Are you asking about a brokerage that offers rebates to the buyers? Are you talking about the buyer who comes to the open house, or asks you to show them property, only to go to a rebate company as a buyer agent? That is the only discount scenario I can assume you mean on the buy side. I am in NJ and rebates are against the real estate code here, although legislation has been introduced to change that.
I believe in honest pay for honest work and do not ethically or morally support a seller and a seller agent paying a commission to a buyer agent if the buyer agent does not fulfil the work expected. The seller and seller agent discuss commission at the time of a listing contract. The co-op compensation is predicated upon the fact that certain duties and work will be performed. MLS rules were written without consideration of the various forms of new business models. Many of the MLSs will need to update their rules to recognize variations of compensation that are reasonable, ethical, fair and legal given the developments of non-traditional brokerages. A free market society is a great thing, and new business models will bring both positives and negatives. Consumer choice is fine. Taking payment for work not performed is not fine; itâ€™s dishonest. When a buyer agent does not perform their duties, it is a violation of both the seller and the seller agent. Exploitation is wrong.
I will accept a buyer who comes to an open house, from any source, and recognize their buyer agent. This would include any discount broker/rebater. My complaint with discounters or lazy full service agents is only if I am expected to do their work for them. I donâ€™t consider allowing a buyer to tour my open house a fact of me doing their work for the buyer agent, whether they come from a discounter or a full service traditional brokerage. I welcome all buyers to come to my open house. I advise them I am the sellers agent and working on behalf of the seller. I provide them a written disclosure on agency relationships. Then I ask the buyer whatever questions I think are reasonable about their intentions, motives and capabilities. I have already disclosed my role as sellers agent, so I am now free to ask away.
I do not accept that same buyer, post open house, contacting me to open the home for inspectors, appraisers, and follow up visits. Nor do I accept the buyer calling me for information for comps, or answers to questions that should be directed to the buyers agent. Unfortunately, for listing agents in this predicament, they often absorb the buyer agent duties in order to make the sale work for their seller. I consider the pawning off of buyer agent duties on the listing agent as theft by deception. It may not meet the legal definition, but it meets my ethical definition.
We do not have rebates in NJ. I have worked opposite on a transaction of agents who were less than diligent in their efforts and have had to pick up the ball as a result. :( We have all been there. I anticipate, in the near future, that we will see changes in how compensation is defined in MLS. Previously, â€˜dutiesâ€™ have not been defined, as we all assumed we knew what a buyer agent would do. Maybe, we can no longer make that assumption. Maybe we need to now spell out this is what you get paid for doing X.
Yes, I still welcome all to my open house.
I agree w/ your view as it applies to having a listing agent set an appt and show a property to buyer for a buyer agent. I agree that the question of procuring cause is raised. Although, procuring cause is far more complicated than one random act. I have far too often heard agents claim one individual act determined procuring cause. But, ethically and morally, I am 100% in agreement that a buyers agent owes it their buyer to show them the property, be there for them, know the inventory, and represent the buyers interest in order to claim the right to be paid. The act of showing a buyer a property for a buyer agent may be one factor in the determination of procuring cause, but may not stand on its own as procuring cause absent any other follow through w/ the buyer.
On the subject of open houses, I don't see the purpose of the open house an act on behalf of the buyer, but rather a promotional activity on behalf of the seller. I am one person, and I might be doing a public open myself, or with other buyer clients. I would not want my buyers to be snagged by the open house host simply because I did not accompany them to an open house. I might have invested months of work with the buyer and I realize the same may be true for buyers of agents who come to an open house that I host. I wouldn't want to tell my buyers, "You can't go to an open house unless you call me ahead of time." And, really, would you want to pass up a possible contract for your seller based on that?
In the spirit of good working relations with other agents and on behalf of the seller, I welcome any buyer to attend an open house, and will respect their relationship w/ their agent. I also remind them that I am the sellers agent and working on behalf of the sellers interest. After providing that disclosure, I will listen intently for any clues that will help my seller in the event the interest is serious and an offer materializes.
Now, if you want me to arrange me schedule to make an appt to show you property, I do that only for my buyer clients and on occasion for a Realtor who has reason why assistance is needed.
I know we all face growing business practices that we all think are unethical, but it is not our job to use are clients to fight our battle. There are other ways, and you are behaving just as badly as any agent that doesnt show up. Your clients come first.
When I host an open house, I am there for my sellers benefit. As such, I have not made an appt or taken my time time to meet a buyer and do the work of another agent.
If a buyer called me and wanted me to show them a property I have listed, I would explain that I only work with buyers with an excecuted buyer agency agreement. If they are unwilling to those terms, I am unable to show them the property, however, they are more than welcome to arrange a showing through a buyers agent. (I also disclsose this fact to sellers when I list a property.) As a courtesy to a professional agent who needs assistance, I will show a property if the agent calls and requests and I consider the reason for the request reasonable.
I have a sincere desire to work in my sellers best interest. I follow the guidelines above so I can meet my fiduciary obligations to my seller and preserve good business practices, time management and self respect for myself.
In the greatest state of California, even though we follow NAR MLS model rules, we cannot start adding these type of instructions in our confidential remarks. Let it go Johnathan! As all the others have stated, how DOES a client find out about a property? If they come to my website and I have IDX am I procuring cause? Buyers love to look at open houses. Heck, your Sellers where probably out looking at houses before you listed their house. Do you owe those other agents a piece of your fee?
The constant discussion of commisson on this site is somewhat disturbing. It would make great fodder for the boys at Justice!! Alternative models all sprang up as the market allowed and wanted them. The market giveth and the market taketh away!! After "Black September" we shall see who will be standing come the spring market!!
Good Luck though and i apologize if you took it directed at you.
I also don't understand why you'd not want buyers without agents at your open house and why would an agent not be eligible for compensation unless he/she accompanied the client to an open house. Aren't you required to pay compensation to anyone who participates in your local MLS? In my area, your MLS script would be a violation of MLS rules as you are attempting to modify the compensation rules that are part of the MLS rules. All offers from participating brokerages are entitled to the commission that's published through the MLS whether or not they were there during the open house. Since you ask about opinions, I have to say I don't think it's a good idea as I don't think it helps market your client's property.
WE WILL ONLY COMPENSATE BUYER BROKERS WHO HAVE A BUYER AGENCY AGREEMENT EXECUTED PRIOR TO THE PROSPECTIVE BUYER VIEWING THE PROPERTY.
This sounds alot like what Jonathan is trying to do, but a little different. Would this stated policy fly in other MLS boards?
But I see where you are coming from. I had a buyer in one of my open houses recently that asked me to gtive him a 1% rebate back since I was double ending the deal. I saId "NO."
He went out, found an agent that was willing to do this, and she called for more info on the home without ever seeing it. I asked her if she was giving the buyer a rebate and she said she was. (Why would you even admit to this?) Good for me and my seller! I knew if an offer actually transpired, I was in the winning seat. (If she would give away her own commission, how hard would she fight for her client?)
After several phone calls telling me the contraact was on the way, it never materialized. Would I have been upset if the deal went through? Ultimately I would have been paid. But I would have been upset that the other agent would have made $$$ for doing very little work.
I don't think as a listing agent representing the sellers that you get to set the rule on whether a buyer agent can receive commission or not.
Did you sign a listing contract with the seller saying that you would be entitled to the whole commission, or the agent would not be paid a commission if the buyers walked into your open house and the buyers agent were not present? Did the sellers agree with that?
If a buyerâ€™s agent lead a legitimate buyer to your open house, whether it's by emailing the listing to you, or calling them on the phone to let them know about the listing, or even if they have worked with the buyers on and off and the buyers just so happened, walk into your open house all on their own and decided to buy the home that day through their agent whom you have never seen or heard of; as long as it's a successful sale, your sellers are obligated to pay the commission through you to the buyers agent as defined on the MLS. Did you write the offer for the buyers or did the buyers agent do that? Did the buyers agent negotiated on the buyersâ€™ behalf? You have to pay the commission whether you personally like the idea or not.
The only time I rejected an offer is when an agent from Los Angels called me (in Marin) and wanted to make an offer on my new listing. While talking to him, I found out that the agent is a new agent in L.A., does not know anything about Marin; and the best thing is; his clients only saw my web listing and never saw the house. I told him that itâ€™s not wise to make an offer without seeing the house. He insisted that his clients saw the pictures, and wanted to buy the house so he wanted to send an offer over. Knowing that the property is quite unique, I told him to send his clients over to my open house, and if they really wanted to, bring the offer at the same time and give the offer to me after seeing the house. The agent was very upset with me but said heâ€™d do that. Well, his clients came, and the house did not fit their needs. This is different from what you are asking, but just some related but quite ridiculous, irresponsible real estate practice by a discount (yes, he was going to give rebate to his friends/clients) broker who you would not want to give commission to. But if his clients did present an offer and they did the due diligence, Iâ€™d slip the commission with him â€“ My sellers would have sold their house and his clients were the ones who wanted to use him, not my choice.
Specifically, you are correct about what Jonathan is saying. Generally, he is stating that under certain circumstances, he will not pay a coop. That was my point about the pre-executed agency statement being similar to what Jonathan was stating.
Doing what's best for the seller is clearly priority #1, but what kind of agent would send a buyer alone to an open house is my question??? I don't think that sort of thing would fly here, but every market and its practices and rules are different.
Broker, CRS, GRI, ePro
Raving Real Estate
Laramie, WY 82070
Showing a property does not equate to procuring cause.
What is to stop someone then, from lying saying afterwards that the other agent sent them? If they don'tmention when they come to an open that they are working with another agent, then it is procuring cause.
More often than not even when they are contacted the offer will not come together.
So, we're back to the old "procuring cause" argument. I don't think an agent who does not contact me prior to sending a buyer to an open house or having that buyer set up their own showings with the listing broker is the procuring cause. I think that agent needs to do a basic amount of work tin order to be compensated. If you're interested in reading this compensation rule from my MLS, here's the link: http://www.mlspin.com/rules_regs/ViewArticle.asp?SectionId=3 Thanks, Jon