Sarah,

What a great post...

I wonder how much of that public perception comes from realtor's own attempt to look rich? As realtors, we buy the nicest car that fits the bill, we dress as professionally as we can (depending on our market), and it's not very common that a struggling realtor would mention short cash flow or a tight winter to a client!

When I started real estate, my old car had just broken down, and estimated costs to repair came in at around 2k.  I was in bind, and no matter how I looked at it, I didn't want to fork out the money for another used car, which might just break down. I opted to lease a new car, which came with a navigation system and was pretty swanky. 

Well, as far as impressions, it worked. The first clients I sold a lovely home to asked me if I lived on the water[front]. I said no, of course. The next also assumed I was really rich. 

In fact, we had just recently gotten married, were putting all our money into our fledgling business, and were renting the one bedroom mother-in-law off my parents house for $500 a month. Even though I was closing sales, it was not enough to correspond to the lavish lifestyle much of the public associates with realtors. Owning on the waterfront meant a minimum $1.5 mil house at that time. At the time, I was intimidated listing $300k properites... so the suggestion of waterfront living was very..... comical... hehehe.. It took all my effort not to laugh when my client asked me...

I remember coming home and telling Jon, and both of us laughing about it. hehehe. We went to bed that night in our "cabin" in the trees, far away from the water, and we still crack up about that now. 

Grant,

I'm curious, when you say, "negotiate your commission and give some of it back at closing", exactly what method do you use to do this? Do you write an additional addemdum? What's the difference between discounting your commission up front, and giving the commission back at closing? Wondering, thanks!

Sara 

To the buyer who posted their comment above mine:

I hear you loud and clear, and I agree with you partially. There are quite a few buyers and sellers who are comfortable doing the work of marketing their home for sale, as well carrying the weight of the work on the buyer's side. However, I don't think that it is a fair assessment to presuppose that the reason sellers and buyers don't choose to represent themselves and work with an agent instead is because they don't have access to the MLS. Even this statement presupposes that:

1) The MLS is a equal-access service that should be available to all, and

2) That buyers/sellers that choose to represent themselves are doing equal work as the agents.

First, take presupposition 1). The MLS evolved to its current state by agents years ago collecting all property data for sale in their office and binding it together in a book. At some point, different entrepreneurial folk noticed the opportunity in alleviating the agents' load by gathering up all property info themselves and distributing it as a book to all local agents via a subscription. The next step was for another group of entrepreneurial folk to realize this "book of listings" would be more efficient if available online to agents, and they went paperless. That said, the MLS exists to serve realtors, not unrepresented buyers and sellers. The MLS is maintained by numerous agents' fees, it is not free to agents. 

2) The second presupposition assumes that unrepresented buyers/sellers do an equal amount of work as an agent. I challenge this view. An unrepresented buyer most oftentimes approaches a listing agent for a property they represent. If somehow they convince the agent to give back the "buyer's agent share" to the buyer, it is not as if the listing agent is not going to be picking up the slack for the work the buyer does not do or is inexperienced in. The unrepresented buyer is "using" the listing agent in this situation. They are forcing the listing agent to represent them as their buyer's agent, without paying just compensation. How? Because the realtor is not paid merely to "sell" a house, they are paid for their vast expertise. They are paid to handle diplomacy between parties with differing interests. The unrepresented Buyer is often not skilled in real estate diplomacy. It can happen that some agents do a bad job, or really drop the ball on delivering excellence, but that is not a defeater of the merits of using an agent; it is merely a red herring (a distracting side point that says nothing about highly skilled realtors, and in fact only reveals inadequate research done on the part of the sellers when they signed up with their less than skilled agent. This doesn't discredit realtors, it discredits the particular sellers.)

Further, when sellers attempt to harness the benefits of the MLS without compensating an agent, they are doing two things:

1) Undermining the very viability of the MLS, which depends on realtor subscription fees for existence (by not patronizing an agent, the unrepresented seller undercuts the viability of the very realtors who maintain the MLS) and,  

2) Extorting benefits for something for which they have not paid. Even in the case of a flat listing fee for MLS listing inclusion where the agent taking this type of listing does not represent the seller or buyer in any way, the sellers in this case are forcing the buyer's agent to do double work (to act as a diplomat and expertise provider to the buyer, and to act as a diplomat and expertise provider to the sellers with the limited "mls" listing, the very sellers who refuse to pay the buyer's agent for their additional work load.

There is an exception to these points, and that is when the unrepresented buyer/seller works directly with another unrepresented buyer or seller. Then they are not unfairly "using" anyone. In the case of an unrepresented buyer/seller who used to be a realtor, they are still milking the buyer's agent/listing agent when they choose to represent themselves, because often they lack adequate knowledge of the current market and its dynamics, etc and the other agent has to pick up the slack. 

Does this make sense? I believe there is an integrity problem in any buyer or seller who doesn't have qualms with using people or a service for which they have not paid. Strong words, but sometimes people do sell their character for money. We should be able to swallow what we chew.

So how can this problem be alleviated? It's not fair to suggest that a buyer or seller shouldn't represent themselves or they are taking advantage of other people wrongly, is it? In fact, I am certain that many buyers/sellers honestly have the best interests at heart (at least for themselves) and don't wish to slight anyone. (Of course, we as people can rationalize everything to make it ok.) How to alleviate this? Buyers and sellers should become licensed realtors if they want to buy/sell their home fairly to not "use" another realtor's expertise unfairly (meaning just compensation). If you want to be treated like an equal partner, then know the same things as an experienced realtor. Pay for monthly MLS dues as well.

In a Web 2.0 world where consumers are pegged as king and providers must cower before them, this is what I want to say:

1) Own up to the condescension you give to realtors. Belittling a legitimate line of work by insinuating realtors are all crooks is demeaning and just plain rude. Neither is it true, as any generality tends to exaggerate.

2) Own up to your own responsibility of choosing a good realtor. If you worked with a bad one in the past, and you chose that realtor, don't blame-place, but ask yourself how your judgment could improve (asking more questions, doing better research into realtors, etc).

3) Try humility on for size. Not too popular these days, humility treats others with dignity and doesn't assume that "I am above other humans and no bad experiences should ever happen to me". We all get a bad run sometimes. So you didn't choose the listing agent who in one sale did a horrible job negotiating? As unpleasant as it is, this happens. To denigrate all realtors because of one experience hinges on arrogance that you are above the normal experience of a human being. I am sorry it happened to you, :( but please don't dog all realtors. In any case, such a generalization is a logical fallacy.