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Lowe's Decision Maker is CLUELESS!!!

By
Real Estate Agent with Serving the Greater Phoenix and Scottsdale Metropolitan Area BR534744000 & BR540649000

As you may have read elsewhere, Lowe's has discontinued the REALTOR discount program effective next week, and invested in SoloPro - a real estate website promoting flat fees for Buyer Agents and rebating the Buyer Broker commission to the Buyer.  

It's evident that the decisionmaker at Lowe's is CLUELESS - this direct from the SoloPro website instructing the Buyer Agent to make increased commission from the Seller part of the contract!  

Would not fly in Arizona:  

http://www.solopro.com/agent/closing-agents

How do I ensure that the seller pays the full 3% commission?

If the offered commission is less than 3%, then prior to making an offer you need to present the buyer with two options.

  • Option one is accept the lesser commission amount as the rebate amount.

  • Option two is adjust the commission up to 3%.

If option two is chosen, then your agency agreement should set your commission at 3% and and obligate the buyer to pay the shortfall between the offered commission and 3%. For example, if the offered commission is 2.5%, then the shortfall is 0.5%.

 

Most buyer agency contracts are set up to accomplish this by simply filling in the desired minimum commission. Obviously the buyer does not want to pay for his own rebate, therefore include a provision in the purchase contract that the seller agrees to credit the shortfall amount (in this example 0.5% of the sale price) to the buyer at closing toward closing costs.

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About the Authors - Updated 2018

If you are considering a Traditional or Short Sale of your home in Phoenix, Scottsdale or any location in Maricopa County Arizona, you owe it to yourself to talk with Haven Express @ Keller Williams Arizona Realty to determine whether Tony and Suzanne Marriott are the best real estate Brokers in the Phoenix and Scottsdale metropolitan area to help you with the Successful Sale of your home.

Tony and Suzanne have personally Listed, Sold and Closed more than a hundred Short Sales with the highest list to close rate in the Phoenix Metro Area!

Tony Marriott - Chief Executive Officer - Haven Express @ Keller Williams Arizona Realty

Suzanne Marriott - Chief Learning Officer - Haven Express @ Keller Williams Arizona Realty

Associate Brokers, REALTORS
Haven Express
Keller Williams Arizona Realty

Comments(23)

Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Bill Roberts     "Obviously the buyer does not want to pay for his own rebate, therefore include a provision in the purchase contract that the seller agrees to credit the shortfall amount (in this example 0.5% of the sale price) to the buyer at closing toward closing costs."  Attempting to adjust commission to a Buyer Agent in the contract between Buyer and Seller is "frowned" upon - and why would a Seller want to pay that expense?

Oct 28, 2015 12:03 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Ron and Alexandra Seigel I read another comment that the AR member owned Lowe's stock which is currently "in the tank".  With leaders like that - this appears to be one more example of a poor decision...

Oct 28, 2015 12:03 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Sybil Campbell Thanks for the comment but unclear on how this applies here - please elaborate!

Oct 28, 2015 12:04 AM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Tony and Suzanne,

I have no idea what the leadership is doing, so I can't comment on it, what I am certain of is that the decision has to be $$$motivated.  Sometimes, like brokerages that I have observed always cut the small stuff prior to really looking at where the cuts should be made...perhaps this is the same case.  Sorry, to hear a member's stock is in the tank.  A

Oct 28, 2015 12:09 AM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Tony and Suzanne Marriott In your area many listing agents  get 6% commissions, but only "pay" the selling office 2.5%. I think that the seller isn't aware that their agent is doing this. Getting back that one half of a per cent is fair game.

Bill Roberts

Oct 28, 2015 12:09 AM
Dan Hopper
Dan Hopper - Gold Way RE - Westminster, CO
Colorado Broker / Referral Services

Yes Tony... this is one of the strangest arrangements I have seen from a 3rd party!  They really do not have any idea how this would work in today's environment.  It will be interesting to see how they will put this arrangement into the process, without legal issues.   I guess I need to see how this is any different than a buyer paying $50,000 more for a property, so the seller will provide a concession of $50,000 back to the buyer to repair/replace to upgrade the home.  Lenders will frown upon that.

Oct 28, 2015 12:11 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Bill Roberts "I think that the seller isn't aware that their agent is doing this."  The Seller is actually.  The ARMLS listing agreement require the total commission, and the commission amount to the Buyer Broker, and to be reviewed and agreed to by the Seller(s).  See lines 77-85 at the document found here.  Furthermore, many agents "claim" to get x% - but it's becoming clear they don't - and - unless one is a card carrying member of the 50/50 club, why would the total commission matter?  The contract between the Buyer and the Seller cannot modify the contract between the Listing Broker and the Seller, so this "extra" .5% (in this example) would come from the Seller, not the Listing Brokers portion of the commission.

Oct 28, 2015 12:26 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Dan Hopper You nailed it.  The way Buyer Brokers attempt to "sell" an increase in their commission is by adding it to the purchase price then asking for it back from the Seller.  Given that the appraisers are entitled to a copy of the contract, which would detail this arrangement, what if the property fails to appraise for an amount that covers this "request".  We have specific language we use in all responses to offers requesting seller concessions to protect the seller in the event the appraisal falls short of the mark.

Oct 28, 2015 12:29 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Ron and Alexandra Seigel I would agree that the decision is $$ motivated.  Most if not all corporate decisions are - yet - we know from past experience that not every decision "wins the prize".  I have no issue with Lowe's electing to discontinue their discount program - a business decision is a business decision - but it appears that their choice of investment did not get the appropriate review by their legal department.  In some states "rebates" are illegal.  Here it would be very difficult to explain to a Seller that they have to increase the commission to the Buyer Broker (out of the Sellers pocket) to sell their home - unless it's the "best" offer and makes financial sense to do so.

Oct 28, 2015 12:37 AM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Tony, This is the difference between a buyer's market and a seller's market. The only leverage a selling agent has over the listing agent is the offer. The seller will get his money back from the listing agent in this scenario. It is referred to as a commission-ectomy.

Bill Roberts

Oct 28, 2015 12:42 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Bill Roberts "The seller will get his money back from the listing agent in this scenario. It is referred to as a commission-ectomy."

I guarantee you they won't get it back from us if we are the Listing Broker.  Did you bother to read the listing agreement?  

Our discussion with Sellers is "There are two components of the total commission - this is our listing commission "x%".  You need to decide how much you want to offer the Buyer Agent.  We can tell you that the amounts other Sellers have offered (on SOLD transactions) range from "y% to z%" - it's your decision"  In the singular occasion (out of hundreds of transactions we've closed) a Buyer Agent attempted this by modifying what Seller concessions could be used towards by inserting "BAC" into the contract, their Broker disabused them of this course of action immediately.  

 

Oct 28, 2015 12:51 AM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Tony, I didn't read it today, but I have read your listing agreement before (a client of mine listed his Phoenix investment SFR with a broker in your MLS).

He had agreed to 6% commission with 2.5% to the S.O. BUT he wasn't aware that he had agreed to this.

I understand your defense of your commission (I too am a listing agent primarily) but in my niche (business opportunities) buyers and sellers often gang up on the listing agent to reduce the commission.

Bill Roberts

Oct 28, 2015 01:05 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Bill Roberts The previous version of the LA did not have that disclosure - but if he signed the current version that's been around since 2013 - why wouldn't he have been aware of it - unless he failed to read what he signed.  I am a strong believer that all the players who either earn revenue from a transaction or are a principal in a transaction to be responsible and accountable for their own actions, and if they make a mistake - they own it and pay for it.  Sounds like things may be different in the commercial world?  Thanks for the dialogue!

Oct 28, 2015 01:40 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Tony and Suzanne - it won't be the first time a corporation did not consider all of the facts before making a decision.  We will have to see how this works out.

Oct 29, 2015 12:39 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Grant Schneider Thanks for stopping by and for the comment! much appreciated.  Time will tell!

Oct 29, 2015 12:44 AM
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

Hmm this is interesting.  A good topic for discussion.

Nov 10, 2015 11:35 PM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Georgie - thanks for stopping by and for your comment - very much appreciated!

Nov 16, 2015 02:09 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Enjoyed this post and want to read more - try this one - Peacocks and Pickles for Christmas 2015!  Merry Christmas!

Dec 20, 2015 10:27 PM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Enjoyed this post and want to read more - visit our website  - HavenExpress.com - where all your questions about buying and selling residential real estate in Arizona are addressed!

Apr 21, 2016 10:46 PM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Coldwell Banker Realty

Enjoyed this post and want to read more - visit our website  - HavenExpress.com - where all your questions about buying and selling residential real estate in Arizona are addressed!

Apr 21, 2016 10:46 PM