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So if something goes awry with the house does the realtor or the agency eat the entire cost of the house? Does the agent carry errors and omissions that indemnify the buyer?
There are consequences and repercussions for agents that fail to perform their duties when representing a client, particularly when intentional or negligent.
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Originally Posted by pittsflyer
I guess thats my biggest issue, if realtors want the big bucks then they should be taking on the same legal liability that a lawyer or title company does. But when the real crap hits the fan, I have known realtors in the past that would say things like oh in the small print we are not lawyers. Ok so im basicly paying you just to advertise and unlock doors, seems pretty steep if you dont got my back when things go south and I mean real south, like the entire buy is a bust (an example is the mineral rights issue where there is a massive rig next to my house, now my house is basicly worthless and I cant comfortably live there, thats an extreme example but thats an example of basicly 300k + flushed dont the toilet if the buyer cant get legal remedy and basicly be bought out of the home.
I am sure there are other extreme screw ups that basicly make the home unlivable thus resulting in the buyer taking a 6 figure bath if they cant lean back on someone in the process to get remedy.
I'll address your point. How can you try to hold anyone liable for future unforseen events? If I were to assume all liability for a persons decisions 6% is not enough for me. Maybe for some others but not me.
You still are not responding to my questions and points. Can you actually rebut them or are you just dodging the truth at this point?
I think it's hard because agents' traditional 'turf' is getting squeezed by specialists whose roles are becoming professionalized, licensed, and have their own liability insurance for their part of their responsibilities in the sale.
I'd love to hear some examples of this, because in my experience, it's the opposite.
We've never been the ones to perform a home inspection, or any type of inspection.
We've never done the title work.
And the "fee for service" agents typically either don't represent (and thus assume liability, as you say) or offer very specific and limited representation.
I'd love to hear some examples of this, because in my experience, it's the opposite.
We've never been the ones to perform a home inspection, or any type of inspection.
We've never done the title work.
And the "fee for service" agents typically either don't represent (and thus assume liability, as you say) or offer very specific and limited representation.
I was not criticizing agents or anyone. In fact, I even said that I have sympathy that liability concerns are making it more difficult to operate and to articulate the value proposition. 2 examples are inspections and legal work. I never said that agents used to do title work, heavy legal practice or formally inspect homes.
What I said was that today (if they are wise and want to avoid liability issues) they will need to be very careful giving clients ANY comfort around helping with legal 'things', even minor ones. Likewise giving any comfort around 'pointing out' potential problems is now dangerous for agents to be talking about or doing as it opens the door to liability claims. This narrows the overall value proposition.
Can you explain what you mean by it being the opposite of what I've clearly hypothesized?
I was not criticizing agents or anyone. In fact, I even said that I have sympathy that liability concerns are making it more difficult to operate and to articulate the value proposition. 2 examples are inspections and legal work. I never said that agents used to do title work, heavy legal practice or formally inspect homes.
What I said was that today (if they are wise and want to avoid liability issues) they will need to be very careful giving clients ANY comfort around helping with legal 'things', even minor ones. Likewise giving any comfort around 'pointing out' potential problems is now dangerous for agents to be talking about or doing as it opens the door to liability claims. This narrows the overall value proposition.
Can you explain what you mean by it being the opposite of what I've clearly hypothesized?
well, let's talk about this point then.
You said:
Quote:
agents' traditional 'turf' is getting squeezed by specialists whose roles are becoming professionalized, licensed, and have their own liability insurance for their part of their responsibilities in the sale.
it seems I must have misunderstood you. When you said:
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I am sympathetic to some degree with agents because I believe that their ability to articulate their value is getting increasingly difficult. This is a good example. In the past I think it could all be looser. You didn't have to worry as much about getting sued for things
I assumed you meant that one of the ways we articulate value - and value = commission rate, yes? - is that we COULD do various things, but NOW we are getting squeezed by specialists who do those things, and they get their own licenses (a cost) and insurance (a cost), and they take a piece of the transaction that in the past we were paid for.
So, I asked for a couple of examples of folks who have squeezed in on our turf.
Let's start back at my first comment - "I'd love to hear some examples of this"
and then I can address your next post, which didn't address that part at all.
by the way, you are right - it is possible for us to remove almost every bit of liability. As I and others have said before, we CHOOSE to take that risk (of liability, of being sued) because in our professional opinion, it is the right thing to do for the client.
it seems I must have misunderstood you. When you said:
I assumed you meant that one of the ways we articulate value - and value = commission rate, yes? - is that we COULD do various things, but NOW we are getting squeezed by specialists who do those things, and they get their own licenses (a cost) and insurance (a cost), and they take a piece of the transaction that in the past we were paid for.
So, I asked for a couple of examples of folks who have squeezed in on our turf.
Let's start back at my first comment - "I'd love to hear some examples of this"
and then I can address your next post, which didn't address that part at all.
No need to be combative. I did give two examples. My point is very simple. Yes, I meant that traditionally, agents were the generalists that could do 'everything' (don't take that literally). Now they must be careful and say that they can't do 'anything' around legal 'stuff'. Nor can they do 'anything' around helping to identify problems with the house.
Perhaps like a family doctor who at one time could treat most basic problems. Now due to liability they need to refer so much to a specialist. This shrinks their 'turf' and reduces their perceived value with their patients. Anyway, the world is getting more specialized in every area so no need to get offended. Family/general practice lawyer is the same. But agents need to re-position themselves as other areas professionalize and take the turf (not implying that it's hostile by the way, just how things are evolving).
Formal inspections were never an agent's turf but now the area is much more fortified with liability risks. Agents simply can't put themselves at risk by doing much other than saying "sorry you need an inspector to help you". "What do you think about that wall bowing out like that?" Sorry, you need to speak to an inspector. Maybe they already had an inspection and it's still nagging with them. "Would you buy this house Mr Bromhal. I'm nervous and want your opinion as I trust you" "Sorry I can't really comment on the condition of the home". I'm not ridiculing you...those are the only answers you should be giving.
You can't 'stray' as much to help your clients and still operate within the bounds of your regulations and/or avoid big liability risks. As the turf shrinks and you get more 'no go' areas with liability risks, the perceived value by clients decreases. Every time you say "sorry you need to speak to a....", your perceived value decreases. It's really just basic and I hope I clearly laid out my logic. It's not a criticism of agents, it's appreciating that the world is changing and agents need to figure out how they will continue to deliver enough value to clients despite increasing hot spots where they can't tread.
I'm not trying to be combative on the point, I'm trying to understand what you were saying. As far as giving examples, you gave the same ones I did, I believe (though I didn't mention practicing law, probably).
I agree COMPLETELY with you that an agent whose sole value proposition has become "I can do these very limited duties" for you, then their value is greatly diminished and so should their compensation be limited. They are called Entry Only and Limited Service agents (the terms used in my market).
Make an appointment, open a door, fill in blanks without any interpretation or recommendation, forward written communications, fill in more blanks as directed, use Docusign/Dotloop, review a CD, "maybe" attend closing (we're not required to, some say DON'T!). Those are items you probably should be paid $20/hour + portion of annual costs of the license/Realtor/MLS dues.
And for anyone who thinks that is too much, please remember we pay both sides of FICA and get no time off or benefits.
There are consequences and repercussions for agents that fail to perform their duties when representing a client, particularly when intentional or negligent.
I'll address your point. How can you try to hold anyone liable for future unforseen events? If I were to assume all liability for a persons decisions 6% is not enough for me. Maybe for some others but not me.
You still are not responding to my questions and points. Can you actually rebut them or are you just dodging the truth at this point?
In the case of the mineral rights, it should have been KNOWN and disclosed along with the potential implications in writing prior to sale that hey you could have a massive drilling or mining operation right next to your house that makes your house, for all intents and purposes, unlivable. I am sure there are other disclosure issue that could come up like that as well like right of way easements that go right thorugh your back yard to put in a rail, I mean these are remote things but who takes the bath when they happen since the reason they were able to happen in the first place was due to incompetence and failture to disclose on the front end.
Everyone saying they didnt know or it was some "unforseen event" is unacceptable when its a 300k bath, these examples are not acts of God covered by insurance either, this is straight up negligence on the part of the title company/relator/seller/etal.
I didnt see your other questions, I will have to go back.
by the way, you are right - it is possible for us to remove almost every bit of liability. As I and others have said before, we CHOOSE to take that risk (of liability, of being sued) because in our professional opinion, it is the right thing to do for the client.
Perhaps that somehting that needs to change, realtors need to have full liability and should carry errors and omissions and have the same liability as the real estate lawyer.
First - a plane is not a house. There are many factors that come into a homes value. A plane has a similar value regardless of where it is located in the world. A home - well not so much. I'm also assuming if you can afford a plane you can afford a small mistake on buying a plane. Most people aren't so lucky they can afford a mistake on a home purchase.
Loan cost are not connected to real estate agent commissions so why even bring that into play here?
Fact is many buyers don't know what inspections to get, who does a good inspection, who is a good attorney, what repairs to make/ask for, or even how much the home is worth. Are you expecting the attorney to learn real estate values and run comps so they can advise buyers and sellers on RE matters? Is the seller and buyer just out on their own figuring it out? How do you solve those issues with a boiler-plate fill in the blank contract?
How do people find and access homes? How do sellers screen buyers? Who pays the attorney for time when the offers don't work out? Who pays the attorney when the contract falls apart over inspections/repairs? Who pays the attorney when the deal falls through over financing or other reasons?
Are you basically wanting an attorney to become the real estate agent and walk people through the process? If so what should the attorney's charge?
Yes, the process will probably be simplified by technology at some point in the future. It already has been to a degree but understand agents were behind the process. They conceived and paid for much of the advancement. Nowhere in your post did you actually address my points. If you want to try again go ahead. I'll wait.
We get it, you dont get paid if a deal falls through, however, based on the barriers to entry, school requirements, rigor of testing, etc. I think most realtors have delusions of grandure if they think they would get the bill rates of doctors or engineers if it were "pay by the hour".
If the bill rates were commensurate with the difficulty level of becoming a realtor then people would much rather pay up front rather than pay 6%, because it would be like $20/hr maybe slightly less. The issue is realtors think they are worth WAY more than they really are and they make that 6% through dishonest buisenss practices. If it were such an amazing system for the seller we would not even be having this discussion.
In this paradigm the agents have the buyers wrapped around their fingers because the buyers are not writing the check, so why not use an agent, its the sellers problem and if a seller is FSBO they will be almost universally shunned by the buyers agents. When people start to wise up and realize that they are missing out on dream homes because said home would not make an agent a wind fall (based on the barriers to entry to the profession) then things might fall apart for agents, but since we have young adults eating tide pods I suspect that this system will endure for a very long time.
I also get that there are those 30-40 year realtors that know every single person born and deceased in the entire town and what every story is and they are probably worth the bill rates but thats not typical. These are the people that know every family, every small buisness, etc.
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