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I am not the greedy one here. You are. You see every transaction no matter how simple as earned, even when its not.
If a sellers agent offers a stated rate of pay for bringing a transaction to a close, then the agent has earned the pay regardless of the number of hours worked.
From your statements, it seems to me that you may be playing philanthropist because you want to be popular with your friends and family at parties. That's wonderful. I'm sure they love you for that.
But at some point you will most likely run out of time. Let me see if I recall this correctly:
You have a full time job as a salaried attorney.
You did 50 real estate transactions for yourself in a year, and
Now you're doing free real estate transactions for your friends.
I don't know where you get that kind of time, but all that would change if you were to quit your salaried job and start running your own real estate business.
Let's assume a full service agent did the following last year:
20 Transactions at
$5,000 per transaction =
$100,000 in Gross Commission.
Less $30,000 overhead and marketing =
$70,000 Net pay before taxes (and before broker split)
Now let's assume that agent wants to be popular at parties so all his friends will send him more business. So, instead of working from his reputation of an excellent Realtor, he decides he will be more popular if gives everyone 1/3 of his pay. So he does that, and in the next year he still only does 20 transactions. At the end of the next year it looks like this:
20 transactions x
$3,316 per transaction (after the 1/3 rebate) =
$66,330 Gross Commissions (after rebate)
Less $30,000 overhead and marketing =
36,330 Net pay before taxes.
Looks like this agent gave a whopping 50% of his pay to his friends. I wonder if they will reciprocate and give him part of their pay so he can pay his bills???
So next year he decides that he needs to get back to $100k gross so he can net the $70k and pay the bills he couldn't pay this year; but still wants to be popular with his friends.
30 transactions required in order to gross $100,000 at $3,316 per transaction.
$3,316 per transaction, after rebate) =
$100,000 gross commission required
Less $30,000 overhead and marketing expense
$70,000 Net before taxes and broker split
BUT WAIT, THERE'S MORE: Right away he learned that he does not have the time to do 30 transactions and still provide full service that he wants to provide. Consequently, in order to provide full service at that rate, he had to hire a licensed assistant which is costing him $35k per year.
Subtract the $35,000 from the $70,000 and his Net (before broker split and taxes) was still only $35,000.
So that discount model with full service fails.
There are business models that rebate from 1/3 to 1/2 of their commission to the buyer. From the example above, it's obvious that this rebate model must be built on volume, which will require that the agent provide less than full service. One cannot provide full service at a discount, if they expect to stay in business and support a family .
My business model is that I get paid the amount the sellers agent states in the MLS.
I provide full service at full service pay
I don't have a minimum, whereby the buyer has to pay me extra if the seller doesn't meet my minimum. That's fair to my buyers.
And I don't offer rebates. That's fair to me, so I can keep my business operating and support my family.
So stop the name calling and explain to me why any non-licensed person has the right to any part of a licensed agents pay.
Quote:
Originally Posted by rjrcm Just curious, so if lawyers take on cases based on a contingency fee, usually a % of the awarded amount if they win, do they adjust the fee based on the amount of work they actually put into it? Less if it settles quickly, more if not?
I recall a story about a listing agent who got the home sold in one day at above list price, and the seller said, I think we should renegotiate the commission to half, because you didn't have to work hard to sell the house.
The agent said, I was thinking I deserved a bonus for selling so fast and getting you a higher price; but if you want me to work harder, then turn down the offer and put it back on the market at a higher price so it'll take 6 months to sell and I'll have had to do more work to earn the full commission.
Well, any commission-paid salesperson, yes.
OTOH, I am commission-paid, and close all my "sales" at zero cost to the client. My commission is delivered upon successful accomplishment of helping the client meet client-determined goals.
And, this worthy question languishes without an answer:
Quote:
Quote:
Originally Posted by rjrcm Just curious, so if lawyers take on cases based on a contingency fee, usually a % of the awarded amount if they win, do they adjust the fee based on the amount of work they actually put into it? Less if it settles quickly, more if not?
But I think Mark is a "salaried" employee and wouldn't have any experience with lawyers contingency fees. Which may explain why he doesn't understand real estate contingency fees.
We'll have to forgive him for that which he does not know.
But I think Mark is a "salaried" employee and wouldn't have any experience with lawyers contingency fees. Which may explain why he doesn't understand real estate contingency fees.
We'll have to forgive him for that which he does not know.
I do not work on contingency fee - Bill is correct, but I do fully understand it. However, the contingency fee structure is an extremely risky and extremely costly venture in law, it has pretty much zero relation to a real estate sale....ya both only get paid if closed, but the attorney will normally have hundreds of thousands of dollars invested in the case, where an agent will usually have, at most, a couple thousand...its not a realistic comparison..
The contingency fee arrangement is almost extinct except in a few small areas of law 1) medical malpractice - where the attorney reviews the case and determines its a slum dunk prior to accepting it 2) auto accidents - scum of the earth attorneys, 3) class actions suits - which should be outlawed as the ONLY winner is the attorney, and 4) Shareholder & Derivative actions - nearly identical to class action except usually instituted by someone attempting hostile takeovers of a board. Some other desperate attorneys will work on contingency but the good ones, generally do not.
At any rate - I fully understand contingency fee, and I fully understand commission. I simply reject your line of reasoning that your fee should not be negotiable, regardless of where it comes from....b/c whether you are honest with yourself to admit it or not, its the buyer paying the price. Every seller considers the fee when considering offers on their home. If the fee were less, a lower offer would net the seller the same amount...
You are within your rights to state it how you have...and I am within mine. I would never hire an agent at full pay to close a deal in which I did all the work. You think you earned it, or its yours b/c you got a license that took 7 days to "earn" - I dont - and I can assure you the general public agrees with me....you can ask that question 100x and get the same answer from the public 98x. The public works for their cash and are rightfully offended when an agent wants to help them part with their cash for doing nothing or next to nothing. (this whole line of doing nothing, is still predicated on the assumption that the buyer has already done all of the work and just needs a license number on the contract)
I work in a business...I see hard work everyday and what it takes to earn a dollar...I don't give money away just b/c the agent says that is how it is...if you dont like it, pound sand....I hold those who work for me to a higher standard - every dollar someone gets from me, or as a result from me, will be earned. Just putting your name on a contract where I did all the leg work does not mean you "earned" the money.
So we will agree to disagree and it wont matter to me anymore anyway. I will continue to do what I do and help people avoid agents that believe they deserve a big commission no matter what....its not perfect, and it wont impact many folks, but I will feel great about it and sleep well knowing that I made a difference to those that needed it.
by Marksmu.....You think you earned it, or its yours b/c you got a license that took 7 days to "earn" - I dont - and I can assure you the general public agrees with me....you can ask that question 100x and get the same answer from the public 98x.
7 days to gain the experience and knowledge that I have? Now you're really stretching it, and I would have expected better than that from you. What I've gained in experience and knowledge takes years.
And of course everyone thinks that everyone else charges too much and makes too much money; except themselves.
Ask the public and they'll tell you:
Airline prices are too high
Airline pilots are paid too much
Gas prices are too high
Light rail is too high
Attorney fees are too high
Plumber fees are too high
Electricians,
Contractors
Barbers
Beauticians
And so on, ad nauseum.
But ask the same individual if they are overpaid, and of course they aren't. The individual is underpaid. Everyone else is overpaid.
Quote:
Originally Posted by marksmu
So we will agree to disagree and it wont matter to me anymore anyway. I will continue to do what I do and help people avoid agents that believe they deserve a big commission no matter what....its not perfect, and it wont impact many folks, but I will feel great about it and sleep well knowing that I made a difference to those that needed it.
Fair enough, you can continue on your quest to be a white knight, popular at parties, and save all the minions from the arrogant, greedy real estate agents; and I'll continue to do what I do well, and that is to represent my clients to the best of my ability, using my skills and knowledge, and I'll sleep well knowing that I've provided the best service possible, and have been paid for my services.
And if someone thinks that finding a home is worth half of an agents commission, then I'll be happy to direct them to a discount broker who will provide them with the service they will be paying for. There is someone out there for everyone.
Simple because both parties come to an agreement of their own free will that, that is what would happen. Easy Peazy.
The listing agent determines the fee that is paid to the buyers agent, and that is a contract. If I try to renegotiate that commission with the listing agent, the answer will be a flat NO.
A buyer has no right to a commission because he is not a licensed real estate agent, and the buyer is not going to be able to negotiate a rebate from me. I provide full service, and expect to be paid what the listing agent has agreed to pay me.
Getting a rebate from an agent without a quid pro quo is a win/lose negotiation, which I don't believe in. I'm a win/win type person. You want to get something, you have to give something in exchange.
Therefore, if a buyer wishes to negotiate a rebate with me, (win/win style) I will certainly entertain it, but there must be something in it for me. I'm not a philanthropist like Mark, so I don't give away my earnings. I'm a businessman running a real estate business.
Let's say that the buyer wants a 1/3 rebate and the total commission is $6,000. Then I may consider giving that rebate with this quid pro quo:
The buyer pays me $2,000 up front, non-refundable; then another $2,000 in two weeks, non-refundable. This completely removes the contingency so that I'm guaranteed to be paid for my services whether the transaction closes or not. Then at close of escrow the full commission would be rebated to the buyer.
As you said things are negotiable, and there has to be something in it for both sides. Be willing to remove the contingency by paying me up front, and I may be willing to talk. I say "may" because it will depend on the circumstances, and what I would negotiate for in exchange may be different for different situations.
7 days to gain the experience and knowledge that I have? Now you're really stretching it, and I would have expected better than that from you. What I've gained in experience and knowledge takes years.
=
I never said you don't have the knowledge that takes years to get...I am confident your a capable well informed, good agent....I said in the examples I am using, your knowledge was not needed...just a license number - this whole conversation was based off the Original Poster saying he has done everything and just wanted to know if he could bring an agent in to collect a commission, on the stipulation that he would get half, otherwise he was just going to go it alone.
The answer to his question was yes...your statement was why he thought he should get half of his friends paycheck....
My answer to your answer is b/c the friend did not do ANY work and therefore does not deserve a full paycheck. I think, and the public will agree with me, that in these cases a rebate is a great compromise. EVERYONE wins, even you. You got money for doing next to nothing.
I have not questioned your skills, merely your stubborness to change/compromise. You seem to have one model - full service only - anyone who wants anything different than that needs to look somewhere else. That is fine, I do not criticize you for that - but that model does not work for all consumers. It certainly did not work for me. I felt ripped off, and my last purchase was expensive enough that it motivated me to get my own license. I do not just hand $13,000 over to a friend for no reason, but b/c of the current system I had to do just that.
I have not questioned your skills, merely your stubborness to change/compromise. You seem to have one model - full service only - anyone who wants anything different than that needs to look somewhere else. That is fine, I do not criticize you for that - but that model does not work for all consumers. It certainly did not work for me. I felt ripped off, and my last purchase was expensive enough that it motivated me to get my own license. I do not just hand $13,000 over to a friend for no reason, but b/c of the current system I had to do just that.
Thank you for not questioning my skills and knowledge because my formal education in real estate began in 1974, as did my beginning of rehabbing homes
Actually, my non-willingness to change my business model is not a stubbornness, as you choose to call it, because there is no reason for me to change. It is only your opinion that a model should be something else, that suits you; but that opinion does not matter to me, and will not affect my business model.
I have a business model, and it is a business decision to operate as a full service company. I have no need to change.
I will not get the listing for every appointment that I go on; no matter what my commission fee.
Not every buyer who contacts me will end up selecting me.
And I will not choose to work with every buyer and seller that I speak with.
I prefer to, and will, work with the buyers and sellers who understand what I bring to the table, and are willing to pay me for my service.
I think enough has been said on this subject. I have nothing more to add.
Location: Southern California. I'm in the market for a new home and looking for ways to sweeten the deal. I noticed many builders offer co-op commission out of their marketing budget if a real estate agent brings a buyer to the property. I have a friend who is an agent. Is there anything illegal if I ask him to represent me when I buy the house, he gets the co-op commission from the builder and we split the co-op commission at a predetermined rate (kickback to the buyer)? Thanks!
Just another consideration, most builders require the agent to be with you on the first visit to their sales office to qualify for the commission. Will your friend go with you to all your builder visits? You may not be able to bring him into your deal after you select the home.
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