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"Discount" usually refers to fees, implies a standard commission, not a service model. "Discount" tends to be a price-fixing term.
So, I am glad to see you focused on service and competence, rather than fees.
The two are completely separate issues and should not be commingled in conversation.
I can work for free and still be in a fiduciary role with an expected level of service to my client, and exposure to reprimand and discipline if I fail to deliver.
I see plenty of old school knuckle-draggers tossing out "discount" because they feel threatened by any agent who competes on fee, regardless of quality of service.
Many agents working on tighter margins work circles around a lot of the throwback, circle-the-wagons old dogs.
I didn’t make up the slang, so why the slang includes “discount,” in it I couldn’t tell you but, this is how the industry views, uses and refers to discount brokers. If somebody wants me to discount my commission, my services would have to be cut too.
I didn’t make up the slang, so why the slang includes “discount,” in it I couldn’t tell you but, this is how the industry views, uses and refers to discount brokers. If somebody wants me to discount my commission, my services would have to be cut too.
I am "the industry," and disagree with your take, but I do see your terminology in play from some old dogs, and passed down in inbred firms to poorly trained agents.
Of course, old dog thinking such as you propose is why we are routinely in the crosshairs of sights of DOJ and CFPB meddlers.
I suppose old dog, inbred, and knuckle-draggers in reference to competitors are considered terms of endearment from a trained, competent, professional, ethical agent.
Our industry allows for a wide variety of service and compensation models. I would join you in preferring that we focus on the service/customer experience end. There's say 100 things we should do for our listings (maybe it's 50, maybe it's 500). Do the sellers know this, do they understand the relative value of each thing, and are they getting what they paid for - is the broker delivering what they said they would.
If they only value 2 things, and pay for 2 things, great. If a broker wants to charge a different price for their 100 things - or any combination thereof - great.
Whenever you use a discount broker other realtors will avoid. Not all, but a lot! If you have time to sell then try them. I never have, but if you need to sell quick I wouldn't.
Exactly.
Friend who buys and sells homes every two or three years due to job transfers reports that realtors avoid showing homes that are for sale by owners even when their ad states they offer buyer's agent a commission.
She says they will tell her they were unable to reach anyone to arrange a showing, etc. House before last she bought on her own after trying to get the agent to arrange a showing for two weeks. Finally, she called herself.
Bought the house with an attorney drawing up the paperwork. Sent the agent a gift certificate to a local restaurant.
Know this is not quite the same, but that's been her experience.
I suppose old dog, inbred, and knuckle-draggers in reference to competitors are considered terms of endearment from a trained, competent, professional, ethical agent.
Our industry allows for a wide variety of service and compensation models. I would join you in preferring that we focus on the service/customer experience end. There's say 100 things we should do for our listings (maybe it's 50, maybe it's 500). Do the sellers know this, do they understand the relative value of each thing, and are they getting what they paid for - is the broker delivering what they said they would.
If they only value 2 things, and pay for 2 things, great. If a broker wants to charge a different price for their 100 things - or any combination thereof - great.
Uh, no, they are certainly not terms of endearment, and certainly not intended as such.
I have no respect for old school price-fixing "full commission" mentality, or for not valuing continuing education, or ongoing learning.
Or for denial of legal and regulatory guidelines when they are inconvenient.
Or, for not showing FSBOs or limited service listings because of the model; yet, I will show old dog listings any time.
Or, for saying their full performance of fiduciary duties is dependent on the amount of money they can charge.
People wonder why brokers are under attack from so many directions, while continuing to say the same stuff, doing the same stuff, and not evolving to consumer demands.
It is not a mystery to me.
LOL
Went to BIC Update by an attorney a couple of weeks ago. He says, "Do you ever wonder why consumer respect for real estate agents is low, as low as telemarketers?"
I cracked up at that, as a great many agents ARE telemarketers, and probably scratching their heads why they get similar respect as telemarketers.
Uh, no, they are certainly not terms of endearment, and certainly not intended as such.
I have no respect for old school price-fixing "full commission" mentality, or for not valuing continuing education, or ongoing learning.
Or for denial of legal and regulatory guidelines when they are inconvenient.
Or, for not showing FSBOs or limited service listings because of the model; yet, I will show old dog listings any time.
Or, for saying their full performance of fiduciary duties is dependent on the amount of money they can charge.
People wonder why brokers are under attack from so many directions, while continuing to say the same stuff, doing the same stuff, and not evolving to consumer demands.
It is not a mystery to me.
LOL
Went to BIC Update by an attorney a couple of weeks ago. He says, "Do you ever wonder why consumer respect for real estate agents is low, as low as telemarketers?"
I cracked up at that, as a great many agents ARE telemarketers, and probably scratching their heads why they get similar respect as telemarketers.
Your views are very refreshing to hear and it's great to know that agents like you exist. You seem like one of the good guys. I think many agents and the overall industry fail to understand what consumers want and need. So it's great that you are thinking about this stuff - beyond just "that's how it works".
From what I've seen, the "price fixing" on the seller's agent side is slowly (maybe too slowly but...) being softened by a range of options available to sellers. The industry is very quick to point out this range of consumer options and models for SELLER'S AGENTS in any discussion over competition and "price fixing".
However, the "price fixing" that consumers should worry more about is on the buyer's agent side. You don't really hear the industry talking about this. Whether you sell as a FSBO (no sellers agent commission), use a fixed fee seller's agent, "discount" sellers agent or whatever, you can't really get around paying the "market norm" (let's say "fixed price") for the buyer's agent. Unless you do, you simply won't attract buyers as almost all buyers in a market are or will be under the strong influence of a buyer's agent. Try to offer 1% or 2% or 2.5% to buyer's agents where the "market norm" ("fixed price") is 3% and see what happens. Of course, in everything in life, you need to pay what the market bears but in this market, there is no real consumer choice, no proper competition for price, and no threat to the existing model and players in that model. Buyer's agents sign up buyers based on an illusion that someone else (the seller) is paying and the seller is forced to pay the fixed price or she won't get any buyers. Most buyers don't care what the buyer's agent % in their agreement is because they think someone else pays and in practice it's very rare for it to work any other way.
There is a debate on this thread over whether FSBOs and "non-traditional" sellers agents will get fair exposure from buyer's agents EVEN IF they pay the "market norm" buyer's agent commission. Even if that's corrected, you still would have a "market norm" buyer's agent commission that smells of price fixing. So clearly there are a lot of competition problems with this model. If buyer's agents "control" a very high proportion of buyers in a market (as they typically do) and buyer's agent fees have little variation (as they typically don't), then I think that's a problematic market situation. Some agents are quick to say that they don't refuse to help a client buy ANY home they want but we all know that the influence over a buyer is more subtle than that and it better be a very special home before the buyer will agree to directly fund part or all of the buyer's agent commission and often they simply don't have the spare cash to do so.
So while consumers may be comforted that they now have more choices than ever in SELLER'S agent fees and business models and the industry likes to talk about all the competition and FSBO choice, etc, let's not forget that the BUYER'S agent fees and model is more locked down and a stronger market stranglehold than ever before. There cannot be true market choice and true price competition unless both sides of the equation are addressed. So far it seems like all the new market entrants are only able to address the seller's side of the equation.
Your views are very refreshing to hear and it's great to know that agents like you exist. You seem like one of the good guys. I think many agents and the overall industry fail to understand what consumers want and need. So it's great that you are thinking about this stuff - beyond just "that's how it works".
Very kind. Thanks.
Quote:
Originally Posted by I'll Say
From what I've seen, the "price fixing" on the seller's agent side is slowly (maybe too slowly but...) being softened by a range of options available to sellers. The industry is very quick to point out this range of consumer options and models for SELLER'S AGENTS in any discussion over competition and "price fixing".
However, the "price fixing" that consumers should worry more about is on the buyer's agent side. You don't really hear the industry talking about this. Whether you sell as a FSBO (no sellers agent commission), use a fixed fee seller's agent, "discount" sellers agent or whatever, you can't really get around paying the "market norm" (let's say "fixed price") for the buyer's agent. Unless you do, you simply won't attract buyers as almost all buyers in a market are or will be under the strong influence of a buyer's agent. Try to offer 1% or 2% or 2.5% to buyer's agents where the "market norm" ("fixed price") is 3% and see what happens. Of course, in everything in life, you need to pay what the market bears but in this market, there is no real consumer choice, no proper competition for price, and no threat to the existing model and players in that model. Buyer's agents sign up buyers based on an illusion that someone else (the seller) is paying and the seller is forced to pay the fixed price or she won't get any buyers. Most buyers don't care what the buyer's agent % in their agreement is because they think someone else pays and in practice it's very rare for it to work any other way.
There is a debate on this thread over whether FSBOs and "non-traditional" sellers agents will get fair exposure from buyer's agents EVEN IF they pay the "market norm" buyer's agent commission. Even if that's corrected, you still would have a "market norm" buyer's agent commission that smells of price fixing. So clearly there are a lot of competition problems with this model. If buyer's agents "control" a very high proportion of buyers in a market (as they typically do) and buyer's agent fees have little variation (as they typically don't), then I think that's a problematic market situation. Some agents are quick to say that they don't refuse to help a client buy ANY home they want but we all know that the influence over a buyer is more subtle than that and it better be a very special home before the buyer will agree to directly fund part or all of the buyer's agent commission and often they simply don't have the spare cash to do so.
So while consumers may be comforted that they now have more choices than ever in SELLER'S agent fees and business models and the industry likes to talk about all the competition and FSBO choice, etc, let's not forget that the BUYER'S agent fees and model is more locked down and a stronger market stranglehold than ever before. There cannot be true market choice and true price competition unless both sides of the equation are addressed. So far it seems like all the new market entrants are only able to address the seller's side of the equation.
The buyers' side is murkier, and I think there is more to it than the price-fixing which I believe is still somewhat pervasive on the listing side.
We need revisions to the lending environment that allow buyers to finance commissions in the mortgage. It does not exist, except for the historic shell game of posting to the seller's side of the transaction and disbursing to the buyer's agent.
That needs to change. Buyers should pay their agent directly without the shell game and sellers pay their agent.
And, buyers should be able to finance their fee in the mortgage, if desired, just as they do now.
The criminally-incompetent CFPB could have helped clarify the dynamic, but they fell in with the BS that buyers' agent fees are a sellers' expense, because "that's the way it has always been done."
Meanwhile, commissions inflate the buyer's price and mortgage payment and tax assessment, but they are still a "Seller's expense."
How droll....
Additionally, in my county, 90% of resales are offering 2.4% to buyers' agents.
It is common in buyers agency agreements to state that buyer will make up any shortfall in commission.
I list at 2.4% to buyers agents, as a minimum, because my seller needs to be competitive.
If the property is listed at $400,000, and I offer a 1% co-broke, for the buyer who makes up the difference between 2.4% and 1%, it turns into a $406,400 house, and we aren't as competitive. Many buyers don't have the ready funds, balk at a higher price, and will decline to see the house.
Get into a 100% financing area, such as VA or State HFAs, and buyers may well be financially disqualified due to lack of liquid funds.
And, we also risk failure to appraise at contract price, if the buyer inflates price to cover the additional out of pocket.
So.
Fix the lending mess, and have buyers pay directly, and you will go a long way toward clarifying buyers' agency fees.
Oh, and NAR needs to reject any mention of "Buyers agents can say they work for free" from the Code of Ethics.
It makes no sense to legitimize that claim when the fee is buried in the mortgage from the seller's side of the transaction, after the buyers' down payment is required to cover LTV including the fee.
Annnnnnyway… Thanks again for the earlier compliment.
commission from the Buyer can be debated over semantics without either side winning the argument. And by that, I mean "who pays the fee?"
the reality is that Sellers have for many years had prominent-enough options to pay from 0 to whatever for the successful sale of their home.
In my state, and I assume most states, the agency agreement between the Buyer and their agent says the Buyer will pay their agent's compensation. Of course, it further states the BA will seek compensation from the Seller side first. So yes, rarely is it that a Buyer actually writes a check to their buyer agent for the representation.
A Buyer would do well to discuss with their agent, as part of signing the Agreement, just how the process will work. Will you let me know about FSBO's? Will you tell about homes that offer you a lower compensation than what our agreement says? If yes, then how will your compensation be paid?
I don't know what the answer is but I do know that the last home that I sold, I wanted to explore lower cost options. I wanted to see what alternatives were to the 5-6% that I had paid in the past as I understood there are many more options now - fixed fee, "discount", etc. I also considered FSBO because I'm pretty good with these things and my child was getting older and I still had not gone back to work at the time. Probably wouldn't do FSBO but I liked having that option.
So I talked to lots of people and researched it on the web and found that I could pay anywhere from 0 to around 3% for the LISTING SIDE (0 meaning FSBO). I could have fixed fee for a few hundred $ with just the basics or "full service" with the traditional commission. But one thing remained constant with no choice at all was that i had to pay (if i remember correctly) around 2.6% to a buyer's agent in order to get them to bring buyers to me and make the sale happen. I concluded that there really was no way to get around that and hoping to find a buyer without a buyer's agent (or one willing to pay for it directly themselves) is just not going to happen. No alternative choices. No "new" companies doing things differently. Nothing different. That's why I LOVED Mike's "old school price fixing" and knuckle dragging comments.
I think if 90% of the houses on the market offer the same buyer's agent commission (2.4% in Mike's example) AND the seller has no other options to find buyers (almost all buyers working with a buyer's agent charging almost the same) then this is a strong indicator that there is a lack of competition. This was very frustrating to me as a consumer and I now have a further need to buy and sell and I'm not happy with the way it works as I have no options around this buyer's agent thing. I'm not saying that I would never use a full service agent but I'm frustrated that regardless of the different models and costs available on the listing side, it always comes back to 2.x% that must be paid to the buyer's agent simply to get them to introduce "their" buyer and make sure the sale goes through.
I don't know what the answer is but I do know that the last home that I sold, I wanted to explore lower cost options. I wanted to see what alternatives were to the 5-6% that I had paid in the past as I understood there are many more options now - fixed fee, "discount", etc. I also considered FSBO because I'm pretty good with these things and my child was getting older and I still had not gone back to work at the time. Probably wouldn't do FSBO but I liked having that option.
So I talked to lots of people and researched it on the web and found that I could pay anywhere from 0 to around 3% for the LISTING SIDE (0 meaning FSBO). I could have fixed fee for a few hundred $ with just the basics or "full service" with the traditional commission. But one thing remained constant with no choice at all was that i had to pay (if i remember correctly) around 2.6% to a buyer's agent in order to get them to bring buyers to me and make the sale happen. I concluded that there really was no way to get around that and hoping to find a buyer without a buyer's agent (or one willing to pay for it directly themselves) is just not going to happen. No alternative choices. No "new" companies doing things differently. Nothing different. That's why I LOVED Mike's "old school price fixing" and knuckle dragging comments.
I think if 90% of the houses on the market offer the same buyer's agent commission (2.4% in Mike's example) AND the seller has no other options to find buyers (almost all buyers working with a buyer's agent charging almost the same) then this is a strong indicator that there is a lack of competition. This was very frustrating to me as a consumer and I now have a further need to buy and sell and I'm not happy with the way it works as I have no options around this buyer's agent thing. I'm not saying that I would never use a full service agent but I'm frustrated that regardless of the different models and costs available on the listing side, it always comes back to 2.x% that must be paid to the buyer's agent simply to get them to introduce "their" buyer and make sure the sale goes through.
Extremely frustrating for a consumer.
Again, I don't think that side of the transaction is necessarily price-fixed via conspiracy. I think market dynamics are messed up from a regulatory and historic posture.
40 years ago, the entire commission WAS a seller expense, as both agents only represented the sellers in a real estate transaction and buyers were left to survive somehow.
DECADES ago, that is.
Decades ago, buyer's agency came about with the opportunity to level the playing field and to get buyers some legitimate representation in real estate transactions.
But, due to intransigence, both Old Dog and regulatory, we are stuck with a model that no longer fits market reality.
It begs to be fixed.
1. Lobby your Congressperson to get the CFPB under control, and to fix their lie.
2. Lobby to get lending dynamics fixed to uncouple the cost of services provided to buyers from seller transaction accounting, and to allow buyers to finance commission as a buyer fee.
Once successful, the resulting transparency should well deliver a whole lot of progress toward your desired outcome.
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Thanks again for the earlier compliment.
