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Let's just start with the basic reality that real estate agents generally dislike, often disparage and sometimes disfavor (e.g., an unrepresented buyer in a multiple offer situation) unrepresented market participants. I must say that this basic reality not only frustrates, but also confounds, me. I get it to the extent that if everybody hires an agent, there is more business to go around. And I'm sure that some unrepresented parties are entirely unsophisticated (I see the analogue in my profession as well). But some unrepresented parties are every bit as competent (I would say "more," but I don't want to offend anybody ) as any given real estate agent, and sometimes (e.g., a listing agent fielding an offer from an unrepresented buyer) it may actually be financially beneficial for an agent to deal with an unrepresented party.
So my question is... why? Why do listing agents not understand that an unrepresented buyer means that there is an extra 3% (number may vary) of the pie to go around? (Maybe they understand, but why do they object to a transaction where they could pocket an extra 2-3% of the deal value--which is a true windfall if there ever was one?) Why do some listing agents thumb their noses at FSBOs? Whether and how much of it goes to whom is beside the point (and a hopeless exercise, as far as trying to allocate it between buyer and seller)--nobody is worse off, and at least one of the three parties involved is better off, when one side is unrepresented.
Let's just start with the basic reality that real estate agents generally dislike, often disparage and sometimes disfavor (e.g., an unrepresented buyer in a multiple offer situation) unrepresented market participants. I must say that this basic reality not only frustrates, but also confounds, me. I get it to the extent that if everybody hires an agent, there is more business to go around. And I'm sure that some unrepresented parties are entirely unsophisticated (I see the analogue in my profession as well). But some unrepresented parties are every bit as competent (I would say "more," but I don't want to offend anybody ) as any given real estate agent, and sometimes (e.g., a listing agent fielding an offer from an unrepresented buyer) it may actually be financially beneficial for an agent to deal with an unrepresented party.
So my question is... why? Why do listing agents not understand that an unrepresented buyer means that there is an extra 3% (number may vary) of the pie to go around? (Maybe they understand, but why do they object to a transaction where they could pocket an extra 2-3% of the deal value--which is a true windfall if there ever was one?) Why do some listing agents thumb their noses at FSBOs? Whether and how much of it goes to whom is beside the point (and a hopeless exercise, as far as trying to allocate it between buyer and seller)--nobody is worse off, and at least one of the three parties involved is better off, when one side is unrepresented.
I don't mind paying another agent to shoulder some liability.
Greed for grabbing all the marbles has undone more than one agent.
I don't mind paying another agent to shoulder some liability.
Greed for grabbing all the marbles has undone more than one agent.
Yeah, but I'm not talking about greed causing someone to do something unethical. I'm not saying agents should talk the other party into being unrepresented. I'm asking why the opposite happens--why agents try to talk the other party into being represented when (a) they don't want to be and (b) bringing another agent to the table takes a significant amount of money off the table ($15,000 in a $500,000 deal).
[As an aside, 3% is an outrageous cut for somebody who simply acts as a transaction broker. I understand why agents charge that (when you are showing the house or taking your buyers on numerous house-hunting adventures, etc.), but that is an obscene amount of money for a non-lawyer (or even a lawyer) to basically just do some paper-pushing (with fill-in-the-blank contracts), which agents sometimes recommend.]
I think it's because liability is such a large potential downfall in our business. In my experience, I've been told in many different ways by brokers and attorneys that it is just too easy to overstep while trying to be a good guy, doing all that can be done to make the transaction go thru for everyone's benefit and satisfaction. When I consider the potential of being sued or even losing my license, it's just easier to suggest that the person get his/her own agent. I'm probably not explaining it as well as I should but hopefully you see my point.
I don't know what you think the differences are between transaction agents and single agents but I can assure you that the amount of work each type of agent performs is essentially the same, be it on the selling side or the buying side. If one is obscene, so is the other and if one is deserved, so is the other.
I think it's because liability is such a large potential downfall in our business. In my experience, I've been told in many different ways by brokers and attorneys that it is just too easy to overstep while trying to be a good guy, doing all that can be done to make the transaction go thru for everyone's benefit and satisfaction. When I consider the potential of being sued or even losing my license, it's just easier to suggest that the person get his/her own agent. I'm probably not explaining it as well as I should but hopefully you see my point.
I don't know what you think the differences are between transaction agents and single agents but I can assure you that the amount of work each type of agent performs is essentially the same, be it on the selling side or the buying side. If one is obscene, so is the other and if one is deserved, so is the other.
I'm not talking about "transaction agents" or "dual agents" or anything like that. I believe that should address the concern in the first paragraph. As for the compensation issue, my point was that a real estate agent adds very, very little value to a sophisticated buyer or seller if the agent is only there to help get the paperwork done. An agent earns his/her keep in the hours spent long before the transaction gets done--so to the extent that agents want an unrepresented party on the other side to hire an agent in order to make the transaction go smoothly or whatever, a 3% ask is crazy unreasonable. Which gets me back to my question: if a listing agent (to take the quintessential example) already has the buyer on the hook and can make more money without a buyer's agent involved, why would a listing agent ever recommend the buyer hire an agent?
[Edited to add: I see how my language might have been confusing. When I said "transaction broker," I wasn't using a term of art--I was simply using those words descriptively to refer to a person who doesn't do the prep work on a listing or the hours driving a buyer around, etc., but simply hops into the mix to be a middleman in the paperwork phase.]
Last edited by southernsmoke; 05-29-2015 at 03:51 PM..
There are several reasons why some agents behave that way.
1) They have had bad experiences in the past with unrepresented sellers who don't know what they are doing. It puts an agent in an undisclosed dual agency situation in helping the buyer along, potentially.
2) They have never worked with an unrepresented buyer and it scares them.
3) They are long time agents and don't want to business differently. Change is hard.
4) They listen to too many scripts about how to turn prospects into clients, so they try and sell people on buyer agents.
5) They think if they encourage unrepresented buyers that it means buyer agency will implode and agents won't be around for very long. They don't want to contribute to the demise of their own profession.
Yeah, but I'm not talking about greed causing someone to do something unethical. I'm not saying agents should talk the other party into being unrepresented. I'm asking why the opposite happens--why agents try to talk the other party into being represented when (a) they don't want to be and (b) bringing another agent to the table takes a significant amount of money off the table ($15,000 in a $500,000 deal).
[As an aside, 3% is an outrageous cut for somebody who simply acts as a transaction broker. I understand why agents charge that (when you are showing the house or taking your buyers on numerous house-hunting adventures, etc.), but that is an obscene amount of money for a non-lawyer (or even a lawyer) to basically just do some paper-pushing (with fill-in-the-blank contracts), which agents sometimes recommend.]
It is sort of a package deal. If the customer perceives that they have been wronged, have been taken advantage of, it can be a nightmare for the agent. Our licenses increase our exposures.
I closed a listing recently with an unrepresented buyer. He was a former licensee and former Broker in Charge as a one man show.
He had a clue. I was OK with it.
I have also looked people right in the eye and told them to go get an agent or attorney, and I will do it again when I sense the need to do so. Unapologetically. I am not going to embrace the liability that comes with knowingly working with someone who needs support, and reveals that right up front in conversation.
Sometimes that stipulation to get representation is protective of my sellers, and that protection is a large portion of why they hired me.
So my question is... why? Why do listing agents not understand that an unrepresented buyer means that there is an extra 3% (number may vary) of the pie to go around? (Maybe they understand, but why do they object to a transaction where they could pocket an extra 2-3% of the deal value--which is a true windfall if there ever was one?)
In my experience, the principles always want the commission savings themselves. Nobody wants to share the savings with the agent. The agent has little incentive to pursue a double-sided deal when the parties will almost certainly attempt to chip away at the glistening pile of commission dollars before all is said and done. After all, as you noted, they just filled out some paperwork and maybe drove around a little bit so why should they get a share of the extra booty.
In my experience, the principles always want the commission savings themselves. Nobody wants to share the savings with the agent. The agent has little incentive to pursue a double-sided deal when the parties will almost certainly attempt to chip away at the glistening pile of commission dollars before all is said and done. After all, as you noted, they just filled out some paperwork and maybe drove around a little bit so why should they get a share of the extra booty.
Well, to be fair, I do agree that the agent doesn't really deserve much of the commission savings at all (after all, any increased commission is the literal definition of a windfall), but I know for a fact that they often keep at least some of it anyway. Regardless, though, as I said, who "gets the commission savings" is somewhat beside the point. The fact is that at least one of the parties does, and none of them are worse off.
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) as any given real estate agent, and sometimes (e.g., a listing agent fielding an offer from an unrepresented buyer) it may actually be financially beneficial for an agent to deal with an unrepresented party.
