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Real Estate commission?

Posted by fern76 (My Page) on
Tue, Apr 5, 11 at 22:45

I have a Realtor who sold me a house 19 years ago, I contacted her recently and we have recently seen 8 houses over two afternoons. In the meantime I have a friend of a friend who has a house going up for sale, but not listed yet. I am very interested in it, but don't want to cut my Realtor out.

Am I under obligation to her or am I able to act on my own?

Can I just use my Realtor for my part and not worry about the seller commission if there is no actual listing?

Are there other options?

Thanks.


Follow-Up Postings:

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RE: Real Estate commission?

I'm confused as to what you are looking for here. You said, You dont want to cut your realtor out, but in the next question you ask if you can act on your own?

You can act on your own with no obligation from your agent, (unless you signed a buyer agency agreement) but then you dont have buyer agent representation. Unless either you or the seller know the process of selling a house, one or both of you should have an agent.

Yes, you can use your realtor for just your part. You would pay the commission or the seller would pay the commission out of the proceeds of the house. The seller would probably be happy to work with your agent, because he can most likely sell his house for a reduced commission. Better price for both of you.


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RE: Real Estate commission?

It's easy:

When I represent a buyer on a by-owner sale, we (buyer & I) always spell out to the seller that my fee is included in the offer price.


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RE: Real Estate commission?

You don't need to involve a Realtor to buy an unlisted house, as long as you didn't sign a buyer's agent agreement with the one you've been working with. If you're worried about the process, hiring an attorney would cost a lot less than signing a commission agreement with a buyer's agent.


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RE: Real Estate commission?

Neither you nor the person selling the house needs a realtor. If the house is unlisted, and you found it on your own, there is no realtor commission. You only need 3 people to help you with your purchase: a loan officer, a title attorney and a house inspector. These people are needed even when you do have a realtor - you are just eliminating the realtor, and saving a huge commission in the process. The realtor is much more expensive than the other 3 combined.

We bought our house from a private owner and the house was not on the market. The whole sale went through without any flaws. It was very easy. The title attorney and the bank will have all the neccessary documents to go to closing. Depending on your area, the house inspector will cost around $300, the title attorney will cost around $1500, an appraisal fee may cost $300 and you will have other fees associated with the loan. The seller will be required to pay for termite inspections, well water testing, radon inspections, etc. By not using a realtor, you may also be able to get a better price on the house. You can ask the seller to knock another 3% off of the price.

Another thing to be very careful about - lots of houses start out on the market at a higher asking price, sit for a while, and then eventually drop in price. By you stepping up and showing interest immediately, it is very likely you will be paying a higher price. By allowing them to list it, you may have competition, so if you know for sure this is YOUR house, maybe you don't want to take that chance. Make sure your loan officer gets a good accurate house appraisal supported by good comps - not comps of what similar houses are listed at, but what they have SOLD for.

Good luck


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RE: Real Estate commission?

Jboling,
It will not cost the buyer anything.
Get in agreement with your agent and the seller that if you do end up purchasing the home, that the seller agrees to, in writing, pay for the agent's commission. Most agents would do this for half of the standard rate. It is a win/win situation. You will be represented in the transaction, your freind sells for half the regular commission, and you do not dis your agent.


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RE: Real Estate commission?

It will not cost the buyer anything.

Sure it will. Won't the seller want more for the house if they are having to pay an agent 2.5% or more? If the two parties can agree to a price I am sure that a RE attorney can draw up the contract for a lot less money. If the buyer isn't sure what to offer they may want to pay their agent a fee to do a market analysis on the property in order to come up with an offer price.


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RE: Real Estate commission?

And, in addition to what terriks said, why should anyone--either the buyer or the seller--have to spend more money than necessary by involving a real estate agent? Even at half the regular commission rate, the seller would be spending much more--an passing that on to the buyer--than if the buyer simply hired an attorney. Why make the seller pay more money so that an agent, who would have nothing to do with this specific transaction, doesn't get offended? Is spending two afternoons with someone worth thousands of dollars in commission?


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RE: Real Estate commission? pt 2

It's interesting to see some people are suggesting to use a realtor. Not because it is the "right thing to do", but because that is one realtor watching out for another. There is NO NEED for a realtor here. You owe the realtor nothing. This sort of thing happens all the time, and the realtor should understand and accept it. Educate yourself on what houses are selling for, what this house is worth, and get your loan officer to get hold of some comps. If you are worried about offering too much, that will be ironed out when the appraisal comes through. If you offer higher than what it gets appraised for, either the seller comes down in price, or you walk. There is no need to feel like you owe the realtor anything for showing 8 houses over 2 afternoons. The "loss" that the realtor has incurred here will be absorbed by the house that sells. This is why they get 3%. The house that DOES sell pays for all the time "wasted" showing all the non-sellers. If your conscience is eating you alive, and you feel you really need to reimburse the realtor, I would imagine $100 would easily cover it - and if she were a really decent realtor, she will refuse to accept that anyway.

Good luck, I hope things go well for you.


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RE: Real Estate commission?

look at the home without the realtor. Chances are this house is not the home for you. But if it is, move forward with an offer, etc by using a real estate attorney. Don't even mention it to the realtor. She might go after the listing and then bring it to market.

I do not agree with the other poster above that says you will pay less if it is listed. Just my opinion. But you do need to know market price of any home you are thinking of buying, regardless if listed or not. Many have fair prices and some are overpriced. Of course you get the Appraisal Contingency anyway, that says it has to appraise at or above your agreed upon purchase price.

No need for a realtor. Trust me, you will pay in the end for the realtor fee if you bring the realtor into the picture. The seller will charge more for the home to cover the commission...or you pay the commission on your own. Either way, you pay, and thousands of dollars. And then a good portion of the contract (when using a realtor) is legal mumbo jumbo to protect the realtor and broker.

I sold FSBO before more than once and can tell you that the process without a realtor works just fine.

Just stay tight lipped when you view the home. Don't give too much info to the seller that you don't want them to know(such as you just LOVE the home it is perfect and you can't live without it, etc.).


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RE: Real Estate commission?

Wow! Thank you for all the great advice, I really appreciate it! I have an appointment to see the house next Tuesday afternoon, I've driven past it like 6 times already, I'm sure they think I'm stalking the neighborhood:). I'll keep you posted!


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RE: Real Estate commission?

A seller sells FSBO so that THEY can save the difference in commission... not to give it away to a buyer.
cas66ragtop says to ask the lender for comps... What? They will laugh at you. They are not real estate experts. They will tell you that they are going to send an appraiser out to the property, after you give them a signed agreement.
Most of us agents compensation is derived not from driving people around town, but for the fiduciary representation that we offer our clients throughout the transaction.


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RE: Real Estate commission?

what ncrealestateguy said.


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RE: Real Estate commission?

The loan officer would laugh at you if you ask for comps? Funny, they took me seriously. The bank not only wants you as a customer, and will work with you any way they can, but they also will not loan the money on an overpriced house. They are just as interested in seeing that you make an informed decision before making an offer. You really think they leave it up to the realtors (the so-called "professionals") to figure out what a house is worth? There are a lot of realtors that are far from being professional, or educated - what a joke. Anybody can pull comps - this isn't a very complex or magical thing to do, that only realtors are capable of. I could easily pull comps all by myself if I had access to the data. Thats where the appraisal comes in, and the appraisor will be more than happy to give you comps. Face it, ncrealtyguy - you are trying your best to justify the existence of realtors, when in fact, they ARE NOT NEEDED.


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RE: Real Estate commission?

The loan officer does not look at comps,... the appraiser does. You said the loan officer would valuate the home. they will not, so I corrected you.
Not only do my clients have a need for me, but they actually appreciate me. So do the SUCESSFUL surveyors whom I refer business to quite frequently.


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RE: Real Estate commission?

cas66ragtop, My loan officer could give two sh*ts about comps. They want to know how much money we want to borrow, and what the house we're buying is worth - they really don't care what the house down the street sold for. They have an appraiser who determines what the value of the home is, the appraiser uses the comp data to determine a relative value, not the loan officer.

And yes, of course realtors are needed. I might be able to do it myself, just like I might be able to fix my car or cut my hair, but I don't want to. There really are more important things in life than money. (at least IMHO)
My time is very valuable to me, and I am more than happy to pay people to do things that I don't want to do, or that they are more skilled at than me. Most realtors go into the profession because they really like it (or at least the ones I have met and worked with) - they actually light up and get really excited talking about real estate. Yeah, real estate, tons of fun at parties. Why would I not want to harness that enthusiasm and knowledge? So I can go through all the crap of a FSBO? Have we not seen enough threads about how much that sucks? Even if you are accurately priced, everyone automatically thinks you're greedy and going to be a persnickety PITA to deal with. No. Thank. You. Give me a realtor any day of the week. Saves me time, headaches and carrying costs.


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RE: Real Estate commission?

The "loss" that the realtor has incurred here will be absorbed by the house that sells. This is why they get 3%. The house that DOES sell pays for all the time "wasted" showing all the non-sellers

Thats a joke. I wish I had the $4 a gallon of gas back for every person that "wasted" my time showing them around and they did nothing. How far do you think that 3% stretches? When you go to work, you get paid. Realtors go to work every day without knowing if they will EVER get paid. Its also the only profession where you spend your own money, your own gas, your own time never knowing if it will amount to a paycheck.


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RE: Real Estate commission?

Linda, there are other sales jobs where one spends their own money to get the future commission.
The point is, this agent did not show the buyer a home they wanted. That is the risk agents take when showing properties, some deals are quick and easy, some never come to fruition.
An experienced agent learns to cut their losses and move on.


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RE: Real Estate commission?

"The point is, this agent did not show the buyer a home they wanted. That is the risk agents take when showing properties, some deals are quick and easy, some never come to fruition.
An experienced agent learns to cut their losses and move on."

That's why the better agents insist on a written buyer/transaction commitment from the buyer. In case the buyer finds a home, they will not be able to circumvent the agents and will have to compensate them for their time, which is only fair.


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RE: Real Estate commission?

"That's why the better agents insist on a written buyer/transaction commitment from the buyer. In case the buyer finds a home, they will not be able to circumvent the agents and will have to compensate them for their time, which is only fair."

So, if you spend several days browsing a car lot looking for a new car, and a salesman spends lots of time answering your questions and taking you on test drives, but you decide to buy a car from the neighbor down the street, would you be willing to have signed a buyer/transaction commitment with the car salesman, giving him hundreds and hundreds of commission dollars?


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RE: Real Estate commission?

"So, if you spend several days browsing a car lot looking for a new car, and a salesman spends lots of time answering your questions and taking you on test drives, but you decide to buy a car from the neighbor down the street, would you be willing to have signed a buyer/transaction commitment with the car salesman, giving him hundreds and hundreds of commission dollars?"

That is not a comparable occupation to a self employed REALTOR. Just like new home builders representatives are not comparable ( I know, my daughter is one), they get base pay and commission.


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RE: Real Estate commission ?

p.s. besides spending their money on food, gas, insurance, license fees, continuing education, self employment tax, vehicle ware and tare, office equipment and supplies, communication, software, working on demand 24/7 and host of other things that someone who "goes to an office" every day, never has to worry about.


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RE: Real Estate commission?

I have an agent (actually a broker) of many (~15) years of association.

She looks out for houses that I might be interested in.

For typical sales I go through her so she gets a commission.
For things like REO I use an attorney so she does not usually get anything.

She knows I will use her for future transactions (purchases and sales).


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RE: Real Estate commission?

I'm a self-employed editor. I have spent a fortune on "food, gas, insurance, education, self-employment tax, vehicle wear and tear, office equipment and supplies, communication, software and working on demand 24/7." I charge an hourly fee. If a project I have a hand in makes hundreds of thousands of dollars, but I've put maybe 20 hours into it, my income from the project is a pittance compared to what a real estate agent makes from a house sale in the hundreds of thousands of dollars. And in my experience, the hours an agent spends on a house sale once the contract is signed are pretty low after the attorneys, mortgager and title company take over. I once had an agent complain to me because we weren't hiring an attorney to bring us to closing, and she'd have to do more work for her enormous commission.

The entire real estate-selling industry has to reinvent itself if it wants to stay viable. There's no wonder that FSBOs and flat fee listings are more prevalent as sellers start realizing the ridiculousness of commission rates.


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RE: Real Estate commission?

Most people are not willing to pay an hourly fee to agents, that's why the system is set up the way it is. There are discount brokerages available for those sellers who prefer them, however, they normally don't last and soon go out of business.
Buyers need every penney they have to buy and will not pay their agent, that's why the co-op MLS system is set up this way, where sellers pay the buyers agent.


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RE: Real Estate commission ?

"I'm a self-employed editor. I have spent a fortune on "food, gas, insurance, education, self-employment tax, vehicle wear and tear, office equipment and supplies, communication, software and working on demand 24/7." I charge an hourly fee."

Ours is a results driven business, no results, no pay. Since you get paid by the hour, you get paid regardless what the outcome. Hardly a job you can compare.
Most agents never use an attorney (only a few states require them). In my over 20 years in real estate I never had to use an attorney.


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RE: Real Estate commission?

Car dealers are selling their own merchandise;
their goal is to get as much of your money as they can.

Realtors have a fiduciary relationship with a *client*;
their goal is to get their client the best price & terms when the client sells his/her own property or buys property belonging to someone other than their Realtor.


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RE: Real Estate commission?

An experienced agent learns to cut their losses and move on.

Cmarlin for the record, I have almost 23 years experience. We're not talking about cutting our losses and moving on. Thats a given. The point is, a statement was made that the 3% made on one commission covers all the wasted hours for all the others that dont dont buy. This is far from the truth.


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RE: Real Estate commission?

When we bought our house we didn't use a realtor. We found the house on the internet and used our real estate attorney to submit the contract.

During the course of submitting the contract, the seller's agent asked us to sign a dual disclosure.

Why would they ask us to sign this when we weren't using a buyer's agent from their realtor and were paying our own lawyer out of pocket?

What difference would it have made if we had signed this?

I'd like to hear what realtors/agents think about this.


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RE: Real Estate commission?

An experienced agent learns to cut their losses and move on.

Cmarlin for the record, I have almost 23 years experience. We're not talking about cutting our losses and moving on. Thats a given. The point is, a statement was made that the 3% made on one commission covers all the wasted hours for all the others that dont dont buy. This is far from the truth.

The point is the same, some clients cost you money, you move on, some make you a little money, some make you a lot. Overall you make money or you move on. Most commission jobs are like that, after 23 years, surely you've made enough money to keep doing it.
As an agent, it is your interest to tell the OP to use an agent, other posters disagree.


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RE: Real Estate commission?

"During the course of submitting the contract, the seller's agent asked us to sign a dual disclosure."

This sounds like a state requirement, to disclose to the parties in the transaction, who the agent is working for and to have documentation showing that on file.
We have a similar requirement, however, dual agency is against the law in my state.

Here is a link that might be useful: Definitions Disclosure Form


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RE: Real Estate commission?

It may also be a method to gain another slice of the commission, as the selling agent.


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RE: Real Estate commission?

"It may also be a method to gain another slice of the commission, as the selling agent."

Thats what I figured. Which is why we used a real estate attorney instead of an agent in the first place.


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RE: Real Estate commission?

Good grief.

Real estate practitioners are required to disclose their relationships with the all parties to a contract, regardless of what those relationships are & regardless of how the fee is paid out.

The only reason there would *be* "slice" of the fee would be if the listing broker were paying part of it to the buyer's agent:

The seller pays the same amount whether the Realtor pays part of it to another agent or not.

If the buyer has no agent, the listing agent gets the entire fee, no need to resort to "a method to gain another slice of the commission".


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RE: Real Estate commission?

What Sylvia said!

and I'd like to add, when people say they found the property on the internet, hello folks, the agent is the one paying to put that property on the internet. It doesnt magically appear for you to find it.

What difference would it have made if we had signed this?

It makes no difference at all except to disclose to you that the agent would be getting BOTH side of the commission. Im curious, who went to the home inspection, met the appraiser, got the necessary documents to the atty? Im betting the listing agent. Even though you chose not to use her, she got paid by the seller anyway, because thats how commission works. You saved nothing by submitting the contract to the atty. You probably would have gotten a little better deal using a buyers agent. (seller was paying for it either way). Most people prefer to have an advocate on their side, especially because its not costing them any more if the property is already listed.


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RE: Real Estate commission.?

As an agent, it is your interest to tell the OP to use an agent, other posters disagree.

Cmarlin it isnt in my interest to tell the poster to use an agent. It makes no difference to me at all. I dont know her/him. In fact, if you read my very first post, I told her she was under no obligation to use an agent. The OP is the one who said she doesnt want to cut her agent out. People are free to do whatever they want to do. MOST people prefer to use an agent. I also am a buyer of real estate. I use an agent when I buy outside my area. Why wouldnt I? It benefits me in every way. If I happened to see a FSBO that I liked anywhere except my own area of service, I WOULD USE AN AGENT. Why? Because I dont know how real estate works in every area. I want someone on my side that is looking out for my best interest.


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RE: Real Estate commission?

"and I'd like to add, when people say they found the property on the internet, hello folks, the agent is the one paying to put that property on the internet. It doesnt magically appear for you to find it."

This isn't always the case. I'm flat fee listed. I paid to have our property advertised on the Internet and put on the MLS.


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RE: Real Estate commission?

"It may also be a method to gain another slice of the commission, as the selling agent."

There is nothing illegal for agents to disclose their relationship with their client. In most states it's probably the law.

If the attorney representing the buyer is not a Realtor and member of the local board, s/he is not entitled to a commission and the buyer has to pay their attorney. (Only licensed agents can get paid part of the commission)

If the listing agent has signed a listing contract with a co-op fee for a buyers agent and there is no buyers agent to pay, s/he can get both sides of the fee.


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Also...

Linda, I should add to my response above that we also have our own website, Facebook and Twitter pages to advertise our house for sale. Just because someone sees a house for sale on the Internet doesn't mean an agent paid to put it there.


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RE: Real Estate commission?

This isn't always the case. I'm flat fee listed. I paid to have our property advertised on the Internet and put on the MLS.

Yes, you paid an agent or broker who then entered it onto the MLS. It did not appear there by magic.


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RE: Real Estate commission?

terriks, linda117 said "the agent is the one paying...". No, the agent didn't pay for it. I did. And as I also said, an agent also didn't pay for my house to be seen on my own website, on Facebook and on Twitter. The stated assumption was that if you see a house for sale on the Internet, an agent paid for it to be there out of their own pocket.


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But...

And to be clearer, linda 117, in response to the poster who said she "found the house on the internet," said the agent "is the one paying to put that property on the internet." She didn't say the MLS, she said "the internet." As you can probably tell :-), it bothers me that people are led to believe that the only way they can get a house on the internet is through a real estate agent when there are so many more ways open to them.


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RE: Real Estate commission?

JBOLING, please, find me one person who searches facebook when they are looking for a house. Cmon now, lets be realistic. Ok, if you want to get technical, I supposed she could have found it on a FSBO site, but since it was LISTED WITH AN AGENT and the poster said that, the point is obvious and yours is moot.


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RE:commission?

linda117--If you had made it clear that you were responding directly to the poster, I wouldn't have made a peep about this subject. But, you made a general statement, saying that "when PEOPLE say they found the property on the internet, hello FOLKS, the agent is the one paying to put that property on the internet." This generalization is what got me riled up. You were talking about PEOPLE in general, not the poster--that's how you wrote it.

And in answer to your question about Facebook, a friend of mine just purchased a house she saw on Facebook, numerous Realtors (the ones familiar with current marketing strategies) in my area have Facebook pages where they showcase houses, and I've had numerous hits on my Facebook page with two showings from it so far. You don't expect people to go directly to Facebook--you lead them there through other strategies (flyers, craiglist links, signs, etc.).

I know I sound strident in my posts and I apologize for that. But after spending thousands of thousands of dollars over the years in numerous sales involving agents, and then switching gears with my last two properties and doing it myself with flat fee MLS assistance (and finding out how much work is and isn't involved--and both sold without a buyer's agent, by the way), I find it very important that sellers realize their options and it bothers me when agents refuse to adjust to or admit current realities.


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RE: Real Estate commission?

sylviatexas said: "Realtors have a fiduciary relationship with a *client*;
their goal is to get their client the best price & terms when the client sells his/her own property or buys property belonging to someone other than their Realtor. "

I found this the most convincing argument on the page -- and yet, it's too bad that the conventional payment arrangement creates incentives for the realtor that are so misaligned from the buyer's. This is the case in just about every profession: Lawyers make more money if their clients don't settle easily, doctors make more money if their patients need more care or have more surgery, etc. Those professions have higher barriers to entry and seem to exercise more institutional control on their professionals; and their payment structures aren't so dependent on a few big sales. It's hardly surprising the public has a harder time trusting realtors.

I'm surprised no one in this thread has mentioned the overall state of the U.S. economy. Professionals of all types are having difficulty contending with changes wrought by the internet; and the recession, unemployment rate and declining home values are hitting everyone. Realtors are obviously vulnerable to all these factors.

One response I've seen is redfin, and I'm surprised there aren't more sites like that. Does anyone have experience working with a realtor through an arrangement other than the traditional commission? Or have any of the realtors here ever tried anything other than the standard commission structure for payment?


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RE: Real Estate commission?

Jboling, I'm with you. My house is all over the Internet and I put it there. I also put it on Facebook and someone recently inquired when they saw it.

I sell my houses by owner because I want to make the commission and because it gives me room to be more competitive with the other properties that are listed with agents so I can also give my buyer a better price. We both win when we cut out the middle man. Of course, not everyone can do an agent's job or wants to, so there is a need for good agents. Selling is not easy. It's a job. But for the people who want to, I don't see why all the agents are having a hissy fit. If you're great, you're going to get business.

And it's not the only business where you have to spend money and you don't know if you're going to get paid. I have a flooring business. We spend money on the same thing you do--advertising, office supplies, gas bringing samples to customers trying to sell the job, truck insurance, liability insurance--there are tons of things. And we never know if we're going to get the job. Sometimes the customer decides to go down to Lowe's and get the material himself and do it himself. Sometimes our expensive advertisements don't garner one phone call. But we're good at what we do so the losses are off-set by all the jobs we do get. Sometimes, in fact, we will give free advice to a do-it-yourselfer--who knows? Maybe he'll remember this when there's a flooring job he can't do? Or maybe he'll recommend us? At the least, we will feel good about ourselves.

To the original poster--when I bought this house that I have now, my agent took me to a couple of dozen properties and I didn't like any of them. Then I found this one on my own and it was a for-sale-by-owner. I wasn't obligated to give the agent anything. But I gave her $500. because I felt she deserved something because she did a lot of work. In your case, eight properties over two days--I don't think you owe her anything. It's to be expected. If she was nice and good, use her in the future and recommend her.

ColorfulLair, that's a good point about how the realtors' incentives are misaligned with the buyers' interests.


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RE: Real Estate commission?

Not at all original to me, but thx.


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RE: Real Estate commission?

"realtors' incentives are misaligned with the buyers' interests"

Try telling that to a broker who must answer to the state real estate commission as well as to buyers & sellers.


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RE: Real Estate commission?

"I found this the most convincing argument on the page -- and yet, it's too bad that the conventional payment arrangement creates incentives for the realtor that are so misaligned from the buyer's."

How is that? Just another urban legend!
It's against the law and a sure way to end a real estate career.


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RE: Real Estate commission?

Not even the fact that it is against the law...
good agents realize that in order to be sucessful in this business over the long haul, one has to impress their buyer and seller clients every day. I have never met a sucessful agent that did not have a large part of their sucess owed to referrals from their past clients. In order for this to happen agents have to put their clients best interests ahead of their own. It is really not a hard thing to do.


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RE: Get Real

Not even the fact that it is against the law...
good agents realize that in order to be sucessful in this business over the long haul, one has to impress their buyer and seller clients every day. I have never met a sucessful agent that did not have a large part of their sucess owed to referrals from their past clients. In order for this to happen agents have to put their clients best interests ahead of their own. It is really not a hard thing to do.


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RE: Real Estate commission?

I honestly wasn't trying to insult realtors with my comments, just reflecting that the world has changed, that all professions are facing challenges, and that real estate's unlikely to be an exception.

I also wasn't trying to comment on the ethical or regulatory standards of the profession, just on the financial incentives. Realtors obviously provide a service people find valuable, and they deserve to be paid fairly for it. Personally, I'd prefer to pay someone an hourly consulting fee plus standard mileage rates, but I don't know any realtor who offers that. :)

ncrealestategy said: "good agents realize that in order to be sucessful in this business over the long haul, one has to impress their buyer and seller clients every day. I have never met a sucessful agent that did not have a large part of their sucess owed to referrals from their past clients."

I'm sure that's true, and it's an important incentive but not a perfect one. In my experience people really aren't good at judging the performance of people in fields other than their own... in my world, I'm aware of colleagues whose clients love them but who don't impress me at all, and also of colleagues I think are superb who have difficulty connecting with clients. Might be less of a factor in real estate since the people skills are important both in client relations and in negotiation.

"In order for this to happen agents have to put their clients best interests ahead of their own. It is really not a hard thing to do."

Actually, it's an extremely difficult thing for humans to do. In medicine it's been shown over and over that doctors respond to financial incentives in their treatment decisions even when they think they're making decisions in an unbiased way. The brain just fires on more levels than people are aware of.


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RE: Real Estate commission?

Ncrealestategy said, "I have never met a sucessful agent that did not have a large part of their sucess owed to referrals from their past clients."

The key word here is "successful." The problem is, there are many agents who are not successful and are never going to be and we don't know this when we call them about a property and start a relationship. I had a terrible time when I was house hunting a couple of months ago finding an agent who was good. I was pulling my hair out! I told them that I was under contract with no house-selling contingency, my house already appraised to the price, I was purchasing for cash, I would not ask for an inspection or an appraisal, and I had to find something immediately. I also told them that I would stick with them and no one else, even though I could purchase anywhere in the state. I'd let them take me around. I'm loyal. You'd think they would have been jumping all over me! But I could barely get phone calls returned. I was never able to get good information. I'm buying in another state and so I need as much info as possible before I drive 9 hours. A couple of them didn't even know as much about real estate as I do and I'm not in the business! Finally, I got a recommendation. But truth be told, he's acceptable but he's not great. I've had two great agents in the past. In other states. They were gold. They worked hard, they looked out for my interests. I always recommend them and pine for them, lol.


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RE: Real Estate commission?

"I'm sure that's true, and it's an important incentive but not a perfect one. In my experience people really aren't good at judging the performance of people in fields other than their own... in my world, I'm aware of colleagues whose clients love them but who don't impress me at all, and also of colleagues I think are superb who have difficulty connecting with clients."

It is not about YOU.
It's the relationship between buyers, sellers and their agent that establishes the relationship. That's why one client of mine has called me for my services 15 times in the last 20 years.

"In medicine it's been shown over and over that doctors respond to financial incentives in their treatment decisions even when they think they're making decisions in an unbiased way"

I don't believe it. Please reference proof!


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RE: Real Estate commission?

berniek wrote: "It's the relationship between buyers, sellers and their agent that establishes the relationship. That's why one client of mine has called me for my services 15 times in the last 20 years."

What I'm saying is that the client relationship is not an adequate way to evaluate the performance of a professional (necessary but not sufficient). Whether the agent's advice in selecting a house is good, and whether the agent has helped to obtain the best possible deal, are things I can't evaluate well because I don't have the expertise to compare to other agents.

"I don't believe it. Please reference proof!"

It's a whole body of research. Here are a few the of the articles that came up when I googled "physician incentives" and selected "scholar":

http://www.jstor.org/pss/3767630
http://journals.lww.com/lww-medicalcare/abstract/1990/11000/managing_physician_incentives_in_managed_care__the.4.aspx
http://content.healthaffairs.org/content/21/2/197.short
http://mcr.sagepub.com/content/53/3/294.short


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RE: Real Estate commission?

"Whether the agent's advice in selecting a house is good, and whether the agent has helped to obtain the best possible deal, are things I can't evaluate well because I don't have the expertise to compare to other agents."

Obviously that is not an issue with my client.

"It's a whole body of research. Here are a few the of the articles that came up when I googled "physician incentives" and selected "scholar":"

Looks to me just like the argument between traditional and discount real estate services. The business model determines financial success.


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RE: Real Estate commission?

"Linda-What Sylvia said!
and I'd like to add, when people say they found the property on the internet, hello folks, the agent is the one paying to put that property on the internet. It doesnt magically appear for you to find it.'

What difference would it have made if we had signed this?

It makes no difference at all except to disclose to you that the agent would be getting BOTH side of the commission. Im curious, who went to the home inspection, met the appraiser, got the necessary documents to the atty? Im betting the listing agent. Even though you chose not to use her, she got paid by the seller anyway, because thats how commission works. You saved nothing by submitting the contract to the atty. You probably would have gotten a little better deal using a buyers agent. (seller was paying for it either way). Most people prefer to have an advocate on their side, especially because its not costing them any more if the property is already listed."

Linda. Do you approve of dual agency even when the buyer has their own representation? Seems a bit unethical to me. The seller hired the agent first. How much 'advocacy' do you think we could have expected if we'd allowed the seller's agent/agency to handle both ends of the deal?

As for all the work the seller's agent did, there was no appraisal or mortgage so the only thing left to do was to get the papers back to our attorney. Meeting the home inspector? Never happened. The seller's agent didn't go to go. She called our inspector and gave him the code to the box over the phone! Think the seller would have appreciated that?

Well he didn't because the worst case scenario happened. The furnace broke, the inspector spent two hours trying to fix it then had to leave. We could have left as well but the temps were in the single digits and we knew the pipes would freeze if we didn't find a way to get hold of the seller. As it was, we had to call three numbers before someone from the agency called us back to tell us the seller was on the way over to try and fix it so the pipes in his house wouldn't freeze. When he showed up he was PO'd that his 'advocate' never appeared for the inspection.

Our attorney did the same amount of work that a buyer's agent would have.

Unlike our last buyer's agent, he was very helpful in making suggestions about how much money off our original offer we should ask after the inspection turned up a few other issues.

He didn't expect us to negotiate this with the seller like our 'advocate' did. I think he should have been entitled to at least some of the commission because he actually did something for it, but thats ok, He did fine and was worth what we paid him.

Our last buyer's agent cost us three times his fee because we had to hire an attorney to get out of a deal she screwed up.

Our 'advocate'/buyer's agent promised to provide an attorney if something happened, but they didn't. When the seller sued us to force the sale., they told us we were on our own. That came out of OUR pocket.

Is this the role a buyer's agent is supposed to play when the going gets tough? As far as I'm concerned she was never on our side. She was acting on behalf of the real estate cartel's code of GET THAT SALE, no matter who's side your on.

No wonder more people are going FSBO.


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RE: Real Estate commission?

And it's not the only business where you have to spend money and you don't know if you're going to get paid. I have a flooring business. We spend money on the same thing you do--advertising, office supplies, gas bringing samples to customers trying to sell the job, truck insurance, liability insurance--there are tons of things. And we never know if we're going to get the job. Sometimes the customer decides to go down to Lowe's and get the material himself and do it himself.

Love, Im not talking about "trying to get the job", Im talking about actually having the job and never getting paid. Sure real estate agents and service people sometimes have to do estimates or CMAs and never get the job. Thats part of the business. Sometimes you get it, sometimes you dont. Im talking about agents who actually "GET" the job, spend hours and hours, weekends, months, negotiate multiple deals, go thru hours of home inspections, then deal with issues on that. Im talking about hundreds of hours of work, and then the buyer decides, they arent buying right now, they buy a fsbo etc. In my area, buyer agency contracts havent' taken off yet, but believe me I am trying. This past year I have wasted more hours with buyers that haven't purchased than any other time in my real estate career. I can honestly say, I have spent more on this business than I have made this year.

Linda. Do you approve of dual agency even when the buyer has their own representation? Seems a bit unethical to me. The seller hired the agent first. How much 'advocacy' do you think we could have expected if we'd allowed the seller's agent/agency to handle both ends of the deal?

Dreamgarden if you had your own representation, then there is no dual agency. As for the second part of your question, in NY dual agency is legal and it happens all the time. I've never had a problem being fair to both sides.

Unlike our last buyer's agent, he was very helpful in making suggestions about how much money off our original offer we should ask after the inspection turned up a few other issues.

Then you should have hired a "buyers agent" in this transaction too. The sellers agent cannot represent YOUR interests with 100% loyalty in this situation which sounds like what you were looking for. She also represents the seller. You have to understand what you are asking for before you get mad that you're not getting it.


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RE: Real Estate commission?

"Dreamgarden if you had your own representation, then there is no dual agency.

Unlike our last buyer's agent, he was very helpful in making suggestions about how much money off our original offer we should ask after the inspection turned up a few other issues.
Then you should have hired a "buyers agent" in this transaction too. The sellers agent cannot represent YOUR interests with 100% loyalty in this situation which sounds like what you were looking for. She also represents the seller. You have to understand what you are asking for before you get mad that you're not getting it."

Linda, you are the one who isn't 'getting it'. I said I hired an attorney to represent me.

Why would I expect loyalty from the sellers agent when they are being paid to represent the SELLER?

Why would I sign something stating that the sellers agent is representing me (dual agency) when they AREN'T?

Sheesh, no wonder people are tired of the headgames buyer's agents like to play and going FSBO.


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RE: Real Estate commission?

Unless the agent requested the buyer to sign a buyer's representation agreement, the form was likely something like our "Information About Brokerage Services" form that we are *required* to present to a buyer or seller regardless of whether we are to represent them or not.

No one has to sign it, but we have to present it.


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RE: Real Estate commission?

Linda, I understand your point about taking buyers around and around and around to see houses and then they decide they are not going to buy anything after all. That's exactly why I've decided against becoming a real estate agent myself. I wouldn't have the stomach for it. But it IS similar to my flooring business, only on a different scale. I might drive an hour each way to try to get a job, maybe go back and forth two or three times to bring more samples, call companies to do research about the new product the potential buyer inquired about, and then they buy it from someone else after all the work I've done. Maybe I'll only spend a half dozen hours on the potential sale and a hundred dollars in gas. But I will only make a thousand dollars if I get the job. Whereas an agent has a bigger risk. She might drive people around and spend a hundred hours and five hundred dollars in gas. But if she gets the job, she might make TEN thousand dollars. Bigger risk and bigger investment, bigger payback. I think you have to be a special kind of person to do this kind of work. I think you have to be really easy-going otherwise I can imagine it would drive you crazy. I'm not, that's why I ruled out becoming a real estate agent.


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RE: Real Estate commission?

I never realized how much hostility there was towards realtors. We have bought and sold more than a few times and used a Realtor in all but one transaction...and that was a purchase for which we should have used representation. All the realtors we've worked with have been competent professionals who more than earned their commissions.


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RE: Real Estate commission?

I think it depends on the market, your experience and how competent the realtor. I would argue the amount of the sale also factors in.
Consider 3-6% of a 150K vs. 800K is similar to you paying $20 for a dinner vs. $95 for a dinner - you have certain expectations.

Unfortunately, my experience with realtors is they show or schedule access to homes and create intend for sale paperwork/contracts. They offer value to the seller if they don't wish to be involved but the remainder of the transaction is typically the buyer and lender/closer after appraisal is completed.

In my 4 transactions I've seen realtor cause problems by holding out for competitive bids, outright lies and making rules/stipulations which don't apply. I had a realtor in a foreclosure demand I sign a paper which was dated 1/1/11 but I wasn't in contract until 9/30/11. The idiot wouldn't budge (or listen) until I called the seller who hopefully ripped them a new hole.

If you can avoid a realtor in a transaction it is much better. I purchased 2 homes FSBO and couldn't have been more smoother.


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