Misconceptions on Commission

Right on point here JL, a buyer gives up representation and gains ZERO advantage.  I try to explain the commission is in a separate contract from the buyers contract.  IT is a part of the listing agreement and it is spelled out clearly the sum the percentage and everything before the home is on the market.  A BUYER DOES NOT SAVE THE COMMISSION.  the split is just between listing agent and selling (buyers agent) If that is the same person,  WHO WINS?

Sellers often increase the asking price to cover the commission and that's why buyers think if they don't have an agent the seller will reduce the price.  What they fail to understand is that the full commission will go to the agent who is NOT representing them.    

JL...

This post is an accurate depiction of reality. In the old days, if the buyer wanted representation, they would pay for it, and that was over and above the commission paid by the seller!

There are instances where it does cost the buyer. I had a Realtor who flipped a home and refused to pay my firm for my work. I closed on the home and the buyer is now on a payment schedule to the firm. The seller contacted my buyer at work (because she left their info on the sheet at the open house) and stated they would not pay me because although my buyer had representation they went to the open house without me. (Having 19 buyer's brokerage agreements at the time, this will continue to happen. I can not be 19 places at the same time. Buyers do wander around without us.) The first time buyer, not knowing any better, agreed to pay my firm during the phone conversation. This resulted in the seller refusing to budge on the issue and she had the HUD 1 changed at closing removing my firm. They also prepared a sales contract referencing the fact there was a sep agreement for the buyer to be responsible for the fees incurred in having a buyer's rep.

Some firms don't honor their listing contract regarding a co-broke regardless how hard you work. I took a lot of verbal abuse from the person who flipped that home. In the end I lowered the price significantly, which did not make her happy. We walked from negotiations, found a larger home for less but had our accepted offer canceled because the second seller took her home off the market. She couldn't find another place to relocate to. We wound up returning back to the original target because the home wasn't moving. Since then, I have instructed all of my buyers to always take my business card with them and to never leave their contact information behind for any reason if they get the urge to pull over and peek at a home. They are to write my name, e-mail and phone number instead on the guest sheets if they insist on traveling to an open house without me.

I have one set of buyers I may have to drop because they keep contacting the other side without me and I do not ever want to go through the nightmare of dealing with flip flopping brokers ever again.

Hi JL- As somebody that has to learn how the commission thing worked for realtors this is a very good post to understand how things work even more so. Thank you for your wonderful posts that always teach me something. Enjoy your Weds. <SMILE>

JL ---- excellent point about the commission --- You are right on. I just hope a lot of consumers see it.

JL - The myths of real estate as understood by free advise and misinformation. What if the house is overpriced and without representation you would have paid 7% more than it was worth. Even Lawyers hire Lawyers to represent themselves. Good post.