Empowering the Buyer Consumer - Redfin November 24, 2006
You’ve got to get MAD! You have to say, “I’m a human being, God Dammit, my life has value!
I wish I could take that stupid smile off of my face on my “permanent” photo on the right. Just for this post. Then I can go back to being the perenially smiling postage stamp. But not today, not for this article.
I realized when Noah of Urban Digs commented this morning, that when I said I don’t read NYC blogs, his and Curbed and Christine’s, it’s not because they are about NYC. I read many other blogs that are about their local environs. It’s because “I’m as mad as hell” at NYC for not having Buyer Agency.
Truth is I’ve been mad since August 20th, 2006, when Christine commented to this post, comment #28 “A month a go or so, there was a debate that went from this blog to just about every blog from here to kingdom come, regarding “Buyer Agency”. I am a broker here in NYC and we don’t act in buyer agency. We are all one in the same - we represent the seller. Period. … We make them aware that we (brokers and agents) work for the seller. There are many times that we become a “dual agents” (meaning we are still working FOR the seller but the buyer is working WITH us as well).”
My mind automatically when to Howard Beale’s speech and I said, “As if that’s the way it’s SUPPOSED to be!” and for the love of Pete, for crissakes Christine…”We MAKE THEM AWARE?!?!” as if disclosure that they have NO RIGHTS and are NOT CLIENTS is A-OK as long as it is “disclosed”?!? And BTW - Dual Agency does NOT mean you “are still working FOR the seller!!” Where’s the “dual” in THAT!?
I apologize to the consumers out there for this rant, but I don’t apologize to the agents around the Country who are “tired of agency talk”. You CAN’T be tired of agency talk…because agency is what we DO! It is what we are all ABOUT! and WE need to “get it” or we need to get mad as hell until someone makes us get it and get it RIGHT!
And then we have Greg, and his Smackdown with Jeff and Russ, saying that WE look like aliens to NYC, as if WE who treat buyers as clients, have six toes on each foot when we take off our socks. And Russell spouting garbage about Redfin like “since x company has a proven record and Redfin does not” AS IF a company trying to empower buyers could possibly have a track record in a Country that after 15 years can’t even AGREE that buyers PAY their own WAY and “have value”!
And Jeff who says “Principle - When the universe in which you operate disagrees with you - it’s possible you might be mistaken”…to whom I say there once was a “principle” that some people should only sit in the back of the bus! Were those who perceived this to be WRONG…mistaken?!? because “the universe in which they operated disagreed!” for crissake!
And Russell who says”…my sellers are thrilled as we charge them less commission if there is no co-broke fee being paid…if we can find the buyer.” I’m not going to waste my breath or emotions on someone who doesn’t get that we don’t “FIND” buyers for sellers anymore, who says “co-broke fee” instead of buyer agent fee, and who doesn’t get that IF a buyer CHOOSES NOT to have his own agent, the SELLER does NOT profit anymore…the AGENT does not profit anymore…nor should they EVER HAVE!
If a buyer chooses to represent himself, in whole or in part, that should mean that the BUYER profits from that decision. Agents and Sellers simply should NOT profit, IF a buyer is unrepresented! How can lack of representation of a buyer, turn into a profit for the seller and the seller’s agent?
Stop and think about that everyone, Please! Go outside and stick your head out of the window and say, “I’m as mad as hell, and I’m not going to take it anymore”!
And don’t come around here to tell me real estate is local…because some things are just plain old right vs. wrong. And if the laws allow you to smoke and mirror a buyer to the point that the seller and/or the seller’s agent profits, as a result of a buyer being unrepresented, don’t bother coming around here to tell me you are “allowed” to do that by the laws of your state.
Go look up to what ever “higher power” you acknowledge, and ask How the Heck you were ever ALLOWED to do that and WHY!? “Oh goodie, we FOUND a buyer, and he didn’t scream like a pig when we told him he was being excluded from being represented…whoohoo…more money for us”. Just think about that…don’t point me to the law that allows you to do that…I know them. Don’t point me to the past, and show me where that comes from…I’ve been there done that. Don’t point to Redfin and say if they were right they would not be running at a loss…that’s BS.
Just treat buyer’s as clients, who pay their own way…just DO IT! Recognize that the Buyer Agent Fee is ALWAYS IN THE PRICE. Choose to recognize that the buyer IS the one paying for their representation, and they get to negotiate that amount, and they get to keep it if they choose NO representation, or at least reduce the price to exclude the buyer agent FEE, if there is NO buyer agent!
“I don’t want you to protest. I don’t want you to riot. I don’t want you to write to your congressman because I wouldn’t know what to tell you to write. I don’t know what to do about (it). All I know is first you’ve got to get mad. You’ve got to say, “I’m a human being. God Dammit, my (say as a buyer of real estate) has value.” So, I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window, open it, and stick your head out, and yell, “I’m as mad as hell, and I’m not going to take this anymore!” I want you to get up right now. Get up. Go to your windows, open your windows, and stick your head out, and yell, “I’m as mad as hell and I’m not going to take this anymore!” Things have got to change my friends. You’ve got to get mad. You’ve got to say, “I’m as mad as hell and I’m not going to take this anymore!” Then we’ll figure out what to do (next). But first get up out of your chairs, open your window, stick your head out and yell, “I’m as mad as hell and I’m not going to take this anymore!”
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- None Found
- Posted in : General Real Estate
- Author : ARDELL
Comments»
OK. Let me just speak my peace on this issue because it is one that MOST BUYERS do not fully understand!
First off, YES, most sellers price the commission into their asking price. This is not rocket science and as pissed as you may get as a buyer to hear this, trust me, when you go and sell you will do the same thing. We are human, and as such animals we are greedy and full of emotion.
Second, I completely wholeheartidly and with every ounce of emotion I have DISAGREE WITH THE STATEMENT…”I am a broker here in NYC and we don’t act in buyer agency. We are all one in the same - we represent the seller. Period. “..I’ve had this discussion with another broker in my office and stand by my thoughts.
I DONT CARE WHAT THE TEXTBOOLK OR LEGAL BOOK SAYS ABOUT THIS. AS A BUYER AGENT I REPRESENT MY BUYER CLIENT AND HAVE A FIDUCIARY RESPONSIBILITY TO ACTI IN MY CLIENTS BEST INTEREST AND GET THEM THE BEST PRICE POSSIBLE AND MAKE SURE THEY ARE EDUCATED ON EVERY ASPECT OF THE TRANSACTION. IN ESSENCE, I PROVIDE MY ‘2 CENTS’ ABOUT THE NEIGHBORHOOD, THE BUILDING, THE ASKING PRICE, THE APARTMENT, WHAT TO START OUT BIDDING, WHAT TO MAX OUT AT, AND HOW TO HANDLE SITUATIONS DURING THE BIDDING PROCESS.
This is how I do business. I provide a great service to my clients and work my a$$ off for them. I should get testimonials up to prove this but I like to keep UrbanDigs out of my personal business and let people decide for themselves to work with me. Im not a car salesman. I became a real estate agent because I was MAD AS HELL that I couldnt find someone with experience and knowledge to represent me. I had to learn for myself. Thats why I do my business this way.
If you want to twist it and say I work for the seller because I get paid by the seller, FINE, but ask my clients whether they think I worked for them and in their best interests. I always do!
Now, here is the problem. YES, most exclusive agreements for sellers have a trickle down commission structure; say 6% co-broke and 5% direct. There is NO problem with this as most sellers realize the most important fundamental to real estate: THAT BUYERS DICTATE MARKET PRICE, NOT BROKERS!
Offering 6% to the brokerage community flat out gets you the most traffic and interest. There is no debating this. YES, a buyer could possibly save money by going direct with the seller broker, but WHY? They are not being represented. They are not being guided by a third party. Rather they are being treated as a BONUS for the seller broker who if gets a deal done will get a higher commission split!
If I was a buyer I would at least realize that I should be represented by someone with experience and knowledge about the hundreds of thousands of dollars Im about to plunk down, and not by someone hired to sell a certain property! GET IT! If its not written in books than its a matter of ethics and you need to decide for yourself what the right thing to do is.
Buyers, trust me, get a broker to represent you and do your research to find one that is educated, ethical, and patient! You dont want someone who needs a check next month! Be smart! You’ll end up making a much better investment if you do this!
Good job. Amen. Larry
> And then we have Greg, and his Smackdown with Jeff and Russ, saying that WE look like aliens to NYC, as if WE who treat buyers as clients, have six toes on each foot when we take off our socks.
I said nothing of the sort, Ardell. Honest bloggers quote:
Here is what I said:
“Whenever we talk about Dual Agency, the most fascinating remarks to me come from Christine Forgione at NY Houses 4 Sale. Because they’re still working from sub-agency, we look like aliens to each other.”
This was in a post completely tangental to the main debate.
You’re complaining about people not talking about agency by maligning the weblog that talks about agency more than other weblog on the net.
And: I invited you to weight in as a full participant in that debate.
This was cheap, Ardell. Your argument is reasonable. You methods are not.
In Florida, we have “Transaction” Brokers when a broker represents both seller and buyer and all agents in Florida are “assumed” to be transaction brokers unless single agency is established. Transaction brokers provides for limited fiduciary responsibility to both seller and buyer and must represent both seller and buyer in a fair and honest manner. An agent is a middle man, just there to facilitate the deal. When working with a buyer, I prefer to establish Single Agency. In that way I have full fiduciary responsibility to the buyer. If, for some reason that buyer decides he likes one of my listings or one of my broker’s listings as his/her choice, then we transition to a transaction broker to facilitate the deal. I’m not “mad as hell” because I think this is a fair and equitable solution to agency.
There’s no problem with the full commisson, both sides, being in the price. As long as everyone knows that the Buyer Agent Fee is in there. House is $500,000 of which $15,000 is “the buyer agent’s fee”. No buyer agent, price is $485,000 instead of $500,000. Not Oh good, buyer is unrepresented, so seller’s agent gets to keep the $15,000 on forfeit.
Noah, I hear ya. But I still find it hard to believe that the law says all agents represent sellers. Are you saying you basically “break the law” by operating as you do? Are there no buyer agency agreements there? No way for a buyer to be represented? If not; why not?
Nicki, I was there in Florida the day they outlawed Dual Agency and brought in Transaction Brokerage. You can choose Full Fiduciary duties or Transaction Broker, but the fee doesn’t get reduced for the lesser representation…does it? That was about ten years ago. The fact that no other state has copied Florida is a clue. Not criticizing you personally, just how it is there. It was a good try, really it was. But you may be seeing some changes there yet, from what I hear.
Greg, I haven’t a clue what you are talking about. If I don’t parody you word for word, you get personally offended. This is not the first time this has happened. We agree up to a point. At that point, where we disagree, you choose to take it personally. I wish you didn’t, because we both like to talk about these things. We just can’t seem to talk to each other about them without your ending up personally offended.
Hello all and Happy Holidays.
First - let me start with Noah - You said “DISAGREE WITH THE STATEMENT…”I am a broker here in NYC and we don’t act in buyer agency. We are all one in the same - we represent the seller. Period. “..I’ve had this discussion with another broker in my office and stand by my thoughts”. So are you saying that you have your buyers sign an agency disclosure that you are working for them? If you have a listing that you are doing an open house, if you do them - how do you handle the buyers that come in? What do you do when a buyer makes an offer on a listing of yours? How do you work it? I Have never - in all my years of Real Estate ever had a buyer sign a agreement with me. The buyers would run scared. Don’t tell me that when you have a listing - that you are low balling offers to your sellers? What do you say when a buyer asks “what’s the bottom line”? Don’t say that you disagree with my statement when its merely a statement - it does not mean that I think it is right or I agree with how things are ran here - it is what it is. Do I agree? NO. But for the sake of DOS - This is the way I have to operate, I have to disclose to my buyers that I work (even if it is NOT a listing of mine) for the sellers. I can help the buyers make a reasonable offer, I can help the buyers obtain an inspector and I can help them find a mortgage broker/banker and an attorney. BUT - I still in the end - work for the sellers, if I don’t have a buyer agency signed, which I have never have had.
Ardell - I see your point 100%, but like I said to Noah - it is what it is here and the buyers - believe what you want - don’t want a buyer agent. They do so much searching on the internet that honestly - right now, the buyers that I am working with are from a previous open house or a listing that was advertised on the internet. They have gained trust in me - but I can never lead them to believe that I work for them - unless the buyers and myself have agreed to this. To add insult to injury - if and I mean IF I did have a buyer sign a buyer agency with me.. I can guarantee that I wont be getting paid. The buyers here would NOT agree to pay 1% or $1.00 for an agent. Trust me when I tell ya.
These are not my rules, they are not my office rules - these are rules from the DOS. It sucks yes - but this is what we have to work with.
Let me put it to you this way.. If I called 5 out of my 10 buyers right now and told them, “listen, you know that I am currently working for the sellers, because you and I do not have an agreement signed. If you would like for you and I to have a client/agent relationship, then we have to sign an agreement stating our relationship and then I would be your agent. I would bet you $100.00 that the first words outta their mouths would be - NO. Not even understanding why or what this means to them for or against them. Then to add the extra topping to the cake - I would have to explain to them that because of this agreement now - I won’t be getting paid from the listing agent. So, we (the buyers and I) would have to work out a fee. They at that moment - would change their phone number.
Sorry you are pissed off at NYC but - we still have the best pizza..
NYC Realtors, I brought my daughters to NYC this summer for fun and we loved it. Their favorite part: The subway system.
Here’s the ethical dilemma: How can you be a loyal servant for two masters? Answer: You can’t. Buyers often do not fully understand complex agency law because they are so emotionally invested in the outcome of the transaction.
Real estate transactions are complex. Real estate agents arguably know alot more than the average, random consumer. That’s why consumers pay you what you’re paid: To be their warrior.
I see it from this angle: A couple comes to see their friend, a divorce attorney, for help with their divorce. The couple is parting amicably. Everything starts out fine but, well, you know how things can easily go south fast. I believe an attorney has an ethical duty to only represent one of them and refer the other spouse to another law firm.
If dual agency goes away, real estate agents could not sell homes listed with their broker, they would have to refer them out to another brokerage firm. Reciprocal referrals would be assumed.
Economics drives morality. We have dual agency for many reasons, the first of which is profits.
So then what would an ideal structure look like?
The Mortgage Professor wrote about this a couple of weeks ago on Inman.com. He recommended that lenders agree to add the buyer’s agent commission to the loan amount so that it could be financed. His argument was that it was being financed anyways because it’s part of the purchase price.
Christine,
I totally get it. I worked Bucks County for many years. Your longer explanation makes more sense. But tell me. Why do you think you wouldn’t get paid as a Buyer Agent? You simply withdraw the “co-op” and replace it with the buyer agent fee being paid inside the transaction simultaneously.
Thanks for explaining further. So it IS possible for a buyer to be represented. You simply have a “default” position of all agents represent sellers “unless” the buyer signs an agreement. That’s OK, not as good as WA, but OK.
I just don’t understand why you wouldn’t get the same fee as a buyer’s agent, that you would as a sub agent. It’s still financed either way. If you are a buyer’s agent, does the listing agent keep all 6% or 5% or whatever the total is? He takes half if you are a sub-agent, but all of it if you are a buyer’s agent? Do you do that if you are the listing agent? Isn’t that negotiable?
BTW,
Doesn’t everyone just LOVE that recorded speech? I played it for all of my daughters this morning. I think I’ll listen to it again, I get such a kick out of it.
> I haven’t a clue what you are talking about.
I believe you.
> If I don’t parody you word for word, you get personally offended.
I’m not offended, I’m annoyed. You mischaracterized what I had said, implying that I endorse sub-agency, when the exact opposite is true. I don’t believe you are careful enough to have done this deliberately, but I have to defend myself from it anyway. You can spare yourself and everyone else a lot of trouble by quoting the text you think you are objecting to. This is the transparent way of engaging in debate in the weblog world.
Jillyane,
The majority of the states have Designated Agency so that Dual Agency only exists if John Doe AGENT sells HIS listing, not another listing in the company. Buyer is represented, seller is represented, works fairly well. Why CA and NY haven’t picked up on it yet, I don’t know.
No representation is a consumer right as well. But when a seller chooses to be not represented, he doesn’t pay for it. What is happening in this Country all too often is that when buyers make this SAME choice to not be represented…the seller’s agent keeps that fee and gets double as a result. OR the seller keeps that fee in the price and he gets the money.
Buyers need to understand that the fee is built into the price, and be given the option to hire an agent with it…or keep it, one or the other. Ignorance is not bliss.
Greg,
I did not “imply” that you support sub-agency. You read that into it. Who the heck would believe that Greg Swann supports sub-agency? That’s a freakin’ oxymoron. How can you be sure sure…if it was “implied” and not “said”??
What I DID imply is that you pussy-footed around the issue, as if different states have the right to different ways. That some place with no buyer agency is “just different” and that’s OK. THAT is what I implied, and what I GOT, from what I quoted or misquoted
P.S. I’d love to “cut and paste” it to avoid any conflict, but am told that is a “no-no” in the blog world and will create problems for Dustin for “plagerism” of sorts. I do the best I can without cut and pasting for that reason. I’m not being “cheap”…I’m being careful not to blackball RCG in the search engines.
It was a word or too off, but what I was trying to “imply” is that you seem to think that if another state permits sub-agency, then agents there are OK to just go along with that.
> And then we have Greg, and his Smackdown with Jeff and Russ, saying that WE look like aliens to NYC, as if WE who treat buyers as clients, have six toes on each foot when we take off our socks.
I said nothing of the sort, nor any of the other nonsense you attempt to attribute to me.
Fair use quotation is neither plagiarism nor duplicate content. It’s the way things are done in weblogging. Had you quoted me, you would have spared us both this imbroglio, as you would have said, “But wait, he didn’t say that…”
Greg,
If you have something to say on the topic, great. Otherwise, I’m not going to split hairs with you. What you said meant that to me…we are all subject to how the reader “takes” what we say. That’s my take. You can’t WILL everyone to take it the way you meant it to be taken. Sometimes I think you want to be contrary for contrariness sake, or to follow the advice of those who suggest starting “blog wars” to gain attention. I read that somewhere today…”start a blog war…get your stats up” Just an aside.
In any case…you are splitting hairs. You DID say WE look like aliens to them…you simply also said that they look like aliens to us as well. They are the alients we are not…get it straight
Greg,
I never even quoted you, I just went back and read it. How can you say I didn’t “quote” you right? I linked to your whole thread and didn;t “quote” you at all. Jeez. I stand by my original thoughts on this…which were MY thoughts and not a quote. My thoughts are not subject to your “edit”. You can disagree with me or attempt to change my opinion. But I’d suggest you just “get over it”.
> Sometimes I think you want to be contrary for contrariness sake, or to follow the advice of those who suggest starting “blog wars” to gain attention. I read that somewhere today…”start a blog war…get your stats up” Just an aside.
And I don’t pull those stunts, either, but you’ve just sideswiped me with that accusation, too — just as an aside.
For my own part: I don’t think you succeed in making yourself look better by trying to make other people look bad. I should think I’m a particularly bad target for that kind of game.
The last word is yours.
Greg,
Funny thing is, you and I are two of the few who actually, primarily agree on this topic. It’s a shame you take a 15 paragraph post that mentions your name once, and turn it into some kind of personal attack. If anyone should be complaining…it’s Russell, or even Christine who took it REALLY well, given her comments on both your and my articles were the ones “in question”. Never expected you to take it so sideways. It wasn’t about you…but it’s turning out to be somehow. Not sure why that is.
Ardell -
“I just don’t understand why you wouldn’t get the same fee as a buyer’s agent, that you would as a sub agent. It’s still financed either way. If you are a buyer’s agent, does the listing agent keep all 6% or 5% or whatever the total is? He takes half if you are a sub-agent, but all of it if you are a buyer’s agent? Do you do that if you are the listing agent? Isn’t that negotiable?”
As the listing agent, you can set up a buyer agent commission. It is to the discretion of the agent - when it really should be up to the seller, in my opinion. IF the listing agent puts a 0% in the buyer agent commission then it is up to the buyer agent to get compensated from their buyer. When this happens, yes, the listing agent keeps the whole 4-5% commission. I have on occassion seen an agent do the structure with a buyer agent getting paid by the Listing side. Sellers should most definatley have a say in this - but they don’t understand, they just know that they are paying whatever to whomever and most listing agents do NOT explain this to their sellers.. (Don’t ask why, I have no idea).
On my listings - yes, I do offer a buyer agent a commission. My broker hates that - but I do it. I also split 50/50 on all commissions, whereas MOST agents here don’t do that. THAT infuriates me, but again it is what it is - and I am not going to NOT show a property when I know it is right for my buyers because the listing agent is a jerk. I do what I have to do and I just show.
I just looked now on my MLS and in my area of Whitestone, Queens NY - out of 7 new/price change listings - the buyer agent gets 0%! There is ONE listing that is offering 1% as a buyer agent. Amazing isn’t it?
“Sellers should most definatley have a say in this - but they don’t understand, they just know that they are paying whatever to whomever and most listing agents do NOT explain this to their sellers.. (Don’t ask why, I have no idea).”
My take on this is that we, as the experts, are the ones who are supposed to know how best to market the listing. If we allowed the seller to dictate how much we offer as a split (which is a part of the marketing involved), then why wouldn’t we also ask how big the ad in the newspaper should be, or how much they would like us to budget for other advertising for their property?
On a slightly different note:
Thank goodness I don’t deal with residential much, but in the commercial world (as well as business brokering) there are plenty of agents and brokers that selfishly guard their listings. There is no predominant commercial MLS (not to say they don’t exist).
My broker has no issue with splitting with an outside broker — we would be happy if someone else came and sold every one of our listings. What kind of service would we do our selling clients if we did not cooperate with outside brokers? And yet that’s what several other agents and brokers do.
We just use it as part of our sales pitch. You can go with the guys that only care about keeping the whole commission, or you can go with us and have maximum exposure for your listing.
Christine,
Again, I totally “get it” because that is what happened in 1994 or so, when buyer agency was first introduced where I was in Bucks County, PA. I am not amazed at the structure. I’m amazed that it stopped there and didn’t progress.
In a lot of ways, Christine, you make me feel a lot better. I realize how good we really have it here. Probably the closest system to one that treats buyers and sellers fairly equally. We have designated agency…kind of “love the one you’re with” on an individual basis. I can represent a buyer and someone else in the office represent the seller. We have buyer representation as the default, without contract needed, representation at first contact for the most part.
While not everyone “operates” as I would like, the laws support the best life has to offer, as far as I can tell here in WA. So I’m not “mad as hell” anymore.
Truth is…the reason NY would make me mad, is because New Yorkers came “over the bridge” and demanded buyer representation in Bucks County. We “got it” and you didn’t. Same with 3 day attorney review period. But we didn’t go the way of the “lawyer needed for every sale”. Consumers did not demand that. It must have been the strength of the Bar Association in NY, that created that.
I have to say watching Richard Dreyfuss on Bill Maher last week is partly responsible for my getting so “riled up”. He made me realize how very much the ball is in our court to keep this Country on track with regard to the rights and options of the people. I’ll mellow out soon
Nathan,
Once in a while Russ Cofano asks me why it maters whether or not we have “statutory duties” or “full fiduciary duties”. Thanks for reminding me why it matters. Keeping the affect our decisions will have on our clients as the only thought process, is what I call “fiduciary”.
I have always viewed the total commission as two different amounts with two different functions. One of the reasons I hate when people quote it as 5% or 6% instead of 3/3 or 2/3.
I never expect the commercial markets to operate the same as residential markets. For the most part, they are not even subject to the same rules (RESPA) and general protections afforded the residential market. That’s why I don’t like agents who “crossover” and apply commercial mentality to the residential market. It’s harder for me to train agents, who started in commercial, to put the client first and to think like a buyer or seller of a “home”.
Oh boy, the “Buyer pays for his own representation” is a bad idea. I’m surprised Ardell keeps pushing it (probably feels guilty getting a commission as a buyer’s agent).
If people had to pay their own buyer’s agents, there would be NO buyers agents…they’d go out of business. People won’t do it. Why should they, they have the “free” MLS search to which they feel entitled (and for which buyer’s agents pay to have it on their website). They’ll just find the homes themselves online, and make offers. Most people don’t value some agent’s advice…it only takes several minutes to give so they see no value to it.
What will happen, is since it would be virtually impossible to make it as a buyer’s agent, most realtors would revert to doing listings only, and we’d be back to the old system. But now, since so many buyer’s would be unrepresented, the listing agent would have to again make 4-6% to work both sides of the deal, just like it was many years ago.
The way things stand right now, sellers don’t pay buyer’s agents, neither do buyers. The listing agent does! They get a certain commission and choose a portion of it to offer buyer’s agents for help. It’s like a bribe, or a bounty, if you will. Works perfectly. Now you have several thousand agents scrambling to show your property, nagging their clients to see it.
I don’t see what the problem is anyway. It’s a great system and works well. The problem is with buyer’s agents who don’t take their job seriously!
Will somebody please GET that the buyer already does pay their own agent now!! Sheesh!
What’s so great about Redfin? They :get” THAT!!!
Jim, thanks for the “explanation”, but it’s a fairy tale you have hard one too many times.
“I never expect the commercial markets to operate the same as residential markets. For the most part, they are not even subject to the same rules (RESPA) and general protections afforded the residential market. That’s why I don’t like agents who “crossover” and apply commercial mentality to the residential market.” — Ardell
I agree with you completely. It’s also nice to hear a residential agent sound serious about keeping the commercial and residential sides separate.
In the two years I have been practicing, I have done exactly two residential transactions: one for my girlfriend, and one for a very good client that asked me to represent them. I prefer to refer the residential business to agents I know that have been doing it for 20 years.
That being said, I still stand by my previous statement of how splits should be determined by the listing broker/agent and not by the client (regardless of whether it is a residential listing or commercial listing). If the broker/agent is fufilling his fidicuary duty to his client, then he will keep an eye on the prevailing rate for buyer’s agents and use that as a minimum for the split offer. Maybe he will even want to offer a higher than market rate, just to get some good action on the listing.
We can’t have anyone central (i.e., the Realtor Association) tell us how much the split should be — that’s called “price fixing”.
Although, all of this doesn’t mean that the client can’t ask how the split will be handled and decide to go with a different broker if he/she doesn’t like the answer.
Maybe I’m just confusing the issue and should just watch from the sidelines, rather than throwing in my 2 cents.
Nathan: “We can’t have anyone central…tell us how much the split should be…” “…this doesn’t mean that the client can’t ask…”
I always have a problem with the client NEEDING TO ASK to get the info they need. What if they don’t know to ask the right questions? Puts the client with the highest need for transparency, at the greatest disadvantage…not good.
While I agree that local authorities can’t dictate what the split should be, I do think EVERY authority should require that the client sign the “split” that is going to show in the mls. The offering dramatically affects the client, and the amount of the offering should not be hidden from their view, nor should it be unilaterally determined by the agent without the client’s knowledge and consent.
Nothing that affects the consumer to this degree should exclude them from the decision making process. If they want to offer 1% in a market that generally offers at least 2%, it is our duty to advise them of the potential negatives. But ultimately, and clearly, it is their choice and not ours.
I totally “get” where you are coming from, and you are not confusing the issue to put in your $.02. In fact, it is very good for seller readers to see that some agents and brokers operate this way, so they know that they may HAVE TO ASK, to get this very important info.
In that regard, your comments are very much appreciated, even though we do not agree. Transparency is good…hiding facts from consumers is bad.
Ardell,
There won’t be to many offers today in the real estate business up here in Bellingham, WA. It’s just after 2pm up here and I just checked my front yard for yard for the amount of snow…12 inches and growing. It is really snowing hard up here. Those buyers and sellers are going to have to wait a few days…I’m not kidding it is really snowing hard up here…wow. Funny little post if you want to read it. http://www.bellinghamwahomes.com/blogs/jerry_campbell/default.aspx Just your friendly weather man/ Realtor here.
Ps…I love representing buyers. Folks…remember it takes a willing buyer to give all that money to a willing seller inorder to make a transaction. If it wasn’t for buyer’s that are willing to say “hey Mr seller, I agree…your house is worth this much. here’s $500,000″ Don’t spend it all in one place now. Sure the Seller sets the comish…but it’s the buyer that agrees that the “Price is Right”. Thats called a “Market Value”. So id argue that the buyer and seller are already equally in the game of paying for the professional Realtor costs.
I first had my real estate license in 1980…the days of one or two pages on a typical real estate license. The days when…yes we only represented the Seller. I’m glad those days are long long gone around here. That was wrong to not have representation for buyers as well. We have a good situation for the real estate transaction now. And, don’t even get me going on the thought of dual agency…it’s just a matter of being up front, being ETHICAL, and protecting each sides negotiating ideas and financial aspects. Dual agency is a challenge…but as professionals we can do a good job for both sides. Just be honest and protect both sides.
Ok off my soap box and back to shoveling snow…lol “Its a Winter Wonder land out there after all”
Jerry,
You are so absolutely dead on right! I have one in escrow that sold at “market value” the other day…that price at which neither party is exceedingly happy. Lowest the seller would go and highest buyer would go. That’s why I say the market is fairly balanced right now.
But that’s pretty much EVERY November, for as far back as I can remember. I expect Spring to be the same as last year as well. More multiple bids on certain properties. Still hard to sell an ugly on a busy road or a difficult floor plan.
The only truly confusing market I saw, was as a seller in 1989 before I got into the biz. There really aren’t as many surprises out there as people think there are. I remember once I learned this crazy business from the inside, it was like a major light bulb went on. That was 16 years ago and the light bulb hasn’t burnt out yet
It’s snowing at my house now.
Anna and Sasha are missing the cold weather!
We spent the weekend at the beach! LOL!
Christine,
Did you read my post? No, I NEVER had any client sign a buyer agency agreement. There is no loyalty as a buyer broker between agent and client. The buyer can do whatever they want.
However, when I have buyer clients, I work FOR THEM! Not for the seller. I try to find the best property that meets their needs, within their budget, with my thoughts on the property itself, the neighborhood, its asking price, and how to bid based on current market value.
I do NOT disclose that I work for the seller, because I have absolutely NO CONTACT with the seller at all. I have contact with their hired broker who the seller agreed to pay a 6% commission to. If I get my client the property at a price that they agree to, then its clear that I worked for them on this deal.
Jim said it best: “The way things stand right now, sellers don’t pay buyer’s agents, neither do buyers. The listing agent does! They get a certain commission and choose a portion of it to offer buyer’s agents for help. It’s like a bribe, or a bounty, if you will. Works perfectly. Now you have several thousand agents scrambling to show your property, nagging their clients to see it.”
I look at the seller broker splitting their commission to the buyer broker for bringing the deal to the table.
You said: If you have a listing that you are doing an open house, if you do them - how do you handle the buyers that come in? What do you do when a buyer makes an offer on a listing of yours? How do you work it?
My Answer: I do my best to SELL the property! If Im successful, and they submit a bid, I submit it! If they are on their own or with a boker. I do not discriminate either way as my responsibility is to my seller in this case and to get the highest and best price possible. I only had 1 direct deal in my days as a broker and I think I actually did disclose to this client that I was hired by the seller. In fact, they low-balled, refused to go higher and my seller accepted. I tried to get the buyer up, but it didnt work. It was all they could afford. Honestly, I didnt expect a deal to get done.
Also, Ive had buyers come into my exclusives and request information from me, which I provided to them. Does this mean I work for them now? No it doesnt. Im tryint to get my client a deal.
I just dont see the big hassle in this process. Buyers should have representation whether they sign an agreement or not.
Noah - I hate to beat a dead horse. Seeing as you are my neighbor - I want to understand what you are saying. You start off by saying ” I NEVER had any client sign a buyer agency agreement. There is no loyalty as a buyer broker between agent and client. The buyer can do whatever they want.” You have me here. BUT where you lose me is this statement: “I do NOT disclose that I work for the seller, because I have absolutely NO CONTACT with the seller at all. I have contact with their hired broker who the seller agreed to pay a 6% commission to. If I get my client the property at a price that they agree to, then its clear that I worked for them on this deal”.
Granted - you may not know the seller, the buyer could be your best friend, your sister or your mother for that matter. Bottom line DOS says you work for the seller if you do not have established a buyer broker agreement. Just like a listing agent would have an agreement signed laying out the specific duties. A buyer agent would need to do the same. Just because a buyer walks into your office or calls you from your blog - does not make that your client. They are your customers and only your customers unless you have a BUYER agreement signed.
Christine,
Does the DOS say that buyer agency can ONLY be established via a WRITTEN contract? Can’t it be a verbal agreement or implied agency? Does it say unless you have a written agreement with someone else, a licensee by default represents the seller? Also, if there are 3 offers, two from “sub-agents” and one from a “buyer’s agent”, do you think there is any negative attached to the one from the “buyer’s agent” from the seller’s camp?
Again, to Seattle readers…this does not apply here. We have buyer agency without written contract, by our State Laws.
The agency can not be implied. Who implied what? Is it the agent that is implying that they work for the buyer? Or did the buyer imply/THINK that the agent was working for them? Who implied and how do you prove it?
Verbal agreements - well not that I can imagine. Thats another - one word against another. How do you prove it?
Written Would be the best. You must have the agency disclosure http://www.dos.state.ny.us/lcns/pdfs/1565.pdf filled out from the first contact. If you read it - it spells out who the agent is working for - The seller, the buyer or both. If this is done on intial contact then there would be no implying, no word of mouth it would be suffice as written.
The DOS requires that the buyers sign an agency disclosure at intial contact. There should not be any implied agency ever. How would implied agency be proved? It has to be made known from first contact who works for who -the buyer,the seller or both.
As for your other question - I actually can not answer that. I have never recieved an offer from a buyer agent. BUT, if I did - I dont think on my end it would make a difference -
Well Noah?? Do you blame me for being THAT MAD at a Major City in this Country where an agent can say that she hasn’t even SEEN an offer from a Buyer’s Agent by 2006!?!?
I stand by my post, and someone needs to get as mad as Howard out there and fix this.
It’s not that I never hear or see this. I know a guy in some podunk town in PA, away from a “big city” who only handles historic homes, who operates this way. I can see his point, as he knows the quirks of really old houses and doesn’t promote other agents selling them who don’t know as much about these really old houses.
But really…NYC? You definitely oughta be better than that, and “There Oughta Be a Law”, by this time. Where’s Richard Dreyfuss when you need him! Maybe Seinfeld! Someone needs to get mad about this. Someone who can make a difference. This is soooo antiquated. Isn’t anyone proposing Designated Agency? A law “in the works” at least?
Christine,
OK, right, they are my customers. But in my mind I treat them as a client, and the services I provide for them are as if they are my client.
Thats all that matters in my mind, the real deal, the actions that are provided. If the DOS says I work for the seller, fine, than I am doing a very poor job for the seller as my true intentions are to represent my buyer customers.
Is this better? Forget semantics, you know the point I am trying to make here.
It WOULD be great if you could indeed wipe off “..that stupid smile on your face” (your words). You take cheap shots at Redfin yet appear to champion the very cause that Redfin offers to buyers - choice and empowering the consumer. Seems like a lot of consumers like Redfin for those reasons- I can understand why self-serving, self-important real estate agents/windbags don’t.
Not sure what you are referring to, Mark. I’m going to let this comment stand, though the last line is obviously a personal attack. I’ll give you a chance to respond intelligently and on point. Where’s “the cheap shot”? If not, I’ll delete both this comment and yours if you are just “trolling by”…your choice. Keep the personal attacks out of it, and I’d be glad to respond to your “concerns”.
Cheap shot illustrations for the painfully-obvious-challenged >> Start by looking at this post’s title…and your so thoughtful sharing of “why you like Redfin” previoiusly, etc. etc…. Perhaps you made this issue PPP..personal from the beginning.
Maybe readers aren’t as interested in what YOU think - but it’s your blog so blab/blog on - I’m turning the channel -sorry for the distraction.
Thanks for stopping back Mark. That wasn’t what I expected at all.
I have to admit that from a “passing through” perspective, the post title is not “self explanatory”. But I would think most people understand that Redfin, to the best of my knowledge, is the only company that recognizes the buyer’s role in the real estate transaction. They are the only company that doesn’t act as if the fee paid to the Buyer Agent, is none of the buyer’s business. Maybe not the ONLY one, but clearly the one saying it loud enough to start making a difference in the way agents think about this issue.
Those who “like” Redfin, as you state, are the ones who have already gotten “mad as hell” and refused to be ignored regarding their role in the transaction…hence the subject of the article “Empowering the Buyer Consumer - Redfin”. I acknowledge that they do “empower the buyer consumer”. Where’s the “cheap shot”?
I thought maybe “the cheap shot” was in the For Sale By Owner post, which had nothing to do with buyers. I felt badly, but in being honest, said nothing that Redfin themselves have not said. They are less tried and tested on the listing side than the buyer side, just fact at this point in time.
On the one hand, we (agents generally) are criticized for being “cheeleaders” if we only say superlative things about the market. On the other hand, are you asking us to BE cheerleaders, at all times, regarding Redfin or Zillow? Not fair. Everything has its pros and cons.
But since you are just trolling by…no sense in going any further on this one.
I’m just spellbound by these discussions over buyer representation. Almost as baffled as the California Association of Realtors was back in, oh, I’m not sure I recall the exact year — maybe it was 1982 or ‘83 — when I wrote letter in support of operating as a buyer’s broker. Because that’s how I ran my brokerage and conducted business, as a buyer’s broker. In California.
Even today, my buyers sign agency with me, except now I represent them exclusively. Nobody complains. OK, one guy did but I didn’t work with him.
I look forward to the day when sellers sign exclusive listings that do not allow for dual agency. But for now, buyers can still choose in California. The smart buyers know enough to ask for a price reduction or credit if they are unrepresented, but the really smart buyers realize that by hiring a top-notch agent with superior negotiating skills, they are saving money by hiring a broker.
The real question isn’t whether services or prices are discounted, it’s whether sellers and buyers are getting their money’s worth — are they getting what they are indirectly or directly paying for? Because every single real estate in CA has the ability to operate as an buyer’s broker if that agent so chooses.
Elizabeth,
I remember polling some people in California and they all seemed to “operate” and think, as if they had “Designated Agency”. In other words, if their agent was not the listing agent, they were OK with that, and felt that their agent was representing them and the other agent was representing the seller. For the most part, that is how everyone acted in the marketplace also.
There were those who wanted to deal with the listing agent direct and work part of the commission into the transaction. I don’t think anyone can force “no dual agency” for that reason. Some buyers want dual agency, many want to call the listing agent. I don’t think we can make laws that tell the consumer they can’t do that.
Much like Noah, where the laws haven’t caught up with his ethics. The marketplace acts as it should, and waits for the laws to catch up sometimes.
Ardell,
I agree with your assessment that the marketplace will eventually dictate the laws. Now, I don’t know what you are seeing in WA, but in CA, I foresee a time down the road, maybe within the next 10 years, when sellers will hire a listing agent and not offer a commission to a selling agent at all, and that will become the norm in the West.
When that does happen, and I think it will, I just don’t have a crystal ball to say when, then you will see an increase of brokers using Exclusive Right to Represent buyer’s broker agreements. The forms I used in the 1980s called for the sales price to be reduced by the amount of the selling agent’s commission and that amount was then credited to the buyer for direct payment of the commission. It was clean. It was simple. It avoided sub-agency, and I received a lot of heat for operating in that manner from C.A.R.
In addition, it removed all the complaining from competing brokerages over the listing commissions. Nowadays, the agency agreement I use says if the listing broker doesn’t offer enough compensation to meet my minimum commission requirements, the buyer will pay, at my sole discretion, the difference. At first blush, an agent may back away from using such an agreement, exclaiming, “What buyer in her right mind would sign such a thing?” But they will and they do.
BTW, lovely blog.
[...] I’m coming around more and more to Ardell’s line of thinking. Forget the quest to protect the almighty real estate commission. Let’s talk about what is right by your client, the client whose fiduciary interests you are supposed to protect. [...]