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Old 07-28-2017, 11:24 PM
 
8,540 posts, read 12,279,061 times
Reputation: 16437

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Quote:
Originally Posted by just_because View Post
The buyer certainly can ask the seller to pay all or part of the fees for an agent to represent THE BUYER'S interests - he might also ask her to pay for his lawyer, for his home inspector, for his mortgage fees, and while he's at it, he could ask her to pay for a nice dinner for him and his partner and a nice pair of cuff links.
Well, in an awkward way, you are correct: everything is negotiable.

Quote:
Originally Posted by just_because View Post
The problem is that the agents on this thread are suggesting that the seller will benefit from the buyer's agent who is there to look after the buyer's interests.
If they're suggesting anything, they may be suggesting that the Seller will benefit because the Buyer's agent will help get the Seller's house sold. Since the OP desires to hire an agent to help with the transaction, I see no problem with that.

Quote:
Originally Posted by just_because View Post
That's confusing things. And if the seller agrees to pay for part of it, she could easily assume that this agent is looking after her too.
That is a legitimate concern. It's also a concern that many first-time home buyers, in particular, feel that a Listing agent is representing them. That's why many states require agency disclosure forms to alleviate some of that confusion.

Quote:
Originally Posted by just_because View Post
At least if the seller does pay for part of this circus, she is paying to incentivize the agent to make the purchase price as high as possible (to the seller's benefit) as this will maximize the agent's commission. So she might get some benefit in the end as perverse and convoluted as this all is.
If you want anyone to take you seriously, you really shouldn't make ridiculous assertions like that. I've been representing Buyers for many years and I have yet to encourage anyone to up their price so that I could make a bit more money. Heck, part of the fun of being a Buyer's agent is negotiating a good price.

Quote:
Originally Posted by just_because View Post
I am a firm believer in making things as simple and as clear as possible. Already on this thread, people are assuming that the BA will be a dual agent, nobody has any idea why 8k would be spent or what services are needed. Nobody can explain why on earth an agent that is legally bound to represent the buyer would get higher commission for a higher purchase price when that is directly against the buyer's interest.

It all defies common sense. Too much money, Too complicated and convoluted, Too ripe for fraud and abuse.
The Buyer's primary interest is in making a purchase at a fair price. Sometimes we can get the Seller to agree to what many would consider to be "a good deal"...and sometimes the Seller will hold out for more. If it's within reason, most Buyers will still opt to pay a bit more if the price seems fair and reasonable. Any incidental increase in commission, which is usually paid by the Seller, is insignificant.

If you've read many of my posts, you may have noted that I don't go out of my way to defend agents. Yet, your "logic", if you can call it such, seems a bit too complicated and convoluted. Your attempts to rail against a minuscule increase in commission is basically much ado about nothing.

Again, I have never encouraged someone to raise their price so that I could get a bit more commission. I suspect that if you were an agent, that you wouldn't do so either. (Or maybe I'm wrong about that. Maybe you're projecting onto others based upon what you feel that you would do.)
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Old 07-29-2017, 04:40 AM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 17 hours ago)
 
Location: Cary, NC
43,049 posts, read 76,592,428 times
Reputation: 45373
Our story so far:

An OP has made it clear that they will be using an agent they like who has already provided extensive satisfactory services over an extended period of time.
OP says the purchase is remote and the agent knows local vendors, and OP desires that help.
OP has posed a reasonable question how to structure a deal so their agent is compensated for their past work and the service they expect to receive in the prospective transaction.
Quote:
Originally Posted by dogsandart View Post
...

My question is- how does this work? We'd like to move on this soon, but can our agent handle everything? Who pays the commission? Would asking her to accept 3%, and to split that between us and the seller, be reasonable? Thanks for any insight!
Unfortunately this exposes the OP to hijack and to tangential misleading input from anonymous posters with no concern with helping with the OP's reasonable questions as long as they get in typical goofy and misleading shots on agents.

Let's go back to Square One, before the hijack.

OP, it seems to me:
You appear to be an honorable person with reasonable goals.
You may have been offered a "really good price for the neighborhood."
That price may have been mentioned because the seller is assuming there is no agent.
The seller may not want an agent to be involved.
The seller may be comfortable with an agent, taking assurance that the process will be more organized with an agent taking care of details.
Or, the seller may not care if an agent is involved.

Question 1:
"'Is the really good price' good enough that you could pay the full expected commission on top of the mentioned price, and still feel that the total price is fair market or better?"

It appears that you are at about $265,000. Would it still be a "really good price" +3% at $273,000?
If the agent works at 3%, and negotiates a price of $270,000 including that 3%, would you still buy the house and feel you got a good price? Assuming inspections, etc, are acceptable?

Question 2:
Cash purchase or mortgage?
Cash simplifies the discussion greatly. You don't ever even mention commission to the seller whatsoever and just cover the price and commission, and hopefully at a total cost that is still a good price for you.
You have to discuss it if you are borrowing, as the lender has to know all monies involved in the transaction.

Best answer to your original post that you will get in this circumstance:

Since you expect to proceed with an agent, contact the seller. Mention that you will be working with an agent.
Don't undermine your agent with further unnecessary discussion that erodes leverage, but only mention that you have a local buyers agent who will be assisting you with completing the purchase.
Do not allow or suggest dual agency, You want full advocacy, i.e., "Single Agency," (although if you have signed an agency agreement allowing Appointed Agency or Disclosed Dual Agency, that ship may have sailed already.)

Do not mention commission unless the seller brings it up. Leave that to your agent.
There is no reason to bring up "seller paying commission." (In the common commission model, Buyer ALWAYS funds agents' commissions. Always. Anyone telling you differently is destroying their credibility.) Commissions are baked into the price they pay for the house, generally so the buyer can finance commissions. (See Question 2 above.)
But, the agent may be able to reduce the impact of commission to the buyer.
You want your agent to negotiate based on your NET price and to get the seller to focus on NET proceeds.
"What will it cost you totally to get the house, and what will the seller receive in net proceeds after closing?"

And, the agent should be able to confirm that that apparently "really good price" really IS a "really good price."

Then, let the agent do what good agents do: Take it from there.

Last edited by MikeJaquish; 07-29-2017 at 05:17 AM..
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Old 07-29-2017, 04:52 AM
 
1,528 posts, read 1,577,055 times
Reputation: 2062
Quote:
Originally Posted by dblackga View Post
Yes, many FSBO's will pay a procuring broker (although they get a little testy if the "procuring broker" gets sprung on them in mid-negotiation.) That seems like a win-win to me, too. Your agent is compensated for their time, experience and effort and will be in a position to monitor inspections and advise you on strategies, the seller pays a minimal commission compared to what they might expect to pay a separate listing agent, and you get a house at a good price. Just be sure that you aren't getting into a dual-agency situation, where the agent represents both the buyer AND the seller. Ideally, they represent only you. The agent may have the seller as a customer instead of a client -- that doesn't involve fiduciary responsibility. But everyone needs to be clear on the agent's role in this transaction.
The seller as a 'customer' but not as a 'client'! I almost spit out my breakfast when I read that one!

Imagine an agent explaining to an old woman whose husband died and now she has to sell the house they've lived in for 50 years - "you're my valued customer but you're not my client. Thank you for paying me and I will do all I can to help you. By the way, my fiduciary responsibility is to the buyer". The last bit about fiduciary responsibility is probably in a form rather than being explained properly. And the agent my not explain this concocted difference between client and customer (which is basically synonymous everywhere else in the world). You live this stuff every day but normal people don't understand all of this.

So in the example in the thread, I'm assuming that you mean that the buyer is the client for the agent and the seller is the customer for the agent. I guess since dual agents have fallen out of flavor, this is a replacement - like two tiers of service - allowing you to show that you are also providing value to the seller as with a dual agency but this is an attempt to avoid the problem that you can't represent two sides of a transaction with competing interests. This is a very creative solution indeed and I'm not really sure how someone could invent this with a straight face. Since client and customer basically mean the same thing to the normal world, it allows you maintain a technical/legal difference but without really needing this to be too apparent to the parties involved. It can easily be glossed over. In other words, you can carry on the sham of the dual agent but technically and legally avoid the problems inherent with it. The whole thing is nonsense but it would have been slightly more ethical and transparent if the industry came up with a clearer term than "customer" (which is easily understood as "you work for me" - perhaps something like "non-representation agent" or something like that. Then at least that old lady can see it and say - "oh, non-representation ----what does that mean". And the agent can say, "it means i don't represent you...I represent the other guy".

This is very unclear and really ripe for misunderstanding and abuse. I'm not saying that there are not agents who would try to explain everything with enough clarity and try to ensure understanding, for example, that the seller should not disclose anything to the agent that could compromise her negotiating position or take advice from the agent. This arrangement is far too convoluted and unclear so there is only so much that can be done to avoid misunderstandings, even with the best intentions. Banks and insurers have had billions in fines for this stuff - creating complicated products, defining whole new vocabularies and selling services in a way where it is very difficult to ensure real compliance and protection for the consumer. The real estate industry should take steps to clean up and simplify how it does business.
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Old 07-29-2017, 04:53 AM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 17 hours ago)
 
Location: Cary, NC
43,049 posts, read 76,592,428 times
Reputation: 45373
http://maine.gov/pfr/professionallic...f/RECform3.pdf
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Old 07-29-2017, 05:33 AM
 
1,528 posts, read 1,577,055 times
Reputation: 2062
Quote:
Originally Posted by jackmichigan View Post
Well, in an awkward way, you are correct: everything is negotiable.



If they're suggesting anything, they may be suggesting that the Seller will benefit because the Buyer's agent will help get the Seller's house sold. Since the OP desires to hire an agent to help with the transaction, I see no problem with that.

That's very dangerous advice. The buyer's agent is not there to 'get the seller's house sold' and any suggestion that they are there to do that is fraud. What if the best course of action is for the buyer to pull out and the BA gives that advice to the buyer, leaving the seller's house unsold? What happens then when the seller says "well you said you were here to help to get my house sold...". It all sounds nice up front to say that the buyer's agent will help the seller sell their house but in the end, there could be very different interests involved. See the problem?

That is a legitimate concern. It's also a concern that many first-time home buyers, in particular, feel that a Listing agent is representing them. That's why many states require agency disclosure forms to alleviate some of that confusion.

'Disclosure Forms' have never proven to be an effective way that inherently unclear and flawed systems that are ripe for abuse can create clarity, fairness or protection for consumers.


If you want anyone to take you seriously, you really shouldn't make ridiculous assertions like that. I've been representing Buyers for many years and I have yet to encourage anyone to up their price so that I could make a bit more money. Heck, part of the fun of being a Buyer's agent is negotiating a good price.



The Buyer's primary interest is in making a purchase at a fair price. Sometimes we can get the Seller to agree to what many would consider to be "a good deal"...and sometimes the Seller will hold out for more. If it's within reason, most Buyers will still opt to pay a bit more if the price seems fair and reasonable. Any incidental increase in commission, which is usually paid by the Seller, is insignificant.

If you've read many of my posts, you may have noted that I don't go out of my way to defend agents. Yet, your "logic", if you can call it such, seems a bit too complicated and convoluted. Your attempts to rail against a minuscule increase in commission is basically much ado about nothing.

Again, I have never encouraged someone to raise their price so that I could get a bit more commission. I suspect that if you were an agent, that you wouldn't do so either. (Or maybe I'm wrong about that. Maybe you're projecting onto others based upon what you feel that you would do.)

My argument is not about whether a buyer's agent - you or the guys in your office or me or anyone else would encourage the seller to raise their price just so that you can get more commission. We should not even be having to have this discussion. The problem is simply that buyer's agent commission is not aligned to the outcomes that favor the party that you represent. In fact, they are aligned to the interests of the opposing party. For every 10k cost reduction that you negotiate, you lose $300 in commission. Sure, you can argue that you don't ever think of this but that's missing the point completely. There should be no question in anyone's mind or potential for perceptions that these conflicting interests have influenced the advice that you give. Like all sales people, agents are under pressure to perform (earn commission for their firm or to keep their business operating) so it's not just about a few extra dollars. The industry should either come up with a commission incentive approach for buyer's agents that truly aligns with the buyer's interests or scrap outcome based fees in these arrangements and just charge fees for service, by the hour, etc.

The problem for the industry is that they need to get the seller to pay for this as generally buyers will be unwilling to absorb this with all the other transaction fees. So the fundamental problem with the system is that the seller pays for representation for himself AND the buyer and from there it all becomes convoluted. In the most basic sense, the buyer's and seller's interests are directly opposed (one wants the highest sales price possible and the other, the lowest). In this model where the seller funds it all, it would be very difficult to have different commission incentives that both align to the opposing interests of the parties represented. So there is a very awkward and fundamentally flawed system in place to deal with the fact that the seller is paying to protect both his own interests and the opposing interests in the transaction.

Please see my responses above.
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Old 07-29-2017, 06:54 AM
 
8,540 posts, read 12,279,061 times
Reputation: 16437
Quote:
Originally Posted by just_because View Post
The seller as a 'customer' but not as a 'client'! I almost spit out my breakfast when I read that one!
That's only because...or is it just because?...you apparently don't realize that real estate practices vary from state to state. I would never call someone I work with in Michigan a "customer", but other states have that option defined in their state laws.

Read up.
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Old 07-29-2017, 07:08 AM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 17 hours ago)
 
Location: Cary, NC
43,049 posts, read 76,592,428 times
Reputation: 45373
Quote:
Originally Posted by jackmichigan View Post
That's only because...or is it just because?...you apparently don't realize that real estate practices vary from state to state. I would never call someone I work with in Michigan a "customer", but other states have that option defined in their state laws.

Read up.
Quote:
Originally Posted by MikeJaquish View Post
Why let silly concepts like "law" get in the way of a good diatribe?
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Old 07-29-2017, 07:29 AM
 
8,540 posts, read 12,279,061 times
Reputation: 16437
Quote:
Originally Posted by just_because View Post
That's very dangerous advice. The buyer's agent is not there to 'get the seller's house sold' and any suggestion that they are there to do that is fraud. What if the best course of action is for the buyer to pull out and the BA gives that advice to the buyer, leaving the seller's house unsold? What happens then when the seller says "well you said you were here to help to get my house sold...". It all sounds nice up front to say that the buyer's agent will help the seller sell their house but in the end, there could be very different interests involved. See the problem?
Yes, I see the problem: you misread what I wrote. No where did I offer advice and I never mentioned that an agent would tell a Seller that they are there to help them sell their house. A Buyer's agent is hired to help facilitate a transaction for the Buyer. If successful, the end result is that the Buyer purchases the house (so the house gets sold). If the best course of action is for a Buyer to back out of the purchase, based upon discoveries during due diligence, then hopefully they would have done that had there been no Buyer agent involved. With one involved, there is hopefully more likelihood that the Buyer agent will persuade them not to go forward with the purchase. I've been able to talk a few clients out of buying particular properties. It's good business to do so.

Quote:
Originally Posted by just_because View Post
'Disclosure Forms' have never proven to be an effective way that inherently unclear and flawed systems that are ripe for abuse can create clarity, fairness or protection for consumers.
Au contraire. Having a written agency disclosure form--where the agency relationship is spelled out in black and white--seems the most clear cut way to create clarity and provide for consumer protection.

Quote:
Originally Posted by just_because View Post
We should not even be having to have this discussion.
Again, you are correct. We should be trying to be helpful by sticking to answering the OP's questions instead of getting into useless trolling discussions.
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Old 07-29-2017, 04:33 PM
 
1,168 posts, read 1,217,940 times
Reputation: 1435
Quote:
Originally Posted by MrRational View Post
Experienced buyers can manage with just an attorney representing them.
All buyers benefit from that.


Do they have the money sorted out? Qualified? Cash on hand?
Then talk to their current family attorney.
Ask him (or others) to recommend an active RE specializing attorney.

Meet. Discuss their views. Prepare a standard contract.
Make their offer.
---

otoh... Do they need help with all the inspections, surveys, loan origination and other hand holding?
They show ask their attorney for the name of an agent to help them.
Ive bought quite a few houses with just a lawyer.
However it is getting more and more difficult to do this.
Too many rules and regs in the way that the lawyers, seller, title company dont really understand.
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Old 07-29-2017, 04:44 PM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 17 hours ago)
 
Location: Cary, NC
43,049 posts, read 76,592,428 times
Reputation: 45373
Quote:
Originally Posted by Joe33 View Post
Ive bought quite a few houses with just a lawyer.
However it is getting more and more difficult to do this.
Too many rules and regs in the way that the lawyers, seller, title company dont really understand.
It has been recommended to the OP to proceed with an attorney handling this transaction, with the OP several hundred miles remote from the location, and never having lived there.

Did you ever do one like that?
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