It's not normal for us to consider the impact of our requests when we hire a professional to perform services for us. We normally assume that they know what they're doing and understand how much to bill us and that they will do so fairly. This generally holds true for people who are billing us directly.
The problem comes up when we're not being billed directly and the payment for the services that we need is being supplied by someone else. If you've thought about this at all, you probably understand that when someone else pays, the consumer's best strategy is to use as much of the "free" service as possible. This is normal and very understandable.
The end result is the same in all such instances, the service which is over-used becomes less available and more expensive. This is the case in health care and we're preparing to see how this works on a national basis, but that's another topic.
In real estate, the Realtor is almost always paid by the seller on a commission basis. This means that they will do their best to assist the buyer to close a transaction. When the buyer over-uses the Realtor's service, the pay that the agent receives does not necessarily increase commensurately.
Here's an example to better illustrate the point:
A buyer contacts an agent wanting to look at houses. The agent meets with the buyer and determines on the basis of their conversation that:
- The buyer is not very serious and their need to buy is not urgent,
- The buyer is very picky and wants more than they can realistically expect to find given their budget, and
- The buyer expects the agent to show them a very large number of properties.
Given this scenario, the agent must rationally estimate the time they'll spend and the commission they'll earn. Let's say that the commission will be $3,000 and the agent has to show 50 houses and doing so will put about 500 miles on their car and take 4 days of their time. The brokerage where the agent works will take part of that commission and so will taxes. A large part of the remainder will go for various overhead items necessary for the agent to remain in business -- things such as board dues, MLS fees, E&O Insurance, auto expenses, even clothing expenses.
In this case, it might turn out that the agent decides that their time could best be allocated to another buyer. Perhaps they have the chance to work with a buyer who wants the same amount of service and wants to look at the same number of houses, but who will generate a commission of $6,000 because they're going to buy in a higher price range.
Would it surprise you, if the agent told the first buyer that they couldn't help them? What if the agent took the first buyer out for a day and then just sort of became too busy to take them out again? Does this sound familiar?
OK. What's the point of this post? If you're a buyer and you want the best service from your agent, no matter what price range you're in, take a moment to consider the economic results of your requests on your agent. While you deserve and need assistance and while they probably really want to help you, they can't afford to give an unlimited amount of help on what amounts to a limited budget.
Realize upfront that you'll need to have a specific set of needs that the house must meet and when those boxes are filled, you should be ready to buy, even if you haven't looked at hundreds of houses. Your agent will appreciate it and you'll end up getting better service.
Namaste!
Comments(5)