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realtors are the biggest fraud of US

I'm confused. The friend was paying the buyer agent's commission or the SELLER was? If the seller is paying the buyer agent the commission, which is standard practice in VA what is the conflict? Even if the buyer was paying the commission, I don't understand the concern. You pay your surgeon to take out your appendix and if you need something else done while you are on the operating table, would you accuse him of overcharging you to make more money? Should Realtors not get paid to perform services for their clients they were hired to do? Ethical Realtors are bound by the Code of Ethics to handle our clients with the utmost care and protection, and I take that very seriously. There are repercussions if we don't. What is the issue?

Well, time is money. And "low ball offers" are a waste of time. Think you can figure out the rest.

There's a difference between "low ball" and calculated negotiations. I had a client tell me, "If the Seller isn't taking a bath, then I didn't get a good deal." I was dumbfounded. Should have been my first indication to walk. Ignorantly stuck around, though, and finally left pleased to have rid myself of said client. Offers coming in 35%+ under Asking. I wouldn't make his ridiculous offer (waste of my time), so fortunately he chose another agent. My not making his offer was my invitation to leave.

absolutely!! When I talked to my realestate agent I told him he was going to have to give me 1% back. I searched for the house. All he had to do was open the door to earn 5 gs.

I was a Realtor for 6 years. I have done a series of blogs about what a Realtor's job really is. I hope you enjoy the 1st of the series.

http://paragonlifeblog.com/201...

I'm amazed that anyone read anything negative into Bill's original blog. Having been the buyer of a number of homes, and using a buyer's agent on most of those occasions, I don't question the ethics of buyers agents. I do, however, completely agree that the standard commission scenario absolutely does not favor the buyer. I fully agree with Tom Hayman's idea, and have used it successfully myself, that buyer's agents be offered a percentage of the SAVINGS they can negotiate for me off the original sale price - in addition to the standard half of the commission they would normally get from the seller. Most of us buyers who don't agree with the standard commission structure for buyer's agents don't have any ill-will or doubts about the agents ethics, nor do we necessarily want them to make less money on a transaction. I didn't read anything from Bill's question regarding lowering an agent's commission or questioning ethics. At the end of the day, most agents I've dealt with will certainly try to get me a good price. However, at the end of they day they need to feed their families as well - so how far they might "go to the mat" for me in terms of pushing for a lower price or concessions does have a limit. I love being able to offer my buyer's agents a percentage of the "decrease from original sale price" (as well as them keep their share of the standard commission) and then watch them REALLY get aggressive with negotiations - as well as make more money than they would have under just the standard agreement. Win-win for both of us!

An agent who knows that you will be sending them their future clients is greatly motivated to not only get you a fair price, but get you a price as low as possible. It doesn

This very cynical and misinformed person should go get his real estate license (I mean it's" REALLY EASY". -- EVEN A HIGH SCHOOL DROP OUT CAN DO IT!" ). Then go out for a year and work hard and ethically, obeying all the laws and codes of ethics, which incidentally most real estate agents do -- trying to make a living as a real estate agent -- ya know -- pay the couple thousand dollars per year in basic fees just to maintain a license and for association fees, pay the monthly fees for a big cell phone plan and a website, maybe some pay per click leads and marketing mailings and/or internet marketing -- we're usually talking as much as 10- 15K per year on the low side for an agent who is not really well established -- and when you get pretty big about 20% of your income can go to marketing and expenses -- then add to that an assistant at 35 to 50K per year after you reach the point where you are consistently closing 3-5 transactions/mo. -- also pay for most of your own education, which at times includes out of town travel to seminars -- many pay coaches $400-$1,000/mo to keep yourself up to the minute on your knowledge, pay for all the gas to cart people around, buy them lunch and settlement gifts, pay your broker 350+/mo. for office rental, technology fees and Errors and Omissions insurance and 5% of of each transaction for a franchise fee-- then come back and tell us how easy it is and how much money real estate agents make while hardly doing any work! PEOPLE DON'T UNDERSTANDTHAT WHEN YOU BECOME A REAL ESTATE AGENT, YOU ARE STARTING YOUR OWN IBUSINESS! AND IF YOU WANT TO BE SUCCESSFUL AT IT, YOU HAVE TO INVEST IN THAT BUSINESS! And don't forget you may be in your office amost every day by 9 or 10, stay there till 5-6 -- then go out and show property to someone after their work day has ended and maybe even come back and write an offer for them at 10 or 11 at night and show property on Saturday and do an open house on Sunday. Sure there are a few agents out there who are lazy and less than ethical and who went into it thinking real estate is generally conducted in the way this person thinks it is -- that it's a piece of cake and a source of easy money -- many of them have left the business since the downturn, and the state regulatory commissions weed out a wad of them, fines them thousands and/or takes away their licenses and disgraces them in a publication that goes out every couple of months to the real estate community. And another thing -- bonuses to agents to incent them to show certain listings are rare, are paid for by the seller, are often credited to or split with the buyer at settlement and are not "hidden" in the MLS. And commissions of over three percent are also rare and paid for by the seller -- the most common commission paid to the buyer's side of a transaction is 3% ($6,750, NOT $15,000 on a 225K property -- out of that comes the 5% brokers franchise fee, and the rest is divided between the buyer's agent and his/her broker.

I can't believe I let you coerce me to spend this much time explaining how the real estate industry operates the vast majority of the time.

first of all realtors work very hard to get their license and even harder to keep it you sir or maam must be a complete idiot to even say the things you are saying. do you really beleave it takes 40 hrs and the state just hands out a license then think again.the test is no joke but you are ,what a realtor makes should never be the buyer's concern since the buyer is not paying the fee when was the last time you shouted out what you make?does your lawyer disclose what he or she makes or your doctor for that matter?buying a home is a very serious matter and any one that thinks they can do it with out a Realtor will get screwed even if they don't know it until much later. working with out a Realtor will not get you a discount on a home.it only showes your incomputance and your lack of knowledge be not useing a professional. if you need an attorney would you walk in the court room with out one? their professionals and should be treated as such, hiring a realtor was the best thing that happened to me and my husband she was with us from beginning to end. and saved us 38,000 off the price on our home and for that we are truly grateful and I have realtor for life as well as a friend I referred her to several of my co workers and they saved on their homes as well and gave me much thanks for recommending her. and with the price of gas these day's they are god sent my realtor drives a HUMMER and she never complaines .just remember people you get what you pay for so if you want discount brokerage then a discount sales person should be what you get.

The "Anonymous" person below failed to point out is that the seller's agent is contractually bound to get the best price and terms for the seller; therefore, that agent's interest will never be aligned with the buyer's interest, unless the buyer wants to pay top price; or perhaps, concede in other aspects.

Only experience with multiple transactions can make one versed on the nuances of a real estate transaction. One can research on the internet from here to doomsday about buying a home without a buyer

This is ridiculous. Real estate agents keep writing that even though the buyer's agent is paid by the seller and is paid a commission on the sales price, it doesn't matter because they live and die by referrals and so what's really important is that the get the buyer a great deal. That is incredible nonsense.

First, most buyers have a lot of trouble figuring out if a deal is good or bad and often they have no idea about MLS hidden info on higher buyer's agent commissions for steering a buyer to a certain property. The HUD statement probably contains this information, but most people are too stupid to read all of the paperwork because they are relying on the "professionals" who are practicing a profession that coincidentally doesn't require a high school diploma and does require only 40 hours of study -- even beauticians need something like 3,000 hours of study/training.

My take on how to deal with these jokers is to turn the tables. As a buyer you are already screwed because it's almost impossible to find an agent who will reveal to you the commission kick backs in MLS to steer agents to certain properties. Other listings might only offer 2% or 1.5% and some 4% or 4.5%. The buyer's agent, seller's agent and seller all work together. I've talked to buyer's agents who refuse to forward "low" offers because they think they are "ridiculous." Can you imagine someone in your employment saying that your wishes are ridiculous even though you are paying them? Of course not. But here you aren't paying them, the seller is.

Anyway, the trick is to not get a buyer's agent and to approach the seller's agent and offer him extra money to be your agent too. Usually the agreement that the seller's agent has with the seller says that if a buyer shows up without an agent that the seller has to pay the seller's agent to also be the buyer's agent (this is so ridiculous as to be completely criminal except the lobby these folks have have managed to keep laws from being passed to stop this). So the deal usually is 3% to the seller's agent and 3% to the buyer's agent. You walk in and say, "hey, I really need expert help from a drop out like you who finished a 40 hour Century 21 real estate class and has your little picture on your business card and something about having graduated from college with a degree in communications. Anyway, I need your expertise so much that I want to pay you an extra 1.5% commission so that the total is 4.5% for the buyer's agent's commission. But in return, I want you to really help me because I am one of those people who really needs my hand held through the process."

Now you've aligned the seller's agent's interests with your interests. If you are bidding on a $1,225,000 house, by paying 4.5% instead of 3% to the "buyer's agent" who is really the seller's agent because this is such a stupid scam these people have going, the seller can now drop the price of the house a full $225,000 without lowering the overall commission of the seller/buyer's real estate agent.

The difference in commission on a normal deal between a $1 million sale price and a $1,225,000 sale price is $15,000. What I'm saying is if you as the buyer pay the "buyer's agent" an extra $15,000 to compensate him for his 40 hours of education and years of expertise driving people up and down streets while commenting on things like curb appeal and overgrown vegetation, a sale at $1 million with a buyer's agent commission of 4.5% is the exact same thing form a compensation perspective as if the house sold for $1,225,000 with a 3% buyer's commission.

Now I'm not suggesting that this will actually alter the agent's behavior because as all of the agents on this bulletin board have attested, they aren't working for the commissions, they are working to help people. Instead of becoming pediatricians, or heading abroad with the Peace Corps, they thought they could do the most good by "helping" people buy and sell houses -- something that it's unclear why a person would need help doing but for the anti-trust violation that is the Multiple Listing Service.

But since none of these agents would actually change their behavior based on the amount of the commission because they are worried intensely about all of their very smart customers being happy with their expert service so that they can get referrals for a "lifetime" career, we can be certain that this won't create any conflicts of interest. After all, it is seller's agents who often post on MLS that a seller is willing to pay the buyer's agent 4% or 4.5% -- something the buyer's agent generally doesn't tell the buyer -- and even if at the end, it's with the caveat "But of course it had nothing to do with your or my love for this house."

Only an idiot would pay an extra $225,000 for a house to avoid paying an extra $15,000 to a real estate agent. Buyers who try to get the seller's agent to refund part of the commission if the buyer doesn't have an agent apparently don't know much about aligning interests.

Give it a try. It works.

When a person undertakes a full time career in real estate, their goals are always going to be aligned identically with their clients. Most states (if not all) do regulate this as well as possible. And those who choose to become a REALTOR voluntarily submit themselves to, in some cases, even more stringent ethical guidelines than the state may require one to adhere to. Furthermore, those of us who are committed to real estate as a career and way of life are not in it for a single transaction. Though an indiviual may only purchase a home every 5 - 7 years (as statistics show), a professional will want to earn the referral business from their client, from their sphere of influence. REALTORs live and die by the referrals they generate, not the commission they earn for a single transaction.

You also alluded to steering based on incentives which are not based on sales price, but on the sale itself. While this incentive may create awareness in the eyes of the agent, it does nothing to magically create alignment of the buyers wants and needs to a particular home. Trust me when I say that an agent pays for their gas just like you and would prefer to show the homes that most align with the buyers wants and needs right up front. And if there happens to be a bonus to the agent, great! And finally, when agents begin to receive compensation before they accomplish anything for their client, it creates a "Menu of Services" mentality: I'll do this, it costs you this regardless of the outcome. This sounds kind of like some legal offices, but then again, lawyers have the least amount of confidence from the public of almost any profession. I prefer to have my fees based on results.

As a law student, you should recognize that to obtain long term success, when you have a fiduciary responsibility to another, your fee should be the last consideration. Instead, focus on why and how you can be a positive impact on your community and forget about the money. Take care of your community and it will take care of you, guaranteed!

Becoming a realtor in most cases is not voluntary by any means, I personally think as an agent your held hostage to it.

What's the #1 tool any agent needs to be an effective agent? MLS membership

What is usually a rule to become a member of every mls I've ever seen?
You need to be a realtor in good standing, meaning you're a member who has paid your dues!

The curious thing is I see that usually at least in New Jersey, most of the local realtor organizations have some sort of ownership stake in the MLS's. Too bad the realtor organization themselves don't hold themselves to the same standard they expect their members to, I would call that an extreme conflict of interest.

Another rule, never talk negatively about NAR or other realtors. I can understand that as just being respectful and good business not to always talk bad about the competition but as a rule for membership not to speak negatively about your organization even if there is something negative to say only is for the benefit of the organization and not those who are being affected by the bad thing kept in silence whatever that may or may not be.

I've got a million rants, like who has a partial or wholly undisclosed ownership stake in many real estate technology and marketing companies which is pushed constantly by NAR... hmmm... I'll let you take a stab at that one.

The realtor code of ethics is good in conceptual theory, however when you make it necessary for everyone to be a member and the local level office rather not make waves with other realtors and lose membership and instead focus more on just the dues and fines for listing paperwork being late or whatever over problems with unethical realtors, the whole concept can make one extremely skeptical.

I've encountered plenty of situations with employed brokers refused to release mls membership stock back to the company they used to work for or taking listings with them when they leave to listing agents refusing to allow another agent to present an offer or even give the name of the sellers attorney so we can submit an offer to for fair consideration because they may have their own offers already. This stuff happens every day and the local NAR branches refuse to get involved unless you file an official complaint with the real estate commission which at that point you wouldn't need them anyway.

While NAR does a lot of good with legislative action committees and providing a lot of useful info on the realtor.org site for agents, I think paying national dues to NAR, regional dues to the state branch and then dues to a local county branch all being required is a bit overkill seeing what you get in return.

I think there was a time and place for NAR and perhaps for some things it is still a useful organization but in the end find it an additional un-needed expense.

My state recently enacted making buyer rebates legal however NAR fought it ever step of the way and now with it becoming law anyway to allow them, they are doing their best to make it difficult for those agencies wishing to make those offerings.

Exampe: They help legislate the rules on the newly enacted law such as advertising these offers. You need to post a paragraph long disclosure which must have the text the same size or larger than the text used in the headline of the offer your making, that is counter productive and kind of defeats the purpose of a headline to attract attention of the offer your making.

ugg... frastrated and tired at nearly midnight, I'm going home after another long day.

The Washington Post gives buyers the

If the buyer has no agent, then generally the 3% overage will be retained by the listing agent (seller

I came across this blog as a law student researching Buyer's Agent interests for a paper. My thoughts: I have a very small & brief relationship with my agent; even if I use him/her repeatedly. Practically speaking, I will not have enough background information on this person to make a reasoned judgment on their ethical base. Therefore, I rely a lot on standard business practices and regulatory agency oversight.

I would prefer to have their incentives align IDENTICALLY with mine.

The benefits to the buyer's agent based on higher sales price is obvious. Is the incentive enough to impact the final sales price? Debateable. I find other commission based conflicts much more alarming.

1) Filtering of properties shown based on seller's commission agreements or buer's agent bonuses.

2) As noted numerous times on this blog, no financial reward for buyer's agent until a home sells. You should not be incented to transact a property. You should be incented to provide a service to the buyer that may or may not result in a transaction.

The agent's financial incentive is to close a transaction on the highest priced property in the shortest amount of time. That statement works for both buyer's and seller's agents. That is not appropriate.

The buyer's agents have expressed outrage over the possibility that an agent would execute under that incentive. I am outraged that they are not open to correct the incentives - their outrage makes me distrustful of them.

I do not want an agent to work for free. I want to pay them appropriately for their service. I do not want to pay them for their disservice. If they acted as honorably as possible during the sale, I do not want to wonder later whether I paid them for disservice. Do you want us wondering?

I have purchased several homes, and have always used a buyer's broker. As I have become older and wiser, I will be open to using them again in the future. However, I will dictate the terms to ensure they are in favor of both me and my agent. If an agent is not open to that agreement, I certainly do not want him working for me.

An agent should be compensated for:
1 - Time spent locating the perfect property for me
2 - Time spent managing the transactional
3 - Insight & experience in the negotiating process leading to the lowest possible price

It cannot be that hard to structure a contract that rewards an agent for satisfying these needs.

good pointers i should take note of these

Bill,

I teach a 2 day negotiation seminar focused on real estate negotiation situations. Those who attend the seminar receive the Certified Negotiation Expert (CNE) designation for real estate professionals. We are a new designation but have awarded over 1100 CNE designations across the country in our first year.

As I perused the responses to the Buyer's Agent commission question, I saw many comments that have been voiced in our seminars. We offer a couple of options for consideration as the traditional approach to Buyer's Agent compensation is clearly not in the Buyer's best interests. One approach is to have the Buyer formally responsible for his/her agent's fee. The co-broke then acts as the Buyer's "insurance policy" similar to the medical industry. For example, if the Buyer has agreed to pay his/her agent 3% and the co-broke is 3%, then the Buyer doesn't have to come out-of-pocket. If the Buyer has agreed to pay a 3% fee to his/her agent and the co-broke is 4%, then the Buyer's Agent can agree to give all of the difference to the Buyer or maybe split the difference 50/50. If the "insurance policy" doesn't cover the fee, the Buyer may have to come out-of-pocket, but the Buyer's Agent can always attempt to negotiate the co-broke with the Listing Broker/Agent (without violating the fiduciary responsibility to the Buyer of course) or maybe get the Seller to pay the difference in closing costs to the Buyer and having the Buyer credit that towards the Buyer's Agent's fee.

Another approach, not perfect but actually preferred by most Buyer's if you offer it to them is for the Buyer's Agent to get a "bonus" based on the amount negotiated off of list price. For example, the Buyer's Agent can negotiate with the Buyer a bonus of 10% of the difference between the List Price and final Purchase Price. This will give the Buyer's Agent the maximum incentive to negotiate the very best deal for the Buyer (i.e. the Buyer's Agent will always make the largest fee by negotiating the most off of the list price). And the lower Purchase Price creates less cash for the down payment (unless 100% financing but that's not very likely nowadays is it?) so the Buyer can pay the bonus out of these savings and not have to come up with additional cash at closing. While some agents will have problems with this approach, the 10 year history of agents using this approach is that 90% of Buyers will select this option if given the chance.

There is no question that the traditional co-broke approach is not in the Buyer's best interests. Yes, we can tell Buyer's that being paid by the Seller's Broker on an incentive basis won't influence our commitment to doing the best job possible for them, but offering them a compensation option that removes the potential conflict is a better solution.

The Certified Negotiation Expert (CNE) designation is offered nationally - more info at www.negotiationexpertise.com.

When buying a property, a consumer

To take this to the next step did the agreement cover

Interesting Question: Should the Buyer's Agent receive more commission if he gets the Buyer a lower price?

Realistically, most professionals earn their income from the successful transactions they do. The small amount of incremental increse in a higher selling price should not enter into it. I like to let my prospective Buyers know that when I am negotiating on their behalf I am committed to get the best deal for them. I am a professional and that's how I do business.

My average selling price on the properties I list is 98.4% of the listing price. When I am working for a buyer, I manage to negotiate an averge buying price for them of 95.8% of asking price. That is the value I add for them.

However, let's look at how other professionals earn their income. Lawyers or Accountants are generally billing the hours they spend on a project. Using the same line of logic as the question posted, doesn't that create an incentive for them to do the job slower and less efficiently and therefore earn more? I think they would tell you otherwise.

In this age of information, how a Realtor represents his or her clients will be more and more public. I think that will tend to protect the Buyers who do their research properly.

Again, the question of commission or fee for services brings up another question. If we were charging a fee for services, should it be based on the quality of the expertise that is involved, or should it be hourly based, so the Realtors who do a poor job and take more time get paid more? Just wondering....

Here's an article giving another perspective on how commissions could be explained or justified. It still sticks with the traditional approach, but gives a good explanation of how commission dollars are split and utilized, and how much the agent actually takes home. Check it out at http://rismedia.com/wp/2007-09....

Bill Miles

EVP Connecting Neighbors

www.connectingneighbors.com

bmiles@connectingneighbors.com

Bill, I don't think you are missing anything, but I think you are too narrowly focused. If you take your precise example of $1,000,000 price being negotiated down to $900,000 then maybe, just maybe the $1000 in additional net commission to the buyer agent (after splits, taxes and expenses) would be worth compromising their fiduciary responsibility to some agents. However, I doubt the vast majority of agents would risk it for a 3.3% increase in the income. Additionally, you put the thought in the mind of the buyer that if their agent is not able to negotiate a 10% reduction in the price of the home they want, that their agent may have ulterior motives. What percentage of the time do you guess that is the cause versus the seller simply wouldn't agree to that low of a price? This isn't a purchase on e-bay. Every seller is different, every transaction is different. And in addition, a suspicious buyer will be just as annoyed, and perhaps more so, if they agree to pay a set fee and when the negotiations are done it turns out the percentage would have been less. Every buyer wants the best or fairest (depending on their personality) in their specific deal. However, it's impossible to know ahead of time what that would be. So most agents try to create a system that is as fair as possible for all their customers based on past experience and without being able to predict the specfics of any one future deal. Two other details to consider: 1) The financial value to most agents of the referrals one might get from a happy, satisfied customer. 2) Are we exceptionally well paid for a quick and easy deal? Probably. Is it reasonable to be paid about $1.50/hour on the deal for the elderly senior we had to work with for a year cleaning out their home, helping them downsize their things, figuring out the bridge financing, etc. because their kids live out of state, don't care or they don't have family? Or the short sale with two lenders that is a nightmare. Do we just turn those customers away because they aren't financially viable? The way the system has been set up from the beginning of time, we work a lot for free, we work a lot for very little compensation and occassionally we get an easy deal that helps even the whole thing out. Would we make more money if the system changed? Absolutely. But the public is only in favor of that when it works in their favor and that isn't the case a great majority of the time.

Bill, it is unfortunate that the double-digit IQs of many of these negative-reply bloggers does not support the moderately complex concept that you have so adequately and repeatedly shared. Your position and rationale are clearly stated and well-founded. It is too bad that so many who don't understand what you are saying, turn to attack the hand that feeds them! Thank you for adding value to your service! I agree, we still have not "arrived" at the perfect "Agency Disclosure" or agency relationship, despite its long and bloody evolution to date! It's like any other science theory...tentative rather than absolute, and more of a process than a destination. As good minds, such as yours, keep finding flaws with what we have developed to date and stick your necks out to promote change and improvements in this evolution of ideas and practices called real estate law...don't let the dummies barking up the wrong tree bother you, (they probably won't last long in the current market anyway).

Great post. The blogger doesn't seem to understand that the basis of his question is that agents are unethical and are pushing prices up to get higher commissions. He probably should have phrased the question differently instead of being so shocked that his comment is causing such waves.

Odd that so many people misunderstood you. Perhaps your message wasn't written clearly enough.

So if the buyer agrees to a flat fee of $6000 for a buyer's rep and the house they buy is $150,000, they just spent more than they would have at 3%.

Yes, Virginia, there are still houses selling for less than $700,000. Your theory breaks down when you realize that we're not one big market with the same trends and pricing. And yes, you did infer in your original blog that the agent was being unprofessional by driving the price higher to get the higher commission. Thats the whole argument you're making here. How can you now say you didn't insult the professionalism of agents? We do NOT mark up houses for a few extra dollars of commission.

Either you wrote a blog that EVERYONE misunderstands as a slight on our ethics and professionalism -or- you wrote a blog that have a different intention than you wanted.

I agree with what you are trying to say, but in reality, it is the BUYER who is paying both the listing and the selling agents.

As a relatively new agent, I find it so hard to understand all of this 'bickering' about compensation. We have listing agents in my office who PRIDE themselves on getting listings that pay 4% to the buyers' agent. We have agents in our industry who put down the 'discount brokers' and talk about them as if they were less than respectable members of society.

I know that we agents need to be compensated for the work we do or we could not afford to continue to do that work. But, I find it hard to get my head around the idea that an agent who puts the best interests of the client foremost, would refuse to show a property with a lower commision percentage. Are we working towards the best interests of our client or the best interests of our checking account? If your primary interest is your checking account, you might want to start a payday loan outlet.

We practise buyer agency in Australia, and deal with this potential conflict of interest by fixing the buyer's "acquisition budget" in the agreement BEFORE we start work. Our fee is based on the buyer's budget, regardless of the final price paid. So the buyer-client knows from the moment they sign the agreement, exactly how much the fee will be.
Michael Whitrow

I agree with you. This blogger is way off base.

Why do you say the agent is not "aligned" with his client? No matter what the selling price of the home the buyer purchases, the agent will not make any commission until the client is satisfied with the deal and the transaction closes escrow. As a licensed agent, it doesn't matter to me if my client buys a home for $100,000 or $1 Million, if my client doesn't like it, can't afford it, or can't finance it, I DON'T GET PAID!

Thanks Bill, what a maroone!!!

I find it hard to stomach that people such as this blogger keep insisting that agents work for free or substantially cut our fees -- that we don't offer a service and we don't deserve to continue in this profession. All positions proved inaccurate by surveys commissioned by NAR and CRS. I work in Dallas and the average sale is around $175,000. We were never in the bubble. We're not raking it in the way agents on the coasts are. But blogs like this one lump all markets together, insinuate that all agents are unprofessional rip-off artists, and recommend we buy products they just happen to offer to make our business better. I think the unscrupulous person is not the agents, but the sales people who blog and publish articles hoping agents will fall for their advice and make them richer. If someone's going to leech off our industry by selling products to hard-working agents and offering consulting then I would expect them to have a positive attitude towards our industry and be supporting us instead of carrying the banner for the death of our industry. It's unfair to ask us to buy your products and then stab us in the back.

As a Realtor you are committed to your clients needs not yours. Do all Realtors think this way~I can't honestly say they all do. So it is up to the consumer to "interview" agents & talk to friends to hire a Realtor who is driven by referrals and not turn around business. I don't think we often give the home buyer enough credit for knowing what "type" of agent they are hiring.

You are definitely missing a lot! Again, if you have read your own blog, you are missing the ethics involved. I am an honest Realtor and I will do my best to get my buyer/client not only the home of their dream but also at the lowest price. Because that is what I am being paid to do. And I know that when I do a great job for that client that they will refer to me other clients. Thus instead of possibly making and extra $1000 off the sale, I may make several extra $1000's from repeat service from my present client and others. Just think of this. . .McDonalds could charge $5 for a burger (and people may pay this) but not as may people would buy as many burgers. So it is not always how much you can squeeze out of a customer in one transaction (as you make it out to look). But it is the fact that being honest and ethical will allow you to complete many more transactions! - Sean Austin, RE/MAX.

Price varies by 10000.00 or 5000.00. An agent can not get you a house that is over prized by 100000.00. For 10000.00 agent will make extra 300.00 for the broker, and in average that will give the agent 160.00 less tax!! Give me a break. These are professionals, and if you hire somebody, you will have to trust them a little.

I always like this discussion about Seller or Buyers paying commissions. First the laws are different form state to state, does the buyer actually pay a commission, does a seller actually pay a commission, not really, the Seller agrees to fees and the buyer agrees to fees but they are both based purely on performance, no performance, no fees. The payment comes from a meeting of the minds and more particularly the transaction itself, without those elements there are no fees. Actually someone agreeing to consulting fees or fees for service could stand to lose as much as someone agreeing to commissions. What if the consultant doesn't perform but all agree to hourly fees, the consumer pays and gets nothing. It is a true dilemma, I agree with previous posts in this thread it really is about the integrity of all as it is with everything. The real challenge is not to challenge the compensation, but to challenge the methodology of how people choose representation whether on a commission basis or a fee for service basis. I have long felt the consumers of real estate's most difficult task it how they chose representation.

A buyer's agent should be completely loyal to the buyer's position. No amount of compensation, either negative or positive will prevent and unethical person from cheating a client. And likewise, no amount of compensation will prevent me or other agents with high professional ethics from doing their best to get the lowest price for the best home for our buyers.



Of course, your point only covers the question of compensation. It doesn't cover all the other elements of representation and how well we do that job. Keep coming up with your clever ideas. I think it's highly suspicious that you make your money with your websites off the backs of hard working agents like myself, and then you want to publish articles and blogs about how bad agents can be and how agents are a dying bred. Don't ask me to spend money on your websites if you're just going ridicule my profession.

The previous commment:

"What your comment regarding the "typical cooperating commission" shows me is how hard it is for a consumer to challenge that structure. By imbedding the 3% in the "cooperating commission" structure, the terms of payment take on an aire of untouchability."

The buyers agent will not bring their prospect to a listing without a previous agreed on fee. Do the math! Do they work for a few dollars or 3%. When you "touch" a previous agreement - you are not acting in good faith and we can all agree if it smells now - wait 'till closing!

Sure, just pay me in advance! consultants get nights weekends and holidays off and are paid in advanced. Realtors - nothing 'till closing! Who will be thinking about the transaction when they go to bed and wake up everyday?

You are missing alot! Do the math! The incentive is there just to get the best deal for the buyer signed and closed. Paying a buyers agent more to get a lower price from the seller demonstrates the lack of experience of the writer - you decide.

consultants get nights weekends and holidays off and are paid in advanced. Realtors - nothing 'till closing! Who will be thinking about the transaction when they go to bed and wake up everyday?

do the math! The slight increase in commission compared to losing the whole commission if the buyer discovers the duplicity - which is not difficult. Also, your article assumes your dealing with an untrustworthy Realtor. They do not last long in the business because the word gets out and buyers usually work with known agents. On top of that, the agent will get more referals if they have worked hard and acted in good faith - just typical good business sense - you decide!

Brain, thanks for the contribution.

What your comment regarding the "typical cooperating commission" shows me is how hard it is for a consumer to challenge that structure. By imbedding the 3% in the "cooperating commission" structure, the terms of payment take on an aire of untouchability. And becuase it is "paid for by the seller" not by the buyer, it seems removed or obsured from the buyer's considerations. But the fact of the matter, like you say, is that the buyer could extract their agent's payment terms from the typical structure, negotiate them separately to ensure alignment and motivation and then approach the seller for a reduced price to reflect that the seller will not be paying the buyer's commission. Or perhpas the buyer's agent could suggest this acting in the best interest of their client and then help negotiate a reduced price from the seller.

I agree with your comments. Just like any other business engagement, the compensation agreement between a buyer's agent and the client are completely negotiable. If your market is similar to mine, the reason that the buyer's commission is typically a percentage of the sales price is to match the market's typical cooperating commission offer. Anything more would be a cost to the customer. Anything less would I guess be retained by the listing agent, neither of which are advantages to the buyer.
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Brian Wilson, www.zolve.com

Since all commissions are negotiable, why not negotiate a flat fee or settle on an hourly rate that is fair and equitable for all. Any commissions paid by the seller can be credited to that fee and the balance paid to the buyer or buyer pay the agent if it is less than the fee.
Another option is to pay the buyer's agent a flat fee and percentage of the savings negotiated, talk about incentive....

Jay, great points and I totally agree with you.

I guess my point is, wouldn't it be even better if buyer's agents were also incented financially to get the best deal for the home that "speaks" to the consumer. The agreement may be fine today, but could it be better? And could this help the buyer's agents earn more per transaction?

In other words, if I am considering a home that lists for $1 million and my real estate agent can negotiate it down to $900,000, I would be happy to pay them more than $30,000 to do that because I would make up the difference in down payment and mortgage payments over time.

Fiduciary duty is hard to measure and pin down. The amount you pay for a home and commission percentages are precisely measurable. The fact that the buyer's commission is actually paid from the seller does not help me get comfortable with the fact that we are asking consumers sign an agreement that incents their real estate advisor to purchase the most expensive home possible.

Maybe I am missing something. I would love to hear more on this topic.

"As a buyers agent I can not worry about what the pay off will be, I have no control over that or the amount of commission I will receive"

- This an amazing quote and a hell of a statement for a business person to make.

Check out www.TerritoryRE.com, we have been harping on this issue for years.

Bill,
As a buyers agent my fudiciary duty is to find my client the best home for the least amount of money and also the least amount of money out of their savings account. Most buyers agent fees are paid by the home seller and the fee to the buyers agent is part of the listing contract for the home. Therefore the fee may vary from home to home. As a buyers agent I can not worry about what the pay off will be. I firmly believe a buyer will buy the home that "speaks" to them, I have no control over that or the amount of commission I will receive as a buyers agent.
Jay Johnson - Massillon Ohio