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"I've already done the work and found a house. I just want an agent to write the offer ...

...and give the buyer 75% of the commission."

This prospective buyer found me on Trulia to ask me if I can write an offer for her. She said she already "did all the work." She has found a house. She "just" wants the agent to write the offer and handle the paperwork." In turn, she wants the agent to give her 75% of the agent's commission as a "gift"

Let's see....assuming a sales price of $300k at2.5% commission to the selling agency, that's $7500 total commission. Assume that the realtor has a 70% split with his/broker.

$1875 gross commission (25% of the total commission that you propose the realtor and the agency gets)
Less: 30% split= $1312 is 70% split to the realtor
Less: transaction fee of $400
Less: Errors and omission insurance of $150
=$762 for the realtor (and that's before taxes!)

10 hours minimum spent on transaction --- that's to;

write the offer and get required signatures, preapproval letter, initial deposit check
submit offer to the listing agency
if offer is countered, prepare response and counter offer
if accepted, get all the necessary disclosures and documents signed by both parties
open escrow by giving copy of the agreement, names/numbers/emails of all parties involved in the transaction
get preliminary title report on the property and review with buyer
connect with the lender by giving copy of executed agreement
coordinate bank appraisal
follow up with loan underwriter after appraisal to find out if property appraises for the amount of the loan
schedule inspections if necessary
if not an REO (bank-owned) prepare request for repairs as needed following inspections
negotiate request for repairs and/or credits
outline and monitor timelines for contingency release for loan appraisal/approval and buyer investigation periods
get buyer to release contingencies at the appropriate times or request extension
give closing terms to escrow officer
verify closing statements
phone calls to listing agent and buyer throughout the process

Furthermore, the realtor will be taxed for the gross amount of the commission received. The whole amount of the "gift" or 75% of the commission is not going to be a total tax write off, even if it's written as an expense.

As such, I don't think netting $762 for all this work is worth it, even if the buyer found the property herself. That is just ONE step in the whole buying process. That's the beginning, sure. But the real work lies ahead. Going through the buying process isn't just about finding a place and writing an offer.

Furthermore, if this is a distressed property, or if there are litigation issues, and even if her offer was accepted, there could be lender or underwriting challenges if the loan is rejected.

I tried to explain all this to the buyer, told her that other realtors will probably tell her the same thing.

I wished her good luck, and bid her adieu.

UPDATE: Some states ban brokers from offering cash rebates to consumers http://www.usdoj.gov/atr/public/real_estate/rebates_details.htm

U.S. map with links to each state

Posted by Pacita Dimacali - e-PRO, SRES, CDPE, MBA East Bay, North CA real estate on 07/05/2009 02:00 PM

Comments (116)

Realtors Do a Lot More for Buyers and Sellers in the ActiveRain Channel

buyer found the house just wants agent to write offer, buyers agents, what realtors do after offer is accepted

Originally posted at: Pacita's Quick Bytes of Real Estate: "I've already done the work and found a house. I just want an agent to write the offer ...

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116 Comments on "I've already done the work and found a house. I just want an agent to write the offer ...

JUL

["did all the work."...and give the buyer 75% of the commission."]

Oh Pacita . . . did you conceal your laughter?

I would have been hard pressed to.

This post should be featured and headlined on the newsletter. Off to suggest it . . .

PS. That buyer should get the 75%

PROVIDED THAT he/she/it USE that money

AND ADD FROM THEIR POCKET the additional to earn the license and do the first 2-5 years marketing and CE and expenses to acquire the expertise of the agent.

Deal or no deal?

Silly wabbits . . .

The numbers would quite different from my perspective.

Assuming a $300,000 property @ 2.5% commission, I'd receive a $7,500 fee. From that, I'd pay for a $400 One Year Home Warranty, unless the seller paid for it. So, my net with no split as a broker and no transaction fee, I'd keep no less than 7,100.

I STILL WOULD NOT BE INTERESTED.

What this consumer doesn't realize is that the RISK to the agent/broker is the same whether or not we helped them find the house.

Finding the house is the easy part. The risk for the agent/broker really begins when the agent begins to write a contract.

My fee is my fee and I don't negotiate it.

Pacita - I love it when buyer's assume that finding the house is the hard part, that's the easy part. I showed a buyer two homes, he went under contract on one and told me this was going to be an easy sale for me. Did I mentioned the property is a short sale and only the seller has accepted his offer?

Pacita...

My commission is not on the table ... period! Finding a house is easy, if they find someone to handle their transaction more power to them!

How rediculous. Maybe you should post this to the Comedy group! In any case did you explain to this knucklehead that a "gift" that large (whether in quotes or not) is most likely a RESPA violation? I'm not a broker, but I'm with Lenn...my fee is my fee. If you don't want to pay Macy's prices, then get your butt to Dollar General and deal with the quality of product you'll get there.

Glad the buyer saved some time in finding a home... I congratulate them on their efforts, quickly say why it won't translate to their bottom then - then try to convert them in a "real buyer". If they don't than we both move on.

So many buyers just don't "get it" in my opinion. You did the right thing, telling them to hit the road. As Lenn said, the risk certainly does not out weigh the reward!

They have an incredible sense of entitlement, asking for 75% back. Just goes to show, much of the public has NO idea of what it really takes to represent a buyer, or seller.

Hmmm. Why does she think she deserves your commission? She has no clue the work is just beginning when you find the house. Ridiculous

Candice --- I was trying to be polite and didn't burst out laughing (I did it privately). Then I tried to illustrate how the commission would look like, broken down in $$ she can understand. And then I tried to educate her on what realtors do for buyers.

Lenn --- I agree. I wanted to take that opportunity to educate this buyer. Hope she got the message.

Michelle --- I think you will find many buyers who think this way. Our work is cut out for us to educate them.

Richard W --- clients don't really understand or see all that we do for them. Before I became a realtor, I had no concept of the work and the risks involved in a transaction.

Troy --- you think the other folks will get a big laugh out of this :)

Sure you bet! I've run into a few of these folks along the way and it's always so stupid. They have no idea of the work it takes nor the legal liablity we all have nor do they appreciate it. Can you say...next fast enough!

Thanks for the Sunday laugh!

Pacita, There are actually many companies out there that will rebate her 50%. She needs to find one of those and do business with them. Maybe refer her over to one and take a referral fee!!!

I dont understand why people think they have the right to ask for our "Income". It does not matter what the agent gets, 100% or 10%, it is their income. I have been asked on more than a few occcassions to do what Zip Rea;ty do and rebate my commission. In response I ask for some of their income. They have no real estate license, but want my money. No I don't have a degree in whatever their job is, but it cuts both ways, split your pay chek with me and I'll work with you!

The sheer audacity of some people is ridiculous. I always help with closing costs - it is just part of my biz plan, but when people try and get greedy, I dig in. They have no idea how expensive our jobs are.

I'm with Lenn on this one. It is not in your professional best interest to work with buyers that think finding the house is the end of the line! I don't think they appreciate how much work goes into each transaction. Sometimes, they just don't get it and other times, they just want the least expensive agent and it looks like that is not you.

Did ALL the work...lol! I always thought that the tough part was from contract to closing! But I'm just a professional REALTOR...what do I know??? Unreal!

Jeani

I would say if you want the commission of a Real Estate Agent, get a license and earn it. Otherwise, please go ask someone else for their paycheck.

We have had to deal with this (buyers asking for our check or portion of it) more and more. Some are even now trying to put us up against other agents saying well - such and such will give us x amount - oh, yeah, well go there then. Sorry, we are worth every penny. This is one of the things that gets me reallly going -lol ~Rita

Cathy --- yes, the buyer saved some time....a fraction of the time involved in a transaction that may or may not close. >SIGH<

Elizabeth --- most of my clients have learned, as things progressed, just how much work is involved from beginning to end. This buyer isn't going to be one of my clients, so perhaps she won't learn until she is turned down by all the realtors she asks.

Erica --- you're right. That buyer is clueless.

Anna --- glad to have provided one reason to laugh today

Bryant --- Redfin might take her up on it. Maybe I should have suggested them?

Corinne --- maybe if she's a dentist, I would have asked her to work on my teeth for only 25% of the cost, for as long as she owns her house. Then maybe we'll have a deal.

Courtney --- isn't it amazing what people think?

Joan --- no...definitely not a "cheapie". Har de har!

I had a "client" demand 75% of my commission after we found a condo that seemed to suit her tastes. Unfortunately she didn't buy when I asked if she was proposing an income sharing agreement where I would get 75% of her income as well. Durn!

Jeani --- and the gall of some folks who think all we do as realtors is "provide transportation" and "do paperwork."

Wendy --- darn....I didn't add the cost of the license, the MLS membership, continuing education, etc.

Rita --- guess this means I'll have to blog about a seller who wants to get a % of my commission when we sell her place.

Richard --- There must be a really good way to barter for services, depending on the client's profession.

Finding the house is only the beginning. I would have done the same thing. I am not putting my license on the line for any amount of money. My fee is my fee and it is not negotiable. Good luck to those buyers who want to play realtor ®. Aloha, Lana

Pacita, you are spot on target with your analysis of the numbers on this one!!

Pacita, Sometimes you gotta wonder what people are drinking and their decision making processes.

Wow....i'd stay away from that on for sure. Geeze...how dumb do you think I am?

Patricia Aulson/portsmouth nh

Right on. Maybe I would have negotiated for more commission than said goodbye, but otherwise I agree.

Lana --- let's all try to bang the drum and deliver the message to our clients about how much we truly do, and that we're worth it!

Gary --- sometimes, graphic illustrations, charts and numbers paint the best picture.

Leolinda --- it's a matter of educating the public and changing their perception. We have a long way to go.

Patricia --- the buyer didn't know, didn't see clearly. As someone said, she was clueless.

Steve --- I tried to educate her on what it takes to process a transaction, and tried to do it as diplomatically as I can. Since I didn't hear back from her, then it's: "NEXT!"

Some people are just not educable. Good thing you only wasted one phone call with her. In Kansas and Missouri, we could all be going to jail and paying huge fines for giving a kickback. That includes the buyer as ignorance does not excuse breaking the law.

Buyers and sellers still just do't get it. They think that finding the house is the bulk of what we do. We've all got our work cut out for us in educating the public to what we do. Not too many of them know what the bulk of our time is spent on between making the offer and closing the deal.

Pacita,

I just helped a young couple sell their home who made a very costly mistake. When buying their home they used a part time realtor who had no idea what she was doing. They saved money that day and paid $10,000 dollars in repairs to sell their home a year later.

We do no service to buyers who just want to save money. Our work should be to serve the buyers in such a way that when they move into that home we are confident they are in a good place. That takes a great deal of time and energy and we are worth every dime we earn.

Ive said it many times we buyers agents get paid for three things

1) location knowledge: This is what we call on to be able to find the right neighborhood and home for the buyer

2) negotiating skills: the knowledge and skill to get the best price and terms for the client

3) Closing the deal, ie all the knowledge and work to get the contract from signature to closing

There is a 4th item and its the big one. We get paid for the risk we take,. Since everything we touch does not result in a sale we need to charge enough on the deals that do close to compensate us for the time wasted on the ones that dont.

If a client is willing and able to do some of the work (items 1-3 above) themselves I am always willing to discuss a modest commission rebate. If the client is willing to remove all the risk (item 4) I am willing to rebate even more. But if a client is truly able to do all the work and remove all the risk; he would get an even bigger rebate. In fact I would work for a flat fee for a client like you describe.

Here's how I would handle it. lay out for them, like I have for you, how and why we get paid. I would agree that if they do all the work and remove all the risk I havent earned nor do I deserve $7500. I would then take out my trusty buyers brokers agreement , specify an advance, non refundable, fee of $1200 for certain specified services and once the clients check clears, write the offer. (by the way the services I would offer would not include the 10 hours of work that you anticipate. The client would have to either do these things himself or pay an additional hourly rate if I had to do them)

When its all said and done, even if I had to do everything you outlined I would clear about $75 an hour...Not a bad day...If I could do that every day thats ove $250000

The real question in my mind is; Why didnt the client go directly to the listing agent, if it was me he could probably get an even larger rebate

Pacita, You could have done the Redfin thing. You could have also delved further in to what they were trying to acheive. If it was a financed transaction you could have given them far more than 75% of your commission by negotiating a seller contribution to their closing costs. Or you could have just told them to "bite me" :)

I don't think the general public understands the liability . . . but not only that . . . how many offers have you written up this year -- and ZILCH? How many prospective clients did you meet this year . . . and ZILCH? How much gas have you spent with buyers who want to low ball to the point of . . . well, being unrealistic?

It's not this one commission that might have a buyer bring the home to my attention -- as if they did all the work . . . geez! It's the people that didn't follow-through, or low-balled after touring 45 properties, and the list goes on. OVERALL . . . is how I look at my practice. OVERALL how much time do I spend with buyers. So this one thought that she found her own deal?! So what? What about the people you've been working with for the past 6 months, and never made a dime,but gave up all your Saturdays for? I'm a business, so it's the OVERALL net . . . not just the one net from the one sale! The time I take to prospect, to write my blogs on A/R, the comments . . . to study the market, to look up listings . . . OMIGOSH . . .the list could go on!

Pacita -

Just wondering.....did you ask the buyer if you could have some of what they were smoking?? My guess is they're going to have a hard time closing a deal with anyone, given their impressions and expectations of the market. Yikes.

It is amazing that this buyer think that just because they found a home they may be interested in equals 75% if the work. What were they drinking ? You did the right thing here.

I once had a buyer come to me on one of my listings and wanted to make a low ball offer. Also, he said that there were to be no Realtor fees in this price as it was the sellers responsibility to pay me and since he was not represented I would not get paid that portion either.

Lenn is absolutely correct. I also wouldn't drop my commission. The buyer is paying for your expertise which takes time, money and education to acquire. If the buyer wants to pay a considerably lower amount, then the buyer can find someone else to write the offer. There are many people willing to work for minimal compensation.

Personally, I like Bryant's response to this buyer the best. JUST BITE ME!!!

Do you really expect more from people looking on Trulia for their Real Estate needs?

Maria ---- I haven't received any requests for a kickback of 75% like she did, but some folks who are aware of Zip Realty's and Redfin's platforms wanted me to match their programs. I haven't had to do that once. And the Redfin client chose to work with me.

Leah --- and we should keep showing all our clients the value of what we do.

Paul --- I'm all for saving money, but not at the risk of sloppy work. What was that expression again? A penny wise, a pound foolish.

Ron -- who knows why people think the way they do?

Pacita - great responses! You're very thorough.

Fortunately, in Iowa, an agent paying a commission, or a kickback, to anyone who is not a licensed agent is a violation of state law. And the law also dictates that commissions be paid through a broker.

I'm sure some agents do some under the table stuff but for me, I value my license entirely too much to risk this type of activity.

Certainly, it's nice that your prospect did a lot of research prior the desire to make an offer.

Good for them and it shows they are intelligent, yet as several have pointed out, finding the right property is the easy part. Negotiating and getting them to close is a whole 'nother issue.

Is that even legal in your state. That would be illegal in my state. And I would tell her that to start with. I wouldn't get into all the math and why I wouldn't want to do that. I would just tell her that no one could legally, but I would be happy to write it up for her without doing anything illegal.

I don't know, it would depend on the situation for me. If they do all the ground work and agree to a strong offer, I would rebate (not "gift" or "give" as it is illegal in CA unless they are licensed) a portion of my commissions within escrow.

Like you mentioned, redfin rebates 66% of their commissions. We also have flat fee brokers who keep $4500 of the commission and rebate the rest.

Times are changing. Our clients have more access to information than before. If they take the time to do their homework and leg work, then I will be happy to accomadate them. It's a personal choice and there is no wrong or right decision.

I once had a seller ask me if I would put out the word to the realtors in my office that he would pay 1% to a realtor who sent a buyer to his FSBO. I said that I would do that but told him that most realtors would not be able to work for such a reduced commission. He said that he thought that was pretty good pay for just making a phone call. I did as i promised and announced it at a sales meeting and you can imagine the reponse.

That seller had to list his house with two different realtors and it took around a year to sell. This was back in 2007 when houses were selling quickly, so I guess you probably know what was wrong with his house. We all know that three things sell a house price, condition and location. Guess which one it was!

Not my cup of tea...wouldn't do it. Makes no sense. Anyone can find the house eventually but all the stuff after that is where the work comes in to play.

I read this several hours ago, but didn't have time to reply at the time. My first thought was, "that's illegal in the state of Oklahoma, and I wouldn't risk my license for any amount of money."

Now, I've had time to read some of the comments, and see that this point has already been brought up. And, I agree with Lenn -- my fees are not negotiable.

I am flexible with my fees WHEN APPROPRIATE, which of course is subject to my personal opinion (and Broker's approval). You were absolutely right to send this Buyer on her merry way!

Pacita - I've worked with a few buyers who have asked for some crazy things none of which I agreed to but this one takes the cake!

Unfortunately Pacita, You have agents that do give Commissions Back and if it is not on the HUD I'm sure it is an Inducement to purchase and I would say a RESPA Violation. It sucks sometimes caughing up commissions, but asking for the 25% upfront wow. I have had to give up commission it seems like on every Deal Lately, as you will have a FNMAE REO and they tell the First Time Homebuyer that 4650 will be a credit towards the cost, Usually 4500 to 5000 should cover closing cost. Of course depends on Orig, or Discount fees, but I find it a hard Fact when the associtation fees, and the Home Warranty and inspection fees are are in the 4650.00 So at time we do help but I agree the buyer doesn't warrant a commission for finding their own home.

Pacita - I'm glad to hear you stuck to your instincts and declined the business. It's easy to get caught up in taking what ever deal comes your way in this economy, but if you accept one shady deal, you let yourself accept the next more easily, and so on. Nice post!

Pacita you handled this well. I am no longer amazed at the off the wall requests.

I thought as a licensee we are not allowed to share, split, gift commissions with an unlicensed person?

At least she told you upfront what was going on in her head so you could kiss her goodbye without wasting your time.

Andrew --- because the laws are different for the states, I went ahead and updated the blog to include information about which states ban rebates to consumers.

Julie --- see map. Yes, it's illegal in some states, but not California.

Amiri --- according to the Department of Justice, it's legal in California. Or does it depend on what we call the rebate? Gift? Contribution? Credit?

Sybil --- until people can see realtors are professionals, just like other licensed service providers, they may always ask for discounted fees. Funny, I can't seem to recall ever asking my CPA, my dentist, my hair stylist or my manicurist for a discount or rebate. Why do people think they can ask a realtor?

Neal --- my sentiments, exactly. Not for me. But I felt inclined to at least try to explain why it doesn't make sense to give that much of a rebate or "gift".

Did you thank her for her time or is she going to bill you for it? Just kidding. I think that this is an example of a get rich quick late night infomercial that instilled the notion that you can use OPM (other peoples money) to invest in real estate. This person believed that realtors do this sort of thing (if you ask them to)

Bryant --- "Bite me!" That almost sounds like "Kiss my grits!"

Carla --- you got that right. The general public doesn't know.

Colleen --- that buyer may have been influenced by other folks who don't know any better either, like those who make a low ball offer on an REO that's already priced way below market.

Roland --- we can try to educate as often as we are presented the opportunity.

Marc --- I've learned that you get what you pay for. Money isn't the only reason for turning her request down. There is also a matter os self-esteem.

Laraine --- yup, I love the wicked sense of humor.

Good for you Pacita, I would have done the same thing. Buyers have no idea the qualitative and quantatative difference a good agent makes.

JUL

Andrew --- I've actually had several excellent leads from relationships that originated from Trulia, and have probably closed 3-5 deals at last count because of Trulia. I respond to questions, and repost my Active Rain posts on Trulia. It may be a different audience, but the oureach is vast.

Lori --- I often do things for my clients, but never in the form of a rebate especially a percentage of my commission. To ask me for that, in my opinion, is brazen.

Donna --- it's okay to give a gift....but a gift of this magniturde?

Chris --- it all boils down to this: we have to make that client see, understand, and appreciate the value of the work we do for them. And we have to make them respect that realtors are professionals who deserve the income generated from performing a service.

Kim --- educating the client while preserving one's self-esteem.

Jennifer --- we hear crazy requests all the time, don't we? This is not the first, nor the last time.

Suzanne --- I amended my blog to include a map showing which states allow/disallow rebates to consumers.

Nancy --- Hopefully it wasn't a complete waste of time. Maybe some of the things I tried to tell her got into her heard.

Tom --- you're probably right. This person may have been influenced by all those infomercials.

Chris --- spread the word, brother!

That is very Insteresting, I would tell your prospect that your not Valued that amount of money. there is more into it than just writting an offer

Pacita: Yes.. Education the client is always good.... Just if they are willing to listen.. :)

Welcome to my world of hell !! I hear that all day, every day!! I checked out the DOJ/anti trust lik and CA does not make it illegal. I have people who offer 500 dollars and ask me to give them my entire paycheck. The problem is arising because of part timers who have regular jobs but do real estate as a [art time gig. Their investment is low and they usually work for discount brokers who charge them $450/transaction. We collectively have to fight this phenomena or else we will all be at the cleaners pretty soon. We work too hard as full service agents and consumers do not see that

Could this work? Call up the llisting agent, ask for a referral, give her the name and voila its their Trulia buyer and you get a referral fee. The listor gets a dual agency headache. Buyer can hagle them.

Or you could tell her to get a real estate lawyer at $175 an hour to write the contract then represent her.. See how that would fly. The buyer would be at 8k in no time

Unfortunately there are companies out there that do this type of transaction for clients. I do not think it's in anyone's best interest as it doesn't provide the level of service that should be required in a real estate transaction.

Hey Pacita: If you had stayed on the phone with this "buyer" a bit longer, you may have also discovered that she wants to make a lowball offer, too. I had one of those calls a few years back and, far as I know, those buyers are still looking to find an agent who will give them a kickback.

They found a ZIP agent who wrote an offer on one of my listings. I used their offer to entice an offer from another buyer so my seller could issue multiple counter offers. Knowing ZIP buyer would walk away, we were able to bump up the price for the seller and accepted the second offer.

Pancita,

You need to find a new brokerage. $400 transaction fee and $150 for E&O on top of a 70/30? Wow!

Rebates are legal in Texas. While not a standard practice, we have done them from time-to-time when they make sense.

There are local companies who advertise 50% rebates in our market. Most operate ethically but we have one who tells the buyer to have the listing agent show them the property and to tell the LA they are not repesented if asked. Once a suitable property is located, the broker writes the offer, collects the commission, and rebates 50% to the buyer. He used to advertise the process on his website but we put enough presssure on him that the "how to" was removed.

-- Tom Branch, CDPE, Broker Associate, RE/MAX Dallas Suburbs

Respa applies in all states and this to me would be a violation. It wouldn't work in Georgia on a statewide basis either. No payment for real estate to any one other than a broker.

good for you... some people have a lot of nerve. The sad thing is that some Realtor will end up doing it for her. I believe our commissions are earned during the last 2 weeks of escrow when we manage to keep everyone from bailing out of the deal.

She did all the easy work. Stay strong & thanks for sharing.

Drew

http://blog.DreamDesignRealty.com

I showed a listing to a prospective buyer the other day and before he left, he asked me if I would give him some of my commission should he write an offer. He said "You would still be making plenty of money, so giving some to me will be ok". Excuse me? How about this, you give me some of your paycheck this week for me coming to show the property, and then we can discuss giving some of my paycheck to you at the closing table.

The hard work is from contract to closing. She did 75% of the work? Yeah, right! Next!!!

I don't think anyone mentioned the fact that, if this person saw the house, the listing agent showed it to them. So you may have to fight to get any commission at all. If you lose, then what? Do you still 'owe' the buyer?

Hi Pacita, I have had a few of these myself. You handled this so very well! Hats off to you! thank you for sharing!

Showing a home is the fun part...gettiing it to closing is where the real work begins.

Now I would too have said No, but I am sure there are agents in Ann Arbor that would do this, but not me.

I just closed on a Trulia voices question. No problem and they didn't ask, they too had found the house.

Now I am listing her old one. Two deals, I love Trulia voices.

I would have sold this person a story about self directed clients gone wrong:

Too much can go wrong if negotiations have to re-open after inspections. And then there is title work. A discount agent is not likely to even study the title work. People have gotten stuck in a house with a history, that they cannot unload, or hung up with a house that has a serious problem.

People have lost a lot of money over title work gone wrong. Oh, it's just a little easement. Right of entry? License? Mineral lease? Waiver of Quiet Posession? Oh - it should be OK. These papers are all standardized forms... (NOT)

And people have been poorly served by the kind of agents who would accept such a proposal. Consider, if an agent is not able to sell their skills at prevailing rates, they must not have even the basic prevailing skills. A discount agent would certainly not work as hard, for a few hundred bucks, as an agent who was being appropriately compensated.

The agent is charged with fiduciary responsibilities - to care for and seek the best outcome for the client in matters where the client is not educated.

If you need a champion on your side to get your out of a bad spot, or a hero agent to to go pound the other side into submission when the seller tries a fast one... then you want the full monty, fully armed, fully prepared and completely competent agent on your side.

The wimpy agent who was so unaware of the legal and financial pitfalls that can happen in real estate as to accept the proposal being made would not be able to understand nor safeguard the basic tenets of land ownership, much less handle the art of the deal.

And so, to sum, and now that you know how wrong this could go if you bought your Realtor at a fire sale, I would be happy to be your agent for a fee of X%. My buyer agency agreement is right here. If you sign where I have made the X then we can get started getting you your house at the best price and terms available while also making sure that you don't get taken advantage of in the process.

BTW: Please press hard when signing... There are 4 copies : )

Pacita, I wonder if that Buyer has found an Agent to agree to her conditions yet.. Your right, they just do not "get it", and it is our job to inform them as to what is involved in completing a short sale. Yes, finding the house is the easy part.

What did she say when you told her "the rest of the story"?

This mentality comes from the fact that the general public thinks that ALL we do is show houses and/or post them on the MLS for sale. We have to prove our worth every step of the way.

Morning Pacita, Amazing how consumers interpret the role of an agent. I'm betting thisw buyer found a willing agent.

MSN and yahoo both have done articles on how to get a Realtor to cut their commision in recent months. An easy google search of Negotiating with Realtors came up with at least 15 articles about how to get an agent to cut their commision. With those articles out there no wonder it is becoming more popular for clients to ask us to take a cut. One thing the articles do not express is how much time and energy goes into a closed deal.

she wanted 75%?

good lord, it takes balls the size of grapefruits to ask for 75%. while i have no problem kicking in commissions now and then when it makes sense, no amount of educating that dope would have been persuasive. it's a luxury we all have in this biz that we can pick and choose our clients...and IT FEELS GOOD to fire the the nuisances and those who do not value us. you were far more patient than i would have been.

75%...that's a new extreme.

Well, I am not surprised by what the buyer asked and I can honestly tell you that this is the State of California's fault for allowing this kind of madness to exist. I recall a few years ago a client had relocated to Cali from Oklahoma and went house hunting in the 800k+ price range and told me that the agents who were competing for her business were offering to give her back a % of the selling commission. I was completely dumbfounded and immediately thought to myself how lucky I was to be in the wonderful State of Oklahoma where this was 100% illegal as it should be in the whole US of A.

I guess you can't fault the buyers 100% since I'm sure this is an all too common practice in your State but still, this sucks for you and all the other agents who have to go through this same ridiculous situation to try and make a living.

I would be curious to know what other kinds of weird things happen in California where someone wants a chuck of your hard earned salary?

Sad thing is...she probably found some desperate, pathetic agent that would do it.

Tina in Virginia

Um, yea I'll pass on that - Usually those are the transactions that eat your lunch!

Best, Dan

Pacita, my response would be "no, we're only at the first 1/4 of the mile we have to travel to get to closing..." But you did get some other great responses too. Thanks for sharing your experience with us and congrats on the !!

Some people do not understand the value of your services. You know when things go wrong she would blame you. You would do far more work than you want or she planned.

Pacita,

Saying "goodbye" was the best thing you could do! she has no right to try and negotiate for ANY of your commission!

Kathy Opatka

You got to give her credit for trying. Thank you for trying to educate the potential buyer.

Pacita,

If this was a guy, I would have said, I might have encountered your buyer too, he came to my office and told me the same thing. But not the 75%. He said another agent told me the same thing for 50% commission. That was the end of it as I have told him, work with that agent then.

If I have to use Michael Jackson's songs on how to handle these buyers, I'd say:

1. Beat It!

2. Leave Me Alone

3. She's Out of My LIfe

(sorry folks, I can't help it :)

nope, nadda, nothing doing! They just did the easy part and now the real work and liabilty begins.

I am soo happy I am in a state that prohibits rebates so I don't have to put up with things like that! I did have a major website (K*Z**K) ask me if I would just post their listings on the MLS for $275 each. I told them that I didn't want to promote those kind of listings or small commissions.

I too would have asked the potential buyer about her work, and put to put it in perspective I would ask if she would rebate 75% of her fee or service back to the client, and would have proceeded to ask how would she survive charging only 25%. Absolutely ridiculous! I did actually refer a person who ask for my commission to a Zippo Realty, if somebody is willing to do it, it is their business. I simply would not lower my fees and take a huge liability risk with a person like this one buyer. It simply is not worth it. Thanks for sharing your experience with us.

Antonio

Jose --- I tried to illustrate just some of the things we do after finding a place to write an offer on,

Roland --- we can only hope that people will listen to good reason. Unfortunately, most will only choose to believe what they want to believe.

Rama --- yes, we do have to counter the discount mentality. No one gets a pass unless we all do our part to educate our clients.

Frank --- I thought about recommending that she hire a lawyer to write her offer and then rebate the commission. But the lawyer may come up with other thoughts regarding the risks involved if the buyer undertakes all the other actions items in managing the escrow process. What if the buyer misses material fact in the disclosures. Whom will she sue? Or will she be sued? Can this real estate attorney represent her, or will she hire another lawyer?

Darrell --- Yes, I'm sure she eventually found someone who will do it for her. I can only hope that the transaction goes off without a hitch. Otherwise, it will be "another one bites the dust!"

Elizabeth --- good strategy using the other agent's offer to stimulate the winning offer.

Tom --- I don't mind the transaction fee (full service). And we pay for our E&O insurance one transaction at a time instead of paying it all in one fell swoop. We have other benefits that we don't find in other agencies (some of whom don't even have a transaction coordinator, or some with hefty franchise fees).

Chris --- rebates are disallowed in some states, but based on the map from the Department of Justice, the majority allows it, including California.

Drew --- I'm sure she found someone else. As for me, I'd rather stick with clients who appreciate me.

Jennifer --- it makes me shudder every time I encounter someone who wants a hefty rebate, or someone who wants me to discount my commission. Perhaps we should all ask all professional service providers to give us discounts every time they perform a service for us. Hey, about charging me $10 instead of $25 for a manicure & pedicure? Hey, how about just $250 for a dental crown instead of $1000?

Hollis --- it always helps to have a client sit down with you, while you go through the process. Handing out the buyer or seller guide also illustrate the various things we need to be aware of. Sometimes we should give them a copy of the stack of disclosures they should expect.

Joetta --- my thought is, this buyer may have gone to the open house. She may have even asked the agent at that time if the agent would rebate 75% of the commission, and she was probably laughed out of there.

Ginger --- I've encountered buyers who asked for a substantial gift or credit towards closing costs. I've also run into those who want me to match Zip's or Redfin's rebate. But not 75%!

Missy --- thanks for validating that Trulia does offer other and good opportunities. I've had good luck there, too.

Lonn --- good points!

Ray --- after laying out the rest of the story, I didn't hear back from the buyer again. Just as well because she may have wanted to press for another percentage. At this point, I truly don't feel I lost anything. I just hope she gets what she pays for.

Eric --- you are right. That's why although I knew I would say no, I tried to educate the buyer along the way.

Bill --- I'm sure she found someone who would do it for her. $$ isn't everything. It wasn't worth it to me.

There is much more than "just" finding the house and writing the offer, and as those above have stated, finding the home is the easy part.

My broker told me some wise advice on my first day "Don't ever cut your commission, or you will wind up cutting it on every deal afterwards". If you cannot stick up for your own value and worth, how will you ever stick up for the value of your clients at the negotiating table?

Thanks for sharing your story!

Here in Texas the most we would be able to give her is a $50 referral fee because she didn't have a license.

Brady --- if you google how to save on realtor commissions, you will see gazillion articles and blogs about this topic.We need to do our part in proving our value to our clients, every step of the way.

Mike --- yep, I thought 75% was ballsy. Greedy may even be a better word.

Russell --- apparently, it isn't just California who allows rebates. As a matter of fact, in the entire USA, only 11 states disallow it, your state being one of them. Good for you!

Tina --- I'm sure the buyer found someone else. I'm not so desperate that I would sacrifice my self-esteem and integrity.

Dan --- I think you're right. This would have opened a Pandora's box.

Lee and Pamela --- I just had to share this encounter. I knew others would have great thoughts and responses. I'd be even more prepared if it happens again. Thanks!

Gene --- yes, I thought this particular buyer would have been a bitch to serve.

Kathy --- she tried, she failed. But she'll probably try it with someone else. Hopefully that next person will see this blog!

David --- it seems par for the course to educate our potential and active clients every step of the way.

Laura --- you're so clever!

Kathleen -- thus far, the majority of the folks who commented agree with us!

Jami --- good for you for taking a stand!

Antonio --- the time, the risks, the liability....ain't worth it. You're right!

Pacita - GOOD FOR YOU! Until consumers learn that there is much more to a Realtors job description than just showing houses, they will not learn to value your services.

I've had this happen twice (and who can blame consumers when there are models like Redfin and Zip around).

For the first not reducing my commission was a dealbreaker to get a buyer agreement signed. For the second, I not only educated my (now) client as to how we earn what we do (and you get what you pay for), I also explained that if a commission falls short of our "standard" on a property, we expect the client to make up the difference. We've put in list price plus on two offers thus far, and will get stronger until we win.

Lesson learned for all of us...make Buyer Agreements a part of your consultation, and be sure to include how you expect to be paid. Once that's signed there are no misunderstandings.

Maybe 25% but you know how buyers think....plus whats the odds the offer goes through.

Am I missing somtething here or is everyone else gone mad? Assuming you are in a state that allows rebates...you said She "just" wants the agent to write the offer and handle the paperwork." In turn, she wants the agent to give her 75% of the agent's commission as a "gift"

1. If your deal with your broker is as stated then your negotiating skills are suspect at best already...OMG you're being raped!

2. If all she wants is for you to write the contract why are you bringing up all the other stuff. My response (as it has been in the past) is sure, I'll send you over an agreement detailing that what you asked. I will give you a 75% rebate on the Buyer's side commission for merely writing the contract.

Beyond the writing of the Contract, I will need to charge you $250.00 per hour for any work to be performed over and above the submission of a contract with said payment due at closing and to be deducted from any agreed upon rebate.

Game over..easy money...geez...you guys really make this stuff out to be difficult..it's not...it's Geico caveman stuff. It really is. C'mon..you guys need to be realistic. Say you're not going to budge out of principal...that's one thing...but to posture if it's a lot of work...well c'mon..let's be real.

I wonder if a lot of the agent sin this Country who are working at Walmart stocking shelves would think this is such a "lot of work".

I've moved on from real estate BS like this but sometimes ya just are left shaking your head.

Barb Mihalik Coldwell Banker Sea Coast Realty, Wilmington, NC

I, for one, am not in the habit of offering up my paycheck just because I'm asked. I know it can be tempting to take whatever one can get when times are tough...but you are right, Pacita. If you don't have your priniciples, what do you have? You'll be angry with yourself for compromising your standards. I'm relatively new to the business, but I work awfully hard for my money and I'm worth every penny. I will never jeopardize my career or my self respect in exchange for a quick buck. I put a lot of time and money into education and training. Finding the house is the easy part. Obviously, that buyer is of the impression that anyone can "do" real estate.

Rebecca --- so many people think that "all" we do is drive people around and write an offer. Guess they don't see the back-office work and follow ups that need to be done all the way to closing.

Ann --- different strokes....but it still hurts to think that clients think our jobs are as smple as merely drafting an offer.

Donne --- unfortunately, the perception is still several notches below reality

Lisa --- noted!

Chuck --- maybe we should start charging by the hour, like most professionals do, and charge time and material?

Realestateradio --- where do you factor in the risk, the liability, the responsibility? All offers are accompanied by an agency disclosure that point to speficific responsibilities beyond writing an offer.

Barb --- apparently, RealEstateRadio thinks writing an offer is "Geico caveman stuff."

Interesting responses. I'm in the minority on this one. Aren't there several things you can do? First off, I would not of accepted that deal. I certainly would of countered her offer though. Some suggestions on the counter.

1) She has to pay the $400 transaction fee. Explain that it goes directly to your broker.

2) Offer to rebate 25% or even 50%.

3) Tell her you will charge her $100 per hour for the time involved and you will track your time like a consultant. By the way make sure you get the money paid up front. You can then give her 100% of the commission.

Her offer as you explained it to me shows that you believe it takes 10 hours and you make $762. That's $76 an hour. Most people would take that hourly rate. I know it may take more time etc. but figure out the cost. What are you making now in the course of a year. If it's more than $76 please let me know. I'm trying to figure out how to get it that high.

In Colorado it is not illegal to do what the client wants. You just have to get it phrased correctly.

How does your E&O insurance work out in your state? Is it $150 per transaction?

What I find amazing is that all these Realtors who flat out refuse. We constantly negotiate with buyers and sellers, but our own stuff is sacrosanct? I certainly feel that if you make x amount per transaction if you figure out how much you spend of your time on the transaction looking for the house. If the client does that for you why wouldn't you be willing to discount your fee that much? Somebody educate me please.

Great post. Really got ours goats on this one. Shame on that buyer for asking for 75%. Is she crazy? How do they expect us to pay our bills?

JUL

Pacita you asked..."where do you factor in the risk, the liability, the responsibility? All offers are accompanied by an agency disclosure that point to speficific responsibilities beyond writing an offer."?

What risk> What liability? In Florida we have a designation as a Transaction Broker...what liability ar you referring to? Monetize it. Don't just stand behind a mantra. Even a plumber carries insurance..it's called cost of doing business. And yes, I re-affirm..writing an offer IS Geico caveman stuff.

Most agents don't even know what's on a contract and what the language means..they just fill in the blanks...don't bother attacking me on that one..we have recorded SOOOOO many agents on our show who had no idea when we began questioning them on certain clauses in a standard contract. I'm not saying that you are in that demo...but puhleeze...filling out a contract is no where close to being hard work.

I love what Mike says above...he's got the right attitude.

REI ---

You already know that Realtors also carry Errors and Omissions insurance. And like plumbers, we also bear the expense of continuing education to keep our licenses and certificates current, on top of the cost of maintaining the tools of our trade. Have you ever asked the plumber to discount his fee, after all you found the problem (that's why you called him).

The risks could be on a number of things. How can I "monetize" that?

In California, we have a stack of mandated disclosures that buyers, sellers and their agents complete and acknowledge. I used to live in Florida, and believe me, the paperwork there is a smidgen of what we have to complete here. The rules are also different, as in who will clear the termite report (in Florida, is it still the seller's responsibility?)

The biggest risk probably is of a legal nature. According to an article titled "Don't Get Sued" the most common reason that real estate professionals get sued involves failure to disclose some claimed property defect. These defects are often ordinary, run-of-the-mill problems such as a roof leak or a foundation crack.

"In many circumstances, the buyers determine they may have trouble forcing a seller to pay a claim. The seller may have moved out of state and can't be located. Even if the seller can be found, the claimant might have difficulty enforcing a claim across state lines. Plaintiffs often name real estate professionals in their lawsuits for practical reasons. The brokers aren't going anywhere. They're right down the street"

The hard work isn't in writing the contract, but for what else follows, starting with getting the disclosures, and discussing these with the buyer.

Yes, I might have considered doing what Mike H. suggested, but I had the feeling that the buyer was shopping around and wasn't in the mood to negotiate her cut. Not having met this buyer before, not having enough information to go by, I went with my gut feeling. I can choose whom to do business with, and I chose to pass on this one.

Mike H ---- thanks for your thoughts. As in my answer to REI, I went with my gut feeling on this buyer and decided to pass.If I had a continuous flow of work at $76/hr, I would certainly consider it. But this is a one-of-a-kind inquiry and I really didn't feel it was worth it to me.

Angelia --- lots of good exchange here. Glad there are differences in opinion. But I haven't seen it get personal yet. And hopefully, it won't.

75% rebate of comissions. That woman is crazy. She could have saved some money if she could have just called...never mind.

It is amazing what buyers will ask of us. Good information and education for eveyone to read.

I called my plumber the other night and needed some work done...I told him since I jammed up the toilet in the condo, I would like back 75% of his fee to unclog it. After all, I did the hard work...all he has to do is come over and clean it out. If I hadn't called him, he would just be sitting at home right?

Anyway, he wouldn't discount his fee 75%, and for some reason, neither would other plumbers. What a carzy loon this whole industry was...here I am offering them an easy job and they won't do it for 1/4 what they normally charge...why those selfish brats.

Anyway, while all of this was happening, my kid flushed the toilet and over the rim it ran...being inexperienced at clogged toilets, I thought if I just flushed it a couple more times, I would be able to clear the clog with the force of the water...after all, how hard can it be to do the job? I never realized the mess I would make and the time and effort it would take to clean it up. I finally called the plumber and he charged me extra due to the crappy working conditions.

So, I am sitting there licking my wounds the next day when the neighbor from below me calls and mentions something about a wet ceiling and damage to it. Something about his lawyer talking to my discount lawyer about damages was mentioned but I had my mind on trying to find a car mechanic who would give me a 75% discount on new brakes...after all, I am the one who wore the brakes out...

And on and on and on...

Mike McCann you are being foolish and you should have slapped your kid..you're analogy doesn't support the case it only brings to light how detached some realtors are. The woman in Pacita's post didn't have a problem...she was negotiating. If she was serious all she had to do is dial until she got someone who was willing to "negotiate"

Pacita you're really talking nonsense as well. When I call a tradesmen whether they be plumber or pool service or lawn service, I ALWAYS negotiate the best deal before I allow any work to be done.

Are you people saying you don't negotiate fees BEFORE people perform work for you? Of course you do. Your post said a woman tried to negotiate with you BEFORE you had done any work..not after the fact.

You can get sued walking down the street...please be real. If that was your real concern you'd never write ANY contracts. So what you're saying is your willing to take the liability of being sued for X amount of commissions but not being sued for Y amount of commissions.

Yes..you can choose who to work with...but don't try to pass off an excuse of liability or insurance as the reason. FYI...my wife is a a realtor and has been for nearly 10 years.

You blew what could have been easy money. We keep a database of hungry, hustling agents. When we get a call like that which you received, if it's something we don't want to spend the time on...becasue we choose not to...we simply refer it out to one of about 30 young agents we know and work with. If it pans out it's found money...if it doesn't then no big deal.

Over the past 6 months my wife has made a ton of cash on deals like this and hasn't had to do anything more then send out a referral agreement.

No posturing, no pontificating...if someone calls with an outlandish request (can I get a house by the beach for $50k??) we don't blow them off..every call has a dollar value. Whether it's a million dollar waterfront property or a $50k rental in the hood....it's all green!

Makes me laugh when I hear about realtors who won't negotiate their fees then know they are working second jobs...that makes a bunch of sense..NOT.

You guys act as if there is some underground network wherein buyers and selelrs exchange info and say hey..that agent will work for less...and you're branded...puhleeze.

We get hundreds of viable leads from our website every week. Some fish are big, some get tossed back into the water (sent out as referrals) but none are ignored because they "insulted" us.

2 weeks ago, my wife got an email from a guy who wanted to put an offer in on a dilapated condo out in the boonies for $19,000. No way that she wanted to make that kind of drive for $600 bucks or so. Instead it was referred out and the guy closed...she pocketed a whopping $95.00 on the deal.

That's $95.00 for a 15 minute phone call and one email. You do the math.

No every deal isn' the home run commission of tens of thousands, those are obviously nice but let's be real...money is money and running a business means staying in the black at all times. My accountant says there's no line item for pride.

So here's my question. If you are successful and are actually making money in what you do, what skin is it off of your back to deal with the small commissions? I mean are you that busy?

We have a small office and I can tell you I would rip someone's head of if they blew a customer off the way you did. I'm in sales and like the movie said...on every call a sale is made. Either you sell them or they sell you.

Right now you only have conjecture. What may be outlandish may have cost you $762.00 for 10 hours of work...your own words...while the commenters here herald your actions on this forum...the numbers just don't bear out.

At $76.00 per hour you are saying that you are worth at least $150k per year. If that's true then you rock...that would put you and every other commenter in that 5% of realtors who actually make money.

But the NAR says otherwise. The NAR says most agents barely make $30,000 per year or roughly $15 bucks an hour. So what you were offered is actually 5 times that which the majority of realtors make.

And you want the consumer readers of these types of posts to believe that it's wrong to negotiate realtors down? Of course they are going to talk you down .. of course you are going to have to negotiate. You can choose not to negotiate. You may be banking huge commissions and don't need the hassle...but the consumer knows that 95% of the agents out there DO need the money and I applaud the caller for trying to get every dime that she could.

She wasn't being preposterous, she understands the nuances of a volatile economy! I used to pay $110.00 per month to have my pool cleaned. Another guy came by and quoted by $75.00...a third stuck a card in the door and said he would do it for $65 with additional services.

I called my regular guy back and told him and he lowered his price to keep my business. Was it wrong for me to ask..of course not. Have you ever asked to have you electric billing rate lowered or perhaps the interest on your credit cards lowered because you got a better offer from another card provider...I can't believe I read this drivel here about not negotiating...you obviously don't have to..but someone will.

It's called Capitalism people! Have we forgot that in this Country. My job is to amasss the most dead presidents possible. Whether it's on a $20,000 profit on a deal or a $95.00 PROFIT on a deal...I keep score in numbers...not pride.

My pride bursts my buttons when I can take a month off and go to St. Lucia with my wife...that's what makes my buttons burst...not writing BS on AR telling the world that I don't negotiate my commission.

That's a fools game! I gotta go fishing this morning for a sailfish or marlin...my live bait will cost about $70 bucks this morning. I guess that puny $95 commission will come in handy after all.

Just say NO... consumers generally do not realize what goes into the sale process... if this person thinks that all the work involved is in finding the right house, they are sorely misinformed, and while I would not accept this plan, I would try ot educate the consumer, so that perhaps they will let me earn my income. If not, find another client.

Ditto! .... 70/30 split? Find a new brokerage!

Al - I give her credit for trying. I just hope that other people will take the time to explain why she'd have a hard time finding someone who will agree to the split she's proposing.

Deborah -- what this post did was to get people thinking. Agree or disagree, there's something for everyone.

Mike -- thanks for your funny analogy. Glad to see some humor injected into this eschange.

Paul -- it wasn't easy to say no, as I did want to help. But when I first broached giving her a 25% referral fee instead, she didn't want to hear it. That's why I thought I would break it down $$ terms she would understand. I didn't lose a client; I never had her in the first place.

Toni --- the split is merely to illustrate a typical split, not my current split.

REI --- you presume that there were no negotiations done. I posted an abbreviated version of what transpired. You yourself said, either I sell the prospect, or she sells me. I preferred to walk away. And yes, I am worth more than $76/hr.

Buyers are such a riot aren't they? And on top of it she didn't think she insulted you either.

JUL

Lyn --- in our job, we find buyers and sellers of all persuasions, predilections and inclinations. Sometimes, we succeed in helping them see what works. And sometimes, we as realtors, need persuading ourselves, according to REI,

JUL

The funny thing Pacita is that I bet you that she eventually found a "Realtor" who would do it for that much. lol

Mark --- I'm sure she did. In the past, I've had someone else ask me to write offers for her. Turns out she wants to do simultaneous closes; i.e., before she even closes escrow on what she's buying, she starts advertising the property for sale, and then aim to close at the same time when she finds a buyer. When my gut tells me something isn't right, I'll walk away from the "deal".

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