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So..does the co-broke matter?

By Bryant Tutas

Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

December 11, 2009 08:28 AM

This discussion has been taking place on AR since it's inception.

Some of my favorite responses are:

I don't even look at that until I'm writing the offer.

We should never put our own self interests ahead of our clients.

I show my buyers listings no matter what the co broke is, as it is our duty to our clients to show listings that fit their needs.

My question is....Why are agents so afraid to admit that commission does matter? What aren't you having these discussions with your Buyers PRIOR to them agreeing to hire you. How many of you, that say commission doesn't matter, go out of your way to find your buyers a FSBO? Or do you only show it if your Buyer ask?

Well I know I'm not alone when I say I want to be paid for my services. And I want to be paid fairly. I won't work for peanuts. AND....my Buyers WANT me to get paid.

If you are so unconcerned about your commission then how do you handle your listings? Maybe it goes something like this........

"Hi Broker Bryant. We saw your ad in the paper and would like to list our property with you."

Excellent!! I'll be right over.

So, I head over and give them my little spiel and they want to list with me.

OK folks sign here and here and I will get your property up and running on the market.

"But Broker Bryant.....how much do you charge?"

Folks, I am bound by the REALTOR® Code of Ethics that states:

"When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS^® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary"

Since your best interest is getting the property sold with the least costs to you I will leave the commission up to you. If I didn't do this I would be putting my interest and lively hood ahead of yours and would be in violation of our CoE. So just pay me whatever you want.

"Well that sounds great Broker Bryant!! You're the bomb!!"

Yes, I am. Commission does not matter to me at all. I'll gladly work for free if it is in your best interest. That why I'm a REALTOR®. Make sure and tell your friends too.

"But Broker Bryant....don't we have to offer the other agent some money to show and sell our property."

Yes I'm afraid you do. Our MLS will not allow a property to go into the system unless we offer the selling broker compensation.

"How much do we need to offer?"

Well folks remember the other broker will be a REALTOR® too and is bound by the same CoE that I am:

So why don't we just offer them $1. Most REALTORS® don't look at the commission anyway. They just want to get the best deal for their Buyers. The co-broke doesn't really matter. In fact, if they don't show your property we can bring them up on Ethics charges.

"Broker Bryant....we are soooooo glad we called you. You have far exceeded our expectations. No one has ever explained your ethical duties like this before. We'll be sure to send you lots of referrals!"

Thank you folks!! It sounds like my job here is done!!. Before I leave can I borrow a fiver to pay for my gas home? THE END.

Sounds foolish doesn't it? Well if you feel we have to show every property regardless of the co-broke then this is exactly what you are implying. Or does your incorrect interpretation of the CoE only apply to Buyer Brokers?

If you are telling your Sellers that Buyer Brokers must show their property regardless of the co-broke you are harming them and in fact may be in violation of the CoE. And if you are telling them that Buyer Brokers, who do not show their property, are acting unethical and illegally then you are wrong and may very well find yourself in front of an Ethics Committee.

But, by all means, if you CHOOSE to show all listings, regardless of the co-broke, you are free to do so. Personally, I think you are fooling yourselves. It is your business though. Just know that you do not have to do so. Of course, you do need to have this conversation with your Buyer.

Food for thought?

Posts by Broker Bryant about Buyer Broker Agreements.

Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

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J. Philip Faranda

Howard Hanna Rand Realty - Yorktown Heights, NY

Associate Broker / Office Manager

Of course the co broker matters. Anyone who says otherwise is kidding themselves. This doesn't mean we boycott, it means it matters. Big difference.

Dec 12, 2009 04:10 AM

Aaron Vaughn 830-358-0455

Conifer Builders LLC - Canyon Lake, TX

Bryant:

I would prefer 3 or 4 percent on the sale side, but 2.5% is OK, too -- if my buyers love the house, then they love the house.

However, I would never tolerate a listing agent making more than 1/2 of the commission.

If you do short sales, then by all means charge the seller an up-front fee; you should get paid a little for your extra work.

But finding buyers is much more work than entering listings into an MLS and waiting for somebody else to do your work.

AEV...BURP!

Dec 12, 2009 05:27 AM

Scott Taylor

Realty Center - Orlando - Ocoee - Orlando, FL

REALTOR

I used to not bother to look at the co-broke before I write an offer but in this crazy market I've seen some offering $100 so I do look now. I don't know about you, but my time is worth more than that. We're not supposed to choose listings for a buyer based on the pay but that's rediculous. You can call the agents and ask for more before showing I undertand. Personally this kind of compensation is inulting and should be considered entrapment. Many of us don't look at the commission.

I think it's important to not offer a discounted commission. After all, If a buyer only has time to see 5 houses and 20 match their criteria, certainly a listing with a discounted commission will inevitably be ruled out that day from the agent if they're looking to weed a few out, wouldn't you think?

Dec 12, 2009 05:33 AM

Lori Cain

Own Tulsa - Tulsa, OK

Midtown Tulsa Real Estate Top Producer

Aaron, I recently listed a house and kept more on the listing side. My client inherited this house. I arranged for my house-keeper to pack & deliver items to charity, hold a garage sale, pack items for storage, get things shredded; hired a home stager, paid for professional photography . . . and the list goes on. We offered a FAIR and STANDARD commision to the co-broker, but I still think I deserved more on the listing side in this particular instance.

Loved your post, BB.

Dec 12, 2009 05:39 AM

Ray Mikus

Green Light Real Estate - Montpelier, VT

Green Means Go!

Good conversation. For my two cents, the commission does matter. Don't follow this to ad absurdum, but I'd also rather do a deal at a lower commission than not do a deal.

Dec 12, 2009 05:59 AM

Bill Gillhespy

16 Sunview Blvd - Fort Myers Beach, FL

Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi BB, Great read and very well said ! Weak selling shows it's ugly head in so many ways !

Dec 12, 2009 06:21 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Aaron, "Never tolerate a listing broker taking more than 1/2"? What would you do" Boycott them? If I charged my seller 8% and offered a co-broke of 3.5% you'd be upset? Why? The 50/50 split "rule" does not exist. Another perfect example of why co-broke DOES matter.

Z Realtor, You too are proving my point. Co-broke DOES matter. I offer a more than fair co-broke that is about average for my market but higher than most REOs offer and guaranteed where most short sale listings are not. My sellers have zero issue with it. If it harmed the chances of their property being shown and sold I wouldn't do it. I get paid for selling properties not listing them. I wouldn't do anything that would keep that from happening.

I'll be back

Dec 12, 2009 06:43 AM

Anonymous

Z Realtor

Broker Bryant,

Re: Post #67

That's cool. No problem.

I guess my point, which I muddled up, had more to do with the concept of "competitive co-broke" than a literal interpretation of "50/50".

If your co-broke is "about average for my market but higher than most REOs offer and guaranteed where most short sale listings are not", then that is fine. Like I said, a literal interpretation of "50/50" wasn't what I meant to convey.

I like your quote: "I get paid for selling properties not listing them."

Exactly!

Now... one last bone to pick: How does your co-broke compare on listings that are NOT short sale or bank owned?

Dec 12, 2009 06:57 AM

#67

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

ZRealtor, I want to add that I charge my sellers based on what I feel my time and effort is worth. My suggestion is for buyer agents to do the same. Why depend on the LA for your compensation? It makes no sense at all.

But again, everyone needs to do what works for them the key is to make sure your buyer/seller knows what you are doing.

Andrew Martin, We too have some very good agents in my area that may charge less for their services. I have no issue with what agents choose to charge or what business model they work under. Our buyers work under BBAs. It's their choice whether or not they want to see a listing where they may have to contribute to the compensation.

Dec 12, 2009 07:17 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

ZRealtor "How does your co-broke compare on listings that are NOT short sale or bank owned?" That's pretty much a moot point in my market where 85% plus of the sales are distressed properties.

Dec 12, 2009 07:19 AM

Jon Zolsky, Daytona Beach, FL

Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL

Buy Daytona condos for heavenly good prices

Bryant - I would second with Elizabeth Ramsey (22). And yes, i do not check the commission. Not that I can;t care less, but I simply rely on the Listing agent.

It may be stupid, but I would not ask for Buyer Brokler Agreement on a residential deals.

Dec 12, 2009 07:46 AM

Gary Woltal

Keller Williams Realty - Flower Mound, TX

Assoc. Broker Realtor SFR Dallas Ft. Worth

Bryant, people that say the Co-Broke doesn't matter, in all instances, are not true to themselves. No agent works for free. Typically if on the Buyer side it does not seem fair, the agent will definitely raise their eyebrow and have to make their own call. Commissions are negotiable and this is a business not a charity you are running here. Nuff said. Each agent runs his own business the way they see fit.

Dec 12, 2009 08:50 AM

Patricia Aulson

BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH

Realtor - Portsmouth NH Homes-Hampton NH Homes

Sure the co-broke matters......Share and share alike. I'm happy to split with someone who brings a buyer to a listing I'm marketing and happy to share the commission.....!

Patricia

Dec 12, 2009 10:50 AM

Anonymous

Z Realtor

Broker Bryant,

Thanks, man.

Your response, such as it was, in Post #70 pretty much confirmed what I thought.

Good luck to you!

Dec 12, 2009 12:29 PM

#74

Morgan Evans

Douglas Elliman Real Estate - Manhattan, NY

LICENSED REAL ESTATE SALESPERSON

I enjoy the entertainment of the article very much. The dialogue with the seller was cracking me up for sure.

Dec 12, 2009 12:32 PM

Wayne B. Pruner

Oregon First - Tigard, OR

Tigard Oregon Homes for Sale, Realtor, GRI

I like your spin. I always explain to my clients how and why agents get paid.

Dec 12, 2009 01:22 PM

Bob Willis

Berkshire Hathaway HomeServices California Properties - Orange, CA

Orange County & L.A. County Real Estate Agent

These days, more often than not, buyers find properties online the same day I do. If they want to see them, I show them. The Buyer Broker agreement I have them sign during our buyer consultation takes care of any issues related to the topic of this blog.

Dec 12, 2009 02:46 PM

John Elwell

CENTURY 21 Bill Nye Realty, Inc. - Zephyrhills, FL

You Deserve a Full-Time Agent, Not Reduced Results

I have seen commissions as low as a few, and I do mean, a few bucks. I wouldl lose money the minute we closed and I paid my E&O insurance. No one should be asked to chose losing money for working on a deal. Shame on those listers who offer a losing proposition to others and how sad for those buyers agents who think so little of their own worth that they accept them.

If you have a buyers agreement where they buyer agrees that you will receive a minimum that is different. But in our area, that is very uncommon. If we were to insist on that, the buyers would very rapidly go to the next office where they would not get charged.

When I am asked to show a home that is a losing proposition for me, I offer to give the phone number of the listing agent to the buyer so they can call him/her directly. Not many of they chose to do that. I try to create a good relationship with my customers and they all want me to make at least a minimal profit.

I am glad that some agents are so rich that they can work for nothing or less than nothing. But according to NAR records, that is not many of us. If you take on a situation that will leave you going broke, you have only yourself to blame.

I try to always make sure that I am being fair with the other agents that may sell my listing. We are a small town here and many of the other agents are my friends, even though we are in a sense competitors.

Dec 12, 2009 04:21 PM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Alan May, I agreee that how yo handle buyers may be the ebst plan for you. I honestly have no issue with how agents choose to work. I do take issue when they start throwing the "unethical" think around because soem agents choose to sort by commission. if agents are working uinder a BBA the they MUST sort by commission so the bnuyer can make a decsion abiout whether or not to see the property.

Co-broke also matters if your seller is not willing to offer a co-broke that's inline with what is going on in their market.

My post is the counter arguement to "The co-broke doesn't matter" and "The code of ethics states we have to show ALL properties no matter how low the co-broke is". Both of these are incorrect statements.

John Elwell, I completely disagree that buyers will balk at signing a BBA. My experience is that buyers will sign without even reading it. It's all about timing and presentation. I can get just about any buyer to sign an agreement with no issue at all. Not only will they sign it but they will want to sign it. It's a piece of cake,

Dec 13, 2009 10:05 AM

Rosemary Brooks

BMC Real Estate - 209-910-3706 - Stockton, CA

The Mother & Daughter Realty Team

I do not hold back due to the low commission, HOWEVER, I hate seeing it. I once worked with a broker that insisted that we lower the co-broke percentage on all his listings. I never did it on the ones that I was actually the listing agent for. AM's usually catch that with the HUD, some did and some didn't -- as long as they got their!

Dec 18, 2009 12:31 AM