that they pay lenders now?
What would happen instead is that smart sellers and listing agents would think long and hard about it. Sellers would seek to gain an advantage over competing listings by offering to pay the buyer's agent commission. Then everything would go back to where it is now. That's what I think would happen, and I could be wrong.
Also, the entire MLS system was built on the concept that the listing agent is making a unilateral offer of compensation to cooperating Brokers. Will that remain the same, but the offer becomes $1?
I think this is one of those things that if we think about it long enough, try to imagine/guess how consumers will actually respond, we end up right back where we started. The seller has a pot of money (usually) from which a bunch of selling/closing costs are paid. Buyers are (usually) scaping together funds and trying to keep their purchase costs as low as possible. Just the sheer inertia of these two realities makes the notion of a buyer paying direct cash to buyer agents a gravity-defying proposal.
But I'm not against the idea.
Steve
Last edited by austin-steve; 09-13-2012 at 02:28 PM..
Reason: typo
Like they think "long and hard" about the 1% of loan + junk fees that they pay lenders now?
What would happen instead is that smart sellers and listing agents would think long and hard about it. Sellers would seek to gain an advantage over competing listings by offering to pay the buyer's agent commission. Then everything would go back to where it is now. That's what I think would happen, and I could be wrong.
Also, the entire MLS system was built on the concept that the listing agent is making a unilateral offer of compensation to cooperating Brokers. Will that remain the same, but the offer becomes $1?
I think this is one of those things that if we think about it long enough, try to imagine/guess how consumers will actually respond, we end up right back where we started. The seller has a pot of money (usually) from which a bunch of selling/closing costs are paid. Buyers are (usually) scaping together funds and trying to keep their purchase costs as low as possible. Just the sheer inertia of these two realities makes the notion of a buyer paying direct cash to buyer agents a gravity-defying proposal.
But I'm not against the idea.
Steve
Oh, I think we will be back where we started too because the reality is that most buyers can't afford the costs of representation out of pocket so they would wrap it into the mortgage as seller paid closing costs which is essentially what it is now. It would just be on their line to start and move over as a credit on the HUD. Semantically different, reality the same.
I think there is a big difference between 1% and 3% though. I think most people will look at that 3% number and think about it. I also think it would solve the problem of well versed buyers that need just a little bit of help in the transaction but we don't really have a system for them. They can pay hourly or whatever. It would help them out. We both know that most home buyers aren't like that though so the reality is that it would function the same way it does now with fees just going on different lines.
Oh, I think we will be back where we started too because the reality is that most buyers can't afford the costs of representation out of pocket so they would wrap it into the mortgage as seller paid closing costs which is essentially what it is now. It would just be on their line to start and move over as a credit on the HUD. Semantically different, reality the same.
I think there is a big difference between 1% and 3% though. I think most people will look at that 3% number and think about it. I also think it would solve the problem of well versed buyers that need just a little bit of help in the transaction but we don't really have a system for them. They can pay hourly or whatever. It would help them out. We both know that most home buyers aren't like that though so the reality is that it would function the same way it does now with fees just going on different lines.
More well explained options would certainly make more happy customers. I think the one size fits all model is what generates many of the complaints.
If you have options, consumers will study those and choose the option they feel most comfortable with both practically and financially. When they choose an option you explain to them what services you are providing and not providing. At that point you get to explain the process and let them make a decision. If they choose incorrectly, its not your fault. If they choose a cheaper service, but then try to request more from you, as long as it was clearly explained up front, you just tell them what services they contracted for and allow an addendum if they would like additional services.
Me - personally - I would love more options to pick/choose what I want & dont want. But I also want a good intelligent reputable agent....There are not any good discount brokers, nor are there many good agents who would accept a lower payout in exchange for you doing much of the work. Everyone wants it all or nothing.
I understand we are bucking the traditional norm... but we are not alone. It seems it is the profession that has a hard time with it, even though agents are licensed by the state and everything is legal. Alot of buying and selling does not make sense from a consumer perspective..
The state license in one thing, and every state requires that you be licensed to engage in the practice of real estate brokerage. Membership in an MLS is an entirely different thing, and is in no way required. A licensee may choose to be a part of one or more MLSs, or of non. Any offers of cooperation published in an MLS are for participants of that MLS alone and none other. In most cases, if a non member licensee wants to help a client buy a property that is listed in an MLS, they can easily make arrangements for cooperation & compensation, but it's not automatic as it is for members, because as non members they have not agreed to be part of that group agreement.
Me - personally - I would love more options to pick/choose what I want & dont want. But I also want a good intelligent reputable agent....There are not any good discount brokers, nor are there many good agents who would accept a lower payout in exchange for you doing much of the work. Everyone wants it all or nothing.
Right, the good agents understand that someone searching the internet for a house, that the agents have performed the work and paid to have placed on the internet, does not equate to 30% of the work involved (that most buyers who want a discount seem to think.) The majority of the work, knowledge and experience is required beginning at the home valuation stage, through the offer, negotiation and escrow stages.
So those who would place discount over quality should be happy with the discount agents, whatever their skill levels are. It is difficult to have both because the good agents are not hungry and are willing to "just say no".
Me - personally - I would love more options to pick/choose what I want & dont want. But I also want a good intelligent reputable agent....There are not any good discount brokers, nor are there many good agents who would accept a lower payout in exchange for you doing much of the work. Everyone wants it all or nothing.
I can't speak for other agents but the reason I wouldn't do that as a buyer agent is because part of my time that you buy with that compensation is for me attending classes, reading up on the industry, and touring homes. Those aren't hours that I get paid for directly by any client, but they are a business expense and get wrapped into every fee I charge someone. There is just A LOT to know if you are representing buyers. Because most states put the due diligence onus on the buyers and not the sellers, the listing agents have a bit less liability, I think, than buyer agents. I have done hourly rates for buyers that found a house FSBO and I took over from due diligence to closing. Most of the time that costs between $1500-$2500. It isn't a $500 service, at least not if you do it right, IMO. Where buyer agents rack up their time is in going from house to house to house.
So...if we do indeed shift to a buyer pay their own rep a fee, I can see buyers trying to go through listing agents for appointments and then hire an agent to get around paying a buyer agent more. Listing agents will only stand for that strategy for so long. I can see a shift back to open houses if that happened and listing agents would hold the house open for a specific period for unrepresented buyers to come through at that time only. Real estate would be different for sure.
I would be quite willing to go to an hourly rate. But billed regardless of success. I will discount a bit for old or repeat customers. But I have absolutely no way to tell going in that you are the buyer from heaven or the one from hell. I have no idea how the deal will break even if you are the best buyer in the world.
Worst recent experience which caused immense pain and difficulty was an agent who got onto pain medication while working a complex deal for his SIL. Absolute disaster. End up closing the thing after the client had retained a new agent to get me off his house. She wisely dropped out of the picture when we managed an eleventh hour cliff hanger rescue and got it done. But still. Perfectly reasonable rational straight forward deal into 9 weeks of hell.
What would you have me do. Triple this guys fee because a straightforward deal blew up? Can I charge the other side for a couple of hundred hours wasted? Can I get the idiot broker who had no idea how to fix a busted agent removed from the system?
You just have to put up with it. We don't give discounts because we can't charge premiums when it does not go well.
But I am always willing to go hourly. Just can't find many takers.
At that price point, agents are about 50/50 in attending showings here. (Except the $400k...those are on lockbox). Even with our $150 median, the average for my MLS is 3.4 per agent. Now that is total craziness.
Keep in mind those numbers I quoted are averages. We had broker open house day today and there were about 10 listings being show in town. About half were in the $500K range and the other half were around $1.4M.
Quote:
Originally Posted by Silverfall
I've been to MA and liked it when I was there many years ago. I want to take the kids out there and have them go see all of the amazing history out there.
I thought it was a pretty state, but I'm too laid back for the east coast. You'd probably make me wear high heels and a suit out there...
Nah! We're pretty relaxed here in Needham. I'm usually dressed business casual. I did a broker's open in Wellesley today though and felt pretty under dressed. Everyone always looks so done up in that town.
Quote:
Originally Posted by marksmu
I've said it before, Ill say it again. Commissions in real estate are very similar to W-2 withholding....People dont mind it until they see how much it really is. Buyers never care, unless they are trying to extract a concession, and sellers are annoyed by the high cost. Its never going to change until more people actually realize the costs involved.
I can't say I agree with you on this point. The only people who don't realize how much they're paying an agent are first time sellers. They usually don't realize how much X% really adds up to. Anyone who's seen a HUD before knows exactly what kind of numbers we're talking about. Another fact that you've perhaps pulled from a dark place?
Quote:
Originally Posted by marksmu
More well explained options would certainly make more happy customers. I think the one size fits all model is what generates many of the complaints.
If you have options, consumers will study those and choose the option they feel most comfortable with both practically and financially. When they choose an option you explain to them what services you are providing and not providing. At that point you get to explain the process and let them make a decision. If they choose incorrectly, its not your fault. If they choose a cheaper service, but then try to request more from you, as long as it was clearly explained up front, you just tell them what services they contracted for and allow an addendum if they would like additional services.
As a person who's profession it is to look out for the well being of their client, how can I possibly bring myself to dumb it down or allow my client to get half my effort when they really need a full effort simply because they don't want to pay me a higher rate of commission. How can I possibly not give it my all and how can anyone possibly want to hire someone who wouldn't give 110% effort.
Quote:
Originally Posted by marksmu
Me - personally - I would love more options to pick/choose what I want & dont want. But I also want a good intelligent reputable agent....There are not any good discount brokers, nor are there many good agents who would accept a lower payout in exchange for you doing much of the work. Everyone wants it all or nothing.
So, you want a high level of service and a low level of commission. I believe this is referred to having your cake and eating it too. Next thing you're going to say is that you want a Rolls Royce for the price of a Kia. Why are people who are at the top of their profession not entitled to get paid more than those that do a poor job?
Quote:
Originally Posted by lvoc
I would be quite willing to go to an hourly rate. But billed regardless of success.
A guaranteed paycheck would be great. While I've almost never had anyone leave me for another agent, I have had some clients that have changed their minds about moving. I spent time with these people and it would have been great to be compensated for that time. Keeping track of the time would be a real PITA though.
I would be quite willing to go to an hourly rate. But billed regardless of success.
Yes that is how hourly works. I had some FSBO buyer clients pay me $900 in fees and they backed out after the home inspection. Fees were still due.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
