1 Penny Buyer Agent Co-op! It is here!!

By
Real Estate Broker/Owner with Northern Virginia Homes - FRANKLY REAL ESTATE Inc

I called it about a year ago (still searching for the email). It finally happened. I stumbled upon a 1 penny buyer agent co-op fee!!

Yep, it came from For Sale By Owner service  www.iggyshouse.com (iggys house and iggyshouse for search engine purposes)

The listing ID is AR6381069 in Arlington Virginia

I'll keep everyone posted on how well they do. First indications show that they are $40,000 overpriced for a $570,000 townhouse. And with the $15,000 "savings" in Realtor fees, that could net them $65,000 more! Who needs staging if you can just do this!

Realtors enjoy!

 

This doesn't effect those Realtors that have buyer agency agreements (Exclusive Buyer Agency Contracts. Don't Sign Them... Yet.)

 You can read more about Flat fee MLS services on my other blog at Go FSBO! Save $20,000! Realtor Tells All!!

 

Written by Frank

 

p.s. Make sure to Rate this posting a 5, I want to see more feedback from across the US on this. 

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Rainer
225,272
James Gordon
Sibcy Cline Realtors® - Cincinnati, OH
REALTOR, PBD SFR SRS

Someone will wright an offer and not look at the coop until they try to split it with their broker

Apr 22, 2007 05:11 AM #4
Rainmaker
138,124
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

No, the listing agent usually is a $300 flat fee service. Paid regardless.

As for not showing the listing, the Realtor is obligated to. That is why they need a contract that states what you get paid up front, regardless of the offered compensation. 

Apr 22, 2007 05:19 AM #5
Rainmaker
138,124
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

Hey Bob,

The point is to get on the MLS and they know that MANY buyers will do searches on their own. The old days of a Realtor searching daily for their clients is gone. So the seller figures the BUYER will pull the agent along! 

And James, how do you split 1 penny! Ha. What you should do is help the buyer, and then at closing sue the listing company for not supplying their 1 penny compensation. 

 

Frank Borges LL0SA- Virginia Broker/ Owner FranklyRealty.com

Blog.FranklyRealty.com Featured in BusinessWeek, CNBC, WSJ etc.

                      

Graphic signatures and links are ok on my blog comments. 

 

Apr 22, 2007 05:22 AM #6
Rainmaker
128,073
Tchaka Owen
Galleria International Realty - Hollywood, FL

Frank, at this point in time I'm less worried about the 3% and more concerned with the $40k overpricing.  This place flat out won't sell.  Where does Iggy get his comps from?

- Tchaka 

 

Apr 22, 2007 10:30 AM #7
Rainmaker
1,142,035
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
Frank I've seen these as well. One correction though. We are not obligated to show listings with a less than an acceptable co-broke. However, we are obligated to let our buyers know this in advance, assuming we are working in an agency capacity.  Of course the best way to handle this is to always work under a BBA. That way we can have the buyer ask the seller to pay us our commission as part of the purchase offer. 
Apr 22, 2007 12:02 PM #8
Rainmaker
138,124
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA
Tchaka, Iggy doesnt do comps. This is a flat fee listing. They just get paid to put it in the MLS. They are based out of Florida
Apr 22, 2007 02:04 PM #9
Rainmaker
138,124
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

Bryant,

Please explain, your comment perplexed me. Are you saying that be DEFAULT you can have a company wide policy to now show houses under a certain percentage? Or are you saying that after written approval from your clients, you can avoid certain homes? Of course you can disclose and bypass homes, but I dont think you can systematically bypass low coop fees, or even straight FSBOs 

Apr 22, 2007 02:07 PM #10
Rainmaker
1,142,035
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Frank, We are not obligated either legally or ethically to work for free of for a reduced co-broke. BUT we must make the buyer aware of this prior to creating an agency relationship. If you are working in a non agency capacity then even the disclosure is not necessary. This is why having a BBA is so important for the agent AND the buyer. I can certainly tell a buyer upfront that I will only show him properties that pay me a minimum of x% or I will only show MLS listings(or only my office listings  for that matter) whether I have a BBA or not. The buyer can then decide whether or not to use my services.

As a REALTOR(R) you can also call the listing broker PRIOR to showing the property and request a higher split. With a BBA the BUYER can request in the purchase offer that the SELLER increase your commission.    

Apr 23, 2007 01:20 AM #11
Rainmaker
138,124
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

Just so others don't get confused, you should have a buyer's agent agreement that says "I get paid x% (in this area it is 3%) and that will be paid to me regardless of what the seller is offering.

As for negotiating the commission, yes you have to go to the BROKER and NOT the listing agent. A listing agent NOR the seller has the legal right to alter the compensation in the MLS which is a broker to broker deal.

In Virginia an agent changed their commission from 3% to 2% in the contract to purchase. It was ratified. At closing the 2% was paid out. Then a month later the agent sued and retrieve the ENTIRE 3% again since it was a broker to broker transaction that can not be altered by non-brokers.

Apr 23, 2007 01:52 AM #12
Rainmaker
1,142,035
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Frank, I also want to reiterate that if you choose to negotiate the commission with the listing broker it must be done PRIOR to showing the property. A Realtor CAN NOT use the terms of a purchase offer to negotiate the commission. The commission has nothing to do with a purchase contract between the buyer and the seller. 

Good topic Frank

Apr 23, 2007 01:58 AM #13
Rainer
144,509
Gary J. Rocks
Juba Team Realty - Jefferson Township, NJ

Frank

In New Jersey we have to disclose if we are working as a Buyers, Sellers or a Transaction agent. The penny broker if the house ever gets an offer and if the agent were to write an offer he/she should write an addendum to the contract saying that both buyer and seller agree to pay X% commission to Selling Broker, if it gets signed then you have a written agreement.

Apr 23, 2007 04:33 AM #14
Rainmaker
138,124
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA
Nope, agents, buyers and seller can't negotiate commissions paid to buyer agents, only the Brokers can. At least in Virginia. Ask your broker.
Apr 23, 2007 06:25 AM #15
Rainmaker
1,142,035
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Gary, If you're a REALTOR(R) you also have this little dity to deal with:

Standard of Practice 16-16

    REALTORS®, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing broker's offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker's agreement to modify the offer of compensation. (Amended 1/04) 

As Frank, had pointed out, the commission agreement is between the Seller and his Broker(not agent) and the co-op is between the brokers via the MLS or any other agreement they may have.  

Apr 23, 2007 08:11 AM #16
Rainmaker
138,124
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA
Yeah! What he said!
Apr 23, 2007 09:07 AM #17
Anonymous
james timland
IggysHouse is NOT buy side realty. You have it all confused.
Iggys house you can list on the MLS for free, that is it. BuySideRealty is the one that makes the profit. 
May 01, 2007 01:23 AM #18
Rainmaker
138,124
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

Where did I say it was buyside realty? I'm confused.  

I thought Iggys house was $300, I guess not! It is free. But they do link to BuySideRealty. How can you "get paid when you buy" if you end up buying one of the 1 penny commission places?

Seems like they want it both ways. 

May 01, 2007 01:32 AM #19
Rainer
136,569
Terry Lynch
LAR Notary and Closing Services - Saint Clair Shores, MI
This is why more states need to pass minimum service legislation. How can these kinds of deals benefit anyone except the the one getting the $300?
May 01, 2007 07:17 AM #20
Rainmaker
138,124
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

What $300? It is FREE!

I disagree about minimum service legislation. Why? because there are too many sucky full price Realtors out there. Would this include them too? 

May 01, 2007 07:52 AM #21
Ambassador
1,892,934
Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News
So Frank I see the listing is under contract.  Are you going to contact the buyers agent and see if they were paid more than the penny? 
May 10, 2007 01:26 AM #22
Rainer
16,231
Ben Myers
The Broker Ben Group at Realty Idaho - Meridian, ID
CEO/Designated Broker

We have a flat fee listing service in my area that offers $1 co-op compensation with a disclaimer in the remarks saying that the listing is for "information purposes only, and to please include a compensation agreement with offers".  Just a way to skirt around the system we have in place requiring a co-op commission to be offered in order to be placed on our MLS.  You get what you pay for!

Jul 22, 2008 01:16 PM #23
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FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com

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