Someday someone will sort this all out, or not.

I thought the article was pretty factual and interesting. That you could take the one quote and apply it to an entire industry is remarkable. To preclude any concept of this very situation I always show my clients the full listing sheet which discloses the BAC split. Of course I could selectively remove lower BAC listings from the batch, but with today’s savvy computer wise client that would be foolish. They are likely to find that same listing on their own if it indeed matches their needs and then discover the lower BAC when they ask to see the house. Hardly worth the risk of losing a few hundred dollars and future referral clients. If an agent is this desperate or greedy they will certainly not be long for the industry anyway, especially in these tougher market times.

My average sales price is 6.32% below the list price. So I normally save my clients, who are really paying the commission anyway since they provide all the money, close to the entire commission. Whether I was supposed to get 2% or 4% becomes irrelevant. But that fact that my clients appreciate my service and my integrity means they will send me referrals, making me more money not only in additional sales but in money saved not having to throw it at marketing.

Lets get to the real issue-co op commissions. I believe we should do away with co op commissions and negotiate our side with our clients. The listing agent negotiates their best agreement and I negotiate mine, eliminating the co op issue all together. But I say this more from the aspect of the “limited” or “dual” agency situation that arises at the gleeful salivation of the double sided agent now getting paid double for exclusion form fiduciary duties and no more real work. Lets attach the commissions directly to the client side. This is the real issue.

-Russ

What Fairweather was saying is that, in her opinion, a buyer’s agent with dozens of houses to potentially show a client, would be more likely to show the houses with the full co-op splits, ie, 3 percent, over discounted splits. Ken

Your comments are right on. I am not saying that buyer agency is nonsense. I support buyer agency 110%. However, there is an unavoidable conflict with true fiduciary duties if one lets the SOC govern their behavior.

Marlow,

I have to disagree with the comment that “most” agents are requiring a buyer agency agreement. If that were the case, then this issue would be largely moot. I did the Battle of the Barristers last week and asked the crowd of 100+ if they routinely got Buyer Agency Agreements signed by their clients. Roughly 10-20% of the people raised their hands. It may be “most” in your office. It is the opposite in the overall industry.

-Russ

The only method I have found to absolutely guarantee that I do not in any way use the reduced commission as a criteria, is to not look at it until after the buyer chooses to purchase it. Then if the amount affects the buyer and not me, I need to discuss the impact on the buyer with the buyer, before the offer is written.

As Marlow pointed out, if the buyer has indicated that they are not interested in ANY property where the seller’s offering is less than the price agreed upon between the agent and the buyer, the agent could be following the buyer’s instructions when eliminating it at the office. However I would NOT eliminate it, as I never require the buyer to compensate over and above the offered amount, even if it is less than the amount we agreed to.

That could change if we see more dramatic reductions, but so far it has not been an issue. I have only had it happen once.

Given I will never let the commission get in the way between a buyer and seller, nor will I let a buyer lose a house that they want, if the difference is less than the commission, there is no need to eliminate property based on the offering.

I guess my take on things is that if you are focused on service, rather than on the money you might potentially make, you will always be rewarded in some fashion. Maybe you will get great referrals and a raving fan for a client. Maybe you will be well compensated. Maybe you will luck out and have both outcomes from the same transaction. But, I do think that if you keep the focus on the client and take a long-term relationship-based approach, there is a definite pay-off even if maybe you might make a little bit less on this one transaction.

I always try to keep in mind that my goal isn’t just to have this one closing with my client, it’s this closing and the next one and the next, and the word of mouth that happens when your clients know you really do have their best interests at heart and that you provide great value through the work that you do for them. That doesn’t happen when all you care about is the check.

(One other thing I’ve noticed around my office anyway is that while there is a lot of talk about how crummy it is to pay a low commission split, I do think that it’s mostly talk. MOST agents out there don’t eliminate a property just because of that. Often, though, the commission is symptomatic of other issues that may exist with the property. For instance, most of the properties I’ve seen where the SOC was less than 2.5% were in bad condition or had other issues. They are also often overpriced. So, it’s not the commission that gets them eliminated it’s the fact that compared to other properties on the market they don’t make the cut. There are exceptions, of course, but in my observation these things do seem to go hand in hand.)