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Old 12-08-2012, 01:34 PM
 
Location: Kailua Kona, HI
3,199 posts, read 13,404,836 times
Reputation: 3421

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1. We are paid by the seller according to his listing agreement with his broker because we helped facilitate a transaction to sell his property.
2. Our primary obligation is to represent YOUR best interests - what ever those may be.
3. Why do people get in a twist because realtors get paid for what they do according to industry standards? Don't you get paid for what you do at work? does that cost not factor, in some way, to the final "cost" to the consumer, of whatever it is you do or produce? this always baffles me.
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Old 12-08-2012, 01:34 PM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 14,786,427 times
Reputation: 3876
Quote:
Originally Posted by Bill Keegan View Post
Completely untrue. Let me correct it for you.
Buyer, you are being represented (if you have signed a representation agreement) by someone who has agreed to represent you, and to work in YOUR best interest, including to negotiate a purchase under the best terms and conditions possible for YOU. Your representative will be paid by the agent of the seller, if you and your agent have chosen to use the most commonly used compensation agreement. You are free to choose another compensation agreement if you prefer.
Is it possible that people who "think" that Realtors would violate their fiduciary duties and negotiate a "higher" price for their buyer, just for a few extra dollars commission, are reflecting how they would honor their fiduciary duties if they were in the same position?

Or could it be that they are envious because they "think" all Realtors are overpaid and getting rich?

Or are they just the win/lose type of person who "thinks" the Realtor is not doing her job if she is not a pit bull that tears the other party apart.

Or is it that they have no concept of what it takes in a negotiation with the other side of the transaction in order to get the "best possible" deal without the deal falling apart for their buyer, and to slice the pie so that everyone is happy with their piece?

Just wondering.
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Old 12-08-2012, 01:45 PM
 
Location: Martinsville, NJ
6,175 posts, read 12,946,157 times
Reputation: 4020
Quote:
Originally Posted by KonaKat View Post
1. We are paid by the seller according to his listing agreement
Just a technicality, but...

In NJ, we are paid by the sellers broker, NOT by the seller. The seller is paying her broker to get the property sold. To facilitate the process of getting it sold, the broker has chosen to offer compensation to a broker who brings a buyer to the closing table.
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Old 12-08-2012, 02:00 PM
 
Location: Salem, OR
15,584 posts, read 40,464,656 times
Reputation: 17498
Quote:
Originally Posted by accufitgolf View Post
I was of the belief that in some locales, they automatically reassessed based on selling price. Am I incorrect?
We don't do it that way in Oregon.
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Old 12-08-2012, 02:10 PM
 
Location: Kailua Kona, HI
3,199 posts, read 13,404,836 times
Reputation: 3421
Quote:
Originally Posted by Bill Keegan View Post
Just a technicality, but...

In NJ, we are paid by the sellers broker, NOT by the seller. The seller is paying her broker to get the property sold. To facilitate the process of getting it sold, the broker has chosen to offer compensation to a broker who brings a buyer to the closing table.

Yes, you are correct of course - very good definition.
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Old 12-08-2012, 02:44 PM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 14,786,427 times
Reputation: 3876
Quote:
Originally Posted by Bill Keegan View Post
Just a technicality, but...

In NJ, we are paid by the sellers broker, NOT by the seller. The seller is paying her broker to get the property sold. To facilitate the process of getting it sold, the broker has chosen to offer compensation to a broker who brings a buyer to the closing table.
This is very good and correct.

Allow me to add how I believe a sellers broker can hurt the seller.

In the competitive market for listings there are agents who will take a listing at a lower than the prevailing rate within that area. They may lower their fee by say, 1%.

However, what they do, and the seller may not be aware of this, or may be aware but not realize how it will hurt him, is to take that 1% out of the buyer agents commission. The listing agent didn't reduce their own commission at all.

Many buyer agents have a buyer broker agreement with the buyer that calls for a minimum commission. If the seller is offering less than the minimum, the buyer has to pay the difference. The buyer agent has to show the listing to the buyer and advise him that it will cost him 1% in commission. Consequently, the buyer may elect to pass up that house. The less traffic the seller has through his house, the less possibility of selling it for top dollar in minimum time.

I am seeing this. Recently I saw a $100,000 listing offering 1% commission to the buyers agent. I called and the agent confirmed that was correct.
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Old 12-08-2012, 05:30 PM
 
7,280 posts, read 10,960,819 times
Reputation: 11491
Quote:
Originally Posted by Bill Keegan View Post
Completely untrue. Let me correct it for you.
Buyer, you are being represented (if you have signed a representation agreement) by someone who has agreed to represent you, and to work in YOUR best interest, including to negotiate a purchase under the best terms and conditions possible for YOU. Your representative will be paid by the agent of the seller, if you and your agent have chosen to use the most commonly used compensation agreement. You are free to choose another compensation agreement if you prefer.
And you see in that scenario no conflict of interest and rely on the good faith of the agent and that they could care less about their compensation? If this were true, then why is it that other professions do not use the same methods? Even in almost all sales transactions (not including retail here,the Macy's bill isn't significant enough to consider) no buyer would accept representation from someone being paid by the seller.

Your answer implies very directly that the ethics and good faith and integrity of the real estate industry is higher than other professions. I don't believe that.

Would you then say that a buyer could pay for the commission of a seller agent and that the seller agent would work in the best interests of the seller?

I ask because the financial arrangements for such a commission model can be incorporated as easily as the current model.

How many sellers would trust their seller agent to serve them instead of the buyer if the buyer was paying the seller agent?

If the scenario doesn't work both ways. it doesn't work and the conflict of interest exists. Saying that someone is going to set aside their own financial interests when they go home at night and maybe the kids are hungry, spouse needs a car, mortgage has to be paid and gas needs to be put into the car isn't realistic. I know you'll probably disagree but that is ok.
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Old 12-08-2012, 07:43 PM
 
Location: Martinsville, NJ
6,175 posts, read 12,946,157 times
Reputation: 4020
Quote:
Originally Posted by Mack Knife View Post
And you see in that scenario no conflict of interest and rely on the good faith of the agent and that they could care less about their compensation? If this were true, then why is it that other professions do not use the same methods? Even in almost all sales transactions (not including retail here,the Macy's bill isn't significant enough to consider) no buyer would accept representation from someone being paid by the seller.

Your answer implies very directly that the ethics and good faith and integrity of the real estate industry is higher than other professions. I don't believe that.

Would you then say that a buyer could pay for the commission of a seller agent and that the seller agent would work in the best interests of the seller?

I ask because the financial arrangements for such a commission model can be incorporated as easily as the current model.

How many sellers would trust their seller agent to serve them instead of the buyer if the buyer was paying the seller agent?

If the scenario doesn't work both ways. it doesn't work and the conflict of interest exists. Saying that someone is going to set aside their own financial interests when they go home at night and maybe the kids are hungry, spouse needs a car, mortgage has to be paid and gas needs to be put into the car isn't realistic. I know you'll probably disagree but that is ok.
Actually.....

It works for rentals. In my market, it is quite common for a property to be listed for rent, with the TENANT paying the agents commissions. In my immediate market area of five towns, there are currently 134 residential properties available for rent. Of those 134, 64 require the tenant pay the commission, and 70 have the landlord paying the commission.


Here's the thing. While I disagree with your apparent opinion that most buyer agents are actively working against the best interests of their buyer clients, I happen to agree that the buyers ought to pay for their own agents out of their own pockets. It would make the compensation of buyers agents a more transparent transaction, it would remove the stigma of "conflict of interest," it would cause buyers to be more selective about their choice of agent. It would, in my opinion, be positive for almost all concerned. But banks don't seem to want to allow that cost to be wrapped into the transaction, and buyers don't want to shell out what they see as "extra" money at the time of transaction, especially if they can't finance that cost along with the house purchase.
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Old 12-09-2012, 09:52 AM
 
Location: Hernando County, FL
8,489 posts, read 20,660,904 times
Reputation: 5397
Quote:
Originally Posted by Mack Knife View Post
This whole nonsense of an idea that the seller agent (listing agent, might not be the same) is paying the buyer agent has a lot of bad consequences. Some are obvious, such as entering into a purchasing process with your supposedly on your side buyer agent being paid by the very people who benefit financially from you paying more, not less for the house to that same principle being applied to the buyer agent. A buyer agent that benefits financially from you, the buyer paying more for the house, not less and somehow that is a good thing.

Well, think about this:

The seller is in many cases if not most, going to be able to deduct the cost of the seller/listing agent commission from any capital gains and thus won't be taxed on that money.

Now it comes to you, the buyer. Since as buyers are so often told and chided for if they dare to disagree, that the services are provided at no cost to the buyer, what happens at tax time?

So here are some questions and lets see how much sense they will make and how they affect buyers:

When a house is sold, it often triggers a reassessment for tax purposes. We are told that the tax assessment represents the market value of the house barring any factors such as market pressures that affect the selling price. There are some standard exemptions in certain states, counties or municipalities but leave that alone here, it doesn't factor in.

What is one factor that affects market value? The selling prices of homes in general because as home prices rise, so do tax assessments. Following?

So the big question is:

Since the commission paid to the buyer agent comes from the seller/listing agent (and full circle from the seller as agents often say), does the buyer obtain a benefit or liability from this supposed "free" buyer agent service?

Now before you answer that simple question, isn't it true that the sales price of the home is NOT recorded with a consideration for the buyer agent commission? In other words, the recorded sales price is not reduced to account for the commissions paid but the seller is allowed (in most cases) to deduct the commission for tax benefit purposes?

So, doesn't this have the effect to increase the sale prices and isn't the buyer going to pay higher taxes for the entire time they own that house? I say yes, the buyer will pay more property taxes because the recorded sales price is not discounted for any commissions as far as the tax assessor is concerned. All of the sales in the area contribute to factoring the market values and therefore the tax assessments.

In the end, the buyer pays more tax. The buyer will pay that tax for as long as they own the house.

So buyer, you are being represented by someone who is paid to get you to pay as much as possible for the house, then your property tax assessment increases because that entire seller/buyer agent commission is taxed as part of the property value.

Aren't free things great?
Since this same post comes up repeatedly I just cut and pasted from a previous thread so the median home price is a little high. That means the net extra the agent would see in my example would be even less.

Quote:
Let us use median price figures to see how much more an agent might make by pushing a buyer to pay more or the seller to take less.
Median home price of around $213,000 in the U.S. I believe. Lets say a buyers agent pushes a buyer to pay $20,000 more than they should or a sellers agent pushes the seller to take $20,000 less than they should.

That is almost 10% of the list price so it would be a big push for an agent to do this.

Now yes, this would be $1200 extra commission if the buyers agent pushed for the $20,000 more. Split between 2 agents and the respective brokers each agent would look to get about $300 more from the transaction.

Now if we look at the other side, the agents would look to take around $300 less each if it went $20,000 the other way.

Here is the problems with your weak theory. Firstly most agents are in business and want to build a reputation to stay in business and get more referrals. Making an extra $300 on a sale but having an unhappy client is not going to build a business. If an agent makes $300 less on a sale but has a happy client that refers one other buyer or seller then they can be looking at an extra $6300 down the road based on 3% of the median sale price of $213,000 from that referral.

What makes more good business sense to you?
As far as the buyer paying for it for years to come, the problems with your theory is many. First off in many area home value for taxation purposes are based off comparative sales for the area, not the single home. This would include FSBO homes, short sales, foreclosures, distress sales, etc. You have been provided other answers to dispel your theory in previous posts so no need to revisit them..
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