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Old 03-27-2015, 05:15 PM
 
Location: NC
9,355 posts, read 14,014,289 times
Reputation: 20872

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As a consumer, I would like to see all residential listing agencies offer listing services on a flat fee schedule. Photographers, copy writers, routine office actions common for all properties would be available for the same price for most properties. Specialized services would be offered at additional cost, as requested. Negotiation help at additional cost. Rarely would the total fee run more than 0.5% of the final sales price (perhaps with a minimum or $1000).

The buyer's agent would receive the most compensation but the buyer would do the paying. So much per hour of contact time, another payment for negotiations, another for inspection/discovery services, etc. The buyers agent might receive up to 3% when all was totalled, but he would be paid for every customer he helped.

If each agent was paid according to his value to the seller or buyer, everything would be transparent. No longer would a consumer who had ready money and who knew what he wanted be expected to cover for all the lookie-lous who failed for some reason to carry through on a purchase after exhausting their buyers agents. New agents would probably be more willing to work with the less experienced buyers as ways to establish future credibility and referals.

Just a thought.
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Old 03-27-2015, 05:25 PM
 
18,533 posts, read 15,514,456 times
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What I don't get is why it should be a percentage of the house value and not a fixed fee. Are we really to believe that a $1 million house takes 20 times the work to sell (and all the other stuff) as a house priced at $50k?
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Old 03-27-2015, 05:40 PM
 
Location: Salem, OR
15,539 posts, read 40,313,582 times
Reputation: 17422
Quote:
Originally Posted by ncole1 View Post
What I don't get is why it should be a percentage of the house value and not a fixed fee. Are we really to believe that a $1 million house takes 20 times the work to sell (and all the other stuff) as a house priced at $50k?
No you aren't to believe that. A $1M home has more risk for an agent for loss. High risk=high reward.
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Old 03-27-2015, 05:41 PM
 
Location: Salem, OR
15,539 posts, read 40,313,582 times
Reputation: 17422
Quote:
Originally Posted by luv4horses View Post
As a consumer, I would like to see all residential listing agencies offer listing services on a flat fee schedule. Photographers, copy writers, routine office actions common for all properties would be available for the same price for most properties. Specialized services would be offered at additional cost, as requested. Negotiation help at additional cost. Rarely would the total fee run more than 0.5% of the final sales price (perhaps with a minimum or $1000).
This is a bad business model guaranteed to fail. The math won't pencil out for profits.
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Old 03-27-2015, 05:58 PM
 
Location: NC
9,355 posts, read 14,014,289 times
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So Silverfall, please educate me. What is so expensive about listing a house? Pictures $200. Visiting the client at the house once, $200. MLS plus pushing advertising to other sites maybe $400? Rent spread out among a number of clients = ? Computers/phones etc. ? Add 10% profit? Another 10% 'buffer'? Don't forget, there is no true risk because every thing is paid via the fees. The only risk is in not doing a good enough job to attract clients. In a downturn, if necessary, change the fees.

As it is now, for an average 200K home the listing agency would receive $5000. Where does that go? I'll bet a lot of that goes to listing houses that don't sell. So if I have a 'saleable' house why should I pay for the listing agency's risk?
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Old 03-27-2015, 06:01 PM
 
11,025 posts, read 7,798,823 times
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Quote:
Originally Posted by MikeJaquish View Post
It was an academic question. Actually, I applaud you for offering replies that indicate you have engaged your gray matter.

One of the common themes on this forum is the perception of conflict of interest created when brokers are paid by the "opposing" side and make more money the more their client pays the other side.
You are indicating that you have created a scenario that you believe offers a more attractive conflict of interest.

There are interesting dynamics at play, worthy of conversation, IMO.


Reasonable questions:
  1. How would you propose to compensate a buyers' agent who gets the buyer the house at full price, but with $5000 in closing costs? Would you penalize the agent, who currently would receive commission at the full contract price of the house?
  2. How would you compensate the agent who helps the buyer succeed, when the seller underprices the house to get multiple offers, and the buyer pays over list price, but under appraisal price?
  3. #2 raises another good point. Would contract price vs. appraisal value not be a better basis for compensation? Appraisal reflects comparable sales. List price all too often represents mood, love, listing agents "Buying the Listing," and dreams.
Honestly, I think your plan is too complicated for many "Real World" situations.


(Disclaimer for the trolls: I am not "defending" the current most common model of compensation, nor any commission, nor any commission rate.)
Your response and questions are, indeed reasonable - I'll do my best...

1. Closing costs should be treated as part of the net sale price for purposes of determining compensation. $500,000 straight cost or $505,000 with the seller putting $5,000 into the closing expenses of the buyer both mean the buyer is bringing 500k to the table.
2. I'll refer to my earlier comment of "all real estate is local" for this one; it doesn't happen here. In areas where it does it would need to be accounted for.
3. The problem here is which appraisal price? How many appraisals would be needed to satisfy? Have you ever seen two identical? But the mood, love, buying-the-listing and dreams are real and affect prices every day even if they don't make sense.

Another consideration may be an hourly fee with a negotiated savings bonus. Almost anything that rewards an agent for saving his buyer money is preferable to the ordinary status quo which accomplishes the opposite.
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Old 03-27-2015, 06:05 PM
 
11,025 posts, read 7,798,823 times
Reputation: 23702
Quote:
Originally Posted by MikeJaquish View Post
Additional thought:


I "grade" properties for clients' preferences and needs. I tend not to initiate showings on properties that get less than an 80/100. (Of course, I will show them upon client request.)

Often, I may have 2, or even 3, clients looking for similar properties.
Let's say a house is well-priced to the market, will have hot interest from buyers, and will go fast near list price with multiple offers.
The house is a 90 for Joe and I expect a 2.4% commission from the listing agent.
Same house is a 90 for Joann and I would have a calculated commission, and little chance of success.

Ethically: Who should I show it to first?
Does my choice matter?

Realistically:
Did Judy or Joe build a stronger profile for success in purchase?

(Disclaimer for the trolls: I am not "defending" the current most common model of compensation, nor any commission, nor any commission rate.)
I think you've ignored the part of the proposal that indicates all funds directed by the listing agreement to the buyer's agent would be paid and would be augmented by the commission arrangement if a saving was realized. You'd just have to follow the same moral compass you use today with your rating system.
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Old 03-27-2015, 06:11 PM
 
11,025 posts, read 7,798,823 times
Reputation: 23702
Quote:
Originally Posted by Brandon Hoffman View Post
Your formula makes negotiation the primary function of the agent and the payscale becomes weighted for you as such. Not everyone has your same mindset. Many people feel they can negotiate just fine on their but want the agent to assist in showings, scheduling, and knowledge in other areas.

In my opinion, my value and most agents value comes in the knowledge of the process, contract, and area. I help put people in homes at a price they chose, reduce their risk, and manage the process for them. That's my value.

Interestingly enough, and I appreciate your thought process, but as an agent I feel your process punishes the agent for something mostly out of their control.
Fair enough, but many buyers have sufficient knowledge of the "process, contract, and area" but are excluded from first hand participation in the negotiation process by having a pair of agents insinuated between the buyer and seller. In addition, in my area it is customary for lawyers to prepare contracts and provide representation at closing where the agents disappear into the background waiting for their payday. I'd rather "pay for performance", with the performance strongly weighted towards saving money. Negotiation is not for everyone, but a good negotiator should not have his commission reduced by his success.
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Old 03-27-2015, 06:47 PM
 
Location: California
6,420 posts, read 7,639,289 times
Reputation: 13964
Quote:
Originally Posted by kbutler1 View Post
Believe it should be a flat cost for services vs. % of house value.


Americans will have stand up for themselves to demand righteous change! It isn't rocket science or brain surgery to sell a house. The sales people will try to self promote so called expertise who are so highly trained that only by paying them a commission can you sell a house. Just go to your local real estate lawyer or title company to get the paperwork. Pay yourself instead of the husslers.
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Old 03-27-2015, 07:04 PM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 22 days ago)
 
Location: Cary, NC
43,177 posts, read 76,826,386 times
Reputation: 45533
Quote:
Originally Posted by kokonutty View Post
I think you've ignored the part of the proposal that indicates all funds directed by the listing agreement to the buyer's agent would be paid and would be augmented by the commission arrangement if a saving was realized. You'd just have to follow the same moral compass you use today with your rating system.
"Does it matter?" That was the "moral compass" question.
I think it does, and would have to consider how to handle it. But, I do the same now, and work hard to honor commitments to both parties. Sometimes it is easier than other times.

I don't think I am actually ignoring the aspect of your plan. It was unclear to me in your post.
You say the commission amount will be deducted, not augmented, but I guess it would be an augmentation.
It is a weakness to not reward an agent for helping a happy client succeed with a purchase above list price. It happens too often. My last 3 or 4 listings have gone with multiple offers, and a couple of them above list price. One in particular, I think that the agent did a very good job for his buyer.

The appraisal to use as a basis for value vs. contract price would be the buyer's appraisal at purchase.
Nothing makes me feel better than having an appraiser put a value on a property that is 3-5% higher than the buyer is paying. Most appraisals are from a disinterested, neutral third party without a vested interest in the price.
I had one that was appraised at 9% over contract price, and that was great. I think the buyer sincerely believes, as do I, that I was working in his best interests.

When the buyer has the seller include the washer, dryer, and refrigerator, "at no additional value," would you expect to see the higher price a seller demands in return as a small failure in negotiations by the buyer's agent?
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