When talking of professionals, CPAs, lawyers and engineers, for example, all have to have a college education or more. When the real estate licensure requirements were set up, high school educations were rare enough and the laws much simpler. Contrast a one page sales contract of yesteryear with Pennsylvania's 18-page document and further addenda of today.
I agree that fee for service would be much more equitable. Receiving an enormous amount of commission on a successful sale that took no time at all just penalizes that seller, in order for him/her to compensate Realtors for all the free service and unsuccessful attempts that we make. The really sad thing is that most consumers look at us as being very like Macy's, where the clerks get a salary and browsing is encouraged because there is always the potential for an impulse buy. Perhaps Realtors should carry sunscreen, beach togs and mittens in the winter to enhance our income.
The whole industry needs modernization and change, if you ask me. It will come, if at all, long after I'm gone. None of the powerful want it to change and those who do have more efficient ideas lack cohesion and staying power. By the time you get staying power through income, you become part of the powerful, an endless loop of stagnation continues!
This is just another case of the Realtor giving away their services because they are too afraid to upset the applecart. Just think of what we give away: CMA's, merchandising ideas, access to mtg brokers that give free pre-approvals, not charging the landlord, on and on.
We are the reason why the public thinks the way they do about the Realtor community. How does an agent justify the fee that they charge when most of what they do is for free even before there is a listing agreement signed.
It is our fault. We brought this upon ourselves.
You cannot put yourself in a professional category (I love when agents compare themselves with lawyers, CPA's, doctors, etc.) when you give-it-away and especially because you are on commission.. Other professionals all charge a fee for everything and anything.
What is the value of a CMA, staging, transactional management, a phone call? Should Realtors charge a retainer? It is boundless. The problem is no one will take the first step.
If you want to be a professional then you must get out of the salepersons mindset. I can tell you my time and efforts are not for free. It starts with the Realtor community even by the simple answer to the question:
"Are you free?" Never answer yes. You should always respond' "No, but I am available."
Anyway, back to the question at hand. Starting in the near future I am making the plunge and charging Landlords.
I will keep everyone abreast of where it goes while I am competing with those of you, who are and will contiue to give it away.
On the rare occaision that I show rental properties I make two piles,
1) owner pays commission
2) tenant pays commision
I let the client make the descision and what usually follows is we throw the tenant pays commission in the trash and go see pile #1
I believe that the landlord should pay the commision. Most people that are renting have that grimace on their faces when they have to come up with first months rent and 1.5 month security.
When I take a rental listing, when confronted with a landlord that wants the tenant to pay the commission I explain my 2 pile procedure and that usually ends the discussion.
I will be listing my uncle's property for rent soon. I will urge him to make his property stand out and offer something to a potential tenant.
I bide my time and come through listings on my own, I email those listings that meet my criteria on my own, I set up times to view potential units on my own, and so far once I get to it, the brokers send someone on their behalf to show me the unit - this someone doesn't know anything about the unit and can't answer my questions - then, I negotiate the lease terms and rent on my own, the fill out the applications and pay application fees on my own. How can I not wonder - WHY am I paying a months rent to this brokerage company? For what? For a months rent, I'd like to see an itemized count of the value this broker brought me. I did all of the work myself, I found the listing and to me, it doesn't matter WHO posted it - landlord or broker - I led the inquiry, appointment, negotiation, and application process.
Now it isn't that I CANT pay or that the money is difficult for me to part with. I have good credit, good savings, and I make a decent living. The problem is that I wouldn't have gotten to this state just GIVING money away.
It's been my experience that it is clear the broker works on behalf of the landlord. Why should I pay someone else's fee. (Other than that's the way it works, and if you want to live in the greater New York metropolis, you'll bend over and take it in the you-know-what, like everyone else)
It's a lousy way to begin a landlord-tenant relationship, because once I finally do find a place that meets my criteria, and go through my process and fork over my months rent as a fee, I immediately resent the landlord for making me pay their fee.
I've been through the process of contacting the broker up front and saying hey, here's my criteria for a unit, can you find me something? Thinking.. If I'm gonna end up paying this fee I might as well make the broker work on my behalf. But all I've been presented with are listings that ignored my budget, pet needs, and overall criteria. So I assume the search myself.
Yeah tenant paying broker fee makes 0 sense. It's really called a "finders fee" and unless someone finds it for me, I should pay the fee to myself it seems.
I am glad you agree with the fee for service concept however it will happen soon. Some small shops are doing it now with some success. The smarter corporations and the ones that are fearless of being the first will come around. It may take a baby step process but it will happen in my lifetime. I will make sure of it.
As far as comparing professional stature with a college degree is truly a misnomer. But the public perception will remain the same when the Realtor community makes that change. Continuing education requirements would help the perception, abondoning referral agents are a start, recruiting anyone and everyone is a big downfall, support and professional coaching, and of course the aforementioned give-aways.
And in all this we MUST understand what the public wants to succeed. They want professional representation, they want exposure of their homes to buyers, they want an agent that will get homes closed. However, they do not want to pay the price. This goes back to what our value is to them. But they should get choose what they want and need. We as realtors need to stop telling them what they need. It's not our money. Fee for Service is the most professional way to adhere to those needs.
I have not had a landlord that has raised the asking price of a property above market rate because they have to pay a commission. With rentals the owner pays the commission same as with home sales.
The homeowner pays the commission not the buyer. The line of thinking that the owner/landlord pays commission is just backward.
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