Home Buying in 11213>Question Details

Chony, Home Buyer in Brooklyn, NY

Agent's commission

Asked by Chony, Brooklyn, NY Mon Jun 2, 2008

I'm curious to understand: If a real estate agent makes a percentage commission, why would he or she work to get me the best price? The better the price, the lower the commission... How do you get the agent to have your best interests in mind and not take advantage of someone who really doesn't know better?

Help the community by answering this question:


Nicholas, my answer does not equate to "trust"... it says clearly, that it's in the agent's best interest, too, to get you a good deal.

Ongoing business, and client referrals are no small matter... and that's not just a statement of "trust us".
2 votes Thank Flag Link Tue Jun 3, 2008
Alan May, Real Estate Pro in Evanston, IL
Almost every agent I know would give up commission in 2 seconds if it was necessary to get you the best deal.
An agent is just that "an agent." If you go to a job interview, it's actually better to have someones else represent you. It's true. They are putting their best foot forward. If they just wanted to make a sale, I would be suprised if they would stick to real estate. We pride ourselves on getting the best price possible. I know I do.
When other agents and propert owners or buyers look at the sale and see what price was negotiated, I want them to see that it was a fair transaction. Integrity means a lot.
2 votes Thank Flag Link Mon Jun 2, 2008

This is probably the largest investment that you will make, take your time and think it through. Every answer that I have seen below equates to "Trust" or "Its not that big of a deal". The only other reasonable answer included paying out more money. Those answers are just not sufficient, ever.

The reality of the situation is that housing markets are collapsing in many areas of the country. At this time you need to be more sure then ever that you have the right people on your side. Use the tools that you have, aka money, to motivate people to work for you and ensure they work for you.

Don't sweat RE agents that don't like this answer, commissions are a hot-button topic. Read the post I provided. It is a bit lenghthy but overall the back-and-forth shows an awesome picture.

Do not be dissuaded by RE agents that rip on other RE agents because they structure their commissions differently. I think that is one of the most deplorable tactics ever.
1 vote Thank Flag Link Tue Jun 3, 2008

I think Paul Howard had a stellar idea on motivating a buying agent. I would also add that motivating a buyer agent doesn't have to cost additional money.

Before looking at homes with the buying agent, agree to paying only 2% of the buyer agent commission with the remaining 1% given to you as a concession. If you feel that the buyer agent worked hard, performed well, and negotiated strongly. Then set up a method to pay out that remaining 1%.

This ensures that the buyer agent is truely working on your behalf without brining additional money to the table.

I would suggest that you read another thread on the cost of buyer agent services. It relates to buyer agents in Maryland but it has a lot of pertinent information that might make you more comfortable with paying for buyer agent services.


I hope your house search goes well.
1 vote Thank Flag Link Tue Jun 3, 2008
There are a couple of good self-serving reasons, besides those spelled out below.

There's a little bit of pride involved in the negotiation. Who is the better negotiator, who can prove to their client that we're "just that good".

And secondly, if I can prove to you, that I'm "just that good", there will be a sense of loyalty and gratitude on your part, and you'll spread the word to your friends, and suddenly because I saved you $4,000 that you weren't expecting to save (costing ME an entire $60 or so in commission) I'll have a longterm client and any of her friends, and coworkers she talks to about me.
1 vote Thank Flag Link Mon Jun 2, 2008
Alan May, Real Estate Pro in Evanston, IL
Hire a Realtor to represent you who has a passion for the industry and is of high moral character. I love what I do and my belief system is that if you do the right thing for your client, your referral system will grow and you will make a good living off of your reputation.

I sit on the grievance committee and the MLS rules committee. I believe that Realtors need to police themselves to keep their industry strong.

If you have experience with a Realtor who has not clung to our Code of Ethics, by all means, bring a claim against them. When you deal with a Realtor (member of the National Association of Realtors), you have recourse. Use it!
Web Reference: http://GailGladstone.com
1 vote Thank Flag Link Mon Jun 2, 2008
Hi Chony
I totally agree with Frank. He gave a great answer.

If you work with a Realtor, that person has taken a vow of ethics. Only Doctors take such a vow. When we have client relationship with someone whether a buyer or seller we have a fiduciary responciblity to that person.
Commission, is absolutely, the last thing I think about when negotiating. My focus is to get the best deal for my client.
The answer to your question- "How do you get the agent to have your best interests.....?" Sign a contract with a Realtor. From than on commission aside they are your agent working in your best interest.
1 vote Thank Flag Link Mon Jun 2, 2008
Louis- buyer agency has arrived in New York, providing buyers with someone who is operating on behalf of the buyer. While it might be hard to locate in Brooklyn at this point, that is changing. Don't rely on a verbal "I have your best interest in mind" when you can very easily obtain that "promise" in writing, via a New York Department of State required disclosure.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Wed Jul 23, 2008
An addition to below: if the property that you seek is a condo/coop with four families or more, it is NOT REQUIRED that an agency disclosure be presented, so insist on a buyers agent in that case.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Thu Jul 17, 2008
Chony, there is a required disclosure that you will (or should) be presented with every substantive contact that you make with a real estate agent. In this NYDOS disclosure, it clearly indicates WHO the agent "represents". One of the requirements of both seller and buyer agency is the term FIDUCIARY. Being absent this aspect is what muddies the water for many sellers and buyers. If possible, get a buyers agent (the buyer agency box will be checked) because at that point, you've received in writing the requirement that your best interests come before all else (including personal gain for the agent). At the very least, you have in hand something in writing that is a requirement. If you have not received or seen this NYDOS disclosure, you've been working with the wrong agents- find one that understands the laws designed to protect consumers. If you've had substantive contact without this disclosure, report the agent to the NYDOS.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Thu Jul 17, 2008
My feeling is that if I really try to do the right thing for people, there'll be as sense of loyalty . You'll spread the word to your family, friends and coworkers and my referral system will grow.
When you sign a contract with any realtor, from then on, commission aside, they are your agent working in your best interest.
0 votes Thank Flag Link Thu Jun 5, 2008
The question asked by Chony is two part.

The first part of the question is "why would he or she work to get me the best price?" which have been sufficiently answered. I am very comfortable with the answer of "mutual self-interests" provided by ELV!S as well as the other answers provided. This thread has reassured me that there are good RE agents that want to work on your behalf.

The second part of the question is "How do you get the agent to have your best interests in mind and not take advantage of someone who really doesn't know better?" Mutual self-interests equates to trust in this department. Because you need the buyer to refer you to someone else just doesn't quite sit right with me either.

Paul Howard nailed it right away though. Provide incentive, period. Buyers are not looking for someone to get them a good deal, they want someone to get them a great deal. Instead of adding additional money to the pot restructure the existing pot so that it is incentive based.
0 votes Thank Flag Link Tue Jun 3, 2008
I just sold a property that was listed at $125K for $123K, got my buyers $5K in closing costs, a new roof, termite treatment, and $2K toward some minor foundation repairs from the seller.

I will get referrals from the buyers.

You can take a number of lessons from this. Price is not always the end-all in a transaction. Doing a good job will earn points as well as the commission--and the points are worth more than the commission in the end. An agent who knows the levers and negotiation techniques is worth every dime earned.

An agent would be making a mistake to place their share of the $30 or so per $1,000 they earn on a sale ahead of their client's best interest. In this business, two birds in the bush are worth one in the hand.
0 votes Thank Flag Link Tue Jun 3, 2008
Regarding Nicholas' answer: I think even in states where it is allowed the people that rebate their commission are mostly people that need to do so to get business. It gives a buyer the illusion they are getting something that they are not - a savings. It is likely that many such agents don't have the skills necessary to properly represent a buyer as a client and so the buyer will lose much more on price and terms than they will gain with a 'rebate'.

Paul Howard
0 votes Thank Flag Link Tue Jun 3, 2008
Good question. And lots of good answers below ('cept maybe for Nicholas).

There's another reason, too, that hasn't been touched on. The buyer usually has a list of items that can't all be satisfied at the price range he/she is looking in. Whenever I've bought a house, the properties for $25,000-$40,000 above my price range always seemed so much nicer. They were newer, or bigger, or more conveniently located. And that makes sense.

So very often a buyer will have a list of desirable house features (in x school district...4 bedrooms, 3 baths...a finished basement...garage...nice back yard...and so on) that are above his/her price range. There are always trade-offs. Well, if my client has $400,000 to spend but wants a house that would list for $500,000, we have to start talking about those trade-offs. However, those trade-offs aren't as painful if we can start out with houses listed at, say, $450,000 and negotiate the price down to $400,000. It may not be the client's dream house, but it will come a lot closer than just showing houses listing for $400,000, knowing that my client could afford them without trying for "the best price," but not being nearly as happy with the process, the house, or me. If the house sells for $400,000, my commission would be the same whether the list price was $400,000 or $450,000. That doesn't cost me a penny, and I couldn't have made any more because all my client could afford was $400,000. And my client ends up happier because he/she bought a house that came a lot closer to being the dream house than one listed at $400,000.

Hope that helps.
0 votes Thank Flag Link Tue Jun 3, 2008
Don Tepper, Real Estate Pro in Burke, VA
1. Tell your agent what you want your monthly payment to be
Not all people are monthly payment buyers.
0 votes Thank Flag Link Mon Jun 2, 2008
An honest Realtor will work in their clients' best interest at all times...not just when it comes down to the commission.

If I am working with a buyer client, my first priority is to get him or her the best possible price for the property. Having my client tell their co-workers, friends and family what a fantastic deal they were able to acheive with my professional assistance brings me many more clients - therefore "losing" ({or not ;-) } a few dollars is nothing compared to the advertising that I gain.

If I were able to negotiate 5k off of a price what am I really losing ~ $100 maybe before my costs? Our average print advertising costs run more than that per publication a month - and for negotating well - I gain a happy client who will use my services in the future and tell friends. Well worth doing my job and doing it with the best interests of my client in mind.
Web Reference: http://www.RealtyRenee.com
0 votes Thank Flag Link Mon Jun 2, 2008
Chony, I think it is true that most agents will do the best they can for a client. (Make sure you are a client not a customer though). It may seem counter intuitive that an agent will work to get you a better price given that generally that will result in the agent's commission being lower. Good full time agents, though, rely heavily on referrals. Good results lead to more referrals. Some buyers aren't able to get the potential negative motivation out of their head though. If you are concerned, it is easy to fix. It will just cost you a little out of pocket money. If the agent is otherwise going to receive a commission of (for example) 3% of the sales price, offer the agent an additional 3.5% commission based on the amount by which the eventual contract price is under the list (asking) price of the home.This will reverse that perceived motivation. Instead of losing money for a lower price they gain to the tune of .5% of every dollar reduction. For an ethical agent I don't think it is necessary but it might be worth it for a buyer's peace of mind.

Paul Howard
0 votes Thank Flag Link Mon Jun 2, 2008
Hey Chony,

Great question. Here are a couple of things that we encourage people to do:

1. Tell your agent what you want your monthly payment to be (not what your lender says you can borrow but what you want to pay per month). If they listen, they will not show you properties that go above that number.

2. Do your homework. Ask your agent to give you public websites that list homes (realtor.com). This way you can punch in the price and see all that is available in the areas that you want to live. By doing this you can tell your agent which homes you want to look at and which ones you don't.

3. You are our best advertisement. If you are not satisfied with us you will not reccomend us to others. We want that kind of relationship with you and will do all that we can do to see that it happens.

Have a great day. * connieconner.com
Web Reference: http://connieconner.com/
0 votes Thank Flag Link Mon Jun 2, 2008
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