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LOL
I absolutely and completely get it.
The question you asked was: "Where is the agent...?"
I said, " I dunno." Good answer, and definitely NOT supporting any status quo.
And, for bonus enlightenment, I gave you a clear blueprint how any professional agent can prosper by getting better prices for clients, albeit within the "flawed" concepts of integrity and the notion that working within the status quo and great results from great service are not mutually exclusive.
How can this possibly be confusing to anyone who has read the thread?
Can you not even recall basic details of the proposal you say you posted at some point in the past so you can share?
It may be a good discussion starter, rather than playing hide and seek with rhetoric.
A good discussion starter was all my question was meant to be. Your "clear blueprint" was simply nonresponsive and nothing that hasn't been seen here a hundred times or more and also did not reflect a saving for the buyer.
As far as the proposal, it involved establishing an agreed upon base price (not the listing price) for each property based on things like listing price, days on market, comps and market conditions. Basic commission would be reduced by about one percent but savings below the base price would get the agent an additional 25-50% of the savings. Any money paid to the buyer's broker by the seller would be deducted from the total. And yes, it would require a knowledgeable buyer and research, knowledge and integrity on the part of both the buyer and his agent.
A quick example on a house listed at $525,000 perhaps. Comps are checked, market is analyzed, days on market getting past average, buyer and agent agree on $500k as "base price". Assuming the seller's contract specifies 3% to the buyer's agent/broker.
Conventional method: House sells at $490,000 - buyer's side gets 3% or $14,700.
Incentivized plan: House sells at $480,000 - buyer's side gets 2% (from seller) or $9,600 plus 33% of $20,000 savings for $6,667 - total $16,267. (Excess 1% from seller possibly split between buyer and his agent.)
How does that work out? Here's some samples with selling price listed first using 33% as the incentive rate:
Net outlay for buyer (assuming seller pays 3%) at selling price:
$515k - $515,000*
$500k - $500,000*
$490k - $490,000*
$480k - $480,000*
$470k - $470,600
$460k - $464,133
$450k - $457,667
* For those sold above the "tipping point" agreement would need to include how shortfall would be addressed regarding seller's 3% to agent vs. 2% by agreement but risk/reward would be assumed by both parties. Tipping point in this example is at a 3% saving for agent and at 5% for the buyer. Perhaps a more realistic formula would have the tipping point the same for both.
Actual percentages may be quite different from this example and timing for establishing base price may be critical but probably set after first viewing. How a big inspection problem would be handled would probably result in an adjusted base price. The key, however would be the kind of flexibility that would get both the buyer and his agent away from the closing table with more money in each of their pockets than they would have under the status quo.
I now find that I have probably conjured up more detail than I have previously and used more actual examples even though all the above is strictly HYPOTHETICAL.
I remember your proposal but not the details. The quality of the job the agent does is not defined by your sales price. The agent cannot control the sales price. That is determined by what the buyer will pay and seller will accept. Therefore your idea is a poor one as it does not reward an agent for their actual performance on the transaction.
If you truly believe the agent can have no influence on the selling price, you're not the agent for me and any system other than the current one would probably be of no interest to you. I want an agent whose negotiation abilities are better than my own in order to convince the seller a lower price is appropriate. Hiring an agent as opposed to going it alone is a value added proposition.
I don't see how a buyer's agent is actually in much of a position to negotiate the final price. For example, a stubborn seller, convinced his house is worth every penny of listing price, isn't going to end up giving a buyer a great deal regardless of who the agent is. The buyer's agent doesn't ever even speak directly to the seller, so even the best negotiating skill in the world could get completely lost in translation/personality by the seller's agent to the seller anyway.
Ultimately the agreed upon price is determined by buyer and seller. So these ongoing posts about agents being compensated for negotiating a better price seem silly to me.
The problem in the current system is that the principals are insulated from one another by their agents, which may very well be the way some or even most want it. If this precludes me from direct involvement in negotiations regarding my money, I want the best agent around to look after it and at the same time gain the rewards for doing so.
A good discussion starter was all my question was meant to be. Your "clear blueprint" was simply nonresponsive and nothing that hasn't been seen here a hundred times or more ...
A perfect blueprint founded in integrity and experience certainly is not nonresponsive just because of repetitive posting.
The truth behind it, and the market embrace of that truth, speak volumes.
Quote:
Originally Posted by kokonutty
...and also did not reflect a saving for the buyer....
Ahhh... I see. A lower price does not save a buyer money.
We are far apart on that point, as I would contend that any "knowledgeable buyer" recognizes that they save money with a lower contract price. That is precisely why we attempt to negotiate for a lower price.
Quote:
Originally Posted by kokonutty
As far as the proposal, it involved establishing an agreed upon base price (not the listing price) for each property based on things like listing price, days on market, comps and market conditions. Basic commission would be reduced by about one percent but savings below the base price would get the agent an additional 25-50% of the savings. Any money paid to the buyer's broker by the seller would be deducted from the total. And yes, it would require a knowledgeable buyer and research, knowledge and integrity on the part of both the buyer and his agent.
Now, after recoiling in indignation and revulsion multiple times at the mere mention of inclusion of "integrity" as an agent incentive, you would consider mutual integrity to be a core component in the relationship, whilst also stipulating that a lower contract price does not save the buyer money.
Huh?
And, please define "knowledgeable buyer," and how the agent would reach that conclusion.
That concept, and assuming a level of client knowledge carries immense liability for the agent.
Would there be a standard, formal test to document "knowledgeable?"
And:
Quote:
Originally Posted by kokonutty
Here is my initial post in this thread:
"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?
...
If you believe that there has been any post that responded to my question please tell me its number, I must have missed it.
Seriously?
Yep. You missed it twice. Here is one clear answer in Post #446:
Quote:
Originally Posted by MikeJaquish
...
"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?"
"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?
No need to repeat the same old story about prostituting oneself for 1.5% of a $2,000 unrecognized saving, that's not the question."
If you believe that there has been any post that responded to my question please tell me its number, I must have missed it.
I'll play. How do you reward an agent when it's multiple offers and the buyer pays over asking price? Is there an expected minimum pay with a bonus for a "better deal"? How is the deal deterimined - appraised value, asking price, bpo, etc?
If seller A is grossly overpriced and eventually sells for 15% below asking price and Seller B with a comparable home prices it slightly below market value and generates multiple offers resulting the home selling for over asking price but for the exact same price as seller A, which agent negotiated the better deal?
Now lets complicate more: Seller A's home is an easy close. Seller B is a difficult transaction the agent puts in overtime and masterfully navigates the challenges. Which agent did a "better" job and why would agent A deserve a bonus for negotiations while agent B makes less? If you're going to reward negotiation are you also going to reward problem solving or extra work to get closed?
If you truly believe the agent can have no influence on the selling price, you're not the agent for me and any system other than the current one would probably be of no interest to you. I want an agent whose negotiation abilities are better than my own in order to convince the seller a lower price is appropriate. Hiring an agent as opposed to going it alone is a value added proposition.
Your plan would create a perverse incentive. If the possibility of higher pay incentivizes your agent then she will be well-served by focusing on over-priced listings for you.
Your plan would create a perverse incentive. If the possibility of higher pay incentivizes your agent then she will be well-served by focusing on over-priced listings for you.
In my above scenario for example, if the purchaser buys House A at 10% less than asking price or House B for 2% above asking price that doesn't mean the agent did a better job. If they are comparable but House B cost 5% less than House A then the buyer would have gotten a better deal on House B despite paying over asking price.
Nutty doesn't get it though, so I don't think I'll spend more time on it.
"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?
No need to repeat the same old story about prostituting oneself for 1.5% of a $2,000 unrecognized saving, that's not the question."
If you believe that there has been any post that responded to my question please tell me its number, I must have missed it.
post #415.
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