“Why don’t you give back to me 50 percent of your commission?” That’s the question my client popped just as he was about to sign the last page of the offer on a home he intended to buy. “That’s what a friend of mine told me his agent is doing for him. So why can’t you do the same?" he went on.
I should have seen it coming. After about four weeks of emailing listings, several phone conversations and visits to promising homes, I started to have this tell-tell feeling in my stomach. Speechless just for a moment I reminded my client that as a buyer he was paying nothing for my services and I was earning my money by spending my time and dispensing valuable advice. I pointed out that he was asking for a portion of my income that was being paid by somebody else, namely the seller.
He and his wife finished signing the offer. It turned out to be a multiple offer scenario and my client lost. I, needless to say, lost the client. I have no regrets.
What’s happening here? There is more than one answer. The business of real estate is being changed radically via the internet and late night TV. The national and local professional organizations were blindsided by the speed of the change and worse, invited the foxes into the hen house. The real estate industry said: “Search the MLS online” and the consumer thought they did. Now we are trying to say “not exactly” but the damage is done. Then came the House Values followed by the Zillos of the world, all telling the consumer the same thing: “you are in control.” Add to the mix the “limited listing” brokers, Ebay®, craigslist and easy-money infomercials and my client’s demand for some of my income is only the logical conclusion.
A new breed: The “FSBO-Buyer”
There is another, more basic problem. If you “get what you pay for” then the buyer who is not paying is also not getting much. Case in point: Having found online a home she liked, a woman called me and asked me if she could see the property. She assumed that I was the listing agent and when I told her that I wasn’t she declined. I added the “you pay nothing for being represented as a buyer” part but she curtly ended the conversation with “yeah, I know the story.” She was saying “I am in control; I can do this myself.” Meet the “FSBO-Buyer.” Had our conversation continued she may have said “the price of the home includes the commission to be paid by the seller and, if I come without an agent, then I can negotiate a better deal.” “How is that?” I would have asked. “Because the purchase price could be reduced by the percentage of the commission that was going to my agent” could have been one of her possible answers.
As a real estate professional you know that the buyer has no influence over the contractual arrangement between the listing broker/agent and the seller. Unfortunately, some listing agents faced with this kind of FSBO-Buyer would confirm this buyer in the mistaken notion that she just “saved” herself some money by telling the seller that this will be an easy sale that justifies a minor reduction of the purchase price, while pocketing the entire contractually agreed-upon commission.
Short-term Gain vs Long-term Success
The marginalizing of the real estate professional began at home and it will take a concerted effort by the serious practitioners to reverse that trend. I am not advocating the return to the “good old days” which may have created the impression of monopolistic practices. I am calling for real estate professionals to consider the long-term-damage they are doing by misleading seller and buyers for short-term gain.
How do I know this is happening? I have a page on my website - GNAde.com - where visitors can download consumer publications such as the Washington Agency Law pamphlet*. The page has been ranking on page 1 of Google™ for some time for the term “Washington State Real Estate Law.” When web visitors contact me I tell them first what I state on the page. I am not an attorney and I am not providing legal services. What I can tell you from these calls is that most of the callers and email writers complain about real estate agents who have been less than helpful and some less than truthful. This plays into the hands of those named above who are trying to drive a wedge between the consumers and the real estate professionals. If they succeed we ALL will loose. All includes the consumer.
* Provided by the Washington Center for Real Estate Research at Washington State University
© 2006, Gerhard N Ade
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