Yes, it's typical fore RE agents to post references on their websites or include the letters in their listing presentations - with approval by their clients - they had better be able to substantiate the recommendations.
I understand what you are trying to say about treating clients differently if the properties are significantly differ in value â€“ I agree with you that if I list a $5M property, it will be treated differently than a $500K property.
However, the fundamental difference will be how to market the property to gain the exposure each requires â€“ the market place and medium will be vastly different and the potential buyers will be luxury property buyers vs. first time home owners (this is in Marin property terms). The marketing material will also be different (such as you might want to have a movie made and ad posted on luxury property magazines/websites for a $5M property but it will totally not make sense to have a virtual tour made for a property that needs a lot of work and shows poorly); the house might be by appointment only and might not have many public open houses, etc. You get my point.
How I treat each seller will not be different just because the price points are different. I will also negotiate from the sellerâ€™s side the same way for both types of properties.
For $5M buyers vs. $500K buyers and how to negotiate; I guess I canâ€™t think of anything thatâ€™s much different one from the other; other than, again, the potential differences in mentality of sellers. I might even show the $5M buyers fewer properties than the $500K buyers just because there will be less to choose from and possible more specific requirements; then again the opposite can also be true. On negotiation, for the same 10% I negotiated for my clients, one will receive $500K reduction and the other, $50K. I guess that should make up for the difference in commission.
Do I make $20K vs. $2K commission (hypothetical numbers proportional to $5M vs. $500K) mostly due to the physical effort/hours I spend on each property or due to the experience, knowledge, skills I have accumulated during the years I would like to think itâ€™s the latter rather than the prior.
Am I motivated by money? Yes, I am, just like everybody else; if not, I wonâ€™t be working at all. But I am more motivated by doing the right thing because we all know, the rewards will come naturally (if you built it, they will come).
The results and satisfaction of my clients are extremely important for me â€“ I believe in everything is possible. So, I am counting on my $500K owner to trade up to a $5M property in the future, and I had better be the one to list it.
It's kind of late, just got back from Tahoe, hope I am making sense.
First, I am sure some agents out there will take up on your offer, but you asked for our own opinion, and here is mine. It might sound like a stock answer, but this is what I truly believe in and what I practice â€“
Negotiating on the behalf of my clients is my fiduciary duty when I signed on and took the job to represent them.
I treat all my clients equal and I try to find the best property to fit their needs and negotiate on their behalf to get the best deal for them, thatâ€™s just what I do (and I am proud of my negotiations :-)).
I don't spend the time worrying about if I am going to get $X dollar extra incentive from one buyer vs the other, nor do I worry about if I am get X% of commission from one property or another.
Do you want an agent not to look into a certain property because the seller may not be anxious to sell and may not want to negotiate or do you want the agent to treat each property the same and find the best one for you? â€“ A reality on pricing and negotiation â€“ motivations of buyers and sellers.
I donâ€™t have to decide if one client is more important to me than the other â€“ Shall I treat a $1M buyer better than a $500K buyer? What do you want and how do you want your agent to treat you? Thatâ€™s the kind of agent you want to look for not the one only motivated by $ signs. .
If my clients love what I do for them, Iâ€™d love to have them write a recommendation letter, refer me to their friends and families, and use me for their future transactions.
Thatâ€™s the best bonus structure I can think of.
Happy New Year.
As a seller, I periodically offer a buyer broker "bonus" of 1% over the standard buyer broker commission. This is on a high end house so it a substantial amount. My agent told me that it really will not make a difference - the Buyer's Agent will show the house if it meets their client's needs. My agent was right.
I do think that the reverse is true - consumers who attempt to "squeeze" an agent on commission are penny wise and pound foolish.
I think a bonus to buyers agent paid by the buyer is a nice thought. It is not too complicated to me. You are talking about giving your buyers agent an incentive to dig a little deeper for you. I do not think it is necessary if you hire a great agent; however, if it makes you feel like you are sharpening their skills then go for it.
For me personally, I dig in deep for my clients regardless of the commission waiting for me. For me personally, the satisfaction is knowing the I truly helped my clients and did right by them... the paycheck is reward. Quite honestly, my reasons for digging deep and negotiating hard are also selfish. When I get my clients a great deal and represent their interest... it shows in my statistics of sales price to list price for both buyers and sellers plus with sellers it shows in days on market. And I get to use those statistics to earn more clients. It strokes my ego because it cements that I am one of the best agents in the marketplace. My clients refer me and one of the things that I am told is said about me is that I fight for my clients interests.
I agree with Sylvia. I am not going to treat clients different because the paycheck will be less or more. Is there a difference between marketing a $5 million dollar home compared to a $500,000 home...you betcha. Can the needs of a $5 million dollar buyer be different than a $500,000 buyer...you betcha. Two $500,000 buyers can be different and have different needs. I am about catering to the different needs of my clients which makes the service each client receives a little different not because of money but because of the client.
I would say that many top producing agents are more motivated by ego than money. I have seen top agents take a listing for free just to keep a competitor from getting the listing so that it is their sign consumers are seeing... that is about ego. Some may call this stupid but the agent would disagree... he is in Arizona and he basically owns his market. When people think of real estate they think of him. His team closes 300 plus homes a year.
My point to you, Walstmnky. It is not all about the money!
[[If my clients love what I do for them, Iâ€™d love to have them write a recommendation letter, refer me to their friends and families, and use me for their future transactions.]]
Those are great ideas. Is it typical for RE agents to post references on their websites?
[[I donâ€™t have to decide if one client is more important to me than the other â€“ Shall I treat a $1M buyer better than a $500K buyer? What do you want and how do you want your agent to treat you? Thatâ€™s the kind of agent you want to look for not the one only motivated by $ signs]]
In terms of treatment, of course one should treat all their clients in the same manner. However, business sense tells me that someone doing a 1MM transaction should get more of your time and effort than someone doing a .5MM transaction. It's basic business. You are getting paid 2x more for the first transaction, hence it should require twice the energy, effort, due diligence etc.
Wouldn't you want to get a 2x better car if you paid 2x more for it? And possibly a better service at the dealership during the sale, during maintenance visits, etc.
With that being said, why should the buyer get a portion on a persons paycheck that they are not paying? There are agents that earn the business through referrals from providing excellent customer service and represenation and there are agents that feel they need to "Buy" the business by offering a portion of their paycheck to "buy" clients probably because they have not provided excellent customer service or representation and are not getting referrals and repeat business.... bad representation and/ or bad customer service usually equates to poor negotiation skills so that "buyer rebate" one thinks is so great actually cost them thousands because they did not get the best deal on the home or some important details were missed. In my experience, agents that have a lot of business and receive referrals for buyers because of their excellent service and representation of their clients do not have to "buy" the business with buyer rebates.
It always amazes me how quick some people are to ask an agent to give up their paycheck. I wonder do they do this with their doctors, attorneys, CPA's, dentists, etc. I wonder how excited these people would be if someone ask them to give up a third or half of their paycheck.?
Brian... I disagree with discount brokers doing more transactions than full service, full representation brokers because they discount. In Georgia, the discount brokers combined do not hold much market share... they do not hold enough market share to show up on our charts.
I do agree with you Brian that an agent choosing to offer a reduction in their commission to benefit their clients does not make them a poor agent. I am not one of those agents. There are poor agents charging a premium and there are poor agents discounting their commission rates. Commissions are negotiable.
Every agent should be entitled to charge what they want to charge for their services with permission from their broker.
The only problem that I have is with agents that reduce their commission and deliver poor service and representation because they reduced. Should the client be cheated because they chose to accept a cut in pay?
Maybe I'm a simpleton, but WAY too complicated for my blood.
Honestly? If it takes this much thought and analysis for a buyer's agent to do for her buyer what she should do as part of her fiduciary duty and obligation to her client, the client should be looking elsewhere.
I am not trying to step on anyones toes, I heard of something interesting and I thought I inform a HOME BUYER not real estate agent of it.
I do not have any type of documented evidence supporting my statement that eperks (discount) agents close more transactions. It was only an assumption, my apologies if it came off as fact.
Walstmnky you can still offer your bonuses and incentives but it would be at a reduced cost given you are already offered other incentives. Personally I think it would be foolish not to look into something like that.
Not saying all agents are the same but a $300k fee to sell a $5M is a bit much.
>> With that being said, why should the buyer get a
>> portion on a persons paycheck that they are not paying?
Where did you get that idea from? The idea I am proposing is the opposite of "discount brokerage rebates". The buyer's agent gets paid a bonus for negotiating a deal that is extra well-priced (read: low) from the buyer's point of view.
As for Brian, I'd recommend he take a basic reading comprehension course.
>Brian - I would love to see backup research to prove that discounts agents close more deals than full service.agents. I cannot back it up - but I rescue a lot of buyers/sellers from discount agents....my guess, from experience, is that it is the other way around!
>While I find theidea of a bonus structure interesting, the bottom line is that there are poor agents, good agents, really good agents, and GREAT agents. When choosing a buyers agent, ask them for specific negotiation examples.
And one hint....if they are quick to give you THEIR money in the form of discounts....what are they going to do with YOUR money when it comes time to negotiate with the seller?
You get what you pay for. Good luck! It's a great time to buy!
If they accepted it on the side they would be stealing.
Brian, You are selling Eperks.com. Part of the rules of this site are that you are not allowed to solicit. I am sure this was an oversite on your part.
To put it in simple terms, the buyer pays his buyer's agent an additional bonus (let's not commission) if the agent negotiates a price lower than a certain threshold. The lower the price, the higher the bonus. That's all.
Some full price agents on this site claim discount agents are of poor quality, however I tend to disagree since I'm sure they close more deals as a result of their discount offerings.
>> First of all discussing commissions is not allowed by most real estate boards so I doubt you'll get a lot of discussion here.
I beg to differ. There are some threads on trulia that discuss commissions.
>> Additionally, it would give an economic incentive to search out the most overpriced listings and negotiate down from there.
That assumes a naive buyer. Buyer will only move to make an offer if he feels the price is about right. After the 20 overpriced properties are rejected by the buyer as not even worthwhile to visit, the buyer's agent will learn not to bring overpriced properties.
>> There would be little or no discount on a very well priced, perhaps underpriced, "hot" property.
Great. Then if the buyer and the agent agree this is a good deal, there won't be any bonus, but the agent will get 3% of nearly all of the listed price.
Of course it is more work for the buyer's agent, but also potentially more reward.
>> the Buyer's Agent would have to do more work to secure this desirable property, for less commission.
How is that more work and less commission? There is no way that the buyer's agent gets less money. There is only the possibility of getting more money.
Once again, the extra bonus is paid for by the buyer, as service to the buyer's agent.
Additionally, it would give an economic incentive to search out the most overpriced listings and negotiate down from there. Think this through. There would be little or no discount on a very well priced, perhaps underpriced, "hot" property. There may be a very substantial discount on a stale, grossly overpriced property. If there is a lot of interest in the first property, and I see some of these even in today's market, then the Buyer's Agent would have to do more work to secure this desirable property, for less commission.
So this commission structure would not work for me.
I personally believe that a buyer should not have to pay a "bonus" when an agent negotiates a lower than typical purchase price. It is the buyer's agent to do what's in the best interest of the buyer and get the lowest price possible without an additional incentive. If you believe your agent will not use all negotiation skills without receiving more than the commission offered by the seller, look for a new agent. I personally would not enter into such an agreement with a buyer.
The bonus will be paid by the buyer, this bonus will be agreed upon in a buyer's aggreement, and it will be paid to the buyer's agent directly, as a free for services performed. As a matter of fact, the buyer's agent will take the money directly into their own pocket - no need to give the broker a cut.