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Billy's Questions (0)
Billy's Answers (3)
Billy answered:
Everything is negotiable. Always.
But if you have a legally binding contract, the realtor will have the final word. You will be negotiating from a weak position - the realtor already has you tied down legally. They had a huge smile after you signed that contract, didn't they?
This means you better have something in your back pocket better than "the commission is too much" or "you're making enough off this deal". Those things need to be negotiated when you sign the contract, not after the service is performed. You will need to be pretty convincing.
Maybe your realtor will do it for you because they're a "nice guy". Don't count on this, in the end this is a business. You'll need to find something you can leverage.
So what's important to realtors that you can leverage?
The only thing I can think of is the potential for more money in the future for them. This means strong referrals for new business... you would need to convince them that your word can get them or lose them the listing for someone you have influence over.
Curious realtors - what things would make you consider lowering your fee during negotiations. Be honest.
But if you have a legally binding contract, the realtor will have the final word. You will be negotiating from a weak position - the realtor already has you tied down legally. They had a huge smile after you signed that contract, didn't they?
This means you better have something in your back pocket better than "the commission is too much" or "you're making enough off this deal". Those things need to be negotiated when you sign the contract, not after the service is performed. You will need to be pretty convincing.
Maybe your realtor will do it for you because they're a "nice guy". Don't count on this, in the end this is a business. You'll need to find something you can leverage.
So what's important to realtors that you can leverage?
The only thing I can think of is the potential for more money in the future for them. This means strong referrals for new business... you would need to convince them that your word can get them or lose them the listing for someone you have influence over.
Curious realtors - what things would make you consider lowering your fee during negotiations. Be honest.
Billy answered:
YES! Especially in the market in Florida right now. So many home people need to get out of. Even builders of new homes are negotiating ridiculous prices (yes they are, show valid interest and push back a bit, watch 'em dance for you.) 15% may not be low enough!
Billy answered:
Jr Wrote:
Actually, the buyers I've worked with rarely buy the home they see online or in an ad.
~~~~~~~~~~~~~~~~~
Did we just ignore the part about MLS, or do you counsel that your clients shouldn't list on the MLS also? Do you have a magic list of houses in inventory that only you have access to? 85% of people find their homes through the MLS or Realtor ... C'mon Jr, stop with the spins!
Actually, the buyers I've worked with rarely buy the home they see online or in an ad.
~~~~~~~~~~~~~~~~~
Did we just ignore the part about MLS, or do you counsel that your clients shouldn't list on the MLS also? Do you have a magic list of houses in inventory that only you have access to? 85% of people find their homes through the MLS or Realtor ... C'mon Jr, stop with the spins!
Greg Wrote:
I was smug seeing as got more for the property myself than the two "professionals" would've and I paid 0% commissions . . . I'll never look back.
~~~~~~~~~
You go Greg! It's a new world out there...
I was smug seeing as got more for the property myself than the two "professionals" would've and I paid 0% commissions . . . I'll never look back.
~~~~~~~~~
You go Greg! It's a new world out there...
Jr wrote:
Me: Fine, go for it! List it yourself, FSBO. It makes no difference to me. Good luck!
~~~~~~~
Not a FSBO Jr, theres a realtor in back of me, they just take $500 instead of $15,000.
Jr wrote:
... And don't expect me, or any other agent, to handle YOUR NEGOTIATION or call YOUR BANK or YOUR attorney to see what's holding things up. In fact, I will probably not be bringing any customers, they will all be clients, and in that case, I will be working against you, not for you.
~~~~~~~~~~~~~~~
Are these more scare tactics? More "Look at how complicated the Secret Art of Real Estate is"? Of course I do my part as the seller, my attorney is there for any legal issues, and the title company ... well, they do most of the work anyway, don't they?
And you'll work WITH me, because you want that commission and you don't want your buyers going to someone else. You'll close the deal and make everyone happy or you won't get paid. Stop trying to be scary.
Jr wrote:
Me: You don't have to do any work to market your home, you don't have to be available at all hours to show it and you don't have deal and negotiate directly with anyone, it's simple: but you have to PAY someone to do that for you.
~~~~~~~~~~~~~~~
Even more. Of course I will market my home. But over 85% of homes are found directly through the MLS and by buyers on Realtor.com, aren't they? I'm there. The rest of the marketing is easy. I have an electronic lockbox and the buyers realtor shows my home, it's the way the world works, doesn't it? Direct buyers work with my schedule and are happy to do it. Here is where you try to scare me about strangers being in my home. Negotiations - again, not rocket science when you know what to expect. Stop trying to make your job seem so complicated!
Me: Fine, go for it! List it yourself, FSBO. It makes no difference to me. Good luck!
~~~~~~~
Not a FSBO Jr, theres a realtor in back of me, they just take $500 instead of $15,000.
Jr wrote:
... And don't expect me, or any other agent, to handle YOUR NEGOTIATION or call YOUR BANK or YOUR attorney to see what's holding things up. In fact, I will probably not be bringing any customers, they will all be clients, and in that case, I will be working against you, not for you.
~~~~~~~~~~~~~~~
Are these more scare tactics? More "Look at how complicated the Secret Art of Real Estate is"? Of course I do my part as the seller, my attorney is there for any legal issues, and the title company ... well, they do most of the work anyway, don't they?
And you'll work WITH me, because you want that commission and you don't want your buyers going to someone else. You'll close the deal and make everyone happy or you won't get paid. Stop trying to be scary.
Jr wrote:
Me: You don't have to do any work to market your home, you don't have to be available at all hours to show it and you don't have deal and negotiate directly with anyone, it's simple: but you have to PAY someone to do that for you.
~~~~~~~~~~~~~~~
Even more. Of course I will market my home. But over 85% of homes are found directly through the MLS and by buyers on Realtor.com, aren't they? I'm there. The rest of the marketing is easy. I have an electronic lockbox and the buyers realtor shows my home, it's the way the world works, doesn't it? Direct buyers work with my schedule and are happy to do it. Here is where you try to scare me about strangers being in my home. Negotiations - again, not rocket science when you know what to expect. Stop trying to make your job seem so complicated!
Jr wrote:
Sorry Billy, I don't take agency listings...
~~~~~~~~
Jr, unfortunately for you I don't need you to take my listing. There are plent of limited service / flat fee MLS listing services who are glad to take my $500 and list me on the MLS, Realtor.com, give me a website, and market my home in hundreds of other places (via the MLS listing). I can run an open house, place a newspaper ad, and show the home myself, it doesn't cost me $15,000 for this.
Don't want to show my home as a realtor because I am listed in this manner? Ha, is this ethically looking after the best interests of your client? Shouldn't you be showing them the homes that are best suited for THEM, not your financial considerations?
No worries in any case, many realtors will show that home and I am glad to pay them the 3% if they bring a buyer. Those who evolve get the money while the dinosaurs go extinct. If a buyer comes in with a realtor, I will honor their commission (they're legally entitled to it) .. any further negotiations are between the buyer and the realtor. HOWEVER, I will also leverage my situation if I'm able to bring in a buyer myself (don't you do the same thing as a listing broker?) If I did the work to market that home, I deserve the rewards, there's nothing unfair about that.
Sorry Billy, I don't take agency listings...
~~~~~~~~
Jr, unfortunately for you I don't need you to take my listing. There are plent of limited service / flat fee MLS listing services who are glad to take my $500 and list me on the MLS, Realtor.com, give me a website, and market my home in hundreds of other places (via the MLS listing). I can run an open house, place a newspaper ad, and show the home myself, it doesn't cost me $15,000 for this.
Don't want to show my home as a realtor because I am listed in this manner? Ha, is this ethically looking after the best interests of your client? Shouldn't you be showing them the homes that are best suited for THEM, not your financial considerations?
No worries in any case, many realtors will show that home and I am glad to pay them the 3% if they bring a buyer. Those who evolve get the money while the dinosaurs go extinct. If a buyer comes in with a realtor, I will honor their commission (they're legally entitled to it) .. any further negotiations are between the buyer and the realtor. HOWEVER, I will also leverage my situation if I'm able to bring in a buyer myself (don't you do the same thing as a listing broker?) If I did the work to market that home, I deserve the rewards, there's nothing unfair about that.
Wow, lots of spin and scare tactics here from the realtors. Fortunately the Dark Ages are gone and The Truth is here for all to see. The Secret Art of Real Estate is a thing of the past. As a realtor, you will be successful if you learn how to operate in this new world of Information. Or you will become a dinosaur.
The truth is this - the process of buying and selling a home is not that complex, and there is plenty of information available EVERYWHERE for anyone who wants to purchase their home on their own. Yes, you need to be educated if you want to do it on your own, but don't let realtors scare you into thinking it's complex evil voodoo magic. It's not.
A couple of misleading statements repeated over and over again:
"Lawyer to review contract costs $500/hour"
C'mon realtors. You're not paying $500/hour for contract review. Unless you're doing a very complex sale, offer and real estate sales contracts are standardized. My lawyer offers copies of sales contracts for free and review of a sales contract costs $125. TOTAL lawyer costs for my last sale were less than $500. I await your spin.
"The seller pays the commission."
This is technically true. HOWEVER, a smart seller looks at the bottom line in the sale of their home. That means if I'm selling a home for $400,000 and paying 3% buyers broker commission, then my bottom line is $388,000
If a buyer is able to come to the same seller without a realtor, and the sellers listing does not obligate him to pay the commission in this circumstance, then the seller puts the full $400,000 in his pocket.
Suppose that seller gets 2 offers on this home:
Offer 1 : $400,000 and buyer has a agent who will get 3%
Offer 2 : $394,000 and buyer has no agent (so no commission will be paid)
All other things equal, which offer will I accept? Easy - offer # 2 because even though the price the home sells for is less, I get an additional $6,000 in my pocket at the end of the day! And the buyer - who did all the work of finding the home themselves and therefore deserves it - gets a $400K house for $6k less. Offer 1 with the buyers broker would have to bid at over $405,000 to even compete with Offer #2.
How do I know this? I've sold a house like this! Yes, it's legal. No, the lawyer didn't cost $500 an hour. No, I didn't collude. I simply made the best decision for ME as a seller when the offers came. Bring on the scare tactics!
Stop spinning the commission like it's a non-factor. It is a real cost involved with the sale and purchase of the house, and yes it can be negotiated and leveraged. And in the end, the buyer is effected by that commission, don't let the spin fool you.
"Realtors always negotiate the most terrific price"
Bull. Realtors - on both sides - want the home to sell and will do what it takes to get the sale done. Sellers realtors will happily have you drop price $15k if it means a faster sale, and Buyers realtors will happily put you over the top of budget or in a junk house they can to get that sale asap. 3% is alot of money and $10k-$20k in the home price either way doesn't really effect the bottom line. Go on realtors, tell me about the code of ethics and laws and how many hours of classes you took. The Truth is, your ultimate goal is to close.
Don't get me wrong - I don't have anything against realtors and the work on both ends does have alot of costs and time involved. But stop with the scare tactics already. There is a wealth of information and home sources available, and if your buyer is outpacing you, you're doing a bad job and they shouldn't have to pay.
As for the original question - if you signed the buyers contract with a realtor to pay them 3%, then you are contractually obligated to allow them the full commission even if they stink.
However, I think you are right to feel like they should rebate a portion of their commission in this case.
The problem is - most realtors probably won't - or can't - make this deal. Why should they - they have you right where they want you, and they have the law to back them up!
Moral of the story is - don't sign buyers broker contracts and you don't have to worry about this. If a realtor won't work with you without a contract, find someone who will. They're out there - there are TONS of realtors everywhere who will be happy to help you. If they do a good job, reward them with the sale.
The truth is this - the process of buying and selling a home is not that complex, and there is plenty of information available EVERYWHERE for anyone who wants to purchase their home on their own. Yes, you need to be educated if you want to do it on your own, but don't let realtors scare you into thinking it's complex evil voodoo magic. It's not.
A couple of misleading statements repeated over and over again:
"Lawyer to review contract costs $500/hour"
C'mon realtors. You're not paying $500/hour for contract review. Unless you're doing a very complex sale, offer and real estate sales contracts are standardized. My lawyer offers copies of sales contracts for free and review of a sales contract costs $125. TOTAL lawyer costs for my last sale were less than $500. I await your spin.
"The seller pays the commission."
This is technically true. HOWEVER, a smart seller looks at the bottom line in the sale of their home. That means if I'm selling a home for $400,000 and paying 3% buyers broker commission, then my bottom line is $388,000
If a buyer is able to come to the same seller without a realtor, and the sellers listing does not obligate him to pay the commission in this circumstance, then the seller puts the full $400,000 in his pocket.
Suppose that seller gets 2 offers on this home:
Offer 1 : $400,000 and buyer has a agent who will get 3%
Offer 2 : $394,000 and buyer has no agent (so no commission will be paid)
All other things equal, which offer will I accept? Easy - offer # 2 because even though the price the home sells for is less, I get an additional $6,000 in my pocket at the end of the day! And the buyer - who did all the work of finding the home themselves and therefore deserves it - gets a $400K house for $6k less. Offer 1 with the buyers broker would have to bid at over $405,000 to even compete with Offer #2.
How do I know this? I've sold a house like this! Yes, it's legal. No, the lawyer didn't cost $500 an hour. No, I didn't collude. I simply made the best decision for ME as a seller when the offers came. Bring on the scare tactics!
Stop spinning the commission like it's a non-factor. It is a real cost involved with the sale and purchase of the house, and yes it can be negotiated and leveraged. And in the end, the buyer is effected by that commission, don't let the spin fool you.
"Realtors always negotiate the most terrific price"
Bull. Realtors - on both sides - want the home to sell and will do what it takes to get the sale done. Sellers realtors will happily have you drop price $15k if it means a faster sale, and Buyers realtors will happily put you over the top of budget or in a junk house they can to get that sale asap. 3% is alot of money and $10k-$20k in the home price either way doesn't really effect the bottom line. Go on realtors, tell me about the code of ethics and laws and how many hours of classes you took. The Truth is, your ultimate goal is to close.
Don't get me wrong - I don't have anything against realtors and the work on both ends does have alot of costs and time involved. But stop with the scare tactics already. There is a wealth of information and home sources available, and if your buyer is outpacing you, you're doing a bad job and they shouldn't have to pay.
As for the original question - if you signed the buyers contract with a realtor to pay them 3%, then you are contractually obligated to allow them the full commission even if they stink.
However, I think you are right to feel like they should rebate a portion of their commission in this case.
The problem is - most realtors probably won't - or can't - make this deal. Why should they - they have you right where they want you, and they have the law to back them up!
Moral of the story is - don't sign buyers broker contracts and you don't have to worry about this. If a realtor won't work with you without a contract, find someone who will. They're out there - there are TONS of realtors everywhere who will be happy to help you. If they do a good job, reward them with the sale.
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