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I’ve seen a few posts recently counseling buyers not to worry about the cost of hiring a realtor since the seller normally pays the buyer’s agent fee. Historically this is the way it has always been done. A featured post just asked listing agents not to negotiate the fee for the selling agent. We can get away from that.
There was a time when a buyer had to go to each real estate office and ask what they had for sale. This is pretty common in commerce. If you didn’t like the shoes that Tom McCann offers, then you were free to go to Nordstrom’s. The public knows this is the case and many people still don’t get the concept of a multiple listing association where realtors in a given location pool their listings and agree to share commissions in cross company sales. According to Wikipedia this sharing of listings and commissions has been going on since the late 1880’s.
In the mid 1990’s a new concept arose and took hold. There was a lot of resistance at first, but today the norm is that buyers are represented by buyers’ agents and sellers are represented by listing agents. Still, the seller is asked to pay the entire cost of getting his home sold. I don’t for the life of me know why that cost is shoved on the seller, other than tradition. Yes, the seller was in a contract to sell a property for a fee and the real estate brokerage took it upon itself to share that fee with cooperating brokers.
Listen to me here. Do you, when you get a call from the phone company that wants you to bundle services for a discount have any doubt about whom the person talking to you is being paid by, and who they represent, and why? Do you, when you buy a new or used car from a dealer have any doubt about whom the salesman is working for when he says, “I’ll see if we (meaning you and the salesperson) can get that?”
The IRS allows for certain costs in selling to be deductible. One of those costs is to pay for the services of the real estate broker. The commission is considered a cost of doing business.
Here is a new concept that banks will one day embrace. Part of the cost of buying a home necessitates hiring a broker to represent the buyer and also the cost of hiring an inspector to inspect the home.We know they already consider the loan financing cost as part of the transaction. When will they open their eyes to the rest of the costs of being a responsible buyer, and consider that to be financeable? At that time we will be able to proceed with buyers paying the agent they want to work with a negotiated fee, and sellers will continue to pay the listing agent of their choice, the fee negotiated for the services offered.
What will happen? Fees for buyers’ agents will plummet at first. There are companies already rebating much of that fee. Eventually companies that don’t charge enough will go out of business. But, it won’t be a fixed fee coming from the sellers any more. It will be negotiated. And then buyers will start to learn what a good agent is worth and that fee will become acceptable. I don’t know what it will be. I don’t know if it will be a percentage of the sale price, or a flat fee. But buyers (and sellers) will, after a considerable amount of time, come to realize that there is value in paying for great service.
Using a buyer's agency contract for every buyer makes just as much sense as using a listing contract for every seller. They give us a chance to thoroughly educate each buyer. They make us more professional. Buyer contracts make us wear the shoes we claim to be wearing when we walk a client accross the bridge to home ownership.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.