Comments on: The Commission-Based Fee Structure: it’s Bad for Buyers http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/ Seattle's Leading Resource for Real Estate Information Sat, 21 Nov 2009 06:01:18 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Ken Crotts http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-343778 Ken Crotts Fri, 13 Nov 2009 18:11:55 +0000 http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-343778 I can't wait to see your business cards in my listings after your showing tours! I think attorneys have the right idea. If the customer wants to keep the commission they can pay an hourly fee. If they want to forego the cost or are in doubt of their purchase they can have their agent paid from commissions. Everyone gets what they want. Better agents could charge more per hour, based on market forces, and customers could get by with less cost by going with a less expensive agent. Now if we can only get the customers to agree life would be great! I can’t wait to see your business cards in my listings after your showing tours! I think attorneys have the right idea. If the customer wants to keep the commission they can pay an hourly fee. If they want to forego the cost or are in doubt of their purchase they can have their agent paid from commissions. Everyone gets what they want.
Better agents could charge more per hour, based on market forces, and customers could get by with less cost by going with a less expensive agent.

Now if we can only get the customers to agree life would be great!

]]> By: Craig http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-343774 Craig Fri, 13 Nov 2009 17:40:12 +0000 http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-343774 In any event, now there's an alternative to the commission-based fee: Buyers can pay a flat fee to a lawyer, who is also a <a href="http://walawrealty.com/" rel="nofollow">broker</a> so he can also provide necessary real estate agent services. The lawyer, in turn, refunds the entire buyer's agent commission right back to the buyer. So buyer pays for her own representation, gets fully informed legal counsel, and gets the full commission back. Now if only this lawyer could get the word out... In any event, now there’s an alternative to the commission-based fee: Buyers can pay a flat fee to a lawyer, who is also a broker so he can also provide necessary real estate agent services. The lawyer, in turn, refunds the entire buyer’s agent commission right back to the buyer. So buyer pays for her own representation, gets fully informed legal counsel, and gets the full commission back. Now if only this lawyer could get the word out…

]]> By: Craig http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-343573 Craig Fri, 30 Oct 2009 16:17:53 +0000 http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-343573 Jonathan -- on a million dollar house, the commission is $30k. That's a whole lot of dough. At $150 per hour (a VERY fair wage for a job that requires a GED, a 60 hour junior college class, and a passing grade on the test), that equals 200 hours of work. For a $500k house, that's still 100 hours of work. If the buyer finds his own home to purchase using the excellent search tools available for free on the internet, and the agent simply writes the offer and shepherds the deal through to closing, will the agent REALLY spend 100 hours on the deal? I really, really doubt it. Jonathan — on a million dollar house, the commission is $30k. That’s a whole lot of dough. At $150 per hour (a VERY fair wage for a job that requires a GED, a 60 hour junior college class, and a passing grade on the test), that equals 200 hours of work. For a $500k house, that’s still 100 hours of work. If the buyer finds his own home to purchase using the excellent search tools available for free on the internet, and the agent simply writes the offer and shepherds the deal through to closing, will the agent REALLY spend 100 hours on the deal? I really, really doubt it.

]]> By: Jonathan Blackwell http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-343564 Jonathan Blackwell Fri, 30 Oct 2009 01:55:17 +0000 http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-343564 Good agents earn every bit of that 3% commission. As a lender my workload is generally increased dramatically by a "discount" agent. Good agents earn every bit of that 3% commission. As a lender my workload is generally increased dramatically by a “discount” agent.

]]> By: seattle flat fee mls http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-322697 seattle flat fee mls Thu, 31 Jul 2008 16:46:24 +0000 http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-322697 Have buyers pay their own agents and sellers pay their own agents....I don't think you can imagine the radical changes this would bring on. If buyers had to pay a fee to a buyer's agent, virtually none would use one. On the other hand, with no one representing buyers, I think the importance of the MLS would go away since money would be made on the listing end (or maybe it would just be opened up where all buyers could have access to all data). The one potential curve ball is the lockbox system and the need to still access a lot of properties in a short period of time. Have buyers pay their own agents and sellers pay their own agents….I don’t think you can imagine the radical changes this would bring on. If buyers had to pay a fee to a buyer’s agent, virtually none would use one. On the other hand, with no one representing buyers, I think the importance of the MLS would go away since money would be made on the listing end (or maybe it would just be opened up where all buyers could have access to all data). The one potential curve ball is the lockbox system and the need to still access a lot of properties in a short period of time.

]]> By: Karim Tahawi http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-322538 Karim Tahawi Tue, 29 Jul 2008 19:56:37 +0000 http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-322538 Nice write-up Craig. We were doing a little keyword research when we found this discussion. I agree with you that the incentive are all wrong and we recently launched prooffer.com to try to better align incentives within industry practice. Of course your suggestion that buyers pay their own way is spot on. Let me know what you think of what were are doing. Cheers! Nice write-up Craig. We were doing a little keyword research when we found this discussion. I agree with you that the incentive are all wrong and we recently launched prooffer.com to try to better align incentives within industry practice. Of course your suggestion that buyers pay their own way is spot on. Let me know what you think of what were are doing.
Cheers!

]]> By: denismurf http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-317078 denismurf Sun, 04 May 2008 22:31:35 +0000 http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-317078 Kary says in 284: "The house we bought was on the market for over 4 months, because it was over-priced and dated. The owner was about to take it off the market when he finally came down to a price we could live with." That's exactly the philosophy that's guiding our current house search. House = wedding dress? Not in my world :-) Kary says in 284: “The house we bought was on the market for over 4 months, because it was over-priced and dated. The owner was about to take it off the market when he finally came down to a price we could live with.”

That’s exactly the philosophy that’s guiding our current house search.

House = wedding dress? Not in my world :-)

]]> By: ARDELL http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-317063 ARDELL Sun, 04 May 2008 19:16:19 +0000 http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-317063 Ken, Can you point to the "bashing" part? I thought we were talking to each other...publicly. It's different and new to do that, but doesn't equate to "bashing". Just takes some getting used to. Quote the who bashed who line. I'd like to see your definition of "bashing". I think you guys are allowed to bash me though...cause I'm just an Associate Broker :) Ken,

Can you point to the “bashing” part? I thought we were talking to each other…publicly. It’s different and new to do that, but doesn’t equate to “bashing”. Just takes some getting used to.

Quote the who bashed who line. I’d like to see your definition of “bashing”. I think you guys are allowed to bash me though…cause I’m just an Associate Broker :)

]]> By: Ken Crotts http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-317060 Ken Crotts Sun, 04 May 2008 17:27:09 +0000 http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-317060 When locating homes for a buyer I think you need to look at all of the available properties. Sellers sometimes want a property sold quickly and value that rather than a couple of percent increase in purchase price. David's comment about avoiding multiple offers indicates he's willing to drive past a really good deal in order to avoid having to mix it up in a competitive bidding situation. Some buyers would agree, and avoid the uncertainty of multiple offer properties, but others would seek to attempt to get that property. As an agent I am going to educate them on the processes and pitfalls and let the choice be theirs. If they choose to make an offer on that type of property I'm going to go in and use every bit of experience and talent I have to negotiate to a successful bid. If we lose, so be it, we know the odds going in. If we win my client gets a great deal. I'm curious, David, do you get a buyer agency agreement specifying your compensation before canvassing cancelled and expired listing? Seriously, I work them every day and you rarely find great deals searching through properties that failed to sell. Either they have decided not to sell for reasons unrelated to the home sale, or they have poorly priced or prepared their home for the market. Selling these properties is hard work and takes time and patients to get the property positioned in the market for a sale. BTW, how many sales have you made this way? Taking a step back you avoid really great deals because of the multiple offers and then go prospecting in the failed listings bin looking for the undiscovered gem! A real estate agent is a commissioned sales person. The liability associated with our product is just a part of the job and not the reason for compensation. I'm proud to be a Realtor and associated with the history and accomplishments that Realtors have made to our communities and our nation. It surprises me to hear the Realtors bashing Realtors in this blog in a vain attempt to make their phones ring. Seems like there’s a whole school of red herrings in this blog. When locating homes for a buyer I think you need to look at all of the available properties. Sellers sometimes want a property sold quickly and value that rather than a couple of percent increase in purchase price. David’s comment about avoiding multiple offers indicates he’s willing to drive past a really good deal in order to avoid having to mix it up in a competitive bidding situation.

Some buyers would agree, and avoid the uncertainty of multiple offer properties, but others would seek to attempt to get that property. As an agent I am going to educate them on the processes and pitfalls and let the choice be theirs. If they choose to make an offer on that type of property I’m going to go in and use every bit of experience and talent I have to negotiate to a successful bid. If we lose, so be it, we know the odds going in. If we win my client gets a great deal.

I’m curious, David, do you get a buyer agency agreement specifying your compensation before canvassing cancelled and expired listing? Seriously, I work them every day and you rarely find great deals searching through properties that failed to sell. Either they have decided not to sell for reasons unrelated to the home sale, or they have poorly priced or prepared their home for the market. Selling these properties is hard work and takes time and patients to get the property positioned in the market for a sale. BTW, how many sales have you made this way? Taking a step back you avoid really great deals because of the multiple offers and then go prospecting in the failed listings bin looking for the undiscovered gem!

A real estate agent is a commissioned sales person. The liability associated with our product is just a part of the job and not the reason for compensation. I’m proud to be a Realtor and associated with the history and accomplishments that Realtors have made to our communities and our nation. It surprises me to hear the Realtors bashing Realtors in this blog in a vain attempt to make their phones ring. Seems like there’s a whole school of red herrings in this blog.

]]> By: Leanne Finlay http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-317054 Leanne Finlay Sun, 04 May 2008 16:24:57 +0000 http://raincityguide.com/2008/04/22/the-commission-based-fee-struture-its-bad-for-buyers/#comment-317054 Ardell and the wedding/prom dress analogy is absolutely correct. I've always felt that the best homes were likely to be the most recent ones hitting the market (although, they often are not priced properly at that stage). The ones still sitting around, or cancelled/expired are mostly the ones nobody else wanted. When it's a pet, the ugly duckling may be the best, but for a home, not so much. Ardell and the wedding/prom dress analogy is absolutely correct. I’ve always felt that the best homes were likely to be the most recent ones hitting the market (although, they often are not priced properly at that stage). The ones still sitting around, or cancelled/expired are mostly the ones nobody else wanted.

When it’s a pet, the ugly duckling may be the best, but for a home, not so much.

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