Question Details

Tim Moncrief, Real Estate Pro in Austin, TX

Will buyer's agent's now be charging up front fees?

Asked by Tim Moncrief, Austin, TX Tue Jul 15, 2008

A common practice in Europe most likely will be coming to the US this coming year: Upfront buyer agent fees to buyers looking for properties. Yes, a charge for buyers to see properties.

This has rarely been used in the US, but is very common in most European real estate firms. Usually the real estate company offers a free initial consultation and a reasonable fee to show homes/condos and the fee will be applied toward the purchase of the home, or in addition of the fee of the purchase of the home.

With gas prices rising, the reality of this occuring in the US is likely. Today, it is likely that a buyer's agent will incur $100 to $200 in fuel costs for one POTENTIAL buyer. This obviously excludes wear and tear and the time cost of the agent.

The thought of this was rarely if ever thought of in the past in the US, but will be a topic of consideration this coming year, and I strongly believe will be implimented by successful buyer's agents.

Help the community by answering this question:

Answers

10
I specialize in buyer agency and I welcome Realtors start charging that way i will get more business by not charging them.
1 vote Thank Flag Link Wed Jul 16, 2008
As much as this seems like a great idea, I fear the consequences are going to be incredibly predictable. This practice, is most likely to produce a population of resentful citizens.

However, I do find the practice of collecting an upfront fee to be credited at closing, especially in states such as Florida, where the foreclosure issue has distorted the real estate landscape in unbelievable ways, may be an appropriate environment for such up front fees. A buyer looking for a $30,000 condo or $50,000 3/2/2 will be charged a flat fee meeting my minimum compensation requirements. A recently sold villa sold for $20,000! Calculate the compensation on that! Yes, is some circumstances, the buyer needs to understand, this isn't a hobby, it's a business ......for us.

Best of success to you,
Annette Lawrence
ReMax Realtec Group
Palm Harbor, Fl
727. 420. 4041
Web Reference: http://www.MyDunedin.com
0 votes Thank Flag Link Sun Apr 17, 2011
Several states are already looking at replacing commissions with standard fees, which could be charged before, during and at conclusion of a sale. Commissions are often believed to create a conflict of interest since brokers on both sides make a bigger commission if the sale price is higher. My prediction is that up-front fees will kick in when banks are allowed to be licensed as brokers, which many are lobbying for today.
0 votes Thank Flag Link Sat Apr 16, 2011
Whatever trend is in Europe should stay there. I would never charge a fee to show homes and will never think of changing!
0 votes Thank Flag Link Sat Apr 16, 2011
This is already an option on our buyer forms here in MN! We were encouraged by our trainers to charge a fee to our potential buyers... However, most area VP's and many agents disagree with this idea. I personally think it makes good business sense financially. If you were an attorney, financial planner, or other service professional, there may be one "free" consultation and then you are required to pay for there time and services.

With gas prices extremely high and so much inventory to show buyers, I am thinking it's a smart trend to begin.
0 votes Thank Flag Link Sat Apr 16, 2011
This is not a new practice and is already used in some states, I just don't know how it will work unless all agents start to do it and I don't see that happening because they would have to be in collusion with each other to make that happen or follow a trend and not have opportunistic agents around trying to cash in on offering it for free.

Some very successful companies like redfin charge buyers for fee for showing "x" amount of homes and this fee will be refunded or discounted at closing. I don't know how they manage to get people to pay those fees when other companies are offering the service for free but I do think it is a really smart thing to do if you can pull it off.

I guess you can charge an up front fee if you're offering rebates at closing, the only problem is that in states like New Jersey where rebates are still relatively new and companies like mine being only about 1 of 2 in the state offering them have a lot of resistance from the state realtor organization who is helping shape the laws, rules and regs on the topic which just making it harder to offer buyer rebates with a lot of restrictive advertising rules and disclosure requirements out the wazu and to top it off the lender needs to agree to the rebate offer which many of them will not allow outside of normal loan concession guidelines such as the limit allowed for closing costs.
0 votes Thank Flag Link Sat Apr 16, 2011
Some agents are already doing this. I think it's a good idea, not jnecessarily to cover some of our expenses but as a show of good faith on the part of the buyer.
0 votes Thank Flag Link Wed Jul 16, 2008
I do like the comment about charging for CMA's and we have put thought into it, but not a decision. We do get paid for CMA's from banks; so, the questions arises as to why we do not do that for clientelle if we know that we do a more thorough job on our CMA's than most. We have made a decision that this is a cost write off in building client repport. Yes we will get used, but the percentage is quite low. Perhaps we may change our thought one day, but for now we are not charging.

I was fascinated at the concept of charging buyers to show homes and how normal this is in other countries. Maybe it will come to being here and maybe not. Let the market go where it goes and we will see what happens. With alot of buyer's agents being run out of business, this may end up being a reality.

Let's see.........
Web Reference: http://www.TopKWGroup.com
0 votes Thank Flag Link Wed Jul 16, 2008
On the listing side, I have always thought that giving away CMAs for free is completely nuts. I'd like to see people start charging, say, $200 for CMAs (perhaps refundable at closing). No other "business" gives away the amount of time, expertise, and energy as do real estate agents. I say, charge 'em!
0 votes Thank Flag Link Wed Jul 16, 2008
I don't think Tim. First You don't need to drive as much as you used to. Second, buyers like to do search themselves, sporadically only asking agent to help them open the house. Even in such situation, they often prefer to be in control and drive to the house themselves. To earn an "old" commissions buyers' agents will be working harder, but smarter. They will be offering analysis of information, strategies, options for buyers to choose from. Possibly , they will be charging fees for some services apart of (in addition?) to commission. At least, it is the way I see it.
Web Reference: http://www.cimpler.com
0 votes Thank Flag Link Tue Jul 15, 2008
ARTUR URBANS…, Real Estate Pro in Burlingame, CA
MVP'08
Contact
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer