However, from a contractual standpoint you two are talking about two different things. The listing agent has an agreement with his client. And whether the client's agreed to pay a 10% commission, or 6% total commission, or a commission split that might be specified in the agreement, that's the amount that the seller has agreed to pay.
On the other hand, you have an agreement with your client as a buyer's agent. What your client has agreed to pay you is between you and your client. Now, if the seller has agreed to pay x% as a commission, and that fits in with what your commission will be, that's fine. But if there's an apparent mismatch--as there appears to be here--then the agreements (in this case, the one you have with your client) makes clear where the additional compensation will come from.
I'm not even sure I'd try to educate the listing agent. Just make clear that you're comfortable (and your client's comfortable) with the details and the arrangements. Here's the offer....
Buyer agency works for the listing broker to limit the liabilities stemming from the misdeeds of others. As for the buyer rep, it ensures a commitment from the buyer to guarantee a fee at minimum for services provided. The intricacies of negotiation is separate from "how buyer agency works". It is a technique, not a service.
Here's where the confusion seems to be. I'm advocating that if the SELLER has agreed to an amount to co-broke to a sub agent, or brokers agent, the same amount should be available to the buyer for a buyer's agent. Outsiders are well past sub agency, or the ambiguous broker agency in New York.
If a listing agent in NY advocates to the seller to offer less to a broker offering a buyer represented by a buyers agent, in this or any market, they don't understand buyer agency, and it's permanence. Those that decide to engage remain loyal to the practice, for both sides. This is a buyer vehicle that is going to overtake the antiquated alternatives.
With that belief, I also don't agree that the above statement "furthers the cause", and here's why:
A fee for buyer agency is negotiable. "Building it in" is deal-specific, based on what the sellers have offered to other agencies, and what the buyer is willing to pay. It's not about what the buyer's agent is adamant about accepting.
Just as listing agents are under the gun to justify fees, so are buyers agents- with fiduciary to the buyer first (which includes putting their financial best interest above all). At least, in NY.
I think as time progresses, more agents, both new and seasoned - will realize how buyer agency works and how to negotiate a deal - in general - given any factors that may arise.
Clearly - the ART of negotiating is NOT something every real estate agent understands - but that's been apart of the business long before I got involved.
Anyhow - thanks for the feedback!
What it comes down to is this - the seller is going to pay what the seller agrees to pay towards cooeperation whether it is greater than, less than, or equal to whatever the buyer agent has contracted between themself and the buyer. Typically, all the money is coming from the transaction - first from the buyers "pocket" to the seller (why wouldn't a buyer want a say in how his money is getting split?), then from the seller towards commissions. If the seller is offering less than what a buyer agent has contracted - so be it. At this point, it is strictly up to the buyer agent and the buyer to discuss the remainder of the buyer commission and how or if it will be paid or waived and in no way should impact the seller beyond what the seller has agreed to. Make the deal or break the deal but remember - the client comes first.
1) for a Listing Agent to discourage a Buyer agent from showing a house or presenting an offer becuase they might ask for a certain percent of commission and/or
2) for a Buyer Agent to refuse showing a house or presenting an offer because he might or might not receive a certain percentage of commission
Because unless the house is being shown and the offer is being presented and negotiated, an agent will never know what might come of this. That's called negotiation.
Noticed I did not bother to say which side in the last comment. Without going into an endless loop - the whole thing can be looked upon both ways.
And it does not matter how you dice it, there is a net to the selling price / purchase price. Again, that can be looked at from both sides.
I hope I have not enraged all NY agents because I am getting myself into trouble with both sides coming from a clueless CA agent (again!) and I agree, it's easy for me to say it because I am not in the midst of this.
So sorry. Maybe I have to destruct these postings again! .
Gonna go and get ready.
This is very simple from what I can see - You signed a Buyer Representation with your buyer which says your commission is 3%. To the buyer, you are worth that much.
So, when you put in an offer on the house, knowing that the seller (or L.A. with seller's blessing) will only pay 1% to you, then you should ask your buyer to pay the additional 2% because that;s what you are worth to him, not to the seller. Or his offer to the seller will be 100% (or whatever) with 2% of those specifically goes to you.
Just like you said, you are not concerned about what the listing agent makes, you only care about what you are making. The same argument can be that the listing agent don;t have to care about what you make, they only care about the agreement between him and the seller.
If you are skillful enough, you will negotiate so the seller will accept the 98% or you will negotiate so the buyer will pay the 102% and you get your whole 3%.
If I am a seller, why would I want to pay 3% to a buyer agent so he can negotiate for a buyer? Yes, you brought a buyer here, but again, if your buyer likes the property and the seller offers you 1%, will you not show the house or will you tell your buyer that you two has the agreement that if you found him a great house, you get paid 3%, and now he has to pay for the difference? That is what you are doing, right? Searching for a home for your buyer.
There are definitely two ways to look at things, all depends on which side you are on... ...
listing agents and sellers have a goal - to sell the property .
"Dealing" with a buyers agent is simple - build the fee into the deal - period. It makes absolutely no sense for a buyer to pay by separate check - the "extra" fee amount. That's downright ridiculous.
And YES - I like what many have said on here - exposing listing agents who take a 5% listing and pay out 2%....or even 1% - because they "market" the property...lol - yah.
I have wonderful verbage i wrote on my binders that spells out my fee for service beautifully.
Eric - I liked what you said about the "amount equal to the listing agent commission..." - HOWEVER - I am totally not concerned with their fee. Their fee is their business.
MY FEE is 3%. I do not negotiate a listing agent's commission - it doesn't make sense for them to dictate mine.
The real problem is we have way, WAY too many people in the business who just simply do not have a clue. They're not business people. They do not understand the art of negotiation and thus - allow emotion to get involved and say to themselves "I'm not going to let you make more money then me... blah blah blah"
Had a guy almost kill a deal because of this - In order to represent our client - we decided to lower our fee for service - he said, "i've been in this business 30 years...blah blah blah..." The funny thing is - at the end of the day - this....agent (I want to say idiot with 1 year of experience repeated 30 times over and over again) didn't verify c/o's and the deal was killed when the seller pulled his home off the market.
Anyway - negotiation is not about emotion and it's NOT my fault that most agents out there are actually taking 4% listings and some of them are paying out 2%. I come in with 3% fee and they get bent - simply because....they're not business people and ultimately are in the way. I can tell you this - the "extra" percent I am making on my transactions is adding up.
When writing an offer to include buyer compensation, one can specify the requested amount, and I think it best to also include some language to the effect "or an amount equal to the listing agent commission which ever is greater/lesser". This sometimes may result in a lower than desired commission but an equitable one. Doing this does two things.
It specifies to the seller and listing agent the request for compensation. What it also does is open a dialog for the seller to address with the listing agent, exactly how the commission should be paid. I find sometimes, the sellers are not always as aware of the cooperative compensation being offered and that it may not be equitably split. Remember, as buyer agents, we cannot negotiate what a seller will pay a listing agent, however, as buyer agents, to specify our compensation at a minimum of being equal to the listing commission opens the door for the listing agent to step up and make the deal work it the offer is otherwise acceptable.
If the negotiated commission is less than contracted, then there is a dialog between the buyer and buyer agent on how to handle the outstanding contracted balance. Waive all or some of it or have buyer pay out of pocket are the choices.
Tom knows, via the mls, that there is a percentage offered for cooperation, and is simply requesting that (or a like) amount to represent the buyer, at no extra expense (typically) to the seller.
Our practice is that in Listing Agreement, the seller decides the commission to pay and we split that with the S.A.. However, CA agents do the transaction from start to finish, we don't use lawyer's service. So, I can't answer your question about what happens of S.A gets 0 or 1%.
Laurie - Your statement says it's an inequitable split (in the eyes of Tom's buyer). I re-read Tomâ€™s question a few times. There is no mention whether the whole commission is 2% with 1%/1% split or if it's 3% L.A. and 1% S.A.; and no mention of the BUYER thought itâ€™s inequitable, so I donâ€™t know where you read that?
What I read was that Tom's agreement says he'd get paid 3% commission as buyer agent regardless. This L.A says the S.A. gets 1% (again Tom did not mention how much L.A. is getting). So, to me, Tom is saying whatever price the buyer offers, his 3% commission is built in and it's foolish of seller not to pay him 3% if the seller wants the sale. I can agree if the L.A. is getting much more than the S.A. then there will be inequity, but I donâ€™t know that from reading the question.
I am very curious about this because again, in CA, customarily is commission split 50/50. I recently have a S.A. made a counter offer with commission from 2.5% to 3%, which will cause inequitable split. She sent that offer in along with a (rude) email saying how my seller should do that otherwise lose the deal. In this case, my client is already losing a ton of money from the sale, and she would not want to lose more by paying more commission. I personally would have kicked in that 0.5% just so that it'd work for my client if not for the very low ball offer which would not have worked anyway.
Either way, when I saw her offer, I thought of how greedy she was and how she could have explained that to her client - that the purchase won't go through unless she gets that extra 0.5%. Is it true that her client wants that house but net enough if SHE does not get that extra 0.5%? I could not comprehend. Again, she would have gotten 2.5% which is not a small sum. Where does the fiduciary duty lie in her case? Exactly what I thought at the time and still now.
So, sorry, CA is quite different from NY and Tom is from NY.
Now, if you all think I am muddling the water by bringing up a totally different pracetice, then I will delete both of my answers. .
I am confused by your question and your reasoning.
I represent both buyers and sellers, but I am not an exclusive buyers agent where I sign a contract with my buyers saying I demand to be paid a certain commission if I represent him/her on the purchase of a home. I usually get paid according to the agreement between listing agent and the owner.
So, now you are saying that is a house is priced at $100,000. The listing agreement says the commission will be 5% split between listing and selling agents. You come in with a buyer, you will then demand you get paid 3% while the listing agent get paid 2%?
And if the listing agent (after he did all the work to advertise and market the property), said, he will split the 5% with you 50/50 as agreed with the seller, you will not recommend your buyer client to buy the house and the seller will lose the buyer and the listing agent is not acting upon the sellers' best interest?
My question to you then is, are you acting on your client's best interest for not encouraging your client to buy the house because you are not getting paid your 3%?
Just a thought to look at it from the listing agent's angle and let me know what you think.
I want to emphasize the fact that I do represent both buyers and sellers and I tried to get the best deal for either depending on which side I represent, so I have no gain in your answer here either way.
Also note the money the seller is paying commission with is coming from the buyer's pocket to begin with. Indicate this and let the agent know this is what the buyer requests of the seller for their participation in the sale. Basically, it is giving the buyers a say in what happens with the money they spend for your services. NYS does not disallow you to negotiate your fee via the purchase offer. What you cannot do is determine what the Seller will pay his representative in this scenario. It seems this needs to be clarified with the seller's representative for better understanding.
Bottom line: what is in the best interest of both sides of the equation? Certainly not the pocket of the listing company. Practices vary from area to area; New York is notoriously slow on the practice, acceptance of, and cooperation with the whole notion of a buyers right to be represented. Most areas don't give this practice a second thought, nor do they intentionally create problems to the disadvantage of an unknowing seller.
Realtors are ultimately charging what they believe their value to be.
The greedy listing agent just wants to collect more from the seller- ignore it, and go to the seller (as is permissable) directly with your offer. THAT'S fairness to the seller.