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No. Not rhetorical at all. Let me repeat it here, verbatim, for those who may have missed it in addition to yourself:
"Where is the buyer's agent who wants to propose a system that gets him more money as the contract price goes down rather than up?"
You are obviously not the guy I was seeking. That's okay, but no need to go off on those well trodden tangential paths.
You may not grasp how great personal service, attendant rewards and compensation, money and integrity, and general life work.
That may be why you don't like the answers you get from your question.
But, again:
More clients for delivering good service and helping to attain good pricing generate more money. Fundamental point that cannot be dismissed.
Further indicative of that possible void in understanding is that you either can not or will not propose a system for, or even a cogent answer to, the very specific real-world transaction example that I posted.
I guarantee you those clients will refer future business to me, and I will be further financially rewarded for taking good care of them and protecting their interests, and getting them a very good price on the property.
And that is from a transaction where you may believe that I received "less" as they paid "less."
I DO recognize from past and very recent posts that some folks consider traits like "integrity" or "honor" to be quaint or boring little tangential notions that bring no value to brokerage services in a real estate transaction.
I disagree, and consider such "notions" to be fundamental, unavoidable, inseparable, when proposing value, rewards and compensation, and fiduciary duties.
That disparity in personal values is an ongoing driving factor in failures to find common ground in many discussions on CD.
I won't yield, and the dismissers of the value and importance of personal integrity don't yield.
Meh. So it goes.
Last edited by MikeJaquish; 01-28-2018 at 05:19 AM..
You may not grasp how great personal service, attendant rewards and compensation, money and integrity, and general life work.
That may be why you don't like the answers you get from your question.
But, again:
More clients for delivering good service and helping to attain good pricing generate more money. Fundamental point that cannot be dismissed.
Further indicative of that possible void in understanding is that you either can not or will not propose a system for, or even a cogent answer to, the very specific real-world transaction example that I posted.
I guarantee you those clients will refer future business to me, and I will be further financially rewarded for taking good care of them and protecting their interests, and getting them a very good price on the property.
And that is from a transaction where you may believe that I received "less" as they paid "less."
I DO recognize from past and very recent posts that some folks consider traits like "integrity" or "honor" to be quaint or boring little tangential notions that bring no value to brokerage services in a real estate transaction.
I disagree, and consider such "notions" to be fundamental, unavoidable, inseparable, when proposing value, rewards and compensation, and fiduciary duties.
That disparity in personal values is an ongoing driving factor in failures to find common ground in many discussions on CD.
I won't yield, and the dismissers of the value and importance of personal integrity don't yield.
Meh. So it goes.
Your position is that differences in values and levels of integrity will prevent opposing perspectives from reaching common ground. This is incorrect because your personal integrity and the integrity of others in this discussion have nothing to do with the debate about whether the buyer's agent model creates the right incentives for agents and whether a model where buyer's agents are paid with sales commissions split by the opposing side makes any sense. You aim to avoid this discussion by making it a matter of honesty and integrity. And then, by extension, making it into a debate between those who have integrity and those who do not. Unfortunately, this debate tactic is used far too often in more serious matters such as going to war (e.g. making a debate about going to war into a question of love of country). Those might be weightier issues but the dishonesty and lack of integrity in the tactic is no different. We don't buy that here as those tactics are the enemy of intellectual discourse.
We all understand that any good sales person cares about his reputation, having happy customers, having repeat customers, having customers refer other customer, etc. This is just business as usual and should not distract from the issue of whether the structure of incentives for buyer's agents make any sense or whether there are too many conflicts of interest in it. Instead of addressing the issues being discussed, I guess it's easier to go on and on about how much integrity you have and how dishonest the rest of us are.
You may not grasp how great personal service, attendant rewards and compensation, money and integrity, and general life work.
That may be why you don't like the answers you get from your question.
But, again:
More clients for delivering good service and helping to attain good pricing generate more money. Fundamental point that cannot be dismissed.
Further indicative of that possible void in understanding is that you either can not or will not propose a system for, or even a cogent answer to, the very specific real-world transaction example that I posted.
I guarantee you those clients will refer future business to me, and I will be further financially rewarded for taking good care of them and protecting their interests, and getting them a very good price on the property.
And that is from a transaction where you may believe that I received "less" as they paid "less."
I DO recognize from past and very recent posts that some folks consider traits like "integrity" or "honor" to be quaint or boring little tangential notions that bring no value to brokerage services in a real estate transaction.
I disagree, and consider such "notions" to be fundamental, unavoidable, inseparable, when proposing value, rewards and compensation, and fiduciary duties.
That disparity in personal values is an ongoing driving factor in failures to find common ground in many discussions on CD.
I won't yield, and the dismissers of the value and importance of personal integrity don't yield.
Meh. So it goes.
I didn't ask about personal service, etc. And I'd never be so smug to suggest that another adult does not understand how life works.
I asked a very direct question about another way of compensating agents for their work and twice now you have gotten on the soapbox and totally ignored the question asked. If you don't have an answer no one is requiring you to comment. It's quite okay to say you're satisfied with the status quo, but that's irrelevant.
It's not an answer if it has nothing to do with the question. Feel free to pat yourself on the back until your arm falls off but don't list that as another sacrifice you make in doing your job.
I'd be happy to work as a Buyer's Agent, on retainer and hourly rate.
Our job is to help get the Buyers the house they want, at the best price and terms possible.
If we're paid more by a lower price, or rewarded by a % off asking price, then we still wouldn't be aligned with the interests of our clients.
Let' say I had an agreement for 20% of (List Price - Purchase Price). Then clearly I would be incented to find the house that was most overpriced and get the highest margin off of it.
At the end of the day, it's a relationship built on trust. If you don't trust your current agent's motives, find another. If you believe your agent is only trying to get you to pay a higher price than you're comfortable with, then you should find a new agent.
this is what I said in response to your question. hopefully the last paragraph didn't blur the response.
Perhaps you'd suggest or consider a system whereby the Buyer's agent gets some hourly rate, plus a bonus as a % off list price, or when the appraised value > contract price.
But at the heart of it, it does require a fundamental change in the way commissions are contractually paid. The listing agent offers all of the buyer agents a uniform compensation at the close of the sale. (Example follows).
It would require splitting the compensation model in 2 on the front end - the seller pays the listing agent for their work at whatever rate they agree, and the Buyer directly compensates their buyers agent at whatever rate they agree.
Example: 500,000 house where the seller and listing agent agree to a 5% compensation rate. The buyer's agent is to be paid 3%. House sells for $480,000.
At the current model, the Buyer's agent (brokerage) gets $14,400. That shows up on the closing statement.
Now, the buyer and their agent have an agreement for a retainer and an hourly rate. To use figures expressed elsewhere ($300K/year), a successful agent charges $120/hr. And by the way, I haven't seen any fee for service model that charges LESS than this. A "We list on MLS for $500" is at most 3 hours of work.
We assume 40 hours of work (feel free to propose something else for hours worked), so the Buyer has paid us a retainer of $4,800 in the beginning. At the end of the transaction, let's say all those emails and texts and phone calls add up to 60 hours. The Buyer then writes another check for $2,400.
Now, you've got to deal with the rebating of commission to the Buyer. First - will their lender approve? The brokerage was paid $14,400 but has already been paid $7,200. So the Buyer is actually due back the entire $14,400. That has to be shown on the closing statement and approved by the lender. Lenders have limits based on % of purchase price for concessions, sometimes just 3%. certainly the $14,400 wouldn't exceed that, but it might max out the concessions.
We were discussing buyer's agents and the increased liability risks when they do anything that looks like an inspection or comment on the condition of a home to a buyer.
This form is a requirement to be filled out by the seller's agent with the purpose that it helps with disclosure on the seller's side. So California makes sellers agents do a visual asessment of the home to ensure that no obvious defects exist that aren't disclosed.
How is this relevant to our discussion of buyer's agents? Can anyone explain the relevance to what we were talking about?
Yes... (Repeated for Emphasis) the form specifically states:
The duty applies regardless of whom that Agent represents
So far this discussion of Commissions overlooks Real Estate encompasses more than single family owner occupied homes...
My brother bought a strip mall in AZ... it was a good investment with a 7/11, Optometrist, Cell Phone shop etc... when he decided to sell he hired a local broker and directed the sale from California...
Said it was money well spent because the agent did exactly as instructed... to the letter... it was just not feasible to be two places...
Also, the Optometrist had insisted on buying it and before listing he was offered the opportunity at the projected net figure... the Opto said the price was ridiculous because he "Knew" what my brother had paid 4 years prior...
Brother listed and the Opto rushed to accept... told it was too late as now commission was due... the Opto became very angry... things is the new buyer closed 4 weeks later at 4% over the new higher asking price...
So going with the agent netted my brother more and he no longer had to deal with an obnoxious Opto...
Some people wouldn't recognize a square deal staring them in the face...
Last edited by Ultrarunner; 01-28-2018 at 11:28 AM..
this is what I said in response to your question. hopefully the last paragraph didn't blur the response.
Perhaps you'd suggest or consider a system whereby the Buyer's agent gets some hourly rate, plus a bonus as a % off list price, or when the appraised value > contract price.
But at the heart of it, it does require a fundamental change in the way commissions are contractually paid. The listing agent offers all of the buyer agents a uniform compensation at the close of the sale. (Example follows).
It would require splitting the compensation model in 2 on the front end - the seller pays the listing agent for their work at whatever rate they agree, and the Buyer directly compensates their buyers agent at whatever rate they agree.
Example: 500,000 house where the seller and listing agent agree to a 5% compensation rate. The buyer's agent is to be paid 3%. House sells for $480,000.
At the current model, the Buyer's agent (brokerage) gets $14,400. That shows up on the closing statement.
Now, the buyer and their agent have an agreement for a retainer and an hourly rate. To use figures expressed elsewhere ($300K/year), a successful agent charges $120/hr. And by the way, I haven't seen any fee for service model that charges LESS than this. A "We list on MLS for $500" is at most 3 hours of work.
We assume 40 hours of work (feel free to propose something else for hours worked), so the Buyer has paid us a retainer of $4,800 in the beginning. At the end of the transaction, let's say all those emails and texts and phone calls add up to 60 hours. The Buyer then writes another check for $2,400.
Now, you've got to deal with the rebating of commission to the Buyer. First - will their lender approve? The brokerage was paid $14,400 but has already been paid $7,200. So the Buyer is actually due back the entire $14,400. That has to be shown on the closing statement and approved by the lender. Lenders have limits based on % of purchase price for concessions, sometimes just 3%. certainly the $14,400 wouldn't exceed that, but it might max out the concessions.
food for thought.
'plus a bonus as a % off list price, "
Oh, yeah. Give the buyer's agent incentive to only show overpriced listings.
And the seller motivation to list very low...
when the appraised value > contract price.
Since appraisers never err.
And, then there is the cash offer, with no appraisal.
The problem with playing along with a rhetorical question, like this one with no proposed framework, is you are just launching clay ducks to bust.
To humor, though:
"Where is the buyer's agent who wants to propose a system that gets him more money as the contract price goes down rather than up?"
Your position is that differences in values and levels of integrity will prevent opposing perspectives from reaching common ground. This is incorrect because your personal integrity and the integrity of others in this discussion have nothing to do with the debate about whether the buyer's agent model creates the right incentives for agents and whether a model where buyer's agents are paid with sales commissions split by the opposing side makes any sense. You aim to avoid this discussion by making it a matter of honesty and integrity. And then, by extension, making it into a debate between those who have integrity and those who do not. Unfortunately, this debate tactic is used far too often in more serious matters such as going to war (e.g. making a debate about going to war into a question of love of country). Those might be weightier issues but the dishonesty and lack of integrity in the tactic is no different. We don't buy that here as those tactics are the enemy of intellectual discourse.
We all understand that any good sales person cares about his reputation, having happy customers, having repeat customers, having customers refer other customer, etc. This is just business as usual and should not distract from the issue of whether the structure of incentives for buyer's agents make any sense or whether there are too many conflicts of interest in it. Instead of addressing the issues being discussed, I guess it's easier to go on and on about how much integrity you have and how dishonest the rest of us are.
I didn't ask about personal service, etc. And I'd never be so smug to suggest that another adult does not understand how life works.
I asked a very direct question about another way of compensating agents for their work and twice now you have gotten on the soapbox and totally ignored the question asked. If you don't have an answer no one is requiring you to comment. It's quite okay to say you're satisfied with the status quo, but that's irrelevant.
It's not an answer if it has nothing to do with the question. Feel free to pat yourself on the back until your arm falls off but don't list that as another sacrifice you make in doing your job.
I didn't realize we were back on just_because's point about conflict of interest when paid on a % basis. He's fought that n numerous topics.
There is no way to eliminate the conflict on paper, in philosophical discussion, in legalese nor in the halls of academia. No way. "I get paid more the more you consume" can never be denied. Unless the "extra" is given away free.
The conflict DOESN'T exist when you hire a professional for a job that you trust does what is needed for your benefit, not doing something because it benefits them.
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Makes sense to me!
