Home Buying in Austin>Question Details

Felix, Home Buyer in Austin, TX

Buyer's agents willing to be paid by buyer instead of seller?

Asked by Felix, Austin, TX Wed Aug 29, 2012

Hey all y'all. I'm an economist, and so I am keenly sensitive to aligning incentives properly. The traditional 3% to the buyer's agent paid by the seller strikes me as problematic. A buyer's agent who negotiates well and gets a lower price will receive less commission than one who negotiates poorly or not at all.

I recently sold a condo in California (it closed on Monday) and am looking to buy a house in Austin. We are leaning towards using a buyer's agent, as I hate paperwork and we have a one-year-old, but we want to eliminate any possible conflicts of interest by negotiating a compensation that is higher if the home sale is lower.

Please contact me if interested. Thank you!

Help the community by answering this question:


Hi, Felix.
Great question and absolutely a flaw in the traditional compensation process for selling agents representing buyers. While it's nice to believe that all agents/brokers hold the client's interest first, there are instances where it just isn't true. My profession is one where the majority are paid only after a deal closes and this can (and does) cloud judgement . Emotion and motivation can cross-up an otherwise squared away transaction. If it didn't, we wouldn't have a Grievance Committee (I'm on it) or Professional Standards Committee in place. It's the elephant in the room. If you ask challenging questions and feel like you have trust in your representation, I'd suggest you are in good hands.

Anyway, there is no fixed compensation or standard. Homes listed on the MLS will include an amount the seller's agent/broker has negotiated to pay cooperating brokers. Yet you can negotiate any compensation plan you like with the agent representing you. She/he can pass on the opportunity if is doesn't meet her/his needs. So get creative and see what happens. A graduating scale based on level of service and negotiation might be more rewarding for both parties.

Good luck (and welcome to Austin)!

Web Reference: http://www.crowehomes.com
0 votes Thank Flag Link Wed Aug 29, 2012
This is a heated conversation, which is good, bottom line: professional realtors want to help their clients, buyers, sellers or both depending on what the relationship is. It is a not a get quick profession. It is providing quality service in the long term. I am not in the business of selling realestate. I am in the real estate business. Win , win or no deal.
2 votes Thank Flag Link Wed Aug 29, 2012
And with better aligned incentives, it would continue to be about quality service. When agents making the right decision for their clients are rewarded more for it (on top of referrals, which they would continue to receive), would this increase or decrease good decisions?
Flag Thu Aug 30, 2012
Good question. I am sure an agent would be open to letting you pay them and negotiating the 3% off the price, but a few things to consider. First the market in Austin is pretty tight. This means that sellers (in the hot areas) are not negotiating as much as they were a few years ago. Inventory is down and buyer traffic is up. Supply and demand. However, let's say you are looking at a property that is $200,000. The commission of 3% would be $6000. Lets say you were able to negotiate off $10,000 from the price, that is only a $300 reduction in commission to the agent. So I would wager that who pays the commission or that it is a percentage of the sales price is not relevant if you find a good agent. If you choose an agent that sells a house every few months, this $300 means much more to them than to someone who sells 3-15 homes a month. So I would say it is more a factor of the skill of the agent and that they are an active agent that knows the market rather than who is paying them. So i agree with your analysis, but I would have to say finding an agent that is skilled in their trade and looking for long term referrals will negotiate the best they can regardless of commission or who is paying it. If they get you a good deal you will talk about it:)
2 votes Thank Flag Link Wed Aug 29, 2012
Yes, I am aware that there are other perverse incentives to the standard scheme, such as looking for high volume quick turnovers. This is an additional reason it is often not in the interest of buyer's agents to negotiate on price but to instead encourage buyers to make offers the seller will accept immediately.
Flag Wed Aug 29, 2012
I had a thought - perhaps the buyer's agent's interest would be better aligned if they were paid by the buyer IN ADDITION to whatever co-brokerage fee was being offered by the listing broker . . .
1 vote Thank Flag Link Sun Sep 2, 2012
Sure, as long as the co-brokerage fee was determined mostly by a variable that increased when it moved in the direction that best serves the client.
Flag Sun Sep 2, 2012

Keep in mind that while your real estate agent is negotiating for you, what you agree to pay is ultimately your decision.

If you've done your own due dilligence and homework on what properties comparable to the one you are interested in are selling for - you won't have to worry about the agent "making you overpay to collect a higher commission" - because you'll know yourself the price at which the property is a deal.

The bottom line - do a little of your own research on one of the biggest investments you'll ever make, so you won't have to trust someone elses opinion/advice blindly. You'll have a much lesser chance of getting ripped off or overpaying this way.

Hope this helps!
1 vote Thank Flag Link Fri Aug 31, 2012
That makes sense -- but if someone has the time to do all that market research and double-check every move their agent does, they're probably far better off negotiating on their own behalf and just hiring a real estate lawyer to double-check the paperwork.

As I see it, that will be the main competing model to the one I'm proposing.
Flag Fri Aug 31, 2012
Felix, you've seen many answers and have a good point, but in my experience, especially with the higher ranked and top producing Realtors, such as myself, their primary concern IS their clients, and satisfying their client and therefore gaining future business and referrals from that client as well. For me personally, it is not about the money. For agents like me, who are very competitive, it is more about winning for my client(and myself), whether it is over $10,000 or $100. I also take every deal personally and look at each dollar like it is my dollar and that is how I personally work and have worked for over 20 years. I believe that is part of the key to my success. Being a Realtor, custom homebuilder, and investor, I can appreciate that it all adds up and every single penny I can squeeze from the other side will help you in the long run (and essentially benefit me as well.)
Also regarding our possible gain in commission for not being as aggressive negotiation wise, for every $10,000 of the price the Realtor only makes an additional $300 gross. Out of that gross with my broker, Keller Williams for example, they take 30% off the top. And then the IRS takes about 35%. Therefore I would make an extra $100 if I didn't negotiate as hard for that extra $10,000 it would cost you.... Definitely not worth the risk of losing a client's trust, future business and referrals, and also shirking our responsibility as a legal fiduciary. I understand typically human nature is to do what's best in one's interest, but our self-imposed 200+ year code of ethics is adhered to very strictly by those in the business that take their jobs as seriously as I do. Please click on my photo and review my Credentials and Client Testimonials, and feel free to contact me if you would like discuss working together. Just as added proof that I am more concerned about you than myself, I have been so busy this year helping buyers like you, that I have not turned in my commission sheets yet to get paid. I have closed about $3-$4 million in business and still have not collected one penny from Keller Williams. I am honestly just too busy to worry about that right now(it takes a couple of hours per deal) and I'm too concerned about getting the deal done than lining my pockets!
Joe Jarusinsky, REALTOR/Master Instructor,Keller Williams Realty, Austin's #1 Real Estate Co., Ranked #1 by Buyers and Sellers yet again (JD power and Associates 2012)

P.S. I'm dictating this on the road so please forgive any syntax or grammar mistakes. Thanks, Joe
1 vote Thank Flag Link Wed Aug 29, 2012
It isn't just the negotiations. If an agent knows of a $100k house and a $150k house which a buyer would like equally well, they have an incentive not to show the $100k house, as the buyer would likely be quite satisfied with the $150k house and never learn of the better bargain.

There will always be people willing to do the right thing no matter what the cost, but why not make it so that the right choice is *also* the one that benefits them more?
Flag Wed Aug 29, 2012
A buyer's agent who negotiates poorly may also receive no fee whatsoever.

Enjoy yourself. You'll find someone to go along with this, and you can use it in that book that you write.

All the best,
1 vote Thank Flag Link Wed Aug 29, 2012
A buyer's agent who negotiates poorly with the seller but extremely well with the buyer (e.g. with "fair market value" arguments) does better business than vice versa.
Flag Thu Aug 30, 2012

I don't know that it it conflict of interest so much as a (perceived) disincentive for the agent to negotiate the price downward as much as possible. From my perspective, I want you to get the best price possible as a buyer primarily because whatever conceivable 'loss' I take by negotiating you a lower price will hopefully be more than offset by you recommending me to a friend/colleague because I did a good job for you and with your best interest in mind.

As for being represented for free, it's a nice marketing gimmick, but I don't believe it is entirely accurate. After all, it is YOUR money being used to buy the house. Your money goes to the seller who in turn pays his broker who in turn pays yours. If the total agent fees for a $200,000 house amount to $12,000 (paid out of seller's proceeds), I would submit to you that you should pay no more than $188,000 for that same house if no agents/brokers are involved.

Of course, that is precisely the reason sellers SHOULD use an agent. Why would they spend the time and energy in an area in which they may not be an expert to avoid brokers' fees when they will likely sell the house for the same net? Furthermore, as a buyer, is it in your best interest to enter into negotiations for a house in an area with which you are not familiar and against a real estate professional who negotiates home transactions for a living? To add insult to injury, if you go unrepresented by a buyer's agent, the seller may STILL have to pay the full commission to his/her listing broker.

Call me and I can explain more about how the listing and buyer representation agreements are written here in Austin and we can together determine which way you want to go.

Thanks for your time and I look forward to hearing from you.

Doug Vogelsass
REALTOR :: Agents for Change Real Estate
mobile :: (512) 739-0457

10% of our net agent fees at the closing of our client's property will be donated to a charitable organization of their choice. We do this with ALL clients. This is our way of expressing our appreciation to both our clients and the worthy causes dedicated to the betterment of our communities.

9600 Escarpment Blvd :: Suite 745-75 :: Austin, TX :: 78749
Sponsoring broker :: David Komie, Attorney-at-Law (License# 584762).
1 vote Thank Flag Link Wed Aug 29, 2012
Some folks are wadding into.the weeds on this one. Buyers agents do not control the commission. Listings are the brokers not the agents and the details of how the commission is to be paid and to whom is in the listing agreement. Felix asked simply if there were agents willing to be compenszated by the buyer. You may or may not have noticed that this "buyer" Felix is an employee of trulia. Trulia seems to be in need of traffic s they are "planting" questions.
0 votes Thank Flag Link Wed Sep 5, 2012
I don't know how to prove where I work without compromising my privacy. I'm sorry we didn't get to you, but we selected our agent shortly before you posted. You can contact some of the folks who reacted favorably to my query before yours, as I interacted with a number of them.
Flag Wed Sep 5, 2012
The buyer's agent we eventually selected suggested we not negotiate off the commission but contractually agree for them to rebate me 100% of the standard commission and then I pay them according to the formula we agree upon, which will probably be: 3% (maxPrice + minPrice - salesPrice). This is essentially the same as me paying them without negotiating anything from the seller or the listing agent. Also, I work in educational technology sector, not for Trulia.
Flag Wed Sep 5, 2012
Legally, the buyer broker's commission is negotiable and you have a whole right to negotiate. In most parts of the country, the seller broker “splits” their commission in half and offers half of their commission to the buyer’s broker. Here's one way to negotiate the commission. Instead of letting your agent collect the whole commission, you offer your agent a flat fee with any extra to be given to you or credited towards the purchase price of the house.http://teamcrminc.com/
0 votes Thank Flag Link Wed Sep 5, 2012
Let us know if you plan works out to your satisfaction.
Obviously you can probably find an agent to work your plan, but it would be interesting to hear how it worked when you are done and closed.
0 votes Thank Flag Link Mon Sep 3, 2012
Sure thing. Would an additional reply to my question work? I think you can configure Trulia to e-mail you for additional replies, right?
Flag Mon Sep 3, 2012
Bruce Lynn, Real Estate Pro in Coppell, TX
- Sure, as long as the co-brokerage fee was determined mostly by a variable that increased when it moved in the direction that best serves the client.

That's not how co-brokerage fees work, you understand.
0 votes Thank Flag Link Sun Sep 2, 2012
Then no, that would not help align incentives.
Flag Sun Sep 2, 2012
In Connecticut, the compensation to the broker is paid from the transaction. We have strong agency laws here and when they are followed, it makes the transaction process much better. I know that every state offers different agency law, so, be sure to check on the law of representation in each state.
0 votes Thank Flag Link Sun Sep 2, 2012
Felix, I agree with most of your analysis of the causes of the bubble and its bursting. But lets look at the history. Carter implemented a policy to incent low income/poor credit incentives to encourage home ownership in that demographic. It is common sense that folks that had ownership in a property would take better care of it than disinterested parties (ie renters) and the program had modest success.

Then Clinton's administration applied additional legislation and the social activists in the administration began to see a problem where it didn't exist, unfairly applied standards. Janet Reno actually sued banks that were applying rational standards of credit worthiness to force them to lower their standards for people of poor credit. This had a very strong effect on those standards causing relaxation of them, rather than fight the government in law suits. Simultaneously getting rid of the
Glass-Steagall act allowed commercial banking (I call them financial sharks) get into the business.

This new variable brought in clever ways to hide the true risk associated with high risk loans by combining them into large complex financial instruments where no one could fairly assess the risk associated with them. Commercial banking did not have, and does not have the same mind set and incentives that local and regional banks have. They figure out ways to avoid or spread the risk that are not available to the smaller entities.

At the height of the crisis, I often told people that the standards (due to over wrought social activists pushing for "everyone" to be able to buy a home were so relaxed that if you had a pulse and were breathing, you could "qualify" for a loan. On top of that, the Fed was making so much money available that lenders freed from the usual banking standards began to offer ever more ridiculous terms (interest only loans, 105% of value loans, no doc loans etc.)

When you have a huge supply of money with no apparent concerns about the ability to pay it back, and a finite number of homes available, you create demand that exceeds a rational market expectation and supply of homes. This led to the inane bidding wars as everyone was trying to get in on the act to take care of their own unique circumstances and "get their fair share." What was missing was the government's normal oversight to ensure the market was rational, indeed, given that Reno was suing responsible banks to force them into the "everyone should be able to buy a house" game, it only made sense to participate.

My own assessment is that the government was responsible for setting the stage, and then when the sharks got into it, there was no way to deal with it. A classic overheated market (similar to run away inflation, it's more about expectations than real conditions.)

As stated earlier, the buyer agent's incentive is both financial and logical. His/Her job is to do the best they can for you in any given situation, and that might involve making the best bid in an overheated market (as we saw in the bubble areas like California, Nevada and Florida) or negotiating the best price possible in areas where this kind of rampant price inflation wasn't present. I, and most agents I know, take seriously our fiduciary responsibility to our clients and do our best to inform them of the conditions on the ground where we are working and allow them to make an informed decision. As stated elsewhere, the difference of commission for negotiating a $10,000 reduction in price paid is likely $300 or less, depending on the commission being paid by the seller. That is simply no deterrent on a typical total commission, but making my client happy with my ability to take care of THEIR needs far outweighs any small increase in my compensation. My happy clients refer others to me, and there is a multiplier effect there that simply cannot be denied.

Basically, as an economist, you understand supply and demand and it really is the determinant variable in all of this business. We are seeing a huge spike in rental prices in Austin due to the supply/demand curve. Forecasts suggest we'll have 50,000 people a year moving to the Austin area this year, and in each of the next four years. Rentals are always the leading edge indicator in this kind of market, so we can logically conclude that prices for purchase homes will be escalating here as well, but will lag the rental market for some time. The rental market is also being hammered by a supply shortage as new construction of rental units had nearly stalled and it takes time respond to the increased demand. Reaction is slower than the demand rise so we're likely seeing a bubble spike in rentals and it will be followed by one in purchase homes, unless something dramatically changes in the economy and people stop moving here.

That being said, Austin has a historical aversion to the kinds of increases other areas have experienced, and from what I'm seeing now, it continues.
0 votes Thank Flag Link Sun Sep 2, 2012
For some empirical work, Mian and Sufi (2009) found a close correlation between credit expansion and securitization. Purnanandam (2009) noticed that the secondary market dried up in 2007 and found that the default rate faced by banks who made more of their loans after 2007 was much higher than those who made more before 2007. Keys et al. (2010) noticed that borrowers with a FICO score just above 620 actually performed worse than those just below 620, noting that the only observable difference was that 620 was the cutoff for securitization.

Mian, Atif & Sufi, Amir, "The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis"
Purnanandam, Amiyatosh, "Originate-to-Distribute Model and the Subprime Mortgage Crisis"
Keys, Benjamin J., Mukherjee, Tanmoy, Seru, Amit, & Vig, Vikrant, "Did Securitization Lead to Lax Screening? Evidence from Subprime Loans."
Flag Wed Sep 5, 2012
Finally.....there is at least one person out there who understands what really happened. Surprisingly enough even the NYT agree in an interview with Henry Cisneros about his time in the Clinton administration. I understand their argument, but it was very very flawed in most cases and has probably caused the people it was supposed to help more harm than good. It not only hurt them, but nearly everyone else in the process. It's one of the worst policy decisions ever made, but almost no one understands the implications.
Flag Mon Sep 3, 2012
"My happy clients refer others to me, and there is a multiplier effect there that simply cannot be denied."

Yes, and this multiplier effect works independently of compensation scheme, so it would still be in effect if you aligned incentives. Wall street brokers used to charge per trade. Now that many charge a percentage of account size, they still continue gain many clients from referrals and through reputation.

I do agree that the market in Austin looks like it is improving, and probably would not be buying if I thought otherwise (and the ability to assemble a clean offer quickly is one reason I am choosing to work with an agent rather than attempt to represent myself). I will defer to the experience and expertise of those who know this specific market.

In terms of the Texas market, one of the puzzles for me is why the bubble was relatively mild in Texas. Would be interested in perspectives on this.
Flag Sun Sep 2, 2012
Yes, this is exactly what I'm talking about with securitization: MBS and CDO. My take is that there is plenty of blame to go around. Government kicked the ball to get it rolling, and the free market picked it up and ran with it. The government effort to expand housing includes the mortgage interest deduction, actions of GSEs like Fannie Mae and Freddie Mac, and the CRA. Note, the real estate industry supported some of these things, and if half of the agents had an interest in lower prices, the industry as a whole would not lobby for policies aimed at increasing home prices.

I do think their effect is overstated. These policies increase the number of demanders, shifting the demand curve out to the right and the equilibrium price also by a fixed amount. It works similarly to a tax credit and opposite of a tax. You have an artificially high price, but not one that increases continuously. That's where the Fed and securitization come in, and the timing fits this explanation much better.
Flag Sun Sep 2, 2012
Thank you for all the responses. I expected this to be a bit controversial of a topic and did not expect to find so many agents who agreed with it, so this is heartening. We have now selected a buyer's agent who understands what I'm talking about.

A couple of points I want to make. I understand that there are honest agents who will do the right thing despite misaligned incentives. That is all well and good, but such agents will find it *easier* to do the right thing with a better aligned incentive scheme. From a public policy perspective, you subsidize activity that is positive (e.g. education) and tax activity that is negative (e.g. pollution). From an industry standpoint, activity that benefits your client should be encouraged.

Note, this misalignment has broader implications. When both buyers' agents and sellers' agents face an incentive to increase house prices, this leads to overvalued homes. As we've witnessed, overvalued homes can lead to housing bubbles. This is not good for anybody, and certainly not the real estate industry.

To be sure, I've studied the financial crisis in depth and believe most of the blame to be upon securitization of mortgages (and also on the Fed). Securitization is yet another case of misaligned incentives. A bank reselling a mortgage no longer faces an incentive to care about default risk, so will loosen lending standards. This highlights the importance of aligning incentives. Agents played a small role in that buyers' agents were in the best position notice that houses were overvalued and raise a flag to say that a bubble is forming. They didn't do so because higher prices were good for their commissions. Economists failed to raise a flag as well, and misaligned incentives are to blame for that as well (high degree of political hiring of economists).

With properly aligned incentives, where half of the agents want higher prices and half of the agents want lower prices, the industry will want fairly and accurately priced homes, and the market will stay balanced. The incentive for the industry will then be upon maximizing volume, or making home buying and selling as easy a process as possible. And guess what, that's exactly what home buyers and sellers want as well.
0 votes Thank Flag Link Sat Sep 1, 2012
It's not the securitization of mortgages that caused the problem. Banks and investors have been doing the same thing forever. It was the social policy of the Clinton administration that corrupted the system. On the surface it seemed like a really good policy....Let the disenfranchised buy homes to build wealth. However I often heard many of my colleagues state during the run up how flawed this policy was. We saw so many who weren't ready to be homeowners, who did not have reserves, who weren't going to be able to afford gas to work, who weren't going to be able to afford the energy and water bills of a house 3x the size they were renting. This NYT article probably explains best what actually happened.
Flag Mon Sep 3, 2012
I have often considered this position/outcome. It makes some sense for sure. I am an open minded business man and would like to interview with you. I like to discuss different tactics with you.
Bill ~ 512-709-6343 or bill@teamprice.com
0 votes Thank Flag Link Fri Aug 31, 2012
Interesting idea, but not sure this works. Don't overthink it.

If it were only price and commissions to consider this might work, but there are so many other variables in play that you would need a really nice OR model to calculate all that is in your best interest and the best way to compensate for this.

As I indicated to one buyer this week, your risk is not that I can convince the seller to accept your price. I probably can. The problem is the time it will take me to do this, and your competition. Over about a week to 10days timeframe I negotiated nearly a 10% price reduction off a fairly priced home in better than average condition and quality. Only to be sniped before we could sign off. So another buyer now has the house under contract.

What are the buyer costs at this point? Higher interest rates probably have negated any savings they might have gained by the prolonged negotiations.

I don't know the Austin market, but expect it is heating up. So what if other buyers are bidding over list price? How does that affect your compensation plan. You want to bid to win right? Not bid to loose. So the highest price wins, not the lowest price.

Every agent is different....their motivations are different and how they work is different. Pick the recommendation of a friend or trusted advisor. I personally would rather you get the best price we can, get the best house we can, in the best neighborhood we can, and do what works best for your family. I want to provide you with the best service I can. I ALWAYS think of resale.....I want not only your business....but all your friends, family, and coworkers....and I want your resale when you move. I dont want to have you overpay now, because that will cause me damage in the future.

There are so many variables I just don't think you can or should try to compensate for all of them. What if the very best home is under priced and you should bid high to lock it up. Under your plan the agent might not show you the house. They'd rather show you the most overpriced house, so they can perhaps negotiate the biggest discount, even if that means you are still over paying for the home. I can think of easily 100 scenarios where this simple idea is flawed.....for example what if the house is $100,000...and the seller tells your agent compensated under your plan....I'll sell it at $100K and your buyer can keep $15,000 worth of fridge, washer, dryer, flat screens etc. or if your buyer doesn't need all that stuff I'll give it to them for 90K.

Just some things to ponder....for your thesis...
0 votes Thank Flag Link Wed Aug 29, 2012
Also, under my proposal, the buyer's agent still gets nothing if they don't close the deal, so they have to balance the goal of getting the house against the goal of not paying more than it's worth. In contrast, the current scheme creates strong incentive for the buyer's agent to try and convince the buyer to pay whatever it takes to outbid the other buyers.

This is why I perceive a conflict of interest.
Flag Fri Aug 31, 2012
I know there are too many variables to capture them all. Fortunately, I'm not trying to. My main problem is that the biggest value in the current formula has the wrong sign. That is pretty easily fixed.
Flag Thu Aug 30, 2012
Bruce Lynn, Real Estate Pro in Coppell, TX
Hi Felix!

I understand your concern about the buyer's agency. The right agent, however, has much more to gain from good performance than bad. Agents that have good reputations, have been in the business a good amount of time and expect to continue have everything to gain from getting you the best price. Not only does it gain your gratitude and usually referrals to other people who might be buying or selling, but also your return business when it's time to sell.

Always insist on seeing the comps yourself and ensure that they are using the right criteria, making sure that you are comparing apples to apples at the time of writing an offer.

Most importantly though, contact a couple of agents and talk to them. Ask them some tough questions and, if at that point you aren't satisfied, contact more.

Good luck with your search and if you need to get a name or two you could drop me a line, but plenty of my colleagues here sound willing and able!

0 votes Thank Flag Link Wed Aug 29, 2012
I like your thinking. Please keep in mind everything is negotiable. When you're talking to the buyer's agent, realize the negotiation, attention and care they show in dealing with you will represent the way they deal for you. ; ), economist. I am available. Let's start negotiating.
0 votes Thank Flag Link Wed Aug 29, 2012
Hello Felix,

I can definitely understand your logic but in reality I don't think that is really a problem. It's my fiduciary duty to always help my clients negotiate the very best deal on a home. My clients interests always come before my own but I can understand and fully know that not all agents work that way. If you pay an extra $10,000 for a home I would make an extra $300. That is not really an incentive for any agent to get their clients to overpay for a home. My business is based on referrals so it is essential to always help my clients and ensure the entire process is as smooth as possible.

About 6 months ago and agent actually asked a question here on Trulia that blew my mind. She asked if she could legally go after her client because she found a willing buyer and her client was able to work out a deal with the bank to keep her home. She was going to lose it and was trying to do a short sale to avoid foreclosure.

During the process the bank was able to work out terms and at the same time her agent found a willing buyer. The agent asked what she should do about getting that person to pay her the commission. I honestly let her have it and I received a best answer from the Trulia community. I told her that she must be a starving agent who was desperate for that commission. She should have been happy for her client being able to keep her home instead of being forced to sell and rent an apartment or home instead. I just couldn't believe that agent would pose such a question. With people like that in our business I can definitely understand your concerns.

As a Realtor there is a code of conduct that we all must follow. My duty to my clients is to not only get you the very best deal but also to look out for anything that could happen to you along the way. It is my job to educate you on the market and what homes are selling for. When it's time to put in an offer I don't directly tell you what to offer but my job is to inform you so you can make an educated offer based on the facts. What comparable homes actually sold for as those homes were successful in obtaining their objective.

I help a lot of clients relocating here form California and the rest of the country with companies growing in the Austin market like PayPal and many others. I would be happy to assist you in any way that I can. If you really want to save some money I am also a licensed mortgage broker and can give you an absolute fantastic deal on your financing far better than what any bank or broker can even offer you.

If you would like to talk about how I can help you achieve the very best interest rate with the lowest fees available please give me a call. If I am making a commission on the real estate end I will get you the absolute lowest wholesale interest rate available on the market with the lowest fees, guaranteed. Even my normal offer to a client beats just about every bank and broker in town so I can definitely save you a lot of money.

Call me if you would like to discuss and see if we would be a good fit to work together. Best of luck to you on your move to Austin.

Don Groff
REALTOR® | Mortgage Broker
Keller Williams Realty | 360 Lending Group
o 512.669.5599 m 512.633.4157
listings@dongroff.com | http://www.AustinListed.com
0 votes Thank Flag Link Wed Aug 29, 2012
My only comment is referring to the agent who wanted the commission paid. I would be thrilled that my clients could keep their home. My comment refers to the contract signed when a home is listed. The agent, in most cases contracts with the homeowner (seller) to find them a qualified buyer at a given price and for that a fee is owed (commission). Correct? I can see the point of someone who signed a contact, did the job that they were contracted to do, and then were not paid. Be it a lawyer, programmer, Realtor, or mechanic. I suppose that sometimes there are circumstances that affect things, however to play devils advocate here, the agent did spend time and money to do the job contracted to do and to expect the contracted payment in return can't be viewed as terrible behavior.
Flag Sat Sep 1, 2012
Hi Felix,

First, I would be really excited to work with you, and we can discuss any incentive structure that you deem fair and do our best to make it work. On a side note, the economist in you probably has given this some thought, but I never liked the argument that the buyer pays all commissions. I understand they are the only one's bringing money. However, tell that to the seller who is underwater and has to bring money to the table....I promise you....they feel it is coming out of their pocket when they see the line item on the HUD.

I digress. As for negotiating, I want to let you know that I enjoy that aspect of the job. We will do a thorough market analysis to determine our market value and negotiate from there with that being top dollar you pay.

Please feel free to contact me anytime.


Steve Nusinow
0 votes Thank Flag Link Wed Aug 29, 2012
A good buyers agent who is able to negotiate well will receive more than adequate compensation when the deal is closed. Their reputation will spread thru the area and the repeat business will make it all worth the effort. The industy has many personality types and hopefully the good one's will come out on top in the long run. There is no room for part time agents.
0 votes Thank Flag Link Wed Aug 29, 2012
Hi, Felix,

I am interested. Contact me and tell me what you have in mind. However, you need to know that a buyer's agent (if a representation agreement is signed) should and will represent the buyer's best interest regardless of commission. The conflict of interest could appear only if there is no representation agreement because then the agent is a subagent for the seller. Call me and let's talk about it. I will give you a quick lesson in who represents whom in a given situation (i.e. brokerage services)

Vivianne Dordea
Sierra Homes Realty
0 votes Thank Flag Link Wed Aug 29, 2012

Your question is interesting. A buyer agent works for YOU. They are negotiating on your behalf and performing a fiduciary duty to help you find and negotiate the best deal. The SELLER - not the listing agent - is paying the REALTOR® fee. There is liability on both brokers. If the buyer agent was not under contract with you, the buyer, (it is referred to as subagency) they would technically be under the listing agent's liability and basically have the seller's interest and not yours and not compelled to work hard to find you the best deal possible. They cannot point out flaws but literally just tour you around and provide you information that is public. Do you want that kind of representation or do you want someone who will actually provide discovery?

Look at it this way: You are getting representation for FREE! Although...

A buyer agent CAN charge you fees. We could charge you a one-time fee for showing you a home. Or we could charge you an additional percentage of sale. We could charge you just time and gas. It's endless. And all negotiable. The point is, each scenario based on the agreement set forth between the seller and the listing agent is already in place.

A good agent should set out making your role as easy as possible and make it a memorable experience. I would like the opportunity to be your REALTOR®. Feel free to contact me below.

Laura McMillan
AVALAR Austin Real Estate
0 votes Thank Flag Link Wed Aug 29, 2012
As I replied to Lynn below, it is not really for free. It is an indirect cost. A seller has the ability to pass on higher costs to buyers. The actual cost is not determined by who writes the check for the bill, but it is actually split between the buyer and the seller depending upon their price sensitivity (i.e. elasticity).

In principles, we teach this in illustrating how tax incidence of a government sales tax does not impact tax burden.
Flag Wed Aug 29, 2012
Hi Felix,

I am a Realtor here in Austin and I would be happy to work with you. Feel free to give me a call or email me anytime.

Dan Burstain, Realtor
0 votes Thank Flag Link Wed Aug 29, 2012
Additional note: When you sell a propery owner pays for all Realtors fees
0 votes Thank Flag Link Wed Aug 29, 2012
As an economist, I know that a seller merely passes on higher costs to buyers. The actual cost is not determined by who writes the check for the bill, but it is actually split between the buyer and the seller depending upon their price sensitivity (i.e. elasticity).
Flag Wed Aug 29, 2012
FYI - all Realtors are paid by the property owner whether location is :

Covers listing agent , buyers agent, tenant agent, or apartment locator

Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
Multimillion Dollar Sales Producer

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0 votes Thank Flag Link Wed Aug 29, 2012
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