In a perfect world I am pretty firm on not discounting rates.  That said, in this market most of us are fighting to survive !

Bill, I can understand your point.  That said, I would think that in this market that buyer's agent commission would be going UP!, not down!  I question the business sense of offering less of an incentive to show their property???  Anyway, thanks for the comment!

Bob Mitchell

ValueList Real Estate Services, Inc. 

I am seeing a lot of 4%'s out there.  Everyone has their minimum.  Banks don't seem to care.

First let me say that I believe that every Brokerage / Agent should run their business the way the want (legally of course). I feel that my services, like yours are worth something.  I certainly don't want to work for nothing..

That being said, 

Let me play "devil's advocate".

If your client the buyer, did not have the means (or desire) to offer you any more than the commission being offered, what would you do?  I'm guessing you are working as a Buyer's Agent and representing their best interests correct?

If it came right down to it, would you not write the offer??

It seems to me,  (and by the way, I agree with you 100% for placing a value on your services and sticking to it. Especially with your business model ... so don't take this post the wrong way...) that if you intend to not discount your services on the "buying side" that the clients should be informed of that in the beginning).  I'm not sure about your area but in PA our Buyers Agency Contract has an option "line" to insert a buyers agent commission.  Kind of like a "bottom line". It clearly states your fee and that the buyer will "make up the difference" if a co/op is less than that amount.

I think to bring it up after showing a property (if that's even the case .. I can't quite tell by your post) isn't the correct way to go about it. At that point, your client has an interest in the property which you showed them.

You are working in her best interests and to me, not willing to accept a lower commission when A buyer has an interest in the home does not seem to be working in her best interests (If she decides she does not want to "put up" the extra $$$ that is.)

Hope that's not coming across the wrong way.  (It's kind of difficult to word it and not sound like we're getting into some inappropriate commission discussion).

Last,  My grandfather (A real estate broker) used to have this saying:

A little piece of pie is better than no pie at all.

If your client was to not want to pay you the difference, and decided to circumvent you all together, you'd have no deal.  (In PA, trying to go through litigaiton on somehting like that, even though a signed buyers agent contract would most likely win the case for us, is expensive and time consuming to fight in court. Plus the reputation / bad word of mouth about the brokerage "can happen as well).  Not worth it to us.. 

Bob I agree,

I am primarily a buyers agent and my wife is more of a listing agent. Working with buyers can cost allot of money and sometimes a tremendous amount of time.

Our area is still performing well and is still very desired. However even in our area were are seeing buyers agents commissions increasing not decreasing. I just got an E-mail only minutes ago that had a bonus of 2% to the buyers agent for the next four condos sold. Condos in our area sell well due to the resorts and we do not have an overwhelming amount on the market in fact we have less than last year. With this new bonus the selling commission would be 5%.

Banks need to get with the program and wake up. I think you may be right on being hoodwinked. My family lives in Western Saint Louis and are real estate investors there. We were talking a few weeks ago at my brothers wedding and they said the market was really slow even in the good areas. I told them that I just sold a condo and there were multiple offers and he laughed and could not remember even in the best of times that they competed with other buyers with multiple offers in your market. I'm not saying it does not happen but right now I doubt it unless the listing was priced extremely aggressive.

It seems that you have already done the work... without negotiating a minimum rate up front.  So why not do the right thing for this customer/buyer and make the offer as she desires?  2.25% is more than $0.  You can chalk up the difference between the 2.25% and whatever you believe constitutes your miminum acceptable rate as an education expense - the next time you will get an agreement for compensation before showing any properties.

By the way, in Florida an agent is supposed to negotiate any changes in a co-op fee before showing the property.  We are not to make an offer to purchase that is contingent on a change in the offered rate. 

Over the years, our experience has been that when we put the needs of our customers first, our compensation takes care of itself.  That doesn't mean that every transaction pays as much as we would like or that we believe we have earned but over the long course of business, it all pans out just fine.  If a particular transaction is less than what is hoped for, just brush it off and say "NEXT!"

Melina:  Thanks for the comment!  I'm not sure what they are charging, but I have seen more of the lower buyer's agency commission rates lately.  Honestly, I don't care what percentage the listing brokerage is making, I just don't think that it's a good business move to offer less than the going rate if it means that agents won't show the property.

Brian: Excellent comment!  And no, I'm not taking it wrong at all.  To answer your question, the lady had not signed a buyer's agency agreement with me yet, though it had been discussed that I would be working with her as a buyer's agent (that's the presumption in Missouri).  We did talk about the commission offered when I gave her the printout of the property and before I had shown it to her.  

Jason and Deanna:  You're right...when you factor in the buyer's that you show tons of properties too who never pan out and the cost of doing business, it doesn't make economic sense to get paid a discount commission rate.  Also, I think that the listing agent was bsing....but you never know....

Thanks for the comments!

Bob Mitchell

ValueList  Real Estate Services, Inc.

Bob Did you ever hear back from the bank?

Bob, I certainly agree with others that this needed to be discussed with the buyers prior to going to work for them. If the buyers agreed at that time that you would be guaranteed a minimum then it's simple.....put the extra .5% on their side of the HUD. If you didn't have this conversation until after you showed the property then you should move forward with the deal as presented.

In my area some foreclosures offer good co-brokes and some don't. But as long as I have a SIGNED BBA it doesn't matter to me. I'll show them anything they want and take whatever co-broke is being offered and apply it to what the buyer owes me.

Before this mortgage mess calms down, you'll see agents working for as low as 1-1.5%.  It's called survival, although I think it's actually counter-productive to survival.  But for those who wish to work and make very little, that is there perogative.  For those who would rather go fishing and not make money than work and not make money, that is our perogative.  Of course, my buyer rep. agreement states 3% for me...either the seller pays or the buyer pays, but it's 3% nonetheless.  I have needs too you know.

Unfortunately, we're seeing a SLOWDOWN. Perhaps I'd stick to my guns if it was 2005 or 2006, but personally, I'd take it. Next time, when you sign a buyer's agency agreement, put a minimum commission in there. That would cut this off early.

I think you did good bring it to 2.7%.  I hope you guys get the property. 

As I mentioned in one of my comments on this post, my minimum WAS negotiated prior to showing the property. 

I didn't and don't require a buyer, even in this case a friend's daughter, to sign a buyer's agency until after we've gotten to know one another.  This usually allows time for us to get to know one another and to get comfortable with one another.  It has always worked before because usually the co-broke commissions have never really been a problem.  I may have to examine this policy.

Also, we're still waiting on the bank to get back to us on the offer.

Thanks for all the comments!

Bob Mitchell

ValueList Real Estate Services, Inc. 

Tim and Susan, sorry I missed you there.....to answer your question, the minimum was discussed prior to my showing the property.  It was only AFTER we found out about the supposed "multiple offers" that it became an issue.  Not much of one, but an issue.

Bob Mitchell

ValueList Real Estate Services, Inc. 

One of the foreclosure companies that I work for has reduced commissions to 5.5%.  Guess who is having to take the reduction?  The listing agent....and I am the one who has to do all the preparation to sell including lock change, trash out and clean up and yard maintenance.  Upon hearing a lot of complaints, they said, "But you don't have to ask for the listings.  They are just sent to you."  One time last year they raised the commissions to 7% but still gave the buyer's agent the higher end.  What we hope for is to be both listing and selling agent because we can do that in our state.

Cutting commissions is a plague upon our industry.  I wish agents would hold their heads up higher and let people know we're worth every penny!!!

Cutting commissions is a plague upon our industry.  I wish agents would hold their heads up higher and let people know we're worth every penny!!!

We are worth it! But when others around you are doing it, it's hard to compete. I just lost a listing because I stuck to my guns. Seller sold it FSBO because I wouldn't budge. A piece of something would have been nice, I thought afterward.

Barbara:  On the listing side I think that it's up to each agent to do the math and determine if it's worth it for them to take the listing or not.  When it gets to the point where they are more problems that they are worth, stop taking them.  Let some other agent waste their time spinning their wheels and go out and sell something that will make you some money!  Thanks for the comment!

Jacki and Jerry:  As I pointed out in my post, I'm a pioneer in the field of cutting commissions...I started my discount real estate company way back in 1994!  That said, I cut MY commission....not the other agents!  As I pointed out to Barbara above, to me, it's up to each agent to do the math and make their own decisions on what is acceptable to work for on the listing side.  I don't think that it's fair for an agent to attempt to cut the other agent's throat even if that is what their seller wants them to do!

If it's attempted, it's up to the buyer's agents to stand their ground!  Thanks for the comment!

Erica:  Ditto to you on what I said above.....You have a cost of doing business and if the seller expects you to work for less than that plus an acceptable profit margin, then they aren't that great a client, are they?  As I mentioned in the post, is that seller going to help me out when my kid's tuition payment comes due?  I don't think so....

Bob Mitchell

ValueList Real Estate Services, Inc.