I'm Thinking of a New Pricing Model
When I buy my next house, I'm thinking of going straight to the listing agent and not bothering with hiring my own Realtor. Ideally, if the listing agent wants to get a transaction done, they will have room to cut their commission since there won't be a split.
What I was also thinking though is maybe hiring a Realtor, but only if they were to change their commission structure. The commission structure that exists now does not work for the buyer because the Realtor's interest is in getting the transaction done at the highest price possible.
In order to eliminate this detrimental incentive to the buyer, I propose that the commission for the Realtor representing the buyer be based on a percent discount to the asking price. In short, the higher the discount that the Realtor negotiate, the higher the commission they will receive.
I'd like to hear from some Realtors or readers out there if they think this is a good idea.
Also, you can post anonymously again (you don't need to sign in or register.) Hopefully the spam will be kept to a minimum.
What I was also thinking though is maybe hiring a Realtor, but only if they were to change their commission structure. The commission structure that exists now does not work for the buyer because the Realtor's interest is in getting the transaction done at the highest price possible.
In order to eliminate this detrimental incentive to the buyer, I propose that the commission for the Realtor representing the buyer be based on a percent discount to the asking price. In short, the higher the discount that the Realtor negotiate, the higher the commission they will receive.
I'd like to hear from some Realtors or readers out there if they think this is a good idea.
Also, you can post anonymously again (you don't need to sign in or register.) Hopefully the spam will be kept to a minimum.
posted by Little_Silvered at 10:40 AM
10 Comments:
I'm a Maryland broker. Yes, a buyer's agent should be willing to work on this basis. That is, if you can find a good buyer's agent. That's the difficult part. Most agents still want to "list." This mindset is not easily changed. The current model is truly seller focused, as it has been forever. Perhaps following this crash we will see a true reform of how business has always been done. Perhaps.
I have been working under your first premise for years. I never have a buyer's agent with me, I go directly to the seller's agent. Counterintuitively, however, not many selling agents cut their 6% commissions to get a deal done. I've had several agents walk away from a deal rather than making it work by cutting their commission. It baffles me, but I attribute this to the strong market that has exisited the past several years. There was always another sucker willing to pay full price. Maybe that'll change now that things have slowed down.
there is a service somewhat like what you are talking about it returns a % of the comm back to the buyer...http://www.ziprealty.com/index.jsp
Personally I don't think it makes any difference either way but if you do decide to use the seller's agent be sure you spend a couple of hundred dollars to consult with an attorney before finalizing any deal.
What's most important is that you educate yourself and DO NOT give any Realtor(or anyone for that matter) any more information than they need to know. Keep your cards close to the vest.
Buying strategies are the same whether it is a house, a car or anything where you might negotiate the price. Reading some material on the subject will help greatly.
One strategy I have used when a Realtor would not cut the commission up front is to wait till the deal is close to being signed at which time I would bring it up again. Of course you can always lower your offer to include the amount of discount you wanted on the commission.
In the end it is up to you to be a smart and tough negotiator and always be prepared to walk if you don't get what you want...Even if it is unreasonable!
With regard to offers, the best piece of advice I ever got was this: "If you're not a little embarrassed by your offer then you're probably paying too much".
This comment has been removed by a blog administrator.
The only way to 'win' is spend a weekend studying and get your own RE license and thus 100% of the buyers side commission.
Its totally worth it even for only 1 deal. You will need above average IQ otherwise its a struggle to perform all this.
Any selling agent wont cut commission here is why.
1. he wants to double dip the deal and take the buyers commission ALSO that is already contractually agreed upon that he can double dip commission.
2. the next buyer wont ask him to chop his commission, that is rare.
3. Listing agent doesnt care about price, just commissions, its their dream to double dip. I had agents flush my offers when I came in with a realtor. They get around it legally by never answering voice mail or calling you back. thus no offer ever sumitted.
Instead in this scenario you let the listing agent take the buyers commission (double dip) and tell him 'look you are getting doubel comission if i buy the house, but im only buying at this price'
He will try REALLY REALLY REALLY hard to get the owner to cut price to get his 50k instead of 25k. Thus he should be able to get 25k off the price for you (on top of whatever lower bid you were making).
Trust me this is how the world is. You offer MORE MONEY to the controlling realtor not less. They control the 'poor slob' on the other end. The seller wouldnt list with that agent unless they trusted them.
Also if you approach the listing agent with no agent your self he legally is entitled to the buyers commission if you buy the house. It is not 'negotiable' the second you approach him. You dont know the RE laws. The first agent to show the house gets that commission that is is. You cant say 'ok then you wont cut your commissin, i will bring agent from ziprealty in here and they will rebate me'
In that case the listing agent has a legal case he can if he wants, collect the whole commssion from the seller - he showed you the house and you bought the house. its a contract with the seller, not buyer.
have fun!
I know this sounds silly but suppose you go to the listing agent let him show you the home and tell the owner YOU want to present the offer.With that you tell him you'll pay xxx amt of dollars plus the 2 %or 3% comm to the listing agent ?...would that fly
Since you are the buyer, you're your own "Buyer's Agent" (so to speak), so why can't you get the buyer's part of the commission yourself? Is it forbidden for a person to act as his own licensed buyer's agent? Don't realturs do this for their own purchases?
This comment has been removed by a blog administrator.
This comment has been removed by a blog administrator.
Post a Comment
<< Home