You and I have seen and seen MANY new agents submit incomplete offers and we have kindly helped them “get their act together”. Well I have, so I’m assuming you have also. One John L. Scott agent who submitted his very first offer on one of my listings even sent me a huge flower arrangement for helping him get all of the paperwork in order when he was writing the offer.

Redfin is a newer company, some of the agents are newer, why does that elicit such a response from you. It’s not like we don’t see newer agents every day in this business. Why single out Redfin in that regard?

There is no doubt in my mind that lawyers will agree with you that the buyer has no say in the commission issues, as the contracts are currently written and used here in this area. Would be very simple for NWMLS to draft a suitable form to empower the buyer with regard to the SOC. What are the odds THAT is going to happen.

All you are saying is what I am saying. The seller and listing agent have always taken advantage of the situation when a buyer is unrepresented…I say it’s time for that to change and Redfin seems to have found a way to do it. Let’s copy them, not fight them or get angry with them. Let’s implement some of the good things they do, without making it into some war against them.

The seller doesn’t pay an SOC to a buyer’s agent – a seller pays a listing fee to the listing agent. The listing agent then has the option of offering an SOC and generally does so if the property is in the MLS; that amount can vary just as much as the listing fee is negotiable. There is nothing that states that if a SOC isn’t paid there should be a discount to the buyer. Unfortunately several people perpetuate a myth that if there isn’t an agent representative for the buyer that the seller must drop their price by what some people “think” is the “standard fee” for a buyer’s agent. Any attorney will support the stand that a listing agreement is a legally binding contract between a seller and a listing agent only. No other party has any right to negotiate the details of that agreement – the fee is strictly between the agent and the seller. You can’t write into a real estate contract anything that impacts the previously negotiated commission agreement between the seller and listing agent. If an SOC is advertised in the NWMLS then the listing agent is bound to follow the terms of the stated fee payment agreement but that is because of membership in a cooperative listing service such as the NWMLS. Rules can be put around the receipt of a SOC and the terms of a SOC such as in new construction where it is frequently stated that if an agent isn’t registered ahead of time the SOC fee is either discounted or waived and any buyer’s agency fee is left to the buyer to negotiate with their agent. As long as those restrictions are clear and consistently applied across the board to all agents then it can stand.

I’ve had cases where I’ve helped clients buy from a for sale by owner situations and I’ve negotiated my fees from sellers at various levels – sometimes on a percentage, sometimes as a flat fee, it all depends on the situation and the price point of the property and the expected amount of work and liability I’ll be taking on. In those cases it wasn’t that the seller had left a percentage in the price to negotiate – in fact, in one case the price my client discussed with the seller was without discussion of agent fees to be paid at all and I had to go in and negotiate and justify the fee that this gal was going to pay me. In the end she said it was worth it because she had received a property in probate and she was from out of state and didn’t know what she was doing. The property had been a windfall for her anyway, and she needed guidance in making sure everything was done properly, which I was happy to do for my client, the buyer. The seller knew I only represented the buyer but I spoke with her clearly about agency law (and gave her the pamphlet) and outlined how I had to treat her fairly and honestly in all of my dealings. In the end I received a 3% commission for my work for that specific deal.

I don’t have a problem with change – it’s the best thing going and it keeps the job challenging and interesting. What I have problems with are people misinterpreting much of what goes on in this industry and/or not knowing enough about their industry to give it a more professional face. More self-policing would be welcome and so would higher restrictions and requirements to get into the industry.

Clearly any property listed for sale via the MLS has the Buyer Agent Fee as offered built into the price. No gray area there. Not sure where you are confused.

You say: “I did make it clear to the people at Redfin that I had expectations of the duties they would perform once the contract was agreed to and they did live up to those expectations.”

Are you suggesting they would have handled things differently had you not made it clear what “you expected”. Wouldn’t they have done those things whether you made them a list to follow or not? What might have been missed do you think, had you not first told them what “you expected?”

I totally understand that change is hard, but Redfin discounting to the buyer vs. the Traditional discounting the SOC/Buyer Agent Fee back to the seller is clearly more appropriate. If the seller was paying the SOC to the Buyer Agent, then the Buyer should benefit when that fee is less or zero.

If anyone has taken a procuring cause class in the recent past you’ll also find that there is a mistaken belief that just giving someone a flyer on a house constitutes substantial services but that isn’t the case. However, if in the case that Ardell is relating in this thread that people are asked to drive a prospective buyer all over town to see properties and then the buyer goes to Redfin to get their discounted purchase opportunity there is possible cause for concern about a lawsuit or mediation for that SOC. There is no guarantee that by taking it to mediation it will go one way or the other but time and effort could be spent/wasted.

My clients get a chance to read and discuss my listing and buyer’s agency agreements in advance of us working together. I would suggest that Redfin post the laws of agency on their site (I do) and not only provide the recommended language for talking to listing agents but also perhaps a virtual copy of the law of real estate agency pamphlet that is required by WA State (I have it posted to the RCW on the State’s website).

Having recently experienced a sale with a Redfin agent it is clear that Redfin “clients” aren’t actually clients yet and they aren’t familiar with agency law or how it works. I could have disputed the SOC payment to Redfin based on several things that happened but in particular since this buyer was attempting to discuss the pricing of the property and what her upcoming offer might entail. And, I’ll tell you that when I represent only my client in a sale with an unrepresented buyer I will usually discount my fee to the seller if a SOC isn’t to be paid. But, back to the story…When I tried to follow up with Redfin initially, after this person had asked me to show my listing to them, no one at Redfin knew who this gal and her family were. Basically she had just decided on her own that she’d use this method to buy the home so she could get the refund amount they advertise and I was left to answer a lot of the questions, to qualify her as a reasonable prospect for my clients to consider, and more. I showed her the property a couple of times and answered some questions although I made it very clear that there were certain things I couldn’t answer that were confidential to my clients and I didn’t have permission to disclose and I also told her I wouldn’t interpret any information for her. I was frank and honest with her, as agency law requires in Section 3 of the agency pamphlet. The definition of services http://apps.leg.wa.gov/RCW/default.aspx?cite=18.85.010 doesn’t really go into things such as driving people around and it targets specifically that services include negotiating on behalf of the client. When this buyer starting discussing terms of a deal directly with me then there is possible cause for me to negate Redfin an SOC.

I did make it clear to the people at Redfin that I had expectations of the duties they would perform once the contract was agreed to and they did live up to those expectations.

I disagree with Ardells constant comment about fees being part of sale prices in all situations. Plenty of property is sold in all areas of the country without commissions being included. House prices aren’t artificially high to account for commissions, they are based on market forces and what a seller will accept and what a buyer will pay. The true definition of “value” for a home/property. Commission fees can range all over the map and how then do you also account for FSBO prices? Are you trying to say that a FSBO puts their house artificially low because agents aren’t involved? No, they aren’t. These are folks hoping to get that much more because they don’t think they’ll need to pay a commission. Again, market forces – what a seller will accept and what a buyer will pay.

Well, clearly you do not understand myself or our business model and philosophy. Could be a simple misunderstanding.

For the record, I am in total agreement that the buyer is entitled to select their agent and negotiate their commission. I don’t know where you got the idea that I did not believe this. I have always defended this view point. Of course the buyer ‘pays for everything’ at the closing table. But so does the seller, too, since the seller’s net proceeds are reduced by all deductions. Two different perspectives to the same thing.

(Of course this does not change the technical fact that under the current real estate paradigm, the seller determines the amount of commission to be paid, and the listing broker determines and offers compensation in the MLS – to which by the way only members of that MLS are entitled. i.e. a non-realtor real estate agent is not entitled to compensation when they sell a property listed in the MLS, unless the listing broker agrees to this)

As a matter of fact, our company offers a 75% commission rebate WITH full service buyer representation, Plus an unconditional satisfaction guarantee (so much for Redfin being ‘the only company offering a 100% satisfaction guarantee). We also offer full service seller representation at half the cost, again with an unconditional satisfaction guarantee. Our company does not pay its agents a commission and we are not agent centric but rather ‘consumer centric’.

Redfin is not the first company to offer a buyer discount, period, and they will need to do more/better if they want to have a long term viable business model. What they are doing right now presents no competitive barriers to entry. Any independent agency can do what Redfin is doing (in fact we are doing better), and much of the investment they are making in their proprietary technology will soon be available to agents and brokers for a modest fee from a number of providers (check out http://www.realestatewebmasters.com for great custom IDX solutions including map searches and more).

I am not bashing anyone, I am simply asking some tough questions. And, I *am* a consumer activitst who is much more concerned with consumer choice and value to the consumer, than I am with protecting the status quo for independent contractor agents.

IMO that business model will be dead within a few years. There is no need for 1.5MM Realtors in the US, doing 6-8 transactions a year each.

Keep up the great work, love your blog and even though I am in a different market I do find much of it relevant.

Thomas Heimann, President & CEO
Bravo Real Estate, Sarasota FL
http://www.BravoBrokers.com

Ask 1,000 agents and you get 1,000 answers. By going straight to that place, right off the bat, that negates the relationship set in place by the laws of Washington State, you in effect render them useless for the buyer consumer.

The intention of the law is for every agent to give the buyer consumer the benefit of representation in all real estate related conversations and dealings. By “separating the men from the boys” so to speak, and forcing the question “Do you WANT me to represent you”, too early on in the relationship, is contradictory to the purpose of the law.

Actually, I thought it was “nice” to suggest you didn’t understand it. Seems you do understand it, enough to circumvent it.

Clearly I am their agent, whether or not they sign a Buyer Agency Agreement. That is what the law says. How can one not be? The only agent who isn’t is the agent of the buyer, is the agent of the seller, under the law. A buyer in WA does not have to sign a Buyer Agency agreement to be treated as a buyer “client” vs. buyer “customer” under the laws of our our State.

Now if you say you refuse to interact in any way with someone who won’t sign an agreement to insure you get paid. That of course is your choice. If you will not show someone even one house or offer any advices whatsoever, if they will not sign an agreement to insure you get paid, that is your choice. But to treat buyer consumers you interact with who sign agreements, differently than those who won’t…I don’t think that’s an option.

If the ABR class didn’t teach that here, it wouldn’t be such a sore point for me. I believe the ABR class to be totally contrary to the laws of the State, in teaching agents that somehow they can lean toward the seller’s interests or their own interests, if the buyer refuses to sign a Buyer Agency agreement. I have told them so, and I firmly believe that course should be monitored and the curriculum modified from state to state to match the existing and differing agency laws of each state. Otherwise they are spreading misinformation regarding how agents should treat buyer consumers.

The course actually teaches that the agent represents the seller, unless the buyer signs a Buyer Agency agreement. That is far from the truth here in Seattle.

Of course I am familiar with Buyers Agency. But if you ask a Buyer to sign a Buyer Agency Agreement and they REFUSE, then how can you still argue that you are their agent? Though it is not stated, that should be the test. “Do you want me to represent you and will you sign a Buyers Agency Agreement?” If they say NO, then there is no agency. That is why I always ask, because of the “buyer agent by default” clause, I think it’s necessary.

To insinuate that I do not understand Washington State Agency Law is not nice.

All buyers are represented here, by all agents EXCEPT the one and only LISTING agent, without their need to sign an agreement to “make it so”.

What you say is true somewhere, may in fact be true where Stefan is…but not here in Washington.

Washington State and Seattle Area specifically is a “buyer represented by default” State, under our laws. To suggest that a buyer needs to sign an agreement to be represented here, suggests that you need to read the Agency Pamphlet and the opening paragraph that states to consumers, that the buyer is represented UNLESS they are speaking with the agent who represents the seller. In this state, that is NOT anyone who is licensed by the same broker, but only the listing agent his/her self.

It is one of the reasons the real estate market in Seattle is “the greatest”! But only if agents who work here understand the laws here…which apparently and unfortunately, is not the case.