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.
It got you to make an offer didn't it? So, if that happened then it was a successful tactic. What do you want the agent to say? "My clients are completely unmotivated and will only sell the house if you buy it for $10K over asking." I don't say things like what you've described, but I want buyers to make offers. It gets them mentally invested to the point where a negotiation can begin and then hopefully we can find some middle ground and get the house sold.
It doesn't usually get me to make an offer. I make offers based on $/sqft and my confidence that the house will do well as a rental property. The crap the listing agent tells me is usually just that -- crap. As I have said, it has become much better in the last year now that the market is picking up.
What you're basically telling me is that "revealing confidential client information" (cancer, divorce, forced to move, etc.) is a successful sales tactic? Gotcha.
Here, that sort of confidential information (ANY confidential information) can ONLY be revealed if the agent has specific permission, in writing, from the seller to reveal that information, and that permission becomes part of the listing contract. An agent could lose their license for revealing it otherwise.
Here, that sort of confidential information (ANY confidential information) can ONLY be revealed if the agent has specific permission, in writing, from the seller to reveal that information, and that permission becomes part of the listing contract. An agent could lose their license for revealing it otherwise.
It's the same here. Doesn't mean that agents follow the rules, though. And I'm not about to start wearing a wire so I can report shady agents to the division. If the division wanted to clean up the profession, they could simply send "mystery shoppers" out into the marketplace. But they don't. This speaks volumes about the profession as a whole.
Actually, they do. Usually it has more to do with looking for violations of the Fair Housing Law, but not always.
Why? Because, as with all professions (even yours, I can say confidently even though you have not disclosed it, because it exists in ALL professions that are engaged in by humans), there are bad actors, and the industry does try to weed them out.
I've often wondered about the concept of a buyer's agent. In a real estate deal, both sides are incentivized to get the highest possible sales price to generate the highest possible commission. The seller of course wants to sell for the highest possible and a buyer's agent wants a the largest possible commission, so therefore, the highest price is really the goal for both sides.
You are certainly onto something, but yes, there are buyer's agents. Note that the commission is an agreement between the buyer and the buyer's agent and is specified in a contract between them, so it does not have to be a percentage of the sale price. Many agents will be willing to work on a flat fee basis, so I would recommend finding one that does and avoiding those who are resistant to that.
Indeed, I made the same points you did a couple of years ago here, trying to fine-tune a commission proposal for a buyer's agent I was planning on working with. As you can see, I didn't get any constructive feedback at all, mostly the same kind of defensiveness you see here, but the agent was fine with my proposal as it stood, which was:
3% * (maxPrice + minPrice - salesPrice)
The maxPrice and minPrice being negotiated at the start of the home search. You'll note the minus sign in front of the salesPrice means that the higher the salesPrice, the lower the commission, and vice versa. The rest of the formula is designed so that finding a home at minPrice would earn him the same commission he would have earned finding a maxPrice home under the traditional commission scheme.
The maxPrice was easy. We had $240,000 in cash from a California condo sale and did not want to exceed that. The minPrice effectively determines the base pay, so it's the more important number. We agreed upon a minPrice of $170,000, as in our Internet searches, we hadn't seen any homes we liked listed below $170K (we also wanted to be somewhat generous, since he was willing to go along with something that few other agents seemed willing to). We think it ended up working quite well, and I recall he ended up showing us 11 or 12 houses or so. He didn't try and push us in either direction, and gave us valuable information about each home that we hadn't noticed (he also provided us with the listings as he saw them, which sometimes disclosed buyer agent bonuses).
Note, there was one house we were considering that was across the street from a power station, and he didn't try and dissuade us from it, but did at least make the comment that he felt better that it was across the street rather than closer (once my wife did some research on EMF, we ruled that one out ourselves -- and that was a house that had a buyer agent bonus). Someone on the traditional commission might have steered us clear of that one completely. However, another time when we were talking about two houses and having a hard time saying which one we liked better, he pointed out that it would make sense to pick the cheaper one if we thought them comparable (we knew that already, of course, but it was a good reminder).
The final home price was $168,500, so we paid him 3% * ($240,000 + $170,000 - $168,500) or $7,245, more than the $5K he would have earned under the traditional scheme (had it ended up less than the standard 3%, our agreement was that he'd have submitted the difference to me as a rebate).
In terms of negotiating price, we think he only saved us a couple of thousand more than we might have on our own, but we still consider the extra money well spent. I consider myself pretty susceptible to suggestive selling, so it was a relief to not have to worry about it occurring during the home search, and arguably he saved us over $70,000. We moved into our home in last November and have been very happy with it, using the extra cash leftover to put in granite countertops and hardwood floors, the only things we felt the home was lacking. We still had money left over to pay off all our debt and purchase a new upright piano. We are planning on getting solar installed with the remainder.
We think the low price was likely do to the condition of the old floors and countertops (the previous owners did much of the work on the house themselves), that the garage had been partially converted (which was actually a plus for us, since I wanted a good room for a music studio), and that it was very far south in Austin (also a plus for us, as my wife is now a grad student at Texas State San Marcos). I can't really give our agent or the commission plan credit for identifying these as areas where what we wanted wasn't what the rest of the market wanted, as we noticed the significance after the fact. But it is the kind of thing I would hope buyer's agents would become good at noticing the longer they work under such a system. Value and quality are different things for different people, after all, so you don't always have to spend more to get what you really want.
Anyway, I had originally been hoping to win agents over to this plan, but I stopped caring about it so much after we moved into our home. As you can see, most of the agents here don't particularly take kindly to having flaws of the traditional commission system pointed out to them, but it is certainly possible to find those who have already recognized it. It takes some doing to find them, though. I imagine it would be easier finding someone willing to work for flat fee commission, since some agents already offer that.
Last edited by perfectlyGoodInk; 08-07-2013 at 04:48 PM..
I'd never forget watching TV and seeing a "Buyers agent" allowing her client to buy a house nearly $90,000 over comps and houses on the street. The house needed a lot of cosmetic work and it was a 2 story colonial in a mediocre neighborhood filled with one story ranch houses. FORTUNATELY, the bank wouldn't pay for a house that was that much over appraisal. The buyers agent told the sellers agent and they instantly accepted the banks price. The buyer was also a first-time buyer, new to the area and a single mom.
ALSO: I often watch the realtor shows and it's the same thing, "Oh it's cosmetic", "Don't think about the price", "I know it's over your budget, we can negotiate it". IDK about you, but I don't want a realtor to sell me on a home.
3% * (maxPrice + minPrice - salesPrice)
<>
The final home price was $168,500, so we paid him 3% * ($240,000 + $170,000 - $168,500) or $7,245, more than the $5K he would have earned under the traditional scheme...
I think your formula is an interesting concept, but I think it would work better if it covered an offering on just a single property. Otherwise--if you're concerned about being steered--aren't you building in an incentive to merely find the cheapest property? Cheaper does not necessarily mean the best value; and finding a cheaper house is not necessarily due to better negotiating skills (whereas a lower price might be if you were only considering one property).
I think the better way to assure yourself that you're not being swayed one way or the other (if you have that fear) is to pay a flat rate commission. To me, it seems like you overpaid...but as long as you were satisfied with that arrangement, that's great. Actually, I applaud you for trying to come up with something different.
By the way, I went back and read a bit of your previous post. I couldn't suffer through too many of the replies, though--it was embarrassing to read some of the defensive posts by some agents. People on both sides tend to forget that a commission agreement is a mutual agreement--no one is forced to accept any particular terms if they don't wish to.
It doesn't usually get me to make an offer. I make offers based on $/sqft and my confidence that the house will do well as a rental property. The crap the listing agent tells me is usually just that -- crap. As I have said, it has become much better in the last year now that the market is picking up.
What you're basically telling me is that "revealing confidential client information" (cancer, divorce, forced to move, etc.) is a successful sales tactic? Gotcha.
I've never done something like that, but if your client gives you permission to tell people about their situation in order to entice offers then there's nothing wrong with it. This goes back to my last post. You don't know what's gone on between the listing agent and the seller. Perhaps, they have permission to reveal these details. You're just assuming they don't because you think all real estate agents are scum bags. You've filled in the blanks with likely something you'd do yourself. Makes me wonder who is really the shady person in this scenario.
I think your formula is an interesting concept, but I think it would work better if it covered an offering on just a single property. Otherwise--if you're concerned about being steered--aren't you building in an incentive to merely find the cheapest property? Cheaper does not necessarily mean the best value; and finding a cheaper house is not necessarily due to better negotiating skills (whereas a lower price might be if you were only considering one property).
I think the better way to assure yourself that you're not being swayed one way or the other (if you have that fear) is to pay a flat rate commission. To me, it seems like you overpaid...but as long as you were satisfied with that arrangement, that's great. Actually, I applaud you for trying to come up with something different.
By the way, I went back and read a bit of your previous post. I couldn't suffer through too many of the replies, though--it was embarrassing to read some of the defensive posts by some agents. People on both sides tend to forget that a commission agreement is a mutual agreement--no one is forced to accept any particular terms if they don't wish to.
I see that it was a perceived win for him to pay $7245 for something that any good agent would have gladly done for $5100 or less.
You would have had to have been here two years ago for the original thread. LMAO
Last edited by MikeJaquish; 08-07-2013 at 08:04 PM..
I've never done something like that, but if your client gives you permission to tell people about their situation in order to entice offers then there's nothing wrong with it. This goes back to my last post. You don't know what's gone on between the listing agent and the seller. Perhaps, they have permission to reveal these details. You're just assuming they don't because you think all real estate agents are scum bags. You've filled in the blanks with likely something you'd do yourself. Makes me wonder who is really the shady person in this scenario.
Complete logical fallacy. You're the one projecting. I'm not going to throw my hypothetical clients under the bus. I'm just saying that listing agents tell me all kinds of wild stories (cancer, divorce, gotta sell for one reason or another.)
Sure, there could be an ironclad written agreement between the listing agent and the seller in every single one of these cases. But I REALLY REALLY doubt it. From what I've seen of the agents in my area, I'll just FSBO my house.
PS -- If appearing to be a "shady agent" helps sell a house (with a written agreement to disclose), what does that say about the industry? "You said you were having a tumor removed, right? Sign here, and I'll tell everyone who looks at your house that you have cancer and need to sell quick. What's the lowest you'll go, anyway? OK, initial here and I'll let it slip that you'll go for that price." You REALLY believe that sort of conversation happens for a significant number of listings? I think you're grasping at straws at this point.
Last edited by ScoopLV; 08-08-2013 at 01:36 AM..
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.
