Did I just insult the listing agent? (commission split)

[Captain Bill]

Originally Posted by RE Skeptic

Good to hear that you finally agree that a BA agreement dictates the buyers payment to the BA.

First I need to clarify that I can't relate to your BA agreement, because I have not seen it and don't know what it is, and I'm not familiar with laws in your state.

In Arizona we do not have anything named a BA agreement.

• We have a Real Estate Agency Disclosure and Election form, which is a "disclosure of duties", not an employment contract.
• We also have a Buyer Broker Exclusive Employment Agreement, which is an employment agreement.
• Neither of the two forms are required by AZ law.

I've never disagreed that, in Arizona, IF there is a buyer broker agreement that the agreement will spell out the fee the buyer will, or will not, be obligated to pay above what the seller pays.

REskeptic....I doubt the buyer would be "ecstatic" if he knew that his BA violated his fiduciary duty. Regardless of how good the final price was, the buyer ended up paying 10k more because of his BA unethical disclosure to you. What's equally disappointing is that you would try to rationalize this. Captain, it is clear where you stand on this. I am pleasantly surprised that you seem to the only one on this forum who supports this behavior.

I pointed out the different ways of looking at a situation. I've stated that the agent gave me too much information, which if not authorized by the buyer is a violation of a duty. However, my job is to negotiate the best deal I can for my seller, and get the sale closed for my seller. Part of my negotiation job is to gather all the information I can, and I did that.

You're implying that anytime I enter into a negotiation and through my negotiation tactics get the other agent to give me information that he shouldn't, that I should file a complaint against that agent. I'll be very frank.

• I am working for MY client, not the other agents client
• I am not the Real Estate Police
• I do not run a Sting Operation
• If in a negotiation situation I get information from another agent that he shouldn't give me, I'm not going to file a complaint against that agent
• I would be very surprised if any agent on this forum would say anything different.

REskeptic....If the agent assumed he would get to keep the entire co-broke (even though he was not even acting as his BA) and never clarified it with the buyer, then the buyer is well within his rights to negotiate the fee at the 11th hour. The agent is the professional in this situation and should not assume any payment structure.

The agent is not assuming anything. There is a contract between the listing agent and buyers agent, through the MLS listing, to pay the stated commission to the buyers agent. No assumption. It's a contract.

And, once an agent begins to show homes, or take any action that would resemble duties of an agency, then, in Arizona, an Implied Agency is established, which would have the agent representing this buyer.

Even though it's not required by law, most, if not all, Arizona brokers require their agents to have an Agency Disclosure and Election form signed, which states who the Agent is representing.

Just to be redundant, in Arizona a buyer broker agreement is NOT REQUIRED. That is because the listing agent contracts to pay the agent through the contract amount stated in the MLS. Consequently, the buyers agent knows, just like every buyer knows, the buyers agent is going to be paid by the seller.

Regardless, neither of the buyers actions justifies the unethical actions of the agent that you describe (and condone).

What you want to do is crucify an agent who, through negotiation, gave away some information about the client, which resulted in getting the house for the client that he wanted badly, and at a below list price he was happy with.

Yet you condone and advocate the deceptive tactics used by this buyer to screw the agent out of 1/3 of his pay. He worked with the buyer for 4 months, using a lot of his time. This was not a first time home buyer. He knew exactly what he was doing. He waited until time to write a contract then threatened to drop the agent and get someone else to write the contract if he did not "rebate" one third of his commission to him. That is not negotiation. That is coercion!!!

The agents choices were very poor.

• Give in to the threat and give up one third of his pay
• Say no to see if the buyers threat is a bluff
• If the buyer walks, then the agent has worked for four months for no pay
• The options if the buyer walks are to go for procuring cause
• In addition, file a civil lawsuit against the buyer for the commission, both options are time consuming and expensive, with no guarantee of success.

My bet is that had the agent refused, the buyer would have walked and this would be the chain of events.

• The agent would have contacted me to advise me of his procuring cause claim if the buyer buys the house without him.
• The new agent would have to contact me, and I would advise him that he may not get paid because of procuring cause by the other agent.
• That agent would probably walk, and
• the buyer would be left without an agent (or the sequence would be repeated).
• If the buyer asked to work directly with me I would inform my seller of what has occurred and advise that he not work with this buyer because he has proven by his actions with the other agent, to be not trustworthy
• if my seller elects to work with him I would advise him that he would owe me the "unrepresented buyer" fee as per our listing contract, plus he will probably owe the original buyers agent, who got dropped, a commission due to procuring cause.
• So the buyer may have lost the house.

Of course, given that you've advocated this practice in a previous post, I'm not surprised that you minimize it and condone it here.

If a rebate is something that you can't live without, then by all means hire an agent who advertises discounts. There is one in our area who offers 2/3 back. They exist all over the country, and use rebates as a business model.

But don't use 11th hour coercion tactics with threats on full service agents.

[yousah]

I'm always amazed at buyers who think that the best strategy for getting a lower price on a house is going after the listing agent's commission. Think about it- if the agent is charging their client 6% and you want 1% of that then you are asking for over 15% of their commission money. Do you think that will work as well as simply asking for another 1% off the asking price of the house?

The agent shouldn't have been rude to you but you did decide to play real estate agent yourself and bypass the 'norms' of the business and try to get too creative for your own good. Why not just place whatever offer you'd like on this house and see how it goes? There are also legal implications in some states when you start asking for what is essentially commission money if you aren't licensed. You are indeed asking for commission money from a listing agent and if you aren't licensed then that could be illegal no matter how you try and structure it.

You can always hire your own agent which is always a good idea anyway. But it would be obvious to the listing agent that you talked to that you are making sure that he or she won't get both sides of the commission and that probably won't put you in the best negotiating situation to begin with.

Next time, decide on what offer you'd like to place on a house and don't try playing games with someone elses money that is not yours. The advice from this skeptic guy does nothing more than get listing agents upset at you and will typically result in a less than pleasant experience. No seller wants to get involved with a buyer who tries all sorts of 'creative' garbage when there are normal buyers out there.

[parentologist]

Of course he's mad. He thought he had a double commission in his pocket, and you said no! How dare you!

He's just playing hardball with you. Tell him to cut his commission down to a little bit over the half he was entitled to, or would he rather that you bring in your own agent? Say it nicely, and he'll cut it down. He's just trying to take advantage of you, and trying to intimidate you. Don't let him. If he was expecting 6%, cut it to 3.5%. If he was expecting 5%, cut it to 3%. Don't fall for the line that his agency won't let him - a liitle more than half a loaf is better than half a loaf, or none.

Remember, there's always another house, and it may be even better than this one.

[yousah]

The agent never had a 'double' commission, he only had the commission that the seller agree to pay him. And guess what? That commission is none of anyone elses' business other than any cooperating brokers who are part of his MLS.

Remember, there's always another house, and it may be even better than this one.

Do you know how ridiculous that statement is? You are basically telling someone to buy another house simply because the listing agent won't pay them part of their commission. Fortunately, the vast majority of buyers are actually interested in buying a house that they like and are not interested in screwing up the transaction by going after someone else's money.

What's so funny about this whole strategy is that the seller and their agent might work something out between them with respect to the commission if they both are desparate to pull a transaction together. There are times where the agent reduces his or her commission to pull a transaction together and the buyer will not even be aware of it. It's when it gets forced that there becomes an issue with the buyer. So let things happen naturally by placing an offer on the house in amount that you feel is acceptable and see what happens.

It takes at least two motivated parties (buyer & seller) to keep a real estate transaction together. As soon as a buyer starts making threats towards a listing agent then it become obvious that the buyer can't be trusted to stay with the transaction. There's an expectation that the buyer will keep at these games down the line. There are too many ways for a buyer to continue to play games during the inspection phase of the transaction as well as during the mortgage qualification phase. That's when expereienced agents/brokers advise their seller-client to not accept an offer from someone who is more concerned about playing 'real estate' than actually buying a house.

A lot of this nonsense goes on with investors. You'll get all sorts of funky sales contracts with buyers putting phrases such as "and or assignees" down as the buyer's name or trying the latest financing option that some seminar guy told them to do. Experienced agents see right through these amateurs and are sure to steer their sellers away from these fools who do nothing more than alienate themselves during the transaction.

The majority of these buyers end up either not buying a house, or buying one under more 'typical' terms because sellers have the option of working with more typical buyers.

[moxfulder1]

This nicely shows why you should NEVER use a Realtor, even if you are on the buyer's side, unless compelling circumstances show otherwise. Your buyer's agent -- your supposed agent -- still wants the deal done and will reveal confidences just to get the deal done.

Originally Posted by Captain Bill

You are assuming that the agent is getting an additional 3% and in most cases that is not correct. Unrepresented buyers don't deserve any rebate from a listing agent. If the listing agent has a reduced commission for dealing with an unrepresented buyer, that savings goes to the seller. The buyers needs to negotiate for the house; not attempt to get into an agents pocketbook.
Most agents will prefer the buyer get their own agent.

Be careful what you ask for, because you may not like what you get; but then again, may not even know what you're getting. A good buyers agent is worth every penny s/he is paid because s/he will save the buyer money and keep them out of legal trouble. Here's an example of how a buyer who badgered his agent and got a 1% discount, but it cost him more than the discount. The numbers are modified because I don't want to identify the house.

$500,000 list price

The agent sends me a written $465k offer. We write a counter with $495k

Next the agent calls to negotiate verbally, and told me that his buyer was a pain, and he just wanted this deal done. He had been working with this guy for months; and he confided that the buyer, when making the offer, demanded a 1% rebate or that he would get another agent to write the offer. He said he wanted to refuse but really needed the money, and felt forced to go along.

So, regarding the offer he said the buyer wanted to increase his offer to $475k, but also told me that the buyer loved the house and wanted it badly. I told her that $495 was just about the bottom line for my seller because he had recently reduced the list price to $500k. I also told her that we have a lot of action since the price was reduced. Agent said he would call back.

He called back and said the buyer told him to offer $480, but also told her that if that doesn't work he is willing to go to $590k. Bingo---the brilliant businessman who coerced 1% from his agent just shot himself in the foot.

I knew my seller was anxious to sell and would probably have accepted $480 if it looked like there was no more room. But now I knew we could get $490, and while we may get a couple thousand more, by holding out longer, we could also blow the deal if we held out. We also knew the buyer was strong and was paying 50% down so we wanted to complete a deal with this buyer.

Therefore, my seller determined that for only a couple thousand it would not be worth the risk. (We did have a couple more showings but the feedback was negative due to the location of the home. That's why we had to have a price reduction to $500k)

So my Seller elected to counter with $490. I told the agent that our $490k was the bottom line, and also reiterated that since we had lowered the price there had been more action and the seller knows that we'll get another soon.

The buyer accepted the $490k.

The buyer was happy. He got the house he wanted. He also got a $4,900 rebate from the buyers agent. What he got that he wasn't aware of is that he paid $10,000 more for the house, so that 1% rebate actually cost him $5,100, and he never knew it.

But that's what he asked for. Beat an agent down and take away the incentive by getting into someone's pocketbook, and you get less service. Had the agent not been beaten down, he may have negotiated harder and may have gotten the price lower.

• One can argue that the agent violated his fiduciary duties.
• However the agent got the house for him at a price he was willing to pay, and got 1% rebate
• One can also argue that the buyer was using coercion to get a discount from the agent by threatening to get another agent to write the contract if he didn't succumb.

The bottom line is that the buyer was happy

• He got the house he wanted
• He paid the price he was willing to pay
• He got a 1% rebate
• He got the level of service that he paid for

The old adage is still true today" You Get What You Pay For

[jackmichigan]

Originally Posted by moxfulder1

This nicely shows why you should NEVER use a Realtor, even if you are on the buyer's side, unless compelling circumstances show otherwise. Your buyer's agent -- your supposed agent -- still wants the deal done and will reveal confidences just to get the deal done.

I think you must be from the Twilight Zone...not the X Files.