Does It Really Matter….?

Ardell’s recent post on FSBOs was courageous as you won’t see many agents talk about how one might sell a property without listing it. While it may be a bit counter intuitive to some agents, one reading the post should come away feeling that Ardell (and others like her) are not in the business of providing self-serving advice.

In her post, Ardell said, “[T]here are several companies that offer this service, and while it is true that some agents may boycott you and not show your house, if you have one of those houses that will “sell itself

32 thoughts on “Does It Really Matter….?

  1. Honestly Russ, I think the agent sometimes doesn’t really know exactly why they are doing what they are doing. For instance, buyer gets a little upset over something during the inspection. Does the buyer’s agent help the buyer put that into perspective, as in it’s a $50 fix, or does the agent say “let’s go look at this other house”.

    Since most agents don’t discuss commission with buyers, the fact that the other house pays him double just doesn’t come up in the conversation. That is why I argue for the buyer to be included in commission issues, and not just told “the seller pays it”, with no discussion of what “it” is.

    Of course it’s outrageous for an agent to consider how much they are being paid in their advices, but how do you prove, even to yourself, that the reason is the commission, and not the inherent differences in the properties?

    I had one once where the 1% was a tri-level and the 3% was a full two story, for example. For the same money, the tri-level was an “obsolete” style that is harder to sell. The owner upped the commission to 3% by the way within a week and then did sell it, but my advice stayed the same and my clients bought the full two story, newer home.

    Sometimes when they increase the commission up to “the norm”, they also reduce the price. So did the commission make the difference, or the price?

    How can these situations be anything but “anectodal”. You think someone has in their Policy and Procedure Manual, push houses with higher Buyer Agent Fees? Still a seller has to put himself in the position of the agent and say to himself, What Would I Do if there are two basically identical houses and the buyer is asking my advices?

    When setting the offering, the seller must consider how that offering may or may not affect him. To suggest it has no impact whatsoever, makes no sense from the seller’s standpoint. If it makes no difference at all, then why not $500…why anything at all?

    If you go into a store and see two products priced differently, you may think you are picking the one best for you, but once you KNOW the price difference…is it really possible to erase that consideration from your brain? If you pick the one with the better price, can you really say it wasn’t because of price? There are subconscious influences that are difficult to eradicate, which is why I do not look at the fee, ever, when showing property.

  2. Ardell,

    Fiduciary, in the legal context, clearly means putting your client above self interest. “Statutory” (as in statutory agency duties) means what the statute says it means. I am not trying to be flippant, but state the fact that there are many agency laws across the land and each one is different as it relates to how close the “statutory” duties come to equaling traditional common law fiduciary duties.

    In Washington, a buyer’s agent must disclose to their client any conflicts of interest. A buyer’s agent must also make a good faith attempt to find a property suitable for the buyer, unless otherwise agreed in writing and provided some amount of compensation is payable to the agent.

    Using your example of the agent who would not show a “FSBO” that was put in the MLS, as long as there was a published SOC, the agent would be violating their “statutory” agency duty by not telling the buyer about the listing. Take that same action and apply traditional fiduciary duties, same result.

    Your last sentence is perfect. You said, “[T]here are subconscious influences that are difficult to eradicate, which is why I do not look at the fee, ever, when showing property.” Way to go! Problem is with the folks that you refer to in your other post who not only look at the SOC (and the type of listing) but who apparently allow this information to drive what type of service and advice they give to their client.


  3. Russ,

    I don’t think it is the same result with “fiduciary”. “With fiduciary” the agent would be obligated to ignore any and all self interest issues. Without it, they simply need to be honest and say, “I picked these 4 to show from the 102 that meet your parameters. Feel free to look on the internet yourself and add any others you would like to see”.

    No agent shows every single home in the price range. They pick some and the buyer picks some and many are left “on the table” unshown. Easy to come up with a reason why not to show…an honest one even.

    Here’s where I personally get into trouble with the escrow companies. I don’t want to see the commission at all, until all matters are fully negotiated, like until after the inspection and all contingencies are resolved. I don’t want fee issues to have any affect on my inspection advices or an “in escrow” issues. So I’m always getting calls from escrow complaining that I haven’t sent the Commission Disbursement Form on the day that I open escrow 🙁 I don’t want to see the commission until it’s all over and ready to close. Makes for “late in the game” Commission Disbursement Forms to escrow and many phone calls saying “Don’t you WANT to get PAID? We don’t have your Commission Disbursement Form yet?”

    Here in WA, the want it on day one…which I think is really dumb. I’ve never seen that anyplace else. No agent should even be THINKING about getting paid the day escrow is opened. Maybe Tim can tell us why that is here.

    I think I’ll do some stats on the properties that are “For Sale By Owner” in the mls, and see if we can draw any real conclusions compared to other sales in the neighborhood. Sometimes it could just be that those that skimp on what they will pay ALSO overprice their homes. How can we tell WHY the agents aren’t showing it? No real way to be sure. But let’s see what the stats tell us.

    I do think most look at the SOC and I clearly have heard many an agent over the years say they will not show the lowest of the low. Some companies, by definition, offer a low SOC, and so yes, I have heard agents say they won’t show any of that company’s listings. I’ve worked in five states…so that is not necessarily here in Seattle.

    It is really hard to expect that someone should not care whether they get paid $15,000 or $5,000 for the same work. I am often told that my standards are too high, and I can’t expect everyone to think like me. I can at least expect them not to say those things around me…can’t I? I fired one agent over it. Maybe I can’t fire them for being self oriented…but can’t I fire them for being dumb enough to say it to me?

  4. Ardell,

    First, you asked the question, I answered it and then you decided you like your perspective better. Think what you like but from a legal perspective, you are wrong. Being honest and having conflicts of interest (including monetary conflicts) are, as the Wizard once said, horses of a different color.

    I agree, it IS really hard to expect that someone should not care whether they get paid $15,000 or $5,000 for the same work. Problem is, from the situations that you presented in your other post, it appears that some in your industry want it both ways. They want to defend commission rates because of some higher standard of care (fiduciary?) owed to their client and at the same time, disregard that standard when the offered fee is not what they believe is justified.


  5. This discussion would not even be necessary if every sales agent and every buyer insisted on a Buyer’s Agency Agreement. The standard form supplied by the NWMLS (Form 41A) provides for a pre-negotiated compensation amount to be paid to the sales brokerage (NOT to the agent). This amount could be anything each party agrees to, with a shortfall to be paid by Buyer or if there are any excess funds, to be paid TO the Buyer at closing, anyway allowed by the lender. So, if a buyer and agent agreed upon 3% and the seller or builder were offering that and a $10,000 bonus, then that amount would be paid directly to the Buyer. This form clearly delineates agency, compensation, terms of the agreement and other matters of interest to both parties, and I urge everyone to use this agreement. If a Seller were only paying $100 commission, for instance, it could be discussed with the buyer, prior to viewing the home and they could decide whether or not they still wanted to see the house. This is the “transparency” everyone seems to want and makes the whole issue of agency and compensation clear to all parties. An MLS listing agreement is required and I would like to see a MLS Buyer’s Agreement also standard and required to do business in our market.

  6. Marlow,

    Look around the Country. Look at NYC where the agent apparently represents the seller if the buyer doesn’t sign one, and Christine has not seen a one. Not necessarily a viable option to think that EVERY buyer will be signing agreements anytime soon. They’ve been waiting over ten years in NYC 🙂

    Doesn’t solve the problem of what a seller is to do with regard to the mls offering, not now and not in the forseeable future.

  7. I don’t think signing an agreement is “the transparency” that buyers want. Any buyers out there feel like signing an agreement to work with a specific agent is the “transparency” you want?

    Who does want “transparency” anyway. Is it just the new “buzzword”? Where did it come from?

  8. Ardell

    Let’s see, either (1) sign an agreement and your agent won’t have a financial conflict when deciding what house to show you or (2) don’t sign an agreement and have the uncertainty of whether some seller’s SOC will determine if you even find out about an available house that you might love. Monty, I pick Door Number 1.


  9. Russ,

    I believe the discussion was about what a SELLER should offer. Are you saying to sellers that they don’t need to worry about that? That they can leave that between the buyer and buyer’s agent to figure out. Is that good advice for a seller today?

  10. Ardell,

    Nothing in this thread was about a seller. What has that got to do with monetary conflicts for buyer agents???

    Now, back to the discussion. Do you pick Door Number 1 or Door Number 2?


  11. Russ,

    Sure, why not? I’ve told you before that when I see a benefit to the buyer, I DO offer them a written agreement.

    I negotiate the commission at first contact, or shortly after first contact with a buyer client. If that negotiation results in a fee that is less than the amount I expect will be offered by the seller of the property they will eventually buy, I ask them if they want a contract or not. It protects them, as they otherwise have no recourse really, if I accept the full amount offered, the system being as it is.

    Not one has wanted the contract to protect themselves. Honestly, I am surprised by that, particularly the client who had about $12,000 coming to them based on our verbal agreement. You’d think they would want to have that in writing. While trust is the basis for a relationship, I’d think trusting someone to give you $12,000 is a lot to ask, so I offer the written agreement.

    In the end, they ended up with $12,700. I’ve been to their house since it closed, they came to my house for Thanksgiving and she just called me from the hospital to let us know they that their babies came the day after Thanksgiving.

    When I offer a contract I make it clear that whether or not they sign one does not affect how I work for them. There is no “value added” except the protections afforded them for me to put our verbal agreement, particularly as to how to treat commission issues, in writing. I honestly don’t care if they sign it or not.

    The only time I want a written agreement, is when I am approaching unrepresented sellers on the buyer’s behalf. That doesn’t really work though, as it is still difficult for the seller to understand that I am not acting as a Dual Agent.

  12. Buyers are best served by exclusive buyer agents and brokers. These dedicated buyer advocates do not take listings. They help buyers avoid Dual Agency, which is a conflict of interest. For example, a buyer finds a property listed with their agent’s company, the property is listed with a different agent within the same company, the company becomes a Dual Agent.

    Dual agency becomes a problem when issues arise between buyer and seller. The company cannot fully go to bat for either side, because dual agents are required by law to remain neutral to both parties. Since problems can and do arise between buyers and sellers, it is better for buyers to eliminate the possiblity of such conflicts of interest before stepping into the market. Engaging the services of an experienced exclusive buyer’s agent is a good way for buyers to avoid dual agency and its inherent risks.

    As the general public becomes more aware of these risks, we will see more buyers come to know and understand the value of buyer agency agreements; especially, exclusive buyer agency agreements, which is used to engage the services of an exclusive buyer agent (EBA).

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