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Working without a Realtor has more advantages

We went to show one of our listings today to a buyer not working with a Realtor. Of course our goal is primarily to sell them that house, but it is also to gain that buyer as a customer. This buyer is different - she has done her homework, she knows the inventory, the price per square foot, the recent sales and how long properties have been on the market. no reator necessary

When we asked why she is not working with a Realtor, her answer was that she thought she would have a negotiating advantage if a second Realtor was not involved.

We all have ways to respond to unrepresented real estate buyers, we all have our schpeels and some even scripts. We all would have made points about the advantages of working with an agent that knows the area, the other Realtors and the inventory. We would have even explained the real disadvantages of working without an agent.

I wanted to pose this question here in Active Rain to see what approach you would have taken with an educated consumer that believes there are more advantages to working without a Realtor than with one.

What would you have done? Please keep in mind that even if you could not get this consumer as a buyer, it would be smart to keep the doors open in case she liked the listing she was looking at.

Posted by Rick & Ines - Miami Beach Real Estate on 09/08/2007 06:36 PM

Comments (87)

buyers, realtors, real estate customer, miami, miami real estate

Originally posted at: Miami Real Estate Blog: Working without a Realtor has more advantages

87 Comments on Working without a Realtor has more advantages

SEP

2007

How many realtors have you worked with? Are they all the same or do some impress you more than others? What are the chances the house you really want will have a realtor that is going to get you the best price for the home when they have promised the seller to get the highest price for them. You have most likley bought several homes and are a very savy buyer. We have sold over 500 homes so we have experience also. Good post.

Thats a tough one Ines. This day and age all the information is on the web and the consumer knows how to find it without our help.

I have no problem working with the consumer as a customer on my listings as long as they understand that I will not be representing them. We do an agency disclosure in writing so that it is clear that they will be unrepresented.

I usually ask them a series of questions to get a feel just how prepared they are. Like How many homes have they bought and sold? But up here there are many unrepresented buyers.

I wouldn't have said a thing. Mumms the word. If the buyer wants to represent herself, let her. It's a free country. It isn't always necessary to say something. In fact, sometimes, the less said the better. This is one of those times.

That said, if she wanted to write an offer, write it with her as a customer. Her offer has absolutely nothing to do with the fact that she has no agent. She just thinks it does.

If she makes a less than full price offer offer, it's up to the seller to accept, reject or counter based on the net proceeds.

If she even mentions the listing fee, she is out of bounds because she has no authority to determine your listing fee. Fact is, you incur considerable additional risk and duties when the buyer doen't have their own agent or, in Florida, their own whatever.

It's just not a problem. Nor is it an advantage for the buyer. She just thinks it is. As for picking her up as a buyer, I wouldn't want her because she has absolutely no respect for what we do.

Ines - I've been put in that position and quite honestly, as someone who in principal is against Dual Agency, I say "More power to her!" As long as she's willing to sign a liability waiver if and when she writes on the house, I've accomplished several things. Because in that situation I pass the buyer coop to the buyer (always at least 3%), I give them the option of dropping the price by that amount or taking it in seller concessions. My seller gets his same net, the buyer gets a better deal, and I've sold my listing...which was my job. I may have to do a bit more work but I just give the "savvy" buyer a checklist of things to do and recommend they seek legal counsel for clarification.

9 times out of 10, the house won't be perfect for the buyer customer and they will be inclined to work with you because you've established trust and have exhibited a fair and equitable situation for this buyer. At least, that's exactly what happened to me!

She may be prepared with pricing and comparables, but what about the negotiating, working through the issues, the financing, etc. What does she mean she will have a negotiating advantage? Is she assuming that the commission will be lessened without asking? Knowing square footage is not the same as structuring a deal, negotiating it and then making it happen, is it?

I am not sure that anyone can respond with anything other than "That's interesting, why do you think you would have a negotiating advantage without a second realtor involved?"

One can only assume that she is thinking that if a second realtor is not involved, she can make an offer for less than full price with the thought that a commission will not be paid. It is unfortunate that folks think that this is the case. If she answered my question with a statement that indicated that was her thought process, I would gently school her on the reality of the situation.

I might say something like, "You know, a lot of people think that by eliminating the buyers agent, they can get a better price. I suppose it stems from the fact that so many people selling as a FSBO (for sale by owner) price their home competitively and then cut the price 3% or 4% when they begin negotiating. Some even must cut the price 6% or more. National averages show that for sale by owners receive about 15% less than those that hire an agent to represent them. On the surface it would seem that there is a negotiating value for sellers.

In your situation, you are hoping to buy the home at a lower price because you don't have an agent. Did you know that the commission paid the agent selling the house does not change when there is no agent on the other side? That's right, they will initially receive the same amount regardless of who is on the buying side. The other thing they will do is represent the seller every step of the way. They are not obligated to share anything other than what is in the disclosures with you.

Now you seem very informed. Can you tell me the difference between hot water heaters that are in homes? Can you tell me the signs of potential problems? How about a furnace? An air conditioner? Can you explain to me the forms you will need included in your contract to protect your rights? What are the documents you will need to protect you if your financing does not go through? I can tell from the look on your face, there is more to buying a home than just gathering statistical data. You see a house will be your home. Square feet will become living space that has to be heated and cooled. The length of time a home is on the market will have no relationship to your possible enjoyment of the home.

I will be glad to show you this house. I just hope when you get home you think about what I have shared. And remember, if you fall in love with this house today, looking on your own, any surprise that a subsequent home inspection reveals will be viewed differently. If you had a Realtor with you, they would temper your joy with facts about things that they notice. Oh, and they would have all the necessary forms to protect you."

Eric - very nice, I liked that last line......"We have sold over 500 homes so we have experience also"

Monika - working with an unrepresented buyer is just fine, but communicating that you WILL do double the work is another.

Lenn - once again, I LOVE your answer. You are right about not wanting to work with her as a buyer - we only work with customers that appreciates our services - once that doesn't see the advantages will be very difficult to please (and it will be her loss.....at least from my architectural expertise).

Irene - here is Florida you would be required to disclose in the MLS that your commission is variable.

Miriam - the commission reduction misconception was quickly cleared up.

John - I can tell you've gone down this road before. This particular buyer saw no advantage in working with an architect as her Realtor!! If that's not being closed minded, I don't know what is. I liked your points.

My question would be "Do you have all the forms necessary to submit an offer and protect yourself?" and "Are you aware of the entire process of submitting a contract and getting to closing?" and "What is your positon on a home inspection?". MANY consumers don't realize how much work we actually do and they also don't realize we don't get the whole 3%. We have commission splits, taxes and maybe even referral fees to pay. She may think she's very knowledgeable and maybe she is about comps, but when it comes to negotiating a deal and getting it to close, there's a reason we are licensed! Good Post.

Great answers! I did not know what I would say, but after seeing all of these answers, I will be well prepared if that ever happens to me. My favorite, and depending on my mood, the one I would be most likely to follow is Lenn's. I have tried to work with a few buyers that were "working the field" and nothing ever panned out so I'd leave her be unless she wanted to buy the home I was selling.

Maybe she might've done her homework by knowing the inventory,square footage,recent sold houses and how long the property has been on the market? But does she know all the contracts/forms that goes with a sales transaction? Have she brought a house on her own before? She just doesnt want to pay a buyers agent. But best thing she can do is hire a buyers agent that will negotiate for her on her behalf.

Sandy - I think a lot of the misconception here starts from assuming that the listing agent will take care of all the details. We recently received an offer for one of our listings where the buyer's agent reduced her commission to 1.5% - our seller's comment was great, he said "awesome, more for you guys....you sure deserve it"

Lenn nailed it.

Buy my listing from me.............please!

You can be your own agent all day long.

I got both sides of the deal once when there were competing offers. One guy wrote through me, without representation. Other one was represented by another agent from another firm. The offers were EXACTLY the same. HOW DOES THAT HAPPEN??? Regardless, my seller chose to do the deal with the guy unrepresented because he knew I'd get the whole cut on the commission and he felt like I deserved it after all I had done to get it sold. That was a great day.

Oops, that last post was by me. Sorry, I didn't realize I wasn't logged in.

I posted this question for us as professionals to do a little soul searching. It is evident that our industry is changing right under our feet and it's up to us to inform the consumer of the value we offer to a real estate transaction. There may be people out there that don't care about the value, some others will like for that information to be presented differently, it's food for thought!

Stacey - the question about the disloyal customer is an easy one - but this one requires more thought, maybe a little strategy.....Active Rain is an incredible resource of great professionals who have an incredilble arsenal of useful information.

Lanre - we all agree, but how to present that to someone who is not willing to listen, or do you?

Jim - LOL! I do hope she buys.....that's the bottom line.

Shannon - that's what I call LOYALTY from a customer, I love those stories.

When pople are misimformed, it is usually because they choose to be. In this persons ( Buyers ) case, she represents not only the misinformed but as Lenn says, she had a total disrespect for what we do. You would be convincing her all through the transaction that you were worth representing her if there was ever going to be a transaction.

For the same reason that I wish all human beings were kind and toughtful, reality indicates that is not the case. Same with the uninformed/misinformed. Unless she lived under a rock, she actually already decided why she is out there on here own. There may be a great deal more to her story and she may not even be a Buyer at all.

I know one thing, if she called on one of my properties, I would have interviewed her and had her prove ( especially if on her own ) that she was qualified to buy. If there was no proof, there would be pudding. My fiduciary also requires that I protect my seller's interests and inviting strangers in, is not what they pay me for. She could engage a plethora of hungry taxi driver agents that would have shown the place and would not have bothered to find out who she really is? Been there , done that.

Great thought provoking post. I guess it would be interesting to find out from her what she thinks a real estate agents job is. Is it just opening doors and perhaps negotiating price?

As far as a negotiating advantage - I'd ask her exactly what she means. It's a different answer for different people. Some buyers think they can get a portion of the commission back if they purchase through the listing agent. In answer to that I tell them that no, the commission is not theirs to negotiate. Any changes in the commission will be realized by the seller, not the buyer.

Other buyers realize that they may not get a commission reduction on their side, but that the seller will and that will result in the seller 'going lower' on the ultimate price of the property. Again, my answer to that is that the seller plans on going as low as they desire, regardless of the commission and that rather than discount the price further to the buyer, they will be seeking a higher net for themselves.

In both scenarios, the buyer does not benefit (as far as commission or negotiation is concerned) by using the listing agent.

In Ann Arbor, which is very multi-cultural some nationalities like to work with the listing agent only. I sold one two Decembers ago. I asked them why they didn't want representation and they said, because if we work with the listing agent we will get a better deal, as the sellers won't have to pay double commission. Now where did they come up with that ?

William - she does represent the misinformed, but she also represents a lot of today's buyers. I think it's our responsibility, if we want to keep making money, to find a way to educate buyers like this. Although you and I would agree that some people are not worth the effort.

I can tell you that in Miami we have a very limited amount of buyers and if these don't see the advantage of working with Realtors, then something needs to happen.

David - I do think it would be an interesting question for this buyer, no doubt about it. Or even better.....she would be the perfect one to buy a FSBO property.

Christina - in this case, the second applies - but you are completely right, the seller will always try to net more. The other factor that this buyer is neglecting to take into consideration is the amount of movement a particular listing has had. In a listing with constant movement and offers, nothing is going to help her, but astute negotiating....from an experienced Realtor.

Missy - I have encountered weird generalizations from different cultures. My favorite is "let's overprice the property and tell them the price is negotiable" - I have dealt with plenty of those.

With a market where multiple offers were the norm, I hadn't sold one of my own listing in years. (My policy when approached by the buyer directly was to refer them to another agent. In a multiple offer situation I have always felt that I could better serve my seller if I wasn't competing with other agents to get my offer accepted.)

Recently I had a buyer call me directly to see my listing. After discussing this situation with my partner and the seller, we decided to split the SOC between us 3 ways. This worked out really well. The transaction closed quickly, with out any problems. Everybody was happy. This is probably going to be our new policy.

With so much information available I believe ,whether we like it or not, we're going to be working with more unrepresented buyers.

I always ask if the buyer has a great real estate lawyer to help them review the contract and the disclosures. Even when they don't want a realtor, we end up helping them with the everday details most people don't know about. Sherry

What an educational post! Thanks! It's bookmarked :)

Generally speaking, when a customer says that he or she prefers to work without an agent, then the client has a "Realtor aversion" issue. Somewhere along the line, this client heard or experienced something negative about working with a Realtor.
The statement "have a negotiating advantage if a second Realtor was not involved" is simply smoke in the air. Too sad that this client did a lot of leg work that a Realtor could have done it for her/him in fraction of the time, and most likely provided more accurate information.
With a client like that, I usually offer advice and information in such a manner that by the end of the day, the client will clearly understand that "...a professional plumber knows plumbing a lot better that a DIY'er and the extra knowledge really counts when the going get tough under the sink". I yet to have seen a closing that went down with no issues ... ok... I lucked out couple of times.
Susanne
09/08/2007 by Susanne Case Delete Report as Spam
Gurjit - the problem here is that she doesn't care for our services and she doesn't think "representation" is an important part or a necessary part of the transaction.

Susanne - impressing the buyer is a good tactic - and she might have a Realtor aversion issue. This is the perfect scenario where she could deal with an Lousy Realtor on a seller's side and get an even worse taste for our industry.

Susan - There are tons of unrepresented buyers in my market - and here in Florida you need to disclose in the MLS if you are willing to share commissions with a buyer or if those commissions are variable - that means that a lot of agents refrain from showing your listings knowing that they have a disadvantage when bringing a buyer.

Sherry - when we get unrepresented buyers, we always advise for them to hire an attorney.

Vickie - It's great to learn from these scenarios isn't it - I get some incredible insight from some members of AR.

So the buyer is assuming you'll reduce your commission because you're getting both sides? Why? You still have to work for both parties, so you're getting paid for both sides. As for which way to go if they don't want that particular house, I wouldn't even bother trying to explain. If they feel that strongly about it already, it's not worth the hassle.

Even if we reduce our commission when the Buyer is unrepresented, the savings go to the Seller - not the Buyer. The Seller does not have motivation nor obligation to pass that savings onto the Buyer.

What's more? When we represent the Seller, we do not owe any negotiating on behalf of the Buyer. If I were representing the BUYER, I guarantee our Buyer would get a better deal than when we are on the "other" side.

Lisa - the buyer is assuming a lot of things that ultimately will hurt her. She will never know it and will walk away thinking she did the best thing. I still think that it is our duty to try to educate these people so they can make a better informed decision.

Mariana - are you playing the incognito game today?? You are right, if we are representing the seller, we will pass on all savings and advantages to them, who appreciate our expertise.

This is definitely an interesting post to follow what everyone is saying.

I usually ask the buyer.

What specifically causes you to believe that if there is no other Realtor that you would be in a better negotiating position?

The response usually goes something like this. The seller doesn't have to pay a full commission (whatever that is).

This on the surface kind of makes sense. Until you really analyze it.

Then I ask the buyer. Let's suppose that the seller doesn't have to pay a full commission (whatever that means) and they were only to pay a partial commission. What specifically causes you to believe that the seller would give you the money? The usual response is because they don't have to pay it.

So really what you are saying is pay you instead. How does that benefit the seller?

Then I do role reversal with them. If you didn't have to pay it would you give to a buyer? If the answer is yes, then you really had to pay it.

The real misconception is that the consumers believe there are two commissions. The reality is there is one commission and the listing brokerage is offering a cooperating broker a commission. However there is still one commission.

Then the buyer comes back and says well if I buy the house without an agent will you reduce your commission? Of course my answer is no, do you have any other questions?

The problem is the buyers don't understand is if I reduce my commission it belongs to the seller and we already had that conversation.

Then I appeal to their logic again, if I were going to have a reduced commission because there was not another agent, wouldn't it make sense to have you get an agent?

What I am actually doing is demonstrating my negotiating skills. Then I ask do you want to buy a house because the agent was a weak negotiator or do you want to find a house you really like and hire me as your negotiator and I will pay for myself. That way you can save money and I will do the work. Because what you want is the best deal out there right?

Consumers have this notion that they are entitled to the commission. They also think that the only value is basic research of home prices and days on market.

Ines,

We would have done what we always do, tell the truth, lead her to our blog and let her know we are available to help in any way we can.

We would have told here that she is right about the advantages she sees, and we would have asked her if she would ever like to hear some of the disadvantages, if so, we'd by happy to let her know. We would have also asked if she would like for us to get in touch with her later. We would have also asked if she would like for us to put her on our autoresponders to make sure she doesn't miss anything.

If she said yes to any of the above, or emailed us after seeing our blog, we would have put her in normal buyer development immediately... and let the rest take care of itself.

Don't know if this answers the question or not... but it's late and we're kinda brain dead.

best

What an excellent question. I am showing a listing to an unreprestnted buyer tomorrow morning. Following the comments is an education in itself on this subject. It's hard to know when to draw the line. Do we try to secure the customer as a buyer or keep them at arm's length as a customer. I think it depends on each situation and the people involved, but having all these ideas and game-plans helps me feel more prepared. Thanks.

When I list homes, I always explain that third-party negotiations benefit the seller. An agent doesn't bring any of the seller's emotions to the table, is focused on netting the most for the seller, and in the case of our team's listing managers has negotiated thousands of contracts.

The same could be said for a buyer's agent. Whereas many buyers may tip their hands and pay more than they have to, an experienced negotiator will be able to focus on financial and other terms (such as inspections, repairs, possession, etc) that benefit the buyer.

Of course there will always be an element of emotion that enters into any sale. I don't mean to make this sound simply robotic. My belief is that buyers and sellers rely on us to balance their emotion with our professionalism and business sense in what is often the largest financial transaction of their lives.

Bob and Carolin - it's great to see the different perspectives, isn't it?

Rob - negotiating skills are definitely a plus and I appreciate your detailed response - this particular buyer was not interested in anything we had to say. We did pose a question though.

If you were a buyer and had the choice of reducing the commission of your home to benefit 3 people, which would you choose? yourself, the agent you hired and trust, or a complete stranger? : )

Gary - LOL!! This one new our site, had read plenty, asked lots of questions and was not interested in anything we had to offer.

I would be candid and honest about the advanages of having an agent. I would not try to get them to be a "customer" because they would be in a dual agency. I think both the buyer and seller should have compentent representation resulting in a win/win transaction.

I just wrote a blog about <a href="http://activerain.com/blogsview/198633/Why-Use-a-Realtor">Reasons to use a Real Estate Agent</a> here on Active Rain.

I think you can get the representation and work with a realtor and still negotiate a great deal. It's an awesome market.

Joan - here in Florida we are Transaction brokers -dual agency would not apply - but I know exactly where you are coming from.

Ki - thanks for the link - here's another great article by Janie Coffey

Real Estate Buyers ->>The Benefits of working with a Realtor who Specializes in your Area!

Frank - you are completely right. And nothing like working with an agent that knows the ins and outs of a listing. Today I showed a property that has been reduced $150K, I knew who the orgininal designer was, when it was historically designated, what deferred maintenance the house had (including the need of a new roof), and the fact that the relocation company that has it, is ready to dump it. (just to mention a few things).

Great topic to discuss, Ines. I am going to give it some thought and come back to read more and comment.

Jeff

I almost missed you guys.....don't ask me why.

Chrissy - how timely is this post!! You'll have an arsenal of stuff up your sleeve - good luck!

John - I am glad you mentioned emotions because it had not been touched in this whole discussion. How can a buyer handle negotiations at arm's length. This lady showed up today with a new born and a toddler and also has to deal with details and negotiations. Not that it can't be done, but the advantage is fictitious......and in some cases could be the complete opposite.

SEP

2007

Jeff D. - are you using your parking pass? : )

Ines,

I"m also in agreement with Lenn on this one. Bottom line, the buyes thinks she pockets the selling agent's commission. We had a situation 2 weeks ago where an attorney wanted to represent himself, this guy was totally stuck on dumb. He was clueless.

We also explained to our sellers that "unrepresented" buyers (attorney or not) could be dangerous, they have a high mortality rate, and if they close it's usually with complications. Even though she may know a few facts, comps, price per sq. ft. etc. that doesn't compare to what a knowledgeable Realtor could do for her.

BTW, this a.m. I had a buyer call from the internet wanting me to represent them on a property they found on their own, I declined. I'll be posting on it in a day or two when I have a little more time.

Unfortunately, in this soft market, some listing agents have been giving up some of their commission when they get both sides of deal in order to bridge the gap between what the buyer is willing to pay and what the seller is willing to accept. However, the amount of money that is available to give up is small compared to the value a buyer's agent can bring in terms of the negotiation of the sale price, terms of sale, inspection items, and protecting their interests throughout the sale process. It doesn't make sense to me, but I think the public believes we have a lot more money to give out upon our discretion than we actually do. I know I can't give back a dime without permission from my broker and there has to be a really good reason to do so.

It's amazing how many different responses you got, Ines. A true learning experience for me. I've only had my license for a short time and have had no listings, only buyers so far. I can only work towards being able to show an unrepresented buyer one of my listings. :-) I'll be bookmarking this post to reference when that opportunity arises.

Ines,

I find it's very difficult to change a person's mind unless they are ready. At this point, it seems she was not ready for any change. Perhaps it will be best to follow up with her at regular intervals to see how things are going. At some point, she may change her mind.

Thankfully in Ohio we do not have to perform dual agency. The buyer can be an unrepresented buyer on the agency disclosure form. It is up to you to represent your seller and if the buyer wants no help from a REALTOR® so be it.

I've been there too. If the buyer thinks she will get a better "deal" by representing herself then I would address that first. In my experience sellers rarely lower their price accordingly and there are so many details to be negotiated beyond the purchase price. If she thinks she can negotiate better than an agent you might provide her will an overview of the entire sales process by asking her questionsrather than lecturing in hopes of helping her to realize there is a lot more than negotiating the right price. I think if she has read your blog, respects you and the fact that you didn't try to sell her like all of the other agents she many come back to you once she realizes what she doesn't know.

Ines...In my market I would get both ends of the commission for the double work. The sell end and the list end.

Happens often and as long as the buyer is fully aware and signs the disclosures it is perfectly okay. The buyer being unrepresented has nothing to do with what the seller pays...no matter what the buyer may think. At least here it doesn't.

Lynda - declined??? ooooh! I can't wait to hear about it! It's definitely more than finding the property and knowinng pricing, we all know that. The question is: Is is worth it to try to explain the additional value? Or just easier to walk away.....

Gail - yes some agents give up their commission, but is it for a lower price or is it to net the seller more money? That's were the misconception comes in. With this particular listing we have received several offers with and without agents and the seller wants a particular number and will give us the full commission either way.

Nancy - we all work this market differently, but I agree that we can learn from everyone in the business. Good Luck!

Diane B. - you hit another important point. Her attitude and body language definitely said she was not ready, but it doesn't mean she won't be in the near future.

James - that's interesting, I love to hear how other states function.

Diane A. - you just gave me an idea for miamism, thanks! I will write a general and generic post about what buyers need or how they would benefit from our services.

Monika - it really makes me wonder where some of these buyer get these ideas.....until one day they are on the selling side and it hits them like a ton of bricks.

Ines, my buyer's agents are coming into contact with more & more buyers that think the same way as this one. I've told them to take them out the first time to build a relationship, show them our VIP buyer agreement & then hopefully by the next time they take them out they'll understand the value of having an agent working on their behalf.

But, while I didn't read every response on here....I really like what Lenn said. If they want to buy THAT house, great, write it up with no brokerage relationship. I still feel like if they want to see more it is better to have them under at least a transaction brokerage relationship.

Many agents are not that great & many say & do things that are flat out WRONG. These buyers probably met with a few of them previously. Can't blame them for not wanting to use an agent...

I think I'll go back & read the rest of the replies. Good blog & I'm sure we will be running into this more & more.

Susan - what's interesting in this particular case is that she had seen 3 properties before ours and had 2 other appointments after in addition to seeing 4 properties today. That's 10 different Realtors hearing her swan song........don't you think one will have convinced her by now? This should be interesting.

I had the same senario a couple of weeks ago, at an open house. The guy told me he wanted to know if he could get the house for a lower price if he didn't bring an agent in on it? I explained that NO, the price would not be less, regardless of weather he had an agent or not and why would you not want to be represented??? I offered to write an offer for him as a sellers agent, or if he preferred, I would get him an agent, in my office or even someone from another Broker to write an offer for him.

He called me three days later and tried to make a ridculously LOW verbal offer over the phone. I asked him to put the offer in writing. No, he didn't want to do that. Another week went by and I recieved an offer from an agent representing another buyer.

This same guy from the open house called me again and I tell him we have another offer in writing from another buyer. He says, "but I am still interested". I told him he'd better hurry and round up an agent or let me put his offer in writing, because my sellers were gettig ready to accept the other offer.

Long story short - he did get an agent to write an offer for him and he ended up purchasing my listing for FULL PRICE! (The other offer had been for less than full price).

Ines, thanks for posting this situation!

My husband has mentioned a couple of times he'd like to try selling our house privately when the time comes. I disagree but haven't said anything. My plan is, when the day comes, to print out Frank Llosa's Blog about FSBO's and now your post as well.

The comments have enlightened me as to how the commissions work without the 'buyers' agent involved!

Dane

Rated 5

Debbie - that's pretty funny.....well, not really funny - but I love when that happens. I never understand people's negotiating tactics, but I guess that's what makes our job so interesting.

Dane - Frank's stuff is always very interesting, he definitely has a different take on things. Comments on these type of posts are always very helpful, to the consumer, to newer agents and to experienced agents as well.

As long as listing agents reduce the commission when they find an unrepresented buyer, this situation will continue.

Al - and for buyers to think commission reduction will benefit them is another aspect that is fictional.

Take a look at what Rob Aubrey is doing here - Seller's Obejection #1

Ines - Great question - the challenge is educating people' up front that..

"Just because you don't have a Realtor representing you DOESN'T mean YOU (Mr or Mrs Buyer) get the allocated $$$ commission off your purchase price!"

That's the $64,000 question!!! Who started that myth? Maybe we could get "Mythbusters" to bust it once and for all (LOL)

Interestingly what do buyers get working with us:

We do in-depth analysis on each property for our buyers- includes what we believe it's worth, what we think they could purchase it for and additional inside info - we're your consultants.
We believe we are better negotiators than 99% of buyers (since it is often hard for someone to be as effective for themselves since money is an emotional issue) We achieve significant savings for our buyers based on their needs (ex. closing costs, repairs, lower price, etc.) - we're your negotiator and we usually save you way more than the co-broke commission.
Also we educate our buyers on doing their due diligence so no one is getting sued in the 5 years that follow.
We are a resource for qualified professionals like inspectors and needed repair professionals;.
We also work with the 40+ professionals and 100s of pages of documents that need to be handled during the transaction. The key is when things go right - it looks easy (that's our job) however, when things go wrong - they are often very costly mistakes. We oversee and handle all the transactional details.
Our buyers know we care more about them then selling any particular house - that's key!

Don't know if that helps - I'll be interested to see what else people have to say.

I would explain that it's always better to have representation- unless the agent is unwilling to fully commit to the needs of the client.

Cyndee - thanks for the great response, THAT's how you show value, no doubt about it. The question becomes, do you burn a bridge by trying to convert them? (just playing devil's advocate)

Chuck - and unfortunately, most of the time, these buyers have been burnt by poor representation - that's when it becomes difficult to convert them.

Ines - When representing the seller I find it's a much harder conversion - since we're representing both sides versus one - if they don't know you it's hard for them to trust the systemat that point if they are already skeptical. I believe in the past buyers haven't been represented well which is why many are synical believing a listing agent will push their own listing to their detriment so their only leverage is no agent and maybe they'll get a deal - that's they chicken and egg dilemma for us as REALTORS - like I said - let's call Mythbusters!

That's why the majority of our business is referrals and we work much better in reverse - turning buyers into listing clients. No need to play devils advocate - I'm with you...the only hope is when they are not as educated and you can offer them the kind of info that would help them in the process - then they can see the value.

Ines & Rick, way too many comments here for me to read...just give you my 2 cents. I don't mind showing the property to the Buyer but if they are actually interested in the house and do not representation, I will call another Realtor in for them to be represented. There is way too much liability here and I just won't represent both the Buyer and the Seller.

As far as her thinking that she will save money...hmmmm...the agent may not in the long run. I look at the long tail and not the short tail.

Ines.. I vote with Lenn and Lynda on this one.. as to your comment...The question becomes, do you burn a bridge by trying to convert them? (just playing devil's advocate)

I'll play ..... what would make you think this person would ever be a client... and if by chance she did change her tune I can only think it would be because you stood firm and she was impressed with you sense of your worth. It has been my experience that people who are trying to save the commission..spend more of their time trying to save a commission then in buying the right home at the right terms.

Cyndee - Cynical is a good work. I see many local Realtors pushing their own listings when they work with buyers and it doesn't always mean showing them the best properties that meet their criteria. I met a couple at an open house today that have been "burnt" (those were their words) by 2 local agents. They are ready, willing and able buyers ready to go and they have a really sour taste for the industry.

I do see a chance with them and I will try. Rick and I specialize in listings but work with a handful of buyers as well.....listings to me are so much easier (but I enjoy walking into listings and pointing out great details and flaws).

Gena - in Florida we don't have your problems because we are transaction brokers with limited representation - dual agency is illegal and the system came up with a way of working with the 2 sides of the transaction without detriment. In Sacramento, I would do the same.

The REBAC website (Real Estate Buyer Agency Council) offers scripts that can be beneficial in explaining the advantages of buyer agency to a consumer. ABR classes are an excellent place to learn about how to promote buyer agency.

We're supposed to be educating the public to some extent. If they choose not to accept our advice, then it's out of our hands. There isn't much we can do to help willing victims who elect to disadvantage themselves by going the "do-it-yourself" route in a real estate transaction.

Ines, there are 69 comments before this one and it is to late at night to go back and read them all, so someone might have stated this already. My first response to this Buyer would be to simply ask what negotiation advantages does she she has by not having a second Realtor involved. After listening to what she had to say I would then proceed to address them one by one. In this business sometimes we are to quick to respond before we really know what we are responding to. We need to listen more, and then we can respond correctly. God gave us two ears and one mouth for a reason.

Kaye - I almost missed you. AMEN to that!! And those same people that worry more about commission end up regreting not paying attention to the important details of the home.

Eric - you are pointing out the most important detail of this whole discussion. It is about educating the consumer and proving all those myths wrong (with Cyndee's MYTHBUSTERS), if they don't want to listen, then we can at least know we tried.

)George - you are absolutely right - everyone in the real estate industry should learn to shot up and listen!! It is the single most important factor in establishing a relationship. Blogging is about humanizing us, and what do we accomplish if we can't listen.....once we are "humanized". Good Catch! (that last spammer dude was zapped!

SEP

2007

Ines, comment #72, whew that's a lot to read but well worth the effort. I learned a lot.

very South Florida attitude

buyers think that if they don't have an agent then the listing agent and owner will give up the 3% they would have paid to the cooperating agent.

thus far I don't believe I've heard of that happening in many transactions. Sure, to get a deal done a good Realtor will come off their commissions but even still there is a place in the listing agreement where the agent can "bring a buyer" and get full or "slightly discounted" commission... like a 6/5 or 6/4 arrangement.

I just don't believe that buyers understand that when they come to work with the listing agent, most of the time there are dollar signs in that agent's eyes - not a sense of "hey this is one clever negotiator"

Sue - your follow up article is excellent and worth a look by everyone!

Buyer's Agents: Am I Missing Something?

Hey David! LOL! "most of the time there are dollar signs in that agent's eyes" - unfortunately, as bad as that statement may sound, it can be true. I know many agents that would immediately say "home run!! - I get double the commission"<insert evil grin>, I also know agents that only show their own listings to buyers for the same reason. More the reason to find a buyer's agent that you trust!

Ines - excellent post to get everyone thinking! I did read all the comments, and really like your question, "If you were a buyer and had the choice of reducing the commission of your home to benefit 3 people, which would you choose? yourself, the agent you hired and trust, or a complete stranger? : )" Your prospect obviously wasn't ready to listen to you, so forego the education - at this point - and just ask your question.

Unfortunately in this market it often boils done to one simple question. Does the seller want to use the SOC to offset the reduced price being offer by an unreprsented buyer, and get the house sold today; or does he want to stands on "principle" and hold out, hoping for a represented buyer who will also pay a price that will net him the same.

I think most sellers don't give a hoot, who technically gets the soc, as long as they get the price and terms that they are looking for.

I think my job is not to worry if I'm going to convert a buyer or not; but to get the property sold for my client.

Great question!! Would you believe that even being in the business, I have thought the exact same thing!! It has been great seeing the different responses!

The last post was from me. Sorry I forgot to imput the graphic.

Okay I must be really losing it, the last to nameless comment were from me.

Susan - I think we're back to square one with your question. The comission is agreed to by 2 parties (and the buyer is not involved). It's up to those 2 parties to agree who will benefit, not just the seller, not just the selling agent. The seller does not have to wait for a represented buyer at all, the problem is for a buyer to assume that they have a negotiating advantage when they really don't.

And I totally agree that the Realtor's job in this case is to sell the property, not convert the buyer.....that's why the discussion is so interesting.

Leah - I totally agree.....we can always learn in this platform, that's for sure!

I hate to let someone wallow in their own ignorance (that's another way of saying I like to correct people isn't it?) but some people aren't worth trying to correct. This buyer is no doubt clever and well researched but If I were in that position I'd focus on selling the house and letting the buyer have her silly idea..., or at least I hope I'd have the presence of mind to do so.

Ron - here I go again playing devil's advocate. Since this buyer is so astute, so versatile and so educated. What makes you think anything you say could sell them the house. They obviously have a very particular set of criteria that would not be fullfilled by anything you had to say. In this case.....do you just act as a door opener and let them get on with their own tour?

SEP

2007

After re-reading my comment I hope you don't think I was saying you're ignorant (I meant the buyer)

I don't think the buyer would listen to me..., but when I say focus on selling the house all I mean is., represent the seller client, even if that means shutting my mouth so the buyer is maybe slightly more receptive. I doubt I would handle it any better than you have. But I think we agree, she is probably not easily teachable and not worth your time. Ive run into this sort of person to (different circumstances) and its frustrating because you and I both know they could benefit from our help.., but getting them to realize it...? I haven't figured out a way.

Great post, I wrote one along these lines a couple weeks ago. Thanks for the dialog, Ron

Ines,

I am just reading the responses, this is a great question to be asked, and I am here t o see what everyone says, if you don't mind :0)

Tom Weiss

Ron - I didn't think that AT ALL, I was just playing devil's advocate again. Somehow I like the part! : )

Thomas - please be my guest, there's some good stuff here!

SEP

2007

i would tell them that if they shaved their head for charity, they might get a deal on the crib. no realtor(r), no shaving their head, no donation, no deal!!!

PS. http://www.shaveyourheadforcharity.com is believed to generate business for realtors(r) that donate money to such a noble cause. do i need to help you write that check?? hhhmmm?

signed- no one and you'll never ever ever ever know.

Incognicky - You are doing such an awesome job with your fundraiser and everyone that commented here should at least send you $20. DID YOU HEAR THAT PEOPLE??? - the money is going to a great chariy, go read www.shaveyourheadforcharity.com

at this point $10 each would work also. i think i put a clause in (very) small letters, that 5K turns the clippers on. not 1K :)

btw, that wasn't me above ;)

ok, donors get a 4 square photo, signed by yours truly.. before, during, mohawk and after.. all in one photo.. posage included in $10 donation. howz that?

better than that statue anyday!!

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