Buyer's Agent

Synthia,

 

While I agree that there is a value in working with a buyer's agent. I have to admit  that I do get tired of hearing that it is "free" for the buyer. Buyers are pretty savvy these days and after my response to your post you'll certainly get flames from hell.  The truth is, everybody knows it's not free. The buyer can perhaps pay a lower sale price if the sellers don't have to pay that commission. No listing agent in my area would be ballsy enough to ask for 6% when they have an unrepresented buyer. And dual agency is for scoundels.

 

I will add that when the buyer isn't represented the sellers also want the benefit of paying less. So in all reality, each side probably saves about 1%. I don't have any NAR numbers here, but would be happy to see if I can get some! ;)

 

So, each buyer can make that value determination for themselves. But careful, Synthia. Bull$&@# doesn't fly here and naivete will get you a verbal round house to the groin. Follow these posts for bit. You'll definitely learn a lot. I have.

 

Now, where's Klarek and Walty? I think I'll drink a beer and  enjoy the comments. Happy Friday to you all!

30 minutes and no doomer responses?  Could the doomers have finally gotten a life and come outfrom their bunkers? Could it be?

Thanks for the response Jan.  Real estate is local, including typical contract terms.  In our area typically the contract the seller signs with the listing agent outlines the total commission (the amount negotiated between the listing firm and the seller).  It is unusual for an agent to ignore the signed contract  when a buyer is not represented.  So the seller doesn't save money on commissions with an unrepresented buyer (therefore is not likely to drop their price). 

Perhaps in your area the contracts are different and double siding doesn't occur very often. 

 

Sheesh, 2 Big. Where are these guys? And to think I'm spending the night in drinking beer out of a can and reading zillow posts instead of going out to the clubs drinking Dom with my realtor cohorts!

 

But I do hear you, Synthia - it's definitely different from market to market. Still, I think that if this is true for you area, then yours is an exception, rather than the usual practice. Nonetheless, people here aren't gonna like it when they read it. 

Actually, I'm going to officially call BS on this. If an offer comes in from an unrepresented buyer, and the buyer and seller after countering end some distance apart, a distance the liting agent can easily cover with what would normally be the buyers commission, quite likely at the end the listing agent will cut the commission and make the deal happen. The buyer really can't ask for this, as this is a contract between the seller and the listing agent, but at the end of the day, the lister has two options: 1. Hope another buyer comes along let this deal die, or 2. cut the commission make it happen. Pragmatism generally prevails.

Maybe its market specific.  I've never seen a transaction done that way.  I'm sure it happens, but have not been in a transaction in which it did.

 

Although I have been in Commercial transaction where the client has tried to renegotiate the commission after all the contracts are signed, but even in that case the client did not get what they wanted.

"If a buyer decides to pursue property on their own without a buyers agent, the system simply allows the listing agent to double side the commission - no benefit to the buyer or seller..."

 

Your "system" sucks.  Period.  It is worthy of scorn.  At least admit to some pragmatism, like Azrob.  Jeesh.  Further, this dual commission situation is something that can be negotiated ahead of time.  Hopefully, more and more sellers will come to realize this and take action to limit commissions in the case of an unrepresented buyer.

 

Kudos to you Jan Sykes.  Yes - more and more buyers are coming to realize that they not only are the ones footing the commission "bill" but are, in many cases, even paying interest on those commission dollars as part of their mortgage obligation.  I don't care who your listing "contract" is signed by.

 

Synthia, you need to wake up.  The public is growing more savvy by the day.

Our listings in Atlanta specifically read that the Listing Brokerage is to receive 6% -  usually to be split with the Selling Brokerage. Probably no different anywhere else regarding the Listing Agreement. However, in Atlanta,  the common practice is that if no Selling Brokerage is involved, the Listing Brokerage tends to reduce to 4-4.5%. This is generally done before an offer is accepted and technically, yes, it's negotiatable. The brokerage has the right to maintain that 6%. But that wouldn't be competitive, here. Which I think is pretty fair.  Again, different everywhere.  

At least admit to some pragmatism, like Azrob.

 

I do not see how it is pragmatic to reduce your commission in the middle of a transaction (or after a listing agreement is already signed).  If an Agent and his brokerage is willing to negotiate their commission after they have already signed an agreement that is their perogative, but I do not see how it is something that has to be done. 

 

 

If the difference between making the deal is $3000, why is the REA the one taking the hit?  That is a prescedent that will have longer lasting implications (especially in a small town) then the deal is worth.

 

Now granted a metro area is much different then my little Island, but in this business I think your name is the only thing you have.  If you want to be the guy who will always negotiate his commission to his own detriment... then you will get the type of client to go along with your persona.  If you are a stand-up agent, does the job right and gets paid for quality work, then you will aslo get that type of client.  I think in this field how you carry yourself and how you conduct yourself will be indicative of the type of client you will have. 

The $3,000 in the above post was just an arbitrary number, it can really be any number.  At no time does it make sense to reduce your commission in the middle of a transaction.

The doomers are running for cover.  The stock market showed some technical signs of going bullish today...signs the recovery might just be arond the corner.

 

If you are going to convince a client to use you exclusively as a buyer's agent, you need to give thm some incentive.  A reason to use you, rather than the goober that hangs out at the office all day, drinking coffee, waiting (praying) for somebody to call about a listing.

 

Why should a buyer buy through you?  Answer that, market those reasons and you will have buyers eating out of your hand.  I give sellers a reason to use me, that's why I get listings.  If I give investment buyers a reason to use me, and they come to me.  (Maybe that's why I don't sell too many homes!)

 

Those that question the need for a buyers agent will not see the value, and might actually resent having agent representation.  Simply refuse to provide any service to these buyers without such an agreement.  Or, they just don't feel comfortable with you.  Don't be offended if it's the latter - we cannot be all things to all people.

 

Be patient and persistent, too.  There are fewer than half the buyers than there were a year ago.  You might not see serious results for at least 6 months of effort. 

The stock market is different from real estate market.

Chutta, how is a listing agent doing anything much different to justify twice the commission just because the buyer is unrepresented?  Don't tell me that it is twice the work - that is crap.  The problem lies within these agreements that you keep referring to, and the "system" that you all are running that does it's best to close out anyone trying to act without an agent (refer to our prior discussion about FSBO sellers and how agents avoid them).

 

If I am a unrepresented buyer, I am the one that is taking some risk - or that is paying out of my pocket for legal representation.  Why should I pay the listing agent extra just because the seller might not have thought to specify a commission reduction if there is no buyers' agent?

"The doomers are running for cover. The stock market showed some technical signs of going bullish today...signs the recovery might just be arond the corner."

 

LOL, riiiight.

No one is running anywhere.  The "doomers" here have been consistently dead on - almost entirely.  Remember, David, most of us want to buy.  We just aren't stupid enough to listen to the likes of you when you scream "buy now" (aka "gimme commish").

K101,

I don't know how to respond without coming off like an A$$, but I will paraphrase something that one of our regualar on Zillow has said and a few probably believe.  "I do not care if you can make a living with the way the system works."

 

This is in many ways my response to your question.

 

Why should I pay the listing agent extra just because the seller might not have thought to specify a commission reduction if there is no buyers' agent?

 

Why do I care if you do not save extra cash for being unrepresented.  If my client "the Seller" is satisfied with the service I provide to them, then why should I care what you the unrepresented party feels?  As I paraphrased above "you do not care if I can make a living in this process".

 

You look at is as though you are paying extra.  As though the Buyer's Agent is entitled, if representing a Buyer, to 50% of whatever the agreed upon commission is.   I have seen many instances in which the commission split is not 50%.  There is nothing in most States RE law that dictates that Buyer's Agent gets a certain portion of the commission.  In fact most States law states that the Seller's Agent is not obligated to offer any commission to the Buyer's representation.

 

It has nothing to do with twice the work.  There is a bit more work involved, but I would never use that as a reason to justify the entire commission.  I justify the entire commission (whatever the percentage) as that is what I am worth to have me list a property for you.  The fact that I need to split it... well that's the nature of the business.  As a Seller's Agent I accept that cost to me, but I am worth the entire commission.

"I do not care if you can make a living with the way the system works."

 

this paraphrase was in response to an Agent trying to explain how they do not receive the entire commission from any sale.

Buyers Agency was created in response to demands by consumer advocacy groups because they understood the value of representation in real estate transactions. Prior to Buyers Agency, only the seller of real property was entitled to professional representation.Consumer Advocates recognized that this practice put the buyer at a disadvantage.

 

Now that buyers agency is available to all, some choose not to utilize the service. To me, this is like choosing an antenna for your TV reception while your neighbor is getting cable. Who gets the better picture?

 

 

In New Jersey, for the most part, when you work with an agent to find a house, that agent is your buyers agent (and disclosed dual agent when looking at properties listed with that broker). All the big companies have docs that you are supposed to sign indicating your acceptance of this (whether or not the agents get the buyers to sign is another thing--although usually they get signed by the time the offer is in). I don't know if its NJ law that no buyer can be unrepresented or a tactic to lock in a buyer to a specific agent or both. I do know that NJ law requires a buyer to sign a doc indicating they know the different types of agency relationships that exist (and most of the big firms tack on their buyers agency agreements to this doc).

A lot of agents (and I've seen this in Pennsylvania too) will have the buyer sign a buyers agency agreement for a day or 2 while they look. That starts the process and lets everyone get a little more comfortable.

My understanding is that the big benefit to buyers agency is that whatever the agent finds out about the sellers, their motivation, their finances, etc. must be disclosed to the buyer. Otherwise, the agent needs to keep their mouth shut if they are the sellers agent or disclosed dual agent (dual agency is rampant here so in the end a lot of buyers and sellers don't really get full representation if the agent is following the law).

As for commission cutting after the listing agreement, I'm pretty sure that happens constantly here. Especially when the brokerage covers both sides. The general commission to a buyers agent in north jersey is 2.5%. Often, listing agents will put a commission of 3% in the listing to attract agents. the 3% may last to closing but more often than not, it will drop to 2.5 to get the deal done. Same thing with $million plus homes as the agent would prefer to get the thing closed and foster good will.

"You look at is as though you are paying extra. As though the Buyer's Agent is entitled, if representing a Buyer, to 50% of whatever the agreed upon commission is. I have seen many instances in which the commission split is not 50%. There is nothing in most States RE law that dictates that Buyer's Agent gets a certain portion of the commission. In fact most States law states that the Seller's Agent is not obligated to offer any commission to the Buyer's representation."

 

Except that, by your own admission Chutta and that of other agents here, a house will be ignored on the MLS unless there is close to a "full" buyers' side commission offered.  And, we all know that the MLS controls the world (sarcasm).

 

Chutta, I understand that you guys have to make a living, but you are starting to sound like you are on the koolaid.  But, you work in a special market close to paradise, so I can understand that your view may be a little further outside of the norm.  In general, agents would really help themselves, particularly in a market like this, if they learn how to play fair and stop acting with such an air of entitlement.  The more people learn about the "system" the sooner it is going to change in my opinion.

The

The reality is that a split is a split.  It should not make any difference to you guys whether you are splitting with another agent or with the unrepresented buyer.  It is rather obnoxious of you to operate otherwise.  That is why it is just easier all around to have the commission terms up front (ie. a reduced amount in the case of an unrepresented buyer spelled out in the contract) - and the terms disclosed to the buyer - so that the real players (buyer and seller) can operate on a fair footing.

Except that, by your own admission Chutta and that of other agents here, a house will be ignored on the MLS unless there is close to a "full" buyers' side commission offered.

 

I think my admission in the previous thread was that you could be missing some agents by not offering a full commission.  The admission was that if there is a home offering 2% and one offering 3% some agents will either show the 3% home first or choose not to show the 2% home.

 

The point in the previous thread was that in a declining market, whether right or wrong, wouldnt you want all the potential customers to be shown your property for sale?

I understand that you guys have to make a living, but you are starting to sound like you are on the koolaid.

 

So I am on the koolaid when I disagree with you?  What am I on when I don't?  Ha Ha.

 

We will never agree on commission.  Residential is just one small piece of the pie.  You do not realize how much work is put into just securing a commission in some deals (especially when you work with unsolicited Sellers or pocket listings). 

 

Or if you work with certain large brokerages.  Some of the largest Commercial RE Brokerages in the world, have commission agreements with their clients, but by company policy do not split any commission in their transactions.  Even better they do not even tell that to their clients (and these clients are large publicly traded REITS, large estates etc.) 

I

I meant.  "what am I on when I DO (agree with you)?"

"The doomers are running for cover.  The stock market showed some technical signs of going bullish today...signs the recovery might just be arond the corner."

 

This is another thread I'll bookmark and resurrect in a few months...

The reality is that a split is a split. It should not make any difference to you guys whether you are splitting with another agent or with the unrepresented buyer. It is rather obnoxious of you to operate otherwise.

 

I understand your logic.  I do not agree with it.  I think there is a big difference between splitting with another agent and an unrepresented Buyer.

What is the big difference, Chutta?  It looks to me like it is just one hand washing the other - with the hope that the agent circle jerk keeps going round.

I assume that you are taking your Omega-3 and Ginseng when you agree with me.  8)