Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate
 [Register]
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.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 02-26-2017, 06:18 PM
 
Location: Saint John, IN
11,583 posts, read 6,675,559 times
Reputation: 14786

Advertisements

Quote:
Originally Posted by MikeJaquish View Post
1. A real estate truism: There is no such thing as a "discount broker."

2. No. Most agents will not avoid, and clients will not allow that to happen anyway.
We can certainly help find houses, but we cannot hide them from clients.
Mikejaquish...I'm assuming you're a realtor? Anyway, I tried to sell a house years ago using a discount broker. There IS such a thing! In my case the commission was 4% (instead of the typical 6), which was 1.5% to the listing agent and 2.5% to the agent who brought the buyer. It was terrible! The agent did the bare minimum on everything from advertising, number of pictures on mls, no open houses, etc. After 3 months and hardly any showings we asked to back out of the contract with her. We went with a traditional broker and TA DA, nice pictures (lots of them), broker tour, open house, etc. We had more showings in one week then we had in 3 months with the other place. Had a great offer after 2 weeks on the market and closed 5 weeks later. Not all buyers agents get the same commission. Depends on the structure of the seller agents contract.

I understand agents can't hide houses, but they can sure stir buyers away and if the agent is doing the bare minimum to market your property that could definitely be a disadvantage to the seller!

I'm sorry, but as the saying goes, you get what you pay for!
Reply With Quote Quick reply to this message

 
Old 02-26-2017, 08:12 PM
 
Location: Haiku
7,132 posts, read 4,733,727 times
Reputation: 10327
Quote:
Originally Posted by jm1982 View Post
Good to know , doesn't the buyers agent still get the same commission though ? Or is it just that they don't want to deal with a discount broker ?
Buyer's commission can be either a guaranteed amount or a straight split. In either case the buyer's agent will get less for handling discounted house. In any sort of competitive market place it is just not worth it for them to show houses that are not commissioned at the local, market rate. That is the main problem with Redfin. The other problem is that sometimes a sale needs to be baby-sat and requires some hand-holding, or clever deal making by the agent. You won't get that either.

If you really want to sell your house, I would list it with a normal RE agent. If you don't care how quickly it sells or are testing the waters, Redfin probably can't hurt to try.
Reply With Quote Quick reply to this message
 
Old 02-26-2017, 09:02 PM
 
Location: Needham, MA
8,526 posts, read 13,917,670 times
Reputation: 7908
Quote:
Originally Posted by CGab View Post
Mikejaquish...I'm assuming you're a realtor? Anyway, I tried to sell a house years ago using a discount broker. There IS such a thing! In my case the commission was 4% (instead of the typical 6), which was 1.5% to the listing agent and 2.5% to the agent who brought the buyer. It was terrible! The agent did the bare minimum on everything from advertising, number of pictures on mls, no open houses, etc. After 3 months and hardly any showings we asked to back out of the contract with her. We went with a traditional broker and TA DA, nice pictures (lots of them), broker tour, open house, etc. We had more showings in one week then we had in 3 months with the other place. Had a great offer after 2 weeks on the market and closed 5 weeks later. Not all buyers agents get the same commission. Depends on the structure of the seller agents contract.

I understand agents can't hide houses, but they can sure stir buyers away and if the agent is doing the bare minimum to market your property that could definitely be a disadvantage to the seller!

I'm sorry, but as the saying goes, you get what you pay for!
Paying more is no guarantee of better results.

There are plenty of incompetent agents that charge a lot of money. However, my experience has been that agents who have nothing to offer except for a low price . . . well . . . offer a low price. Personally, I would recommend concentrating on finding an agent who's capable and honest and then negotiate the best possible rate with them. Choose the agent first, worry about the commission rate second.

I also agree with you that agents can't hide houses but they can poo-poo them. I've overheard conversations where that's happening. It's not supposed to happen but it does.

This being said, Mike J. is 100% right. There's no such thing as a "discount" broker because there is not a standard or typical commission by law. Commissions by law are 100% negotiable and are not set by anyone. As there is no set standard to discount from then by definition there can be no "discount" agent. It's semantics really but he's right.
Reply With Quote Quick reply to this message
 
Old 02-27-2017, 09:55 AM
 
Location: Sarasota, FL
2,681 posts, read 2,164,796 times
Reputation: 5160
Quote:
Originally Posted by TwoByFour View Post
Buyer's commission can be either a guaranteed amount or a straight split. In either case the buyer's agent will get less for handling discounted house.

Sorry, but that doesn't seem to make sense. If its a guaranteed amount how does the buyer's agent get less?
Reply With Quote Quick reply to this message
 
Old 02-27-2017, 09:58 AM
 
Location: Sarasota, FL
2,681 posts, read 2,164,796 times
Reputation: 5160
Quote:
Originally Posted by MikePRU View Post
I also agree with you that agents can't hide houses but they can poo-poo them. I've overheard conversations where that's happening. It's not supposed to happen but it does.

In my area at least, discount listing brokers make it clear that seller should expect to pay the usual buyer's agent commission, in addition to the discounted listing fee. Why would a buyer's agent poo-poo a property if he is getting his usual fee?
Reply With Quote Quick reply to this message
 
Old 02-27-2017, 10:13 AM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 1 day ago)
 
Location: Cary, NC
43,060 posts, read 76,604,643 times
Reputation: 45383
Quote:
Originally Posted by CGab View Post
Mikejaquish...I'm assuming you're a realtor? Anyway, I tried to sell a house years ago using a discount broker. There IS such a thing! In my case the commission was 4% (instead of the typical 6), which was 1.5% to the listing agent and 2.5% to the agent who brought the buyer. It was terrible! The agent did the bare minimum on everything from advertising, number of pictures on mls, no open houses, etc. After 3 months and hardly any showings we asked to back out of the contract with her. We went with a traditional broker and TA DA, nice pictures (lots of them), broker tour, open house, etc. We had more showings in one week then we had in 3 months with the other place. Had a great offer after 2 weeks on the market and closed 5 weeks later. Not all buyers agents get the same commission. Depends on the structure of the seller agents contract.

I understand agents can't hide houses, but they can sure stir buyers away and if the agent is doing the bare minimum to market your property that could definitely be a disadvantage to the seller!

I'm sorry, but as the saying goes, you get what you pay for!
Yes, I am a licensed real estate agent, and a REALTOR®.
No, you misunderstand the connotations of the business terminology.

There is truly no such thing as a "discount broker," because the term implies a market-standard fixed commission rate, which does not legally or ethically exist. Without that fixed, "standard" rate, there is nothing from which to discount.

There are just various business models, with various fees.
If I list your house for MY personal standard 4.8%, with a 50/50 split to the buyers' agents, and I decide I only need 4.5% to sell your house, and I still pay that most common local market split, 2.4%, to buyers' agents... Those agents don't care a bit that I am only taking 2.1% for doing a good job. They just want the 2.4% that they can get on ~90% of the listings in my county.
If I list your house at 4.4% (2% for me, 2.4% for a BA) because you also engage me to help you buy your new home, and a listing agent will pay me 2.4% for that sale, that is not a "discount." That is just what I think is a fair business model.
Am I a "discount broker?" I think not. I just control overhead and price to make a reasonable profit. That is the model I have chosen.

Every time a consumer says, "Discount broker," old school price-fixing agents get the warm fuzzies in their tummies. The consumer is supporting and promoting price-fixing, a 6% or 7% fee, and that takes the burden of spreading the word off the price-fixing agent.
See, agents are taught to not say "discount broker," as it implies price-fixing, and their management would rather talk about fixing prices quietly with them, rather than publicly.

And, I can guaran-dang-tee you that "You get what you pay for" is absolutely one of the most common errors that uninformed consumers make.
I have seen great service from cheap-fee agents, and routinely see horrid service with cellphone photos, etc, from agents charging 6%, or even 7%.
Money cannot buy you character, and is most definitely no guarantee of skill, either.
Reply With Quote Quick reply to this message
 
Old 02-27-2017, 12:15 PM
 
Location: Needham, MA
8,526 posts, read 13,917,670 times
Reputation: 7908
Quote:
Originally Posted by CapnTrips View Post
In my area at least, discount listing brokers make it clear that seller should expect to pay the usual buyer's agent commission, in addition to the discounted listing fee. Why would a buyer's agent poo-poo a property if he is getting his usual fee?
In my area, the buyer's agent fee varies quite a bit. In my experience, the brokers that you would refer to as "discount brokers" often offer less than others.

But getting back to your real question of "why would someone do that?" the answer usually falls into one of two categories . . .

1. Because the buyer's agent doesn't feel like they're being sufficiently compensated in the transaction or

2. Because the agent does not want to support the listing agent's business model by engaging with them in a transaction

Quote:
Originally Posted by MikeJaquish View Post
There are just various business models, with various fees.
If I list your house for MY personal standard 4.8%, with a 50/50 split to the buyers' agents, and I decide I only need 4.5% to sell your house, and I still pay that most common local market split, 2.4%, to buyers' agents... Those agents don't care a bit that I am only taking 2.1% for doing a good job. They just want the 2.4% that they can get on ~90% of the listings in my county.
If I list your house at 4.4% (2% for me, 2.4% for a BA) because you also engage me to help you buy your new home, and a listing agent will pay me 2.4% for that sale, that is not a "discount." That is just what I think is a fair business model.
Am I a "discount broker?" I think not. I just control overhead and price to make a reasonable profit. That is the model I have chosen.

And, I can guaran-dang-tee you that "You get what you pay for" is absolutely one of the most common errors that uninformed consumers make.
I have seen great service from cheap-fee agents, and routinely see horrid service with cellphone photos, etc, from agents charging 6%, or even 7%.
Money cannot buy you character, and is most definitely no guarantee of skill, either.
I obviously have no idea what goes on in your neck of the woods and it's no secret that I have a great deal of respect for you. This being said, I think you might be in the minority. In my experience and YMMV the vast majority of agents who charge less do so because they have no way to demonstrate any value to their service. So, they compete on price because they have nothing else to distinguish themselves from their competition.

This being said, paying more is also no guarantee that you're getting yourself a capable agent. There are plenty of agents who charge more than I do who and they're not as capable as I am.

Great bargains are rare in life these days. If you find one (like Mike J's services) then "ride her 'til she bucks" as the old saying goes.

Quote:
Originally Posted by MikeJaquish View Post
See, agents are taught to not say "discount broker," as it implies price-fixing, and their management would rather talk about fixing prices quietly with them, rather than publicly.
My understanding is that if you're the broker of the office that it's 100% legal to require the agents under you to charge a certain commission rate. In the end, the contract is really with you the broker. So, not empowering your agents to negotiate commission is totally legal. I wouldn't call an internal office policy "price fixing." However, if multiple brokerages were to collude to maintain a certain fee level then that would clearly be illegal.
Reply With Quote Quick reply to this message
 
Old 02-27-2017, 12:29 PM
 
Location: Sarasota, FL
2,681 posts, read 2,164,796 times
Reputation: 5160
Quote:
Originally Posted by MikePRU View Post
In my area, the buyer's agent fee varies quite a bit. In my experience, the brokers that you would refer to as "discount brokers" often offer less than others.

But getting back to your real question of "why would someone do that?" the answer usually falls into one of two categories . . .

1. Because the buyer's agent doesn't feel like they're being sufficiently compensated in the transaction or

2. Because the agent does not want to support the listing agent's business model by engaging with them in a transaction.
Ok, I can understand the above if the buyer's agent is getting less than the usual for his market, like 2.5% in this area. That's why I would always insist that my potential listing "discount broker" tell me up front what will be offered to a buyer's agent, since I know that will influence the sale. Since I am willing to give 2.5%, if my listing broker is not, then I would go elsewhere.


But given that many if not most buyers today do their own search, how does a buyers' agent not support a discount broker if his clients have found the house that they want on mls by themselves, insist on seeing it, and decide they like it?
Reply With Quote Quick reply to this message
 
Old 02-27-2017, 12:37 PM
 
Location: Needham, MA
8,526 posts, read 13,917,670 times
Reputation: 7908
Quote:
Originally Posted by CapnTrips View Post
But given that many if not most buyers today do their own search, how does a buyers' agent not support a discount broker if his clients have found the house that they want on mls by themselves, insist on seeing it, and decide they like it?
If that happens then there's nothing they can do about it. However, I've witnessed agents try to talk their clients out of seeing a house because it was listed with a "discount broker." Obviously, they don't say "it's listed with Redfin so let's not see it." They say something like "oh that's a bad neighborhood" or "I saw that house it's in really rough shape" or "I'm familiar with that house the basement takes on water frequently."
Reply With Quote Quick reply to this message
 
Old 02-27-2017, 12:43 PM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 1 day ago)
 
Location: Cary, NC
43,060 posts, read 76,604,643 times
Reputation: 45383
Quote:
Originally Posted by MikePRU View Post
In my area, the buyer's agent fee varies quite a bit. In my experience, the brokers that you would refer to as "discount brokers" often offer less than others.

But getting back to your real question of "why would someone do that?" the answer usually falls into one of two categories . . .

1. Because the buyer's agent doesn't feel like they're being sufficiently compensated in the transaction or

2. Because the agent does not want to support the listing agent's business model by engaging with them in a transaction



I obviously have no idea what goes on in your neck of the woods and it's no secret that I have a great deal of respect for you. This being said, I think you might be in the minority. In my experience and YMMV the vast majority of agents who charge less do so because they have no way to demonstrate any value to their service. So, they compete on price because they have nothing else to distinguish themselves from their competition.

This being said, paying more is also no guarantee that you're getting yourself a capable agent. There are plenty of agents who charge more than I do who and they're not as capable as I am.

Great bargains are rare in life these days. If you find one (like Mike J's services) then "ride her 'til she bucks" as the old saying goes.



My understanding is that if you're the broker of the office that it's 100% legal to require the agents under you to charge a certain commission rate. In the end, the contract is really with you the broker. So, not empowering your agents to negotiate commission is totally legal. I wouldn't call an internal office policy "price fixing." However, if multiple brokerages were to collude to maintain a certain fee level then that would clearly be illegal.
Mike,
"Less" than what?

I pay no corporate or franchise fees. No 20%, 30%, 50% split. No compulsory group marketing fee.
No paperwork fee. No over-priced mandatory fees. E/O at cost.
I don't mind competing on price, because my margins may well be better than margins for the agent who has to pay 30%--50% or more of their generated commissions to others.

Of course, a broker can set fees in the office.
This becomes quite relevant if an agent wants to offer a very low commission, and the brokerage is on a percentage split.
They can enforce a minimum co-broke to other agents/firms, which may be smart.
They can also set splits at a level that reflects a certain commission, but let the agent set their own commission rate.

I.e., IF I am an associate broker at Firm XYZ and have a hankering to work for 1% for my client side, the brokerage may force the 2.4% cobroke, and may impute a 25% split off their desired 3% firm commission.
So, 3.4% total commission with 2.4% to the BA, .25% to me, and .75% to my firm.
One reasonable way to maintain a commission level, and to protect the firm's bottom line vs. expenses.

What firm management should never do:
Disparage other brokers for their fee structure with price-fixing approaches.
Encourage illegal boycotting of firms.
Reply With Quote Quick reply to this message
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.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate

All times are GMT -6.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top