Looking to negotiate a commision rebate with a buyer's agent

[TerdFerguson]

Originally Posted by chi_tino

I am a licensed real estate agent but not a realtor. I am not employed in the real estate industry. I use it as a negotiating tool when I am making a transaction for myself and for friends/family, since I have the ability to do the deal myself (while giving a broker a few bucks to process the paperwork). I've taken tens of thousands of dollars of commissions that would have gone in realtor pockets and instead spread them around to buyers and sellers. This is still completely legal in Florida (although realtors get very angry when you bring this up, and will often argue with you about its legality).

However, the National Association of Realtors is just short of a criminal organization. For years, they have produced "reports" which were easily shown to be factually incorrect, yet the naive media and their clients have believed as gospel.

It doesn't take a lot of research to determine that almost every statement in the past decade made by David Lereah and Lawrence Yun, NAR's pathological liars known as "chief economists", had little basis in fact or economic reality. Would you like me to provide a list of statements made in every year of the past decade where the NAR chief economist called for higher prices in the upcoming year? Remember, this organization's reporting in 2005/2006 included statements such as "there is zero chance of an impending price decline" and when the steamroller of foreclosures began, stated "this 'shadow inventory' should have no impact on real estate prices". The local chapters of NAR scooped up these nuggets and passed them along in their reports, spreading the good cheer in light of staggering amounts of evidence to the contrary.

lavender, since you are a good realtor, did you parrot those "facts" to your poor clients? How many offers did you convince them to reject when prices were 50% higher than they are today?

Many people lost their homes and their equity by listening to their local yokel realtor arguing for a much higher selling price in the face of a plunging market. In fact, I bought my waterfront home on the cheap from a realtor that drank the NAR kool-aid and was forced to short-sell their grossly overpriced house or declare bankruptcy.

As a political organization, their henchmen in many states have been trying for years to stifle and shut down non-realtor agents who have tried to offer discounted real estate services. The Federal government has investigated RICO (Racketeer Influenced and Corrupt Organizations) Act charges against the organization. Do you remember their antitrust settlement in 2005?

Realtors by law must provide a fiduciary duty to their clients. However, the organization openly does the opposite, seeking to increase commissions and cook up other schemes to skim money from their clients. Their reports are a laughingstock in the industry, and the statistics* they use to back them up are completely fabricated.

lavender, you might be nice to your clients, but the organization you pay your hard-earned money to in dues is blatantly anti-consumer. How do YOU define "fiduciary duty"?


* example: the home I purchased was on the market for about 4 years before I closed on it. According to the realtors, though, the "days on market" for this property was not entered as 1,500 in the statistics but rather 30, as they are allowed to reset the number to whatever number they choose upon closing. Why would they want to make the market look any worse than it is?

I agree with everything you say about NAR. They are the worst and we would all be much better off if they didn't exist. Listening to Lawrence Yun talk is pure comedy. I'm not sure anyone has ever been consistently more wrong than that guy. Then you have the fudging statistics scandal that you mentioned. No one should ever believe a single word that comes from that organization.

[chi_tino]

Originally Posted by MortonR

You might want to consider foregoing a buyer's agent/broker and do all of your own due diligence with the assistance of a good real estate attorney.

The OP was seeking a commission rebate at closing. This method not only forgoes the commission rebate, but the buyer would be spending cash out-of-pocket to pay for the attorney.

Most seller's agent agreements state that if there is no commission paid to a buyer's agent, the seller's agent gets to keep both sides of the commission, or the full 6% (typically).

If you made an offer with an attorney or without a real estate agent, I would love to know how loud the seller's agent laughed when you asked for part of their commission at closing. Or did you leave that money on the table?

[bentlebee]

Btw an attorney won't work for free, you have to pay regardless of a closing. The realtor won't get paid for his services unless there is a closing. A real estate lawyer is not going to show you 20+ homes....

[MortonR]

Originally Posted by chi_tino

The OP was seeking a commission rebate at closing. This method not only forgoes the commission rebate, but the buyer would be spending cash out-of-pocket to pay for the attorney.

Most seller's agent agreements state that if there is no commission paid to a buyer's agent, the seller's agent gets to keep both sides of the commission, or the full 6% (typically).

If you made an offer with an attorney or without a real estate agent, I would love to know how loud the seller's agent laughed when you asked for part of their commission at closing. Or did you leave that money on the table?

As we understand it, the lender (this is a short sale) was made aware of our use of an attorney and not a real estate agent. They are offering 3% to the seller's agent as a result of there not being another agent/broker involved in the transaction. We also suspect this is why the seller's agent attempted to get us to sign an exclusive buyer's agency agreement with them, which clearly stated we would be responsible for a 3% fee due them at the time of closing. This was buried in all the paperwork they gave us to sign. Fortunately, we read EVERYTHING in detail before we sign it, as well as have our attorney review it. After all, that's what we are paying them for.

Had they been getting the full (6%) commission signing a agreement with us would have been a moot point, considering they could not "double dip" and get 6% from the seller and 3% from us.

Your logic is flawed regardless. None of the commission comes out of our pockets, so in all honesty, who cares what the listing broker gets? It's not like the price gets inflated to cover the additional commission paid to the seller's agent.

And asking for them to "kick back" or "rebate" a portion of the commission would be highly inappropriate in our minds, as being the buyers those funds are coming from the seller, not us. We asked for nothing from them, since we understood they would get the standard 3% and nothing else. We don't expect them to work for free.

I suspect it's a fairly rare occasion when a broker gets a full commission, so why deny them when it does happen? If I was a seller I could see trying to negotiate the commission, but again, as the buyer, it's not coming out of my pocket, so why would I care? And how would I gain the right to ask for any of those funds in the first place?

Case in point:

The home we just sold had a buyer who approached the broker directly without representation. We discussed a negotiated commission with the broker, however, the property had been on the market for an extended period of time and the broker had gone to great lengths to market it outside of the normal channels. We both detailed our concerns to each other and eventually agreed that the broker deserved the full commission. Had the circumstances been different, we might not have conceded to the negotiation.

RM

[BBI]

Originally Posted by MortonR

I suspect it's a fairly rare occasion when a broker gets a full commission, so why deny them when it does happen? If I was a seller I could see trying to negotiate the commission, but again, as the buyer, it's not coming out of my pocket, so why would I care? And how would I gain the right to ask for any of those funds in the first place?

This strikes me as naive. Unless the seller is underwater (as in your short sale experience), all of the money comes out of the buyer's pocket. Of the buyer's money, some goes to the seller, and other goes to transaction costs (including realtor fees). As a buyer, you want to make sure the seller gets enough to agree to the deal, and you want to minimize all other transaction costs (including realtor fees) to the best of your ability. You have the right to condition your offer however you see fit, including conditioning on some transaction cost structure. Acting as if the full price goes to the seller and the seller then incurs transaction costs makes little sense from a practical standpoint.

In the short sale process, both the buyer and the lender are bringing money to the table. And lenders typically refuse to agree to any deal where one side's realtor gets more than 3%. You didn't face the OP's situation because the lender took care of it.

Originally Posted by bentlebee

A real estate lawyer is not going to show you 20+ homes....

This misses the point. The OP does not believe it is worth paying someone to show him homes. That said, I generally agree that an attorney is not necessary.

[chi_tino]

Originally Posted by MortonR

Your logic is flawed regardless. None of the commission comes out of our pockets, so in all honesty, who cares what the listing broker gets? It's not like the price gets inflated to cover the additional commission paid to the seller's agent.

Um, yes. Unless the seller was completely clueless, the price almost ALWAYS includes the commission, as the seller is paying it.

Originally Posted by MortonR

And asking for them to "kick back" or "rebate" a portion of the commission would be highly inappropriate in our minds, as being the buyers those funds are coming from the seller, not us. We asked for nothing from them, since we understood they would get the standard 3% and nothing else. We don't expect them to work for free.

I'm sorry, but you left money on the table. If you are going to surrender a commission that you could have taken a share of, you are essentially writing a check to the seller's agent or the seller's lender at closing.

You should probably stop digging a hole with your argument. You've already told us that you are a poor negotiator.

[MortonR]

Originally Posted by chi_tino

I'm sorry, but you left money on the table. If you are going to surrender a commission that you could have taken a share of, you are essentially writing a check to the seller's agent or the seller's lender at closing.

You should probably stop digging a hole with your argument. You've already told us that you are a poor negotiator.

As you have shown previously, your logic continues to be flawed.

As a professionally trained negotiator who has handled transactions well in excess of most residential real estate transactions, I can assure you that I left nothing on the table. The "other" 3% is simply not there in this transaction. The lender/seller is paying 3% in fees to the seller's agent, and nothing more.

If you are implying that the balance of what costs they would typically incur are there for me to ask for, you're unrealistic. In a short sale situation, the lender/seller is not about to give up a penny if they can help it. Since I bought the property for about 55% of market, I am way ahead of the game, and the benefit (if it existed) of attempting to hold up the lender/seller for a few thousand dollars and possibly wreck the deal makes little, if any, sense.

I would agree with your contention if this were a typical real estate transaction, but it wasn't. The conditions were such that we profited from a significantly reduced price on the property, the lender recovered a portion of their costs, and all three parties involved walked away satisfied.

That, in essence, is the result of successful negotiation.

RM

[jamietpa]

must be desperate agents to wanting to give up their commissions like that. lol

[Keeper]

closed for mod review