Is your agent spending your money without asking your permission?

It is common practice in the real estate industry, and has been since the beginning of time, for your agent to assist you outside of their area of expertise or geographic service area.

Let’s say you ask an agent to come to sell your house in Seattle.  They ask where you are moving, and you say California.  They offer to have an agent contact you in that area.  You thank them.  You just spent $6,750 if you buy a house in California, using the agent that contacted you, for a home purchase of $900,000.00.  The Seattle Agent who talked to you about this will get $6,750 when you close on your home in California, EVEN IF you never hire that agent to sell your house here in Seattle.

OK, I’ll stop shouting.  The same agents who will scream “disclose, disclose, disclose” when it covers their butt if you do, will not disclose referral fees and ASK your permission to SPEND YOUR MONEY!  Oops shouting again.  Sorry, this topic just freaks me out.  I better go chill.

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: cell: 206-910-1000

132 thoughts on “Is your agent spending your money without asking your permission?

  1. Ardell,

    Im going to be as positive as I can on this subject :).

    First if the people did use the agent they were referred to they must have liked the agent because they had no obligation to work with them. If they did like the agent and they did close on a home with that agent wouldn’t that have been a successful referral all the way around?

    Next the $6,750 you refer to I’m assuming is a 20% referral fee. Now this $6,750 is subject to whatever the commission the agent received. If the buyer negotiated a lower commission this amount would be lower as well. Correct? Okay let’s take it one step further, if the buyer wanted to pay less then the agent was willing to take because they had to pay this referral the buyer would have the option to work with someone else. Therefore the referring agent in Seattle would get 0 the referred agent in California would get 0 and no one is spending the customers money unless they were comfortable with the entire situation.

    On a side note most of my out of state referrals where at 35% if I had a strong relationship with the customer. And the customer did know I was getting the referral.

  2. It is not a federal law to disclose such information…

    The agent SHOULD be doing you a favor by screening through potential agents you will be working with in your new hometown. Theoretically, your agent knows your style, your personality, and knows how you operate.

    It’s not your money… you don’t pay it. The seller of the home you purchase pays the commission, of which the agent refers said dollar to your current Realtor as a ‘thank you’… a business referral.

    I am sure as a software engineer that you could refer ‘clients’ to another… collecting a referral fee. It’s your money… after all, you are the person that procurred their business. Should you disclose that?

  3. Jonathan,

    LOL…and your point is? “Putting the gloves on” is an age old method of duking out an issue to the better enlightenment of all. Not talking about things is what makes them go on and on without being examined. Maybe I am wrong on this…but i don’t think so. Prove me wrong.

  4. It is supposed to be on the HUD-1 if you recieve a referral from another agent. Are you telling me that this is often left off the HUD? Not sure if it is a federal requirement but I know it is a state one here in NC.

    Okay back to sleep for me – 16 hours of history classes – UGH I should have gone to law school.

  5. Allen,

    First, why doesn’t your link go to an agent site? Are you an agent? Because you always talk like one, but your link makes you look like someone in an ancillary field. I have a problem with the lack of disclosure of that. I have had that problem for months with you. Please come clean on that and enlighten me.

    How can I expect you to understand the issue of transparency in the real estate industry, if we can’t even get past that point together?

    Secondly, if you went to dinner and liked the dinner and you liked the service, does that mean you should just hand over your credit card at the end of the meal without knowing what it cost or what the waiter or waitress receives as a tip? Isn’t this the same logic you are using. If they are happy…forget about the money part?

    How can you possible say you had a strong relationship with a consumer, but hid the fact that you took 35% of their money from them without telling them? If that’s a strong relationship, I’d rather have a weak one 🙂

    The fact that you hide who you are…or I’m dense on that…is the same as hiding the truth from your “strong relationships”. Same point, same non-disclosure, same hiding the truth…as I see it anyway.

  6. DSB…I have never seen it on a HUD 1, but by then the consumer has no recourse. “Too little; too late” as the saying goes. That $6,750 could have bought new appliances for the buyer…and still had enough to compensate the “referring agent” for their nominal involvement.

    We have to stop “selling people’s names” for such huge amounts of money. This practice is commonplace, I know. But it really does need to be changed. Not stopped; but changed.

    The buyer needs to understand that they lose this money somewhere. Heck the agent needs to be willing to give 35% to PEOPLE, to their clients…sorry a little shout out there…and not to one another. 35% of the commission is way to much for a buyer to lose for a phone call and not even be TOLD about it.

  7. Jon,

    Comparing real estate to other industries doesn’t work. Consumers are more protected in real estate transactions than the anology you make.

    No, it is not a Federal Law…but it should at least be a State one. Transparency will bring these types of changes. I can’t change laws…but I can make issues more transparent so the laws can follow.

    To date nothing about the inside industry has been examined because of…well…you know…that thing we are dancing around 🙂

  8. Ardell,

    First off please re-read my post. I clearly state the client knew I was getting a referral.

    I have stated many times on RCG my back ground but for you I will do it one more time.

    I was a very active and successful Real Estate agent for 9 years here in the NW. I then took on the role as the CTO for a VERY LARGE NW Real Estate Company. 4 years ago I started a company with a partner of mine which provides technology services to Real Estate Agents and Brokerages all around the US. I have been an outspoken advocate for Real Estate agents my entire carrier.

    If you want additional input on my credibility just ask Saul or John over at RT.

  9. I am looking through the legal texts. I think we may have a deeper problem if the referral is not published on HUD-1.

    I am not seeing where it says it has to be listed however, I am seeing a conflict leaving it off. First of all, the agent if out of state was involved in the transaction if nothing but indirectly and if he is out of state and does not have a license there, then possible there is a license violation that has never been brought up before.

    Second, I am thinking the broker on the recieving end has came into undisclosed income and since it is not listed on the HUD-1 the selling agent is paying taxes – ugh, I dunno… let me look around and I’ll report my findngs to you. Ardell, email me this week at my regular email address and I’ll pour through the state and federal laws and see where I can come up with some potential issues.

    As for the state law (a license law), even through we are required to list it, it in a sense severs no purpose as Congress preemeted the state laws so. I am sure I an come up with a violation somewhere with a little more lawyer like investigation.

  10. Allen,

    I deleted my comment and thank you for responding. I, like you, have practiced under the rules of the game for years. Time to change the rules. What either of us did four years ago is irrelevant.

    Since you are no longer in the industry in this sense, I ask that you make room for those of us who are still in it…to change it.

    We need to start talking in real numbers so the consumer “gets it” . Instead of saying 2% for example, we need to say $16,000. And instead of saying 35% referral…we need to say $5,000.

    Part of the reason things have gotten out of hand is because we talk in terms that lull people our way. Time to stop that.

    If you say, “hey, by the way, I’m going to get $5,000 if you go use xyz agent” and the consumer is fine with that, so am I. Just tell them the dollar amount you will be getting BEFORE it gets to closing day. Not my business what THEY decide…as long as it is desclosed in dollars and cents UP FRONT!

    Not yelling at you here, Allen. I’m yelling at those up there talking about HUD 1’s 🙂

  11. Maybe a different e-mail will stop popping up my old blog … and why is it you always want the gloves on? Have we ever been married? Only my wives take such pleasure in slapping me around.

    1) I have said and will continue to say it’s not the buyers money, not until you prove to me the sales price would be reduced by that same amount without the referral being paid. It wouldn’t. It’s money coming off of the sellers’ net. I will now hold my breath until I turn blue.

    2) I have not seen a referral fee shown on a HUD-1. Maybe it would show up if the title company was cutting all the checks and would not show up if the buyers’ brokerage was cutting the check to the firm of the referrer. I have no issue with the referral being there but have not seen any legal requirements regarding it.

    3) To DSB’s point … the selling agent isn’t paying taxes. If only one check is cut and the brokerage is cutting the second check to the firm of the referrer, then the brokerage won’t include the amount of the second check on the agent’s 1099. The brokerage issues it. They know what money the agent really received.

    4) If I’m reading the basic purpose of the post to be that we as agents ought to tell folks we get paid for referrals, fine. Done and done. I’ve offered this service to buyers in the past. The reaction: “Cool!” Never: “You greedy bastard, how dare you take money that isn’t really mine anyway out the sellers’ net.”

  12. Derek,

    LOL…I didn’t know you were DSB. My main point is I don’t care about the HUD 1 issue, so don’t waste time on that. My thing is that if the agent was willing to pay another agent, they should be willing to use that SAME money for the buyer. Referral fees are way too high, to much money for a phone call, and hurts the buyer somewhere. Give it to the buyer…at least most of it…some of it…or at least talk with them about it up ftont. NOT at closing.

  13. LOL…Jonathan, didn’t read your comment yet, but your new blog did pop. If you use the old email, no problem, just change the url once and it should be OK thereafter…I think. I’m not the techie around here.

  14. OK…here’s the Deal Jonathan. In Seattle it’s the Buyer’s Money LOL. Jonathan, do you tell them how much they will be charged? Your referral fee is IN their sale price and mortgage…so that’s all I ask.

    Well, maybe it isn’t all I ask. Look at the dollar amount and make sure it fits the effort, either kick up the effort or decrease the dollar.

    Referral fees should be a dollar paid for a value received…in balance. To date they rarely are on higher priced transactions. Take the whole thing…keep what you earned…give the rest to the buyer…fair enough?

  15. How can I possibly argue with such wonderful logic, Ms. Ardell?

    Nope, same old url popped up again. Grrr.

    I’m off to watch the Coyotes and help my stepson get through fourth-grade math.

  16. Ardell: Yeah DSB is me. I use the screen name dsb1980 and catchersmitt (a baseball glove) so at times instead of typing my long name in, I’ll just type my initials. No one really calls me Derek even through I prefer to be called by my name – everyone either calls me Coach or “Burress” which is my last name.

    When you are a former pro baseball player and have your last name on the back of your jersey, I guess people forget your first name. My ex used to tease me about how she could say my name and I would never respond but once she called my last name, I popped right up.

    Okay, back to reading about Trench warfare. I feel like I am at West Point studying all this American Military history junk. Maybe after this semester they will start calling me the “General” or something.

  17. I don’t watch sports by and large…but can a Philly girl who is now a Seattlite have a better weekend than when both the Seahawks win on Saturday (in the middle of my holiday party) AND the Eagles win on Sunday!! I have no clue what Coyotes are…

  18. I don’t know what escrow services you all use but each time we’ve had a referral fee paid it has been on the HUD statement. Also, particularly when we’ve worked with investor clients we always let them know that we will be paid a referral fee but we also let them know that we don’t see this as a “let us pass you off to someone” situation. Usually if our clients are buying property out of state but they live here we still provide some services to them. They are, and in no particular order:
    1. screening of the agents on the referral side – we make sure they have the kind of background and experience our clients are looking for. We also find out how the agent will treat an out of state client since many will frequently blow off or put on the low burner the ones that aren’t local.
    2. we still help on the analysis element of their transaction locally by reviewing the documents provided by the other agent. We don’t make commentary about licensing law outside of our own state but since financial analysis is the same wherever you go we help them review data locally and answer questions if they ask.
    3. we still provide referrals to other professionals for questions outside of our realm of expertise such as accounting, 1031, attorneys, etc.
    4. if any issues of communication come up we can help prod an agent along.

    I agree with a previous post that it’s not the “buyer’s money” that’s being spent. It’s the seller’s as part of the listing agreement they signed with their agent. But, I don’t think there is anything wrong with telling a client that a referral fee is being paid – considering the amount of money that agents spend on lead services a referral is usually the best form of lead an agent can receive.

    Ardell, are you saying we should change the laws as they stand now to allow fees for referrals to our clients? Washington doesn’t allow a non-agent to receive compensation for a real estate referral. Considering how much money agents put into advertising for clients then why can’t that fee be considered the cost of advertising for them? Most good agents budget upwards of 40% of their revenues to marketing and advertising so a 20-35% referral fee seems to be a bargain.

    Now, one other point. You mention CA only as an example here and you also talk a lot in terms of the NW prices and how those fees work. My mom is an agent in Wichita KS where a townhouse can start at $7,000 (yes, you read that right) and older houses regularly sell from $25,000 to $150,000. A home selling at $25,000 at a 3% commission only nets my mom $750 and if she pays a 25% referral fee she’s giving away $187.50 for a net of $562.50 before her other expenses. I received a referral fee on a place in NC this year for $210 for one of my client’s and they were happy for the help because we spent hours finding someone to help them sell a house given to them in an estate that they needed to sell. I think you’re being a bit myopic in your position.

  19. Reba,

    Let’s cut to the chase here. There must be some way to convince you that the Buyer DOES pay their own fee and is sometimes entitled to “a Redfin deal”.

    Buyer walks into your Open House at 3:50, ten minutes before you are closing up. He wants it and asks you to fax him a contract. He takes the 3% buyer agent fee off the price AFTER he and the seller come to a final price. He has no agent…he wants the fee off the final negotiated price. Oh, and he crosses out the right side and says NO Selling Office and he puts Selling Agent NONE

    It’s his 3% isn’t it? Your reserved it in the sale price for HIS buyer’s agent…so he has none…so it’s his right? Why should he pay it to you or the seller, when it was meant for his representation.

    I know it’s a different way of looking at it. But realize that the way you see it is the way it WAS back when all agents represented sellers. Shouldn’t there have been a change? It didn’t happen then…but better late than never, don’t you think?

    If I can’t get you to the point where the 3% was reserved by you and the seller FOR the buyer…I can’t get you to the referral fee part…that’s stage two.

  20. Just because the 3% was set aside for a second agent that doesn’t mean it belongs to the buyer. If the buyer had an agent, the buyer wouldn’t have any say in what happens with that 3%. Greg made that argument earlier this year and last week said he’s surrendering the flat-fee buyer representation fight because NO ONE CARES! (Not really yelling, but I wanted to see how it feels. I may even bold something next.)

    It’s the sellers’ money. If there’s no second agent to pay, it goes back in their pocket. Just like if they set aside money to pay both a landscaper and a tree trimming company and then discover Johnny down the block can mow their lawn for them. Just because it was set aside doesn’t mean Johnny’s going to get it. It’s the owner’s money, not Johnny’s.

    It’s the sellers’ money, it’s the sellers’ money, it’s the sellers’ money!

  21. Can I ask a question here? (Remember that I’m not a licensee)

    1- Do broker-to-broker referrals have to displayedon the HUD?

    2- Isn’t the referral fee really a “marketing costs” to the buyer’s agent? I ask this because I know that the end price I pay for products usually have a 40-50% margin for “marketing”…what’s the difference here?

  22. Jonathan! You GO BOY…You call it yelling…I call it passion!!

    Say these words to yourself over and over again. You said “the buyer wouldn’t have any say”…”the buyer wouldn’t have any say”…”the buyer wouldn’t have any say”…now ask yourself if that is FAIR…it may be TRUE but SHOULD it be TRUE??

    It’s about the Kool-Aid. One day you will simply wake up and realize that the buyer DOES IN FACT, have a say…and it is only right and fair that they should.

  23. Brian,

    1) no – my point is even if the fee does show on the HUD 1, that does not solve the problem, as the buyer at that point would lose their Earnest Money if they had a problem with it. Too little too late to disclose on the HUD 1 after all of the buyer’s out clauses are used up. It needs to be an up front disclosure, not a tail end disclosure.

    2) Anyone wants to explain the fee to the buyer in those terms to “sell” the concept…go for it. But don’t hide the fact until closing that the “favor” you did by “finding” them an agent was for a hefty fee.

    Let me ask you this Brian and others…if you say the referral fee is for the “advertising for buyer leads” cost…then what if you met the buyer while getting coffee at Starbucks? Would you then say…or this one is not 25% it’s $10?? If you justify the fee based on X, if X does not exist do you change your tune? I think not.

  24. “If you justify the fee based on X, if X does not exist do you change your tune? I think not”

    I think so. Marketing costs are amortized over a large number of unit sales, so X is calculated taking all scenarios into consideration. Some units are hugely profitable, some are “loss leaders”.

  25. Brian,

    Agent Centric vs. Consumer Centric…when the consumer is not part of the response…then it as an Agent Centric defense position. I’m looking for a paradigm shift here.

  26. So are we now arguing the case for buyers receiving the 3% directly and then negotiating their fees with their agent up front at the start of the transaction? Sorry, I’ll have to take that to my own blog at a later time (again). Don’t want to spend the next 27 paragraphs explaining the pitfalls and flaws in that model.

    >what if you met the buyer while getting coffee at Starbucks?

    If they say to me, “Aren’t you the guy with the beagle” without looking at my business card, my total marketing cost is substantially higher than the cost of my mocha frap.

    Let’s go back to your open house scenario. I was going to cut and paste but the relevant portion is too long and I’m being lazy. As the listing agent, YOUR fiduciary responsibility is the SELLER — NOT to an UNREPRESENTED BUYER. Your job is to help your seller net as much as possible.

    How are you representing your sellers’ best interest when you’re willing to hand 2% off their net to an unrepresented buyer?

    You keep going back to the well that we as an industry need to alter our way of thinking, need to see all of this has its roots in the days when only sellers were represented. That may be so. But turning the table 180 degrees and setting up every scenario so that only the best interests of buyers are considered isn’t the solution. And that’s EXACTLY what you’re doing.

    Ask Daniel the RE Zebra. Make-up calls don’t correct the original errors.

    If I represent the seller and there’s a buyer who BY HIS OR HER OWN CHOICE is unrepresented, my fiduciary responsibility still is to the seller.

    A man is on trial for murder and decides to represent himself. Would it not be fair for the prosecution to provide him access to the district attorney’s law library? Maybe answer a question or two?

    Fair? Perhaps. Ludicrous? Beyond a shadow of a doubt.

    Sellers are consumers, too. You’re starting to sound waaaaaay too much like Hathaway and Burgoin.

  27. Jonathan,

    First and foremost, you have my utmost respect for all that you have put in to that response. I greatly appreciate it.

    Second, I will say only one thing:

    If the prosecuting attorney had added the defense attorney’s fee to his when he billed his client at the beginning of the trial, yes, I would expect him then to remove that charge when in fact it became a non issue. Chew on that a bit.

  28. Excellent point!

    Sooooooo … as the listing agent, I write in the agreement (an agreement strictly between the seller and my firm, incidentally) that the commission would be lower if the house is purchased by an unrepresented seller. Done and done (and something I have done for some time – 2% lower in the case of an unrepresented seller.)

    The charge is removed, you should be happy.

    Happy, that is, unless you insist upon the 2% coming out of my seller’s net – out of the net proceeds of the person to which I have a fiduciary responsibility – upon that 2% automatically going to the buyer in the interest of so-called fairness because the seller had braced themselves for POTENTIALLY netting that much less.

    By your argument that the money already was ceded by the seller … if the seller budgets $1,000 for repairs and the total repair request from the buyer comes to $750, should my seller do extra repairs or hand the buyer $250 simply because that portion of the net was set aside? I think not.

    And to think I wasn’t going to put the gloves on.

    Now that we all agree I’m right, let’s go get a beer. Are there any Rock Bottoms up there? First Jefe is on me …

  29. LOL Jonathan…you are “correct” but you are not “right” LOL I’ll give you that for now, as a reward for having the chutzpah to get into the ring with me.

    I don’t drink beer though…make it dago red…and we’ll toast to baby steps 🙂

  30. Well Brian, now you opened a can of worms.

    Consumer who? Consumer seller? Issue at hand is consumer buyer…not “consumer”…so I’m letting Jonathan take an intermission, but no…he is still not right…simply correct as the system stands, in it’s agent and seller centric fashion. But not as it will be.

    Redfin is the key to all understanding of this issue. No other. We need to learn this from Redfin. The buyer SHOULD control THEIR side of the fence…and we need to not only ALLOW that…we need to support and emulate that aspect of Who THEY Are.

  31. To quote Mr. Flippers (from Hoodwinked) … “If a tree falls in the forest, you’ll find three stories. Yours, mine and the tree’s.”

    It’s seller centric only because they are the ones negotiating the original commission with the listing agent.

    When we have a system where the seller negotiates the commission the listing agent receives and where the buyer pays their own agent (thus opening another can of worms, such as what to do with buyers who can’t afford representation in such a system and then have to run around unrepresented regardless of whether they are capable of doing so), then and only then will it not be seller-centric.

    If buyers want to control their side of the fence, fine. But not with my sellers’ money.


  32. Ardell,

    Are you planning on leaving Sound Realty for Redfin? You certainly are promoting them quite vehemently.

    As for the issue over referral fees, I agree with the poster above that in the NW/CA area where housing prices are incredibly high the referral fee may seem out of line with the amount of work put into getting the referral. However in other parts of the country where housing prices are lower the referral fee may seem more reasonable. At least compared to the standards of NW/CA agents. But to the agent paying that referral fee and the buyer in that situation, perhaps the $178 is a lot of money. Here in CA it’s like pocket change.

    So maybe referral fees should be limited by NAR or local government or whoever currently regulates it so that there is flat fee or a lower percentage.

    Should you disclose the referral fee to the Buyer, absolutely. However, if you weren’t going to refer them and they were to find an agent on their own, they would likely pay the same amount for the home as they would with the referral. Once the money is in the Seller’s hands, it’s the seller’s money to do with as they please. They will pay the agents out of their Gross, then the money is the agent’s to do with as they please. If they decide to pay a 20% referral fee, why is that an issue for the buyer? The fact that there is a referral fee to be paid would not affect the sale price of the home since the list price is set prior to an offer being made.

  33. Jonathan,

    Go talk to some buyer consumers. Say we put $20,000 into the price for your buyer agent BUT since you have none…we will keep that. See what kind of response you get.

  34. Erica,

    Who regulates it? You and I do…that is why we talk about it. You and I do.

    As for Redfin…they are the only company who lets’ the buyer control their side of the commission equation. I support THAT and them for it. We should all do that and then…Redfin will simply be one of the many.

    Ask the buyers what is an issue for the buyer. We have pretended for too long that they have no say and don’t care about the commission paid in their sale price. If they don’t care…it’s because of lack of disclosure and transparency.

    Why do you thing the buzz word of the day is transparency? Let them see it; they will care.

  35. Ardell:

    I think the market will take care of this issue. If Redfin can execute well, and if consumers prefer the lower fees (1%), then the market will eventually push Realtors into doing the same. You’re just ahead of the curve. Realtors (a good sampling leaving comments here) are clearly defending their turf. They sure as hell don’t want to give up the automatic 3% without a fight. It’s human nature.

    You’re ahead of the curve here. You’ll battle the headwinds until consumer preference finally hits the tipping point. Your individual mission to put the consumer first would be best leveraged if you could get the attention of traditional media outlets. That’s where the average joe is. Blogs are cool, and may one day be a force to be reckoned with, but the audience is small.

    Go big, Ardell. Go big and send the Realtors scrambling. 🙂

  36. Ardell,
    Redfin isn’t the ONLY company that allows a buyer to control that side of the equation. Rebating has been going on since the mid 90s. Do you remember the old Costco (used to be Price Club) real estate program?

    Redfin is just the new kid on the block. Any Realtor can negotiate a buyer’s commission with a buyer, no?

  37. The real point is it was a Members Only internal article…so someone obviously made a phone call…or several someones. Legal Affairs was correct…just like I told Jonathan…sometimes correct isn’t right…but it is correct nonetheless.

    I thought it was kind of fun…Dustin has a kewl snapshot of the strike out on the featured post before it disappeared.

    Sellsius shouldn’t have given me that Norma Rae movie for Christmas 🙂

  38. After reading all these debates. I feel I have to make a point here.
    The original author stated that a refferel was “the buyers money”
    meaning that a predetermined commission, one that was already going to be paid anyway, was going to have a slice taken off and given to a buyer. I assume from a pre-arangement? Meaning that a buying agent on behalf of a buyer negotiates a sales price of 6,750. less and then reduces their commission by the same? Why would they do that? They are going to have to work just as hard for that buyer as they would for anyone else. And if we start enticing buyers to work with us because we’ll give them a discount, where will that end.
    You can play the price game all day long and you will always lose. There is alway someone out there who will lower their standards.
    That’s NOT the buyers money. It’s the selling brokers commisiion that has already been predetermined with the seller, and pre-arranged to share with a participating buyers agent. While I agree 100% about disclosure, there is no way you can convince me that is a good business practice to suggest to a buyer that he will be getting x number of dollars off by going with a particular agent. Basically, you’ve just told your buyer that you found them an agent who’s willing to work for less. I don’t know about you, but when it comes to hiring professionals, I want the best paid ones around. If it was the medical comunity and you told a patient that you found a doctor who’s willing to operate on your son for half as much money, money that you weren’t planning on spending anyway because insurance was covering it, how confident would you really be?

  39. Martin,

    Your point supports mine…the buyer should know about the referral fee…because it can affect the buyer somewhere. The $6.750 is taken from the buyer agent fee and given to the agent who met the buyer first. I totally agree with you…the buyer is affected or at least may be affected and the buyer should know about it and give their consent.

    That is the point of the article.

  40. Yes Brian, I took it down. It was obliterated and looked bad after the edit. Once the “story” was “over” I didn’t want it to be representative of something I would post. It received many favorable comments before the edit…time for it to “shut down”.

  41. > we put $20,000 into the price for your buyer

    Is that how your conversation goes on a listing presentation? Mine is more along the lines of … this is what the market says your house is worth, plain and simple. This is the amount I charge in commission. 3% of that will go the buyers’ agent.

    There’s never a discussion of “your house is worth this, but we need to make the price this to cover commissions and make sure if you there isn’t a second agent that you fork over extra money to the buyer, in effect saying your house is worth less, because we want to be fair to the widdle buyer.”

    If I have the listing, my fiduciary duty is the seller. It’s a remarkably simple concept.

  42. Jonathan,

    I have never told a seller that MY charge includes the buyer agent fee. I have always explained what the buyer agent fee is and isn’t.

    We discuss how that offering may affect their showing activity. We discuss what the seller wants to offer a buyer’s agent, based on other homes sold and homes that didn’t sell and what those homes offered factoring in days on market.

    Once we together determine the Buyer Agent offering, we discuss my fee…separately. Then we discuss what we will do if the buyer comes direct and is not represented.

    I do not TELL the seller what my fee is including the Buyer Agent’s fee. The seller and I discuss the Buyer Agent Fee first and then we move from there.

    Question Jonathan. You say you tell them the Buyer Agent will get 3%. When do you tell them what happens to that fee if there is no buyer’s agent? When does that discussion take place and what do you tell them?

  43. Ardell, the response you had to my post has a major flaw. If the buyer and the seller have already achieved mutual acceptance of the price of the home there is no requirement for the seller to provide the 3% “discount” as you call it because the buyer chose to go unrepresented into the deal. I agree with another poster here that the pricing is based on comparables, not “let’s pick a price and then mark it up for selling costs”.

    Plus, unless I had my seller’s permission first I wouldn’t write up the offer for a buyer because I don’t do dual agency, although I provide buyer’s agency and seller’s side agency. And, there is an immediate concern if I write up the offer, unless I have my seller’s permission, that I get into a potentially liable position to the buyer unless certain forms are signed showing my agency position – in this scenario we’re discussing it is the seller’s side. I’ve had this happen in actual practice and I have very serious conversations with my seller’s about the pros and cons. We often times offer the names of other agents for referral of the buyer or we’ll have them sign waivers showing that they are choosing to be unrepresented but that doesn’t always translate into a price reduction.

    I also discuss in listing appointments what will happen if a buyer comes unrepresented and what my seller’s options are in those cases. All of it is discussed up front to best extent possible although every once in a while we find new scenarios to add to the discussion.

  44. Reba,

    You are referring to your post on my post? Which post of yours are you referring to? This is getting be a board game LOL

    Bottom line is ONLY discussing commissions with SELLERS is an idea whose time is OVER. Buyers deserve the same consideration of the discussion regarding commission. This is a paradigm shift that I SUPPORT and there we will agree to disagree.

    You don’t have to explain the real estate industry to me…I’ve been there done that on both Coasts for 16 years going on 17 years in five states. Times are a changing and that is old news to be tossed out in favor of a better way.

    You do not have to agree with that. But please stop trying to educate me on the workings of the real estate industry. I believe buyers get “short shrift” in the ongoing model…and I believe it is time to change that. You believe otherwise if you like. Let’s just agree to disagree about the buyer’s rights and say so.

    It IS there business…in my opinion.

  45. Reba

    “…there is an immediate concern if I write up the offer, unless I have my seller’s permission, that I get into a potentially liable position to the buyer unless certain forms are signed showing my agency position.”

    Not sure why you would need your seller’s permission nor why you or your seller ever NOT want you to write up a deal for an unrepresented buyer? It is no more complicated than making sure they have been provided the Agency Pamphlet and making disclosure of your representation (only the seller…no dual agency) in the PSA. By doing so, you have no agency obligations to the buyer including no duty of confidentiality or loyalty. From your seller’s perspective, there is no other agent involved which puts your seller in a better position than when the buyer is represented.


  46. One of my absolute favorite transactions this year was when the buyer represented himself, seller and I gave him the 3%. Seller’s net was greater than full price. Buyer was thrilled to tears. Win-Win.

    Sometimes offering the buyer the buyer agent fee, when the buyer wants no agent, is what is best for the seller for sure…and giving the buyer what they want at the same time.

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