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I am currently in the process of negotiating a contract on the purchase of a new home for one of my buyers. She is looking at new construction and I am trying to save her $25,000, almost 10% of the purchase price. This would be a significant savings to my buyer. However, my increased commission if the home sells at a higher price is a measly $750 to me. I would never throw my client under the bus to earn an additional commission. I'm more interested in saving my clients money than upping my commission!
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77 Comments on I'm More Interested in Saving My Clients Money Than Upping My Commission!
Those buyers don't realize that a buyer's agent does far more than write their offer and negotiate with the seller and his/her agent.
Someone has to do the work on both sides of the transaction. If that someone is the listing agent, then the buyer's side of the commission rightfully goes to him or her. The difference is that the buyer has no "representation."
I believe most real estate professionals are good people who strive, many times at great sacrifice, to do right by their clients. But they are doing so in spite of the commission system, not because of it. (#55)
I agree with that completely, Mollie .
Agents don't like to hear this but commissions are negotiable. Sellers and buyers can shop around for an agent who will provide them with the most bang for their buck (#57)
...and they should. Consumers who shop are usually better informed. Moreover, and informed consumer is less likely to be a disgruntled one post-transaction, Tammie (and much less likely to sue or win a lawsuit) .
I would have left you a comment but you disabled the ability to do that. (#43)
It was indeed closed to comments. I had a full day yesterday and I monitor my property carefully. I've practiced that policy of property upkeep for five years now. Fortunately, Active Rain recognized the need for that when they afforded us the tool to disable comments. It's open now.
Unfortunately, consumers don't trust real estate agents. I see it all the time. I'm not sure why that is but I'm not going to surmise why now. When they see a post such as yours, they view it as a confirmation of a preconceived view. (#43)
I know exactly why consumers don't trust real estate agents (nor loan agents) and I outlined them in the post. They see blatant conflicts of interest, rarely discuss them during the transaction, then complain abiout those conflicts post-closing. I hear those complaints all of the time.
The interesting thing is that many successful real estate agents (closing 30-50 transactions annually) recognize these problems (as Mollie does in the comments about her book) and operate within the system by diffusing the nagging questiion in the consumer's mind. That sort of transparency not only answers the questions the consumers ponder DURING the transaction, it answers the questions post-closing. This is a powerful marketing message. When a customer evangelizes about an agent as "one of the good gals", while another consumer is complaining about these very conflicts oif interest, it sets up the perfect referral.
Judy - I think you bring up an excellent point. Many firms that are a flat-rate or limited service broker have gone under. If clients are only interested in agents who work for less, why is that happening?
I am not going to venture why Brian wrote this post. Better to just ask him.
Marte - I feel strongly that buyer's should have representation. I've seen people pay dearly who didn't.
Brian - I think the more we debate this issue the more we disagree. Let's just leave it at that.
The loss of commission for a poorly negotiated contract is so insignificant it isn't worth even discussing.
Yes I agree. The brokers need to step in here. Too bad some just don't care.
I don't see where we disagree, Tammie so I'm curious as to where we do. We both stipulate that consumers mistrust real estate agents and loan agents. Why do you think that is?
Lenn - I'm with you.
Erica - It is.
Brian - They mistrust us because they think we make too much money. Too bad they don't have access to the same info my tax accountant does.
Tammie, I don't think that's true, especially after the past few years. The two big complaints I hear about real estate agents are:
(1) "I didn't feel that he was truly looking out for my best interest" They rationalize this with the follow up statement "I mean, I know he's a salesman and all that so he has to earn a commission". This is where I usually reinforce the good job their agent did (unlesss they didn't--then I just shut up)
(2) "They forgot about me after they got their commission check". (You can solve that problem for about $20/month with constantcontact or icontact.)
Let me ask you another queston because you and Lenn think my second point is so minor that it is a non-starter (I assure you that it's not--customers talk about this after closing, especialy the ones who read Freakonomics).
Do customers think BONUS commissions, paid to the buyer's agent, taint the process and are a source for their mistrust?
Brian - The point of my post was to state that I want to get the best deal for my client period. Regardless of the amount of my commission. That is true no matter the price of the home or the amount of my commission. Every client gets the same service.
In terms of bonus commissions, I send all listings to my clients that meet their criteria. I never forward listings merely based on their commission paid. If my client likes a property that has an incentive, I tell them upfront that the seller is offering a bonus. That's it. I don't try to influence them or steer them to that property. Just for the record, I have never received such a bonus.
I know that sellers offer such incentives to get their properties more traffic. Since I have never done that with any of my sellers, I don't know if that tactic actually works. You'd have to ask an agent who has done that to see if they did, in fact, get more buyers viewing the listing.
Tammie, I believe you and the premise of your post. I am not challenging nor have ever challenged, your integrity. I'll state once again that I think most agents are good and honorable people...and yet...
...consumers STILL mistrust real estate and loan agents. Do you think it's because I'm talking about the nefarious practices, of the few bad apples, or it is because of the nefarious practices being practiced? My evidence shows the amount of our earnings is not why consumers mistrust us but how we earn that money is.
If you would like to see an example, read the seven pages here. sandycat is the consumer and her comments, throughout the thread, end with her husband having the final word; it ain't pretty for the good ones like you.
THAT is the point of my post and that's why I wrote it. I honestly thought the good agents would shine in the comments. I intend to write another one for consumers about bonuses too
Oh Tammie:
I read the post by Brian and refrained from commenting (before I even read Alan's post on on-line reputation ;)). You are so right. He directly/indirectly painted brokers and agents as money grubbing fiends that are in real estate just to make a buck and who don't look out for their clients. In NC we are required to disclose our compensation, including bonuses in writing. I have never had a client think I made too much money, but the exact opposite they think I do not make enough for the amount of work and services I provide. They are always appreciative and I have numerous client and agent testimonials to back that up.
Thanks for your post.
Brian - With the millions of real estate transactions that take place in this country every year, it's not surprising that some people would be unhappy with their agent. That's not how I run my business. I disclose everything. I don't keep any secrets from my clients.
Jennifer - Many people don't know all the things we do to get them to the closing table.
Tammie, when people talk about the higher the price, the higher my commission, I just chuckle...it is so little compared to the referral base I am building with each client/customer...I learned a long time ago it's not important to count commission until it is expected to close escrow...in the end, it's all aout relationships!
It is called being Penny wise and pound foolish. I see people getting ripped off like this all the time.
Jo Ann - I absolutely agree.
Gene - Are you referring to agents not negotiating to get a higher commission?
I totally agree with Lenn. #62 and move on.
It just doesn't make sense according to game theory to not get your client the very best deal.
Kimo - I agree that the additional commission is not worth discussing but getting our clients the best deal is.
Mike - Actually, it's agent suicide as far as I'm concerned. Eventually, the word gets around.
Joel #44 hit the nail on the head as far as referral business. I never understand why people think we would think so short term as to only want the higher commission now. If I am representing a client I am representing THEIR best interests, not mine. That's it.
John & Kasey - I'm with you 100%.