7% Cobroke? A little test for the NC Buyers Agent?

Real Estate Broker/Owner with Realty Arts NC Broker License #235526
What's behind Door Number 2?

Big Commission!  Huge Inducement?

I just got the email telling me that I can score a nice 7% commission at a new home community.

I guess that means I should reschedule all appointments, kidnap a customer or two, and run by there tomorrow?

This is why we encourage Buyer Agency Agreements in North Carolina.  When we do, the client enjoys some protection from being dragged out to see homes just because they represent a bonanza for their fiduciary, the Buyer's Agent. 
We have to disclose, in a timely manner, whether the compensation offered to the agent is more than what was projected in the Buyer's Agency Agreement.  And I bet there aren't many Buyer's Agency agreements in the Cary area where an informed Buyer agrees to provide 7% to their Buyers' Agent.
And....   What cobroke is established as the "Expected Compensation" when there is no agreement?

"A timely manner?"  One school of thought says that "A Timely Manner" is defined as prior to showing the home.  But, it is definitely prior to writing the offer.

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Scan the QR Code with your Smartphone to Email MeQR CodeMike Jaquish, REALTOR®

919-880-2769 www.RealtyArts.com

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Independent Broker/Owner, Realty Arts

130 Towerview Court,

Cary, NC


Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Jim O'Donnell 06/09/2011 02:33 AM
ActiveRain Community
North Carolina Wake County Cary
North Carolina Real Estate
The Ninety-ninth Percentile
buyers agent

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Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Interesting marketing choice by that agency, they would be better suited splitting that amount such as 3/3.5 to buyer agent and than 4/3.5 to the buyer. That would inspire buyers as well as agents.

Jun 08, 2011 11:45 AM #1
Mike Jaquish
Realty Arts - Cary, NC
919-880-2769 Cary, NC, Real Estate

Hi, Scott.

I'm thinking that the price could be more competitive, rather than competing for agents.

Jun 08, 2011 11:57 AM #2
Karen Kruschka
RE/MAX Executives - Woodbridge, VA
- "My Experience Isn't Expensive - It's PRICELESS"

Mike  If a home needs that fee I do believe there is an undisclosed problem of some sort

Jun 08, 2011 12:22 PM #3
Mike Jaquish
Realty Arts - Cary, NC
919-880-2769 Cary, NC, Real Estate

Well, Karen, in this case, it is new construction, and I think they want to clear some inventory by the end of the third quarter. Show Wall Street how strong they are in their quarterly results.

The builder can offer an agent the moon and stars, and not have to enter it into the MLS as a concession, or a price cut. So, the agent can possibly be induced to compromise their client, and the builder can maintain comparables...

Jun 08, 2011 01:01 PM #4
Jim O'Donnell
Raleigh Cary Realty - Fuquay Varina, NC

Well said Mike.  I did a re-blog with my own comments

Jun 09, 2011 02:34 AM #5
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

If the governing forces did not want commissions to be negotiable, they would require that they not be negotiable.  Why is there so much pressure and/or criticism applied to brokers who offer cooperating compensation out of someone's individual comfort range?  Perhaps the 7% number is the rught one and all others are too low.

Jun 09, 2011 02:48 AM #6
Mike Jaquish
Realty Arts - Cary, NC
919-880-2769 Cary, NC, Real Estate

Thanks, Jim!


The issue is that weak agents may troll for higher cobrokes and may steer clients to those properties, with little regard to suitability of the property for the client.

And, that is the reason for the second half of the post. NC regulation revision requiring transparency in Buyers agent compensation caused a huge, and not completely yet subsided, ripple with agents who are uncomfortable discussing their compensation with their clients beyond "Buyers agency is FREE FREE FREE!"
I LIKE those regulations.

Jun 09, 2011 02:57 AM #7
Ralph Janisch ABR CRS Broker
Janisch & Co. - Conroe, TX
Selling Northwest Houston to good people like you!

Bonus and increased compensations have been around for the last 25 years that I know of.  While it's nice to occasionally score a little extra dough I've never taken a client to see a property because of extra incentive.  I always show them the all properties that meet the specification that they say they want regardless of compensation (yes even those that I think are under compensated.)  Then they let me know which are more interesting to them.  

Jun 09, 2011 03:18 AM #8
Mike Jaquish
Realty Arts - Cary, NC
919-880-2769 Cary, NC, Real Estate

Jeanne and Ralph,

Sounds like you are doing it  right.  In my experience, new regulations typically are spawned by the activities of the minority with a different approach.

Jun 09, 2011 04:53 AM #9
Tim Peterson
Wisconsin Realtor Safety and Concealed Carry Classes - Madison, WI
Realtor Safety Training Classes

Hi Mike. Interesting . I have never seen anything like that here. Its generally 2.4-3.5 at the top for co-brokes, But you are right the bonuses and % do not sell the home

Jun 09, 2011 03:12 PM #10
Mike Jaquish
Realty Arts - Cary, NC
919-880-2769 Cary, NC, Real Estate


I got another email today, with a list of applicable inventory homes. Someone thinks it works.

Jun 10, 2011 03:22 PM #11
Dianne Goode
Raleigh Cary Realty - Raleigh, NC

Hi Mike.  I have sometimes increased the buyer agent commission on a listing by 1/2 or even a full percent.  It's just one of the things to try when you're trying everything you can.  I don't believe an agent will "push" a listing because it has a better payout for him or her, but if the search pulled up 20 houses that meet the buyer's criteria, and there's only time to show 8 of them, maybe the one with the higher commission on it will have a better chance of being one of the 8 that get shown.  That's my thinking, anyway, and I suspect the subdivisions with incentives are thinking the same way -- just come and see what we have!  One thing for sure, nobody will buy a house, unless they see it first.

Jun 11, 2011 02:19 AM #12
Linda Jandura
Raleigh Cary Realty - Apex, NC
Realtor, North Carolina Buyer & Seller Specialist

7%!!! Wow, I know I have 6 or 8 buyers lined up waiting to buy just those houses. :)


It's amazing that builders don't know that we have to disclose if we get any bonuses or extra commission. What would the buyer's think of us? The builder may be doing this to keep his prices in the neighborhood up for comp purposes, and hoping that we'll give the extra commission to the buyers., even though we will have to declare it and pay taxes on it.

Jun 13, 2011 01:32 AM #13
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