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Egrhomebuyer, Home Buyer in

Reduced Buyer's Agent Commission - Michigan

Asked by Egrhomebuyer, Sun Feb 17, 2008

There is a house on the market in East Grand Rapids, Michigan that I would like to put an offer on. I know the price that I am willing to pay for this property. I currently do not have a realtor (the seller does have a listing agent).

I want to reduce the 6% commission that is stated on the seller's listing agreement. Does anybody have any suggestions?

Please no responses on why the 3% buyer agent's fee is reasonable. There is a reduced work-load for an agent in this transaction and I would like to apply the differential to my equity basis in the property.

Thanks!

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Answers

62
I recently went to a mechanic to have a 68 mustang restored. The guy wanted $9,000, but he was going to have three mechanics working on it.

SO I went to another guy and told him about this post and explained that I am willing to pay up to 5,000. Based on the fact that since he was working alone, there was a reduced workload and therefore I should get the discount. He mumbled a few things about the amount of work being more, (which I clearly didn't understand how) and some things about quality of his work, (which I wasn't interested in hearing and told him so up front) and then showed me the door.

So my point is this......How is the workload reduced. The agent has to represent both parties, carry all of the liability if one of you sues, make appointments for both of you now, show up for the appraiser, inspector, surveyor and you, and assist with all of the title and lender.

Again, how is it reduced work???? Simply judging from your choice of words and assumptions, I would guess it would be more than double.

Don't bother guys, I'll give myself a thumbs down on this one..

Gary De Pury
Broker-Owner
Bay Vista Realty
Director, Florida Association of REALTORS®
Chairman, Communications Committee
6 votes Thank Flag Link Wed Feb 20, 2008
Thank you for stating the facts! And lets not forget all of the phone calls and time...maybe we should start charging people by the hour!!
a 28 year veteran in real estate and mortgage industry!!
Flag Sun Aug 14, 2016
The listing agreement is a contract between the seller and the real estate broker. Those two parties are the only parties that can change the terms of the contract.
4 votes Thank Flag Link Sun Feb 17, 2008
Maureen- I think as the "business" is changing and evolving, these issues are coming more to light.
3 votes Thank Flag Link Tue Aug 19, 2008
Deborah,
The first step and only reachable short -to- mid-term solution might be what elvis referred to and laurie appears to practice; a nationwide form of designated agency, where an agent only represents one party in a transaction - the buyer or the seller. The industry is going to have to give up its greed for the dual commission to make that happen, something that is not happening quickly in many states because the double ended commission is like "crack" to the old-timers who have made their living selling their own listings for years through pocketing them and running intereference to other agents so they could sell it themselves. Unfortunately, its still ingrained in the leadership of our industry.

In a pefect world, both the buyer and the seller are represented by separate individuals or if not, they sign a disclosure recognizing that they are representing themselves. There is never more than one side of the commission at stake for any agent and the roles and responsibilities are clear.

JUST TALKING ABOUT "STRATEGIES AROUND THE DISCLOSURE LAW" IS NOT GOOD ENOUGH ANYMORE. WE NEED TO IMPLEMENT PRACTICES THAT DEMONSTRATE OUR COMMITMENT TO SERVING OUR CLIENTS IN AN HONEST AND DIGNIFIED WAY THAT LEAVES THEM FEELING LIKE THEY GOT THEIR MONEY'S WORTH.

WE ARE ON A SLIPPERY SLOPE AND, WITH THE SAME FEVOR THAT MEDICAL SCIENTISTS ARE LOOKING FOR THE CURE FOR CANCER, EVERY GEEK IN THE WORLD IS DILIGENTLY LOOKING FOR THE ANSWER TO PUT THE REAL ESTATE AGENT OUT OF BUSINESS BECAUSE THE PUBLIC RESENTS PAYING COMMISSIONS TO PEOPLE WHO ARE GREEDY AND THEY DO NOT TRUST.
3 votes Thank Flag Link Tue Aug 19, 2008
EGRhomebuyer, Please remember that the selling agent works for the Home Seller and can never work for your best interests on this home, even as a duel agent. If you have a doubt, please re-read Michigan's Real Estate Agency Disclosure Form. A sample is available at http://www.mi-living.com/index.cfm?pageid=1619 (click on tools to enlarge)

I agree with Bill, the listing agent may not be the principal broker and may not be able to negotiate.

I suggest you speak with your lender and verify this is allowed. With all the recent changes in the mortgage industry, you may not qualify for a mortgage under the terms suggested in your question.

Better to cover all the bases, buyers are responsible for their own due diligence in the purchase of a home. should you choose to forego reprisentation of a buyers agent, that is you right. Good luck in your purchase.
Web Reference: http://mi-living.com
3 votes Thank Flag Link Sun Feb 17, 2008
there's probably a better place for this discussion, than in Maureens backyard. Let's move it to the agent2agent national stage. I say we take it to the Conventions! Barak & John - here we come!
2 votes Thank Flag Link Tue Aug 19, 2008
Okay... too much use of the word "Tortuous" which means "too complex"

vs.

"Tortious" which means "constituting a tort, or wrongful"
2 votes Thank Flag Link Tue Aug 19, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Hi Stephen,

Tx for coming back online w/ the link. It didn’t seem to hook on to your first post. So, tkx for the follow through, as well as your post just a minute ago. You and I agree completely on this matter.

BTW…I also found this on Realty Times….
“Tortuous interference is the interfering by one real estate licensee with a contractual relationship between another real estate licensee and their client. This is a violation of license law in every state. ………………………………...................This violation is reportable to the real estate commissioner and has a penalty”

While the focus of this article dealt with relo companies interfering with listing contracts,
it seems that the concerns I shared earlier may have merit and application here. Again, I am not an attorney and unable to provide legal advice. I suggest that any agent or buyer who was considering interfering with a listing contract seek legal advice and make their own decisions.

Here’s the link for this Realty Times article.
http://realtytimes.com/rtpages/20000526_referralfees.htm

Here’s a link to a NJ law firm on the subject matter.
http://hnlawfirm.com/blog/2008/04/18/tortious-interference/

I am not qualified to provide a legal opinion, only a lay person business opinion. That lay person’s opinion is that people will need to read, draw their own conclusions, perform their own due diligence and proceed accordingly.

Laurie,

No one suggested the question poster not ask the listing agent if he/she would be willing to reduce their commission if the buyer were unrepresented. The concept of tortuous interference is a possibility (to be determined by an attorney) that may present itself if a buyer followed the advice you provided to interfere with the listing contract. If you are confident that your advice is not violating state licensing laws, then you can stand by your advice. I am suggesting that egrhomebuyer, other buyers and buyer agents, perform due diligence and/or seek legal advice before proceeding with your suggestion because your suggestion for them might have consequences. I am taking the better safe than sorry approach.

Deborah
2 votes Thank Flag Link Tue Aug 19, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
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Deborah,
Just to clarify, I never said or intimated that Trulia was trying to put agents out of business. I believe Trulia has created a tool that actually enhances the agents business and showcases listings. Michael
2 votes Thank Flag Link Tue Aug 19, 2008
Hi Michael,

I wrote yesterday that I wished NJ had designated agency, but we don’t. We do have the option of referring a buyer to another agent within the company, and that does provide two different agents working with the clients. Legally, we still fall under dual agency, though.

Complete disclosure about agency has been a long standing issue with me. The way I see it is that we, as an industry have promoted the hiring of an agent based upon having the agent holding the golden key and or as the gatekeeper……not for what we do to add value to a transaction. We can brand ourselves on signs, Trulia, Realtor.com, Zillow and the like with a big “Call me” and in so doing are most agents looking to promote the property or leads?

How many up desks are staffed by volunteer agents looking for leads? When a buyer calls with questions and states they have their own agent, what is the level of help by the agent on the up desk? I suppose it varies according to the agent and what else is going on at the moment.

As an industry, we give the public mixed messages.

We have transitioned from sub agency to buyer agency, but the proceeds still come from the seller. Not until we have buyers paying their buyer agents and sellers paying their seller agents will we have complete separation. It’s a transition, and I suspect we may get there……in another 20 years.

I don’t conduct my biz in a manner that I seek to “get around disclosure laws”, but rather I adamantly want buyer and sellers to understand the benefit of having their own representative. In a prior post, I reference that I speak about agency representation whenever it is relevant. My grass roots efforts will not change the industry. I have long questioned why NAR’s ads do little to educate the public about this, and think the solution comes from there or some other similar national movement.

I don’t know that I share your perception that Trulia and Zillow want to put us out of biz. I think they just want to capture lots of revenue and keep us in the loop. While on one hand we can condemn Trulia, Zillow and other intermediaries, it is our failure as an industry to bring efficiencies to the table that opens the doors for intermediaries. I don’t suspect they will put us out of biz, just change the biz. Trulia’s model depends upon agent and broker contribution for content, listings, Voices, ads, premium positioning payments, etc. I don’t suspect they want to get rid of us….just capture a piece of the pie…and maybe a big piece. If we conduct greater numbers of transactions more efficiently with fewer agents, perhaps the average income of an agent, and image could even go up. OK…that’s a bit “pie in the sky”…..but, I don’t see the disappearance of agents anytime soon.

As it pertains to compensation…….While I support it, I think we are a long way off from totally separate compensation, and rules about who gets to keep what must not cross the line of violating anti-trust. I don’t know that anyone has the right to tell a listing broker what she/he can or cannot collect.

I support regulation about disclosure, am frustrated by an industry that has not promoted this disclosure and discussion, and respect a free market to determine pricing.

Deborah
2 votes Thank Flag Link Tue Aug 19, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
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If the house sells for $300,000, and the owner only owes the bank $200,000, he has a $100,000 profit, from which, to pay the commission. I understand how you might be confused into thinking the buyer is paying the commission.

But if the house sells for $300,000 and the owner owes the bank $350,000... who's paying the commission now. Not only does the seller have to bring $50,000 to the closing table, but he has to add the Real Estate commissions (both sides) to what he has to bring.

Sorry... the seller is paying the commission. The seller negotiated and determined how much would be paid, and what portion of that would be allocated to compensate a buyer's agent.

Just like Macy's has determined how much they will pay their perfume counter salesperson, just because the buyer is bringing the money is not an indication that the buyer is paying that salesperson's salary, nor that they have any control over how much it is, or should be.
2 votes Thank Flag Link Tue Aug 19, 2008
Alan May, Real Estate Pro in Evanston, IL
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as one agent is representing two parties with potentially opposing interests.
~~~~~~~~~~~
I don't understand why people keep saying that in dual agency the agent is "representing" both parties, when in a dual agency situation the agent cannot give either side advice.
2 votes Thank Flag Link Mon Aug 18, 2008
You could ask your buyer's agent, when and if you use one, to reduce their commission. Ask in advance. Your offer to the seller should not include any language involving commissions. This is something to be negotiated between agents....in advance of an offer. If you are negotiating a "rebate" make certain that all parties, including your lender(s)(mortgage fraud, even by ignorance of the law, is a federal offense), are aware of any such agreement and that any such agreement is legal in your state. Good luck in your quest.
2 votes Thank Flag Link Sun Feb 17, 2008
Michael,

-- Your honesty is appreciated:


JUST TALKING ABOUT "STRATEGIES AROUND THE DISCLOSURE LAW" IS NOT GOOD ENOUGH ANYMORE. WE NEED TO IMPLEMENT PRACTICES THAT DEMONSTRATE OUR COMMITMENT TO SERVING OUR CLIENTS IN AN HONEST AND DIGNIFIED WAY THAT LEAVES THEM FEELING LIKE THEY GOT THEIR MONEY'S WORTH.


-
1 vote Thank Flag Link Tue Aug 19, 2008
Well, I figured it was a 50-50 shot- the lawyer on the link spelled it wrong, too. He's got it right four times, and I copied the wrong one. That's really not good, unless there are a few spellings. Thanks, Elvis, but it seems appropriate (the misspelling) somehow...
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Tue Aug 19, 2008
Why the sudden interest in a question asked by a consumer exactly 6 months ago? Just wondering.
1 vote Thank Flag Link Tue Aug 19, 2008
Maureen Fran…, Real Estate Pro in Birmingham, MI
MVP'08
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Except, under tortuous interference (thanks for the NJ link, Deborah) one of the requirements is that the "interference caused damage." The seller isn't damaged; the buyer isn't damaged...that leaves who? The agent who wanted both "sides"? Hardly a figure of sympathy, in a dual agent capacity to boot, particularly if the listing agent has offered a commission to a cooperating broker. What "damage"??? iamnotalawyerandthisisnotlegaladvice- just an opinion.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Tue Aug 19, 2008
If, in your own mind as a listing agent, you've separated the fees, this scenario is simple. If you haven't, it becomes more difficult. Clearly, we all operate with our own moral compass as the guide.
If you are simply unable to separate the fees, there is nothing that I can add that will make sense- the double end will remain more important than the consumer, or fiduciary to the seller. And, the value of a real estate agent to consumers will continue, in both NY and NJ, to deteriorate. Opinion.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Tue Aug 19, 2008
Good article demonstrating the possibility inherent in trying to eliminate a party to the transaction (either listing or selling agent) but has little, if anything, to do with the question above, where the buyer is requesting that an apportioned amount designated for HIS representation is negotiated. There is no contract disturbance, as I interpret it, because there is no contract with a buyers agent. That leaves the listing agent, whose income remains the same as described to the seller (if described accurately: 1/2 to the listing agent, 1/2 to the selling agent, as presumed in the question).
That's an interesting article for reference, though- good for consumers seeking to eliminate real estate agents altogether in an underhanded way.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Tue Aug 19, 2008
Elvis, I can't figure out how your response could have been made more clear- this questioner is asking about the buying side. Hopefully, he's received answers that help.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Tue Aug 19, 2008
Deborah, I was never advocating reducing the listing agent's side. Only the buyer's side, if the buyer was unrepresented.

I've heard many agents posit that an unrepresented buyer means they'll have to do double the work, and are therefore entitled to double the pay. I heartily disagree. I've had many situations where there was a buyer's agent who didn't carry his own weight, and I had to carry the entire deal. In that scenario I didn't make an extra penny.

With no buyer's agent, yes, I'll have some extra work to do, but it won't likely be 'double', and therefore I'm more than willing to negotiate that portion of the commission that was designated for a buyer's agency. But I agree, I will not be coerced into negotiating my contractually agreed-upon listing commission.

Under those circumstances, yes, I'm going to allow my commission to stand in the way of the deal, and I don't believe I'm breaching my fiduciary duty to the seller. Sorry if I was unclear.

Deborah, you do have the option of designating an agent from another agency, and claiming a referral fee. That would be a clear distinction... a loss in revenue, to be sure, but a clean method of serving the client.
1 vote Thank Flag Link Tue Aug 19, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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Hi Elvis,

I have no problem with your position on designated agency, or reducing your fee if you are willing to so and asked to do so by an unrepresented buyer.

My concern was a suggestion about interfering with a contractual agreement between other parties.

Suppose you have a listing, and fees are a contingent commission amount with “x” to the listing side and with “y” going to the buyer broker. You are willing to work for “x” whether there is or is not a buyer broker.

The unrepresented buyer determines that you, Elvis, are only worth and entitled to one half of “x” and drafts an offer for the seller indicating he will buy the property at price of “a“ and commission of “one-half x“ because that allows him to offer the seller less since you will be paid less. The unrepresented buyer says, “Elvis, you have to give this to your seller.“ You do, and your seller wants to accept. Now, are you going to let your commission stand in the way of a sale for the seller? Is it the unrepresented buyer’s right to disrupt your agreement with your seller? Will you tell your seller no? Ah…have you violated your fiduciary by putting your interests above theirs?

I think is OK for a buyer to ask a buyer agent or listing agent to negotiate their fee. It doesn’t mean they will. I am saying it’s perfectly OK to ask. It doesn’t sit well with me to suggest an unrepresented buyer approach a seller and interfere with the terms of a listing contract. So. Laurie and I can simply agree to disagree on this one. There are many points where I do agree with Laurie…but not on this one.

Any agent is free to work for whatever fee they find acceptable. I respect other agents’ rights to work for free, for $198, for 5%, 10%, or $100,000. I also expect other agents to respect my right to negotiate my fees with my clients. Coercion in either direction is wrong.

Elvis, you have the option of designated agency….I do not. While I can appoint two agents, it remains, legally, dual agency. I agree with Michael that it would be great to have designated agency across the country, is that on NAR’s agenda to promote it to the state agencies?

Deborah
1 vote Thank Flag Link Tue Aug 19, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
http://en.wikipedia.org/wiki/Fiduciary_duty
The legal interpretations are more complicated than this, but for those confused about fiduciary on the part of the listing agent to the seller, buyers agent to buyer, this is helpful.
States that include fiduciary have a standard of care that is elevated- again, like it or not. Several states have eliminated that requirement.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Tue Aug 19, 2008
Not sure who I'm agreeing with, but I agree, that if a buyer comes in "unrepresented", and is okay with remaining unrepresented, and wishes to negotiate the buyer side of the commission to that end... every effort should be made to make it work, as Laurie suggests, as part of the fiduciary duty owed to the seller. It is not part of my job, as the listing agent, to stand in the way of the deal, only so that I can double-dip on the commission.

If, however, the buyer insists on representation (which, in my opinion, every buyer should), then in states that allow it (like Illinois) you can designate an agent for them (in my State it can be another agent from my office), and then the buyer's side commissions should go to that new designated buyer's agent.

I, personally, do not practice dual agency, and I recommend to my listing clients that they sign a form, at the onset of our listing, stating that they do not agree to allow me to be a dual agent on their property. Leaving the only option, should I also bring the buyer, of designated agency, ministerial acts or 'no agency' for the buyer.

A bit convoluted, I agree, but all of this is done in an effort to protect the interests of both parties, and to that end I do not feel that we are on a slippery slope, in fact I feel fairly sure-footed on this issue.
1 vote Thank Flag Link Tue Aug 19, 2008
Alan May, Real Estate Pro in Evanston, IL
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I'm willing to accept the ramifications- we opened our own company for the purpose of informing consumers about choices, and not being limited to what IS a broker philosophy.
Please note, as is required, that mention of obtaining the opinion of a lawyer was mentioned- common sense is the message to both brokers and consumers. Opinions are the only avenue to much needed change- I'll take the risk, and continue to provide them.
I appreciate your concern.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Tue Aug 19, 2008
Laurie,

No one said a word about not presenting an offer to a seller. I have never condoned withholding a written offer from a seller. Not on this post, not anywhere on Trulia, not anywhere. A seller cannot unilaterally “decide” to lower the fee to be different than the listing contract. Modifications to that contract require mutual consent.

It isn’t a philosophy, it’s a contract.

My recent discussion included no assertions about whether a listing or buying agent should or should not make an adjustment. I stated that a contract exists and one should consider the potential repercussions of interference with a legal contract before taking actions that could be considered grounds for legal action against them. Buyers and buyer agents equally should consider their risks, and consult with their broker or attorney for advice before making decisions such as you suggest. You are also opening yourself up to liability by publishing this type of suggestion. If you are willing to bear the risk, it is certainly your choice, but you might want to make sure your broker is OK with it also.

Deborah
1 vote Thank Flag Link Tue Aug 19, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
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The big disconnect appears to be the philosophy that the fee is solely between the listing broker and the seller. This assumption creates big problems for consumers, because fundamentally, the fee is between the seller and the buyer- they are the people absorbing it.
If an agent is offering cooperation in the mls, it is common knowledge that there is a buying "side". Armed with this reality, and the knowledge that absent a buyers agent, this fee remains in the price of the house if it isn't negotiated, a buyer such as Egr finds it unacceptable to absorb the cost, particularly because the listing agent is essentially reduced to a neutral conduit (via dual agency).
In a transition to dual agency, I'd be more concerned, as a listing agent unwilling to budge, that "services rendered" would be in question, calling into question the listing agents fee. The majority of sellers, if faced with an offer such as Egr's, would be fine with reducing the fee to the half that compensates the selling agent if it means that a house is going to go under contract.
As a listing agent in NY, with fiduciary required by law (like it or not), clearly that requirement opens the floodgates to negotiation between the two parties, listing contract irrespective. Fiduciary.
It is perfectly acceptable, under buyer agency in NY, to approach the seller directly. Would I do it? Not unless the well being of a client had been proven impossible going through the listing agent. At that point, I'd take advantage of the latitude afforded without hesitation. An example would be a listing agent that refuses to provide a rejected offer with initials, which happens.
As it gets to a micro level, the concern about disclosure still seems to boil down, for many agents, to the fact that once the nature of agency is disclosed, this separation of fee is clearly going to prevent a double ended transaction from being the "norm".
The value of putting a request in writing in the form of an offer is that there is no chance that a listing agent will fail to disclose to the seller the exact nature of the offer- if it's not in writing in real estate, it doesn't exist. This is true of all aspects of the transaction, not just this scenario.
The seller retains the right to simply say "no"- but at least the justification of the offer is clear.
It will be a sorry day, indeed, when a listing agent sues a buyer of a property because they were not satisfied receiving the listing agent "fee", without the fee offered to the selling agent side (in the absence of such).
Bottom line: the seller has the right to disclosure of an offers contents, as well as the right to say, "no, get rid of the offer because I want you, listing agent, to receive the amount in the listing agreement. Let's wait for a buyers agent to bring someone in, rather than negotiate with an unrepresented party."
The agent that demonstrates this lack of comprehension would likely, at that point, bring up "procuring cause" for having shown the property, and not allow buyer representation at that point. Scary- talk about killing a deal for a seller.
If listing agents would simply make the decision to "choose a side" to represent, as is common in many, many areas, none of this would be an issue.
Legal advice is always recommended; common sense, however, offers value as well.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Tue Aug 19, 2008
Michael…..

You hit the nail on the head when you said the consumer often glosses over agency discussions/disclosures and shuts down. That happens here in NJ, and many customers have told me that they have a collection of agency disclosure statements from various open houses, etc. It’s good to hear that agents are talking about agency, but I don’t know how effective our efforts as an industry have been.

As Michael so aptly stated, consumers sometimes gloss over it. Therefore, agency isn't simply "out of the way" because it’s been covered once. My approach to agency disclosure is to incorporate this information in discussions when and where it has relevance at various times throughout showings or a transaction. I have found this to be helpful in getting buyers and sellers past the gloss over stage. I still cover it upon initial meeting, but recognize that discussion alone at that stage may be insufficient. People don’t hear things just because we force them to listen. They hear when it becomes important to them.

I approach agency disclosure with a true commitment to the meaning of representation, and not just something to be reviewed and checked off the list for compliance. Michael indicates he has put forth some effort into the subject of agency and I am very interested in hearing his thoughts, or anyone’s, on how we as an industry can do a better job on this.

Deborah
1 vote Thank Flag Link Tue Aug 19, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
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Some agents are just more comfortable viewing the money paid to them by the consumer as worthy of full representation rather than twice that for nothing more than a non-responsive sounding board (as is required under dual agency in matters of importance to one or the other party). Give me my half in Erghomebuy's scenario, satisfying fiduciary to the seller (as required), and let him do what he has requested, with the seller's permission, with the amount that would have been used for his own representation- as long as the buyer is convinced that their own representation serves them best, my only concern is the seller, and getting him the best possible price. Clear to all.
Fiduciary in New York is eliminated with dual agency- what a horror to have it present in words, when it isn't in actions, if the word remains in the NJ description. Very confusing to consumers.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Mon Aug 18, 2008
A very brave - and a VERY HONEST answer from Mr. Michael Daly:


-- "Oh no, Mr. Buyer, you dont pay our commission, it is paid by the Seller"

--- As the buyer writes the check to the seller that the seller uses to pay the commission...
....and we wonder why the consumer doesn't trust us...


That pretty much raps it up.... Excellent Post.!



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1 vote Thank Flag Link Mon Aug 18, 2008
You missed an option, Mr. Disgusted.

Help the seller, like you contractually agreed to, and provide the buyer with a qualified representative, who is paid from the seller's proceeds at closing.
1 vote Thank Flag Link Mon Aug 18, 2008
Alan May, Real Estate Pro in Evanston, IL
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...and we wonder why the consumer doesn't trust us...
with all this fiduciary cr*p, the only options are:
-Don't help the buyer
-Don't help the seller
-Don't help either
Have you ever seen the shell game (card game) played on the streets of NYC?
That's what our current state of real estate fiduciary and disclosure is like.
"Oh no, Mr. Buyer, you dont pay our commission, it is paid by the Seller"
As the buyer writes the check to the seller that the seller uses to pay the commission...
....and we wonder why the consumer doesn't trust us...

We are sooooo lucky that Zillow hasn't 'hit the nail on the head' and put 500,000 real estate agents out of business, the way they did travel agents with Expedia. It's only a matter of time, unless the leadership of this industry committs to moving forward with honesty, dignity and integrity, over 1 million agents are going to wake up one day and find that their livlihood is extinct...yes, I am disgusted and at moments like this, not proud to be part of this industry.
1 vote Thank Flag Link Mon Aug 18, 2008
In Florida there is no dual agency. The parties agree to transition to non-representation of transaction brokerage. But, until that time, the listing agent was usually a seller's agent. This is the betrayal that Elvis spoke of.

In NJ, we don't, as a matter of practice transition to transaction brokerage. Rather, we engage in dual agency. Again, a betrayal in Elvis’ opinion.

In both transaction brokerage and dual agency, I don't give advice that gives one party an advantage over another. So, although, yes there is a fiduciary in a dual agency relationship, how does one fulfill that?

Since agency applies at the brokerage level, what happens when the buyer and seller have separate agents? Can the dual agent helping the buyer give advice to the buyer while the other dual agent who is helping the seller give advice to the seller? We don’t have designated agency in NJ. We have seller, buyer, dual and transaction broker. The agent helping the buyer is a dual agent who also has a fiduciary to the seller. How does that dual agent who is working with the buyer live up to a fiduciary to the seller while only working with the buyer?

I can recount several times when a seller wanted to know during a listing presentation, “Do you have a buyer for me?” A seller often considered it a good thing, as a matter of fact, a great thing, if I had the buyer. And, yes, I had reviewed agency, and upon introduction of this conversation….will revisit it again.

Elvis.....even giving someone a CMA can be challenging as a dual agent. Providing comps is much easier. I actually did the following once...in an effort to better explain agency. I wrote a list of 30 questions that were reflective of commonly asked questions during offer, negotiation, post inspection negotiations, etc. Then I drew columns and wrote out how the answer might differ depending upon whether the agent was a seller agent, dual agent, or transaction broker. The answers I wrote for the transaction broker and dual agent were highly similar. The answers I wrote for the seller agent were markedly different.

Deborah
1 vote Thank Flag Link Mon Aug 18, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
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Transaction brokers are without a fiduciary requirement, Deborah, aren't they?
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Mon Aug 18, 2008
Evidently, Elvis, Egrhomebuy...is wondering the same thing.
It would seem that the agreed to fiduciary to the seller (that his financial interest come before that of the broker) would provide a pretty clear avenue for the listing agent to make this a sale for the seller.
If the seller is fine with the apportioned fee being reduced, and the buyer is coming in willing to forego any representation, what's the problem?
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Mon Aug 18, 2008
guest lecturer, huh?

But, can you further explain how advice in dual agency differs from advice in transaction brokerage?
~~~~~~~

Sure... a dual agent can't answer a question like... "what should I offer, as our opening bid?"... they could, of course, offer to provide a CMA showing what similar properties have sold for recently... that might be helpful. Once the offer is in play, they can't really answer "what price should we counter with?"... they can only respond with, what I call, a therapeutic answer such as: "I don't know... where do YOU think we should respond"??

The same issue applies during the inspection... "which issues should we complain about"... should we request a credit... a repair.... or should we just cancel the contract??" "what do you recommend?" Again, we're limited to "what do you WANT to do?"... "which issues are the largest concern to YOU"?

This applies on the seller's side as well, who of course wants to know... "where should we counter their opening offer?"... I've had sellers ask me "How high do you think they'll be willing to go.. what do you think their targeted goal is?"... as a dual agent I can't really answer that question. This is an area, as a listing agent, that I spend a lot of time discussing with my seller... trying to get inside the head of the buyer, and figuring out what their strategy "might" be. I find it helps with our responses.

The buyers and sellers both hire us, in part, for our skill in negotiation (both price and inspection) and our expertise in the process, to be able to hold their hand throughout, and guide them in their opening offers, and responses, as well as to strategize.

ll of those skills have been effectively neutralized, when acting as a dual/transactional agent, and for the "loss of those skills" the agent is now being paid both sides of the transaction.

What's wrong with this picture?
1 vote Thank Flag Link Mon Aug 18, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
You, as a buyer, have no say over the commission. As others have pointed out here, that is between the listing agent and his/her seller. make your best offer and let them work it out. Otherwise, get your license...md
1 vote Thank Flag Link Mon Aug 18, 2008
Erg, put your offer in writing; include (if you use lawyers, have them include) the verbiage relating to the discount based on the broker fees, and submit it to the listing agent. The agent is required to present all offers; insist that both the comm. request reduction and the offer price have seller initials. If it gets rejected, you can decide then if you want to make another offer. If you sense reluctance on the part of the listing agent to present it, give the offer to the seller yourself.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Mon Aug 18, 2008
Elvis said it better (than me). :)
1 vote Thank Flag Link Mon Aug 18, 2008
A dual agent can, and does, represent both buyer and seller, and is allowed to advise them... they simply can't give any advice that would give an advantage to either side. How helpful is that?
1 vote Thank Flag Link Mon Aug 18, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Hi JR,

This is a copy/paste from the Consumer Information Statement in New Jersey. It's only the beginning of the paragraph.....but, we, in NJ, definitely have dual agency. (I am a broker in FL, and there is transaction brokerage there, but not dual agency.)

Here's a quote from the NJ CIS:
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DISCLOSED DUAL AGENT

A disclosed dual agent WORKS FOR BOTH THE BUYER AND THE SELLER. To work as a dual agent, a firm must first obtain the informed written consent of the buyer and the seller. Therefore, before acting as a disclosed dual agent, brokerage firms must make written disclosures to both parties. Disclosed dual agency is most likely to occur when a licensee with a real estate firm working as a buyer’s agent shows the buyer properties owned by sellers for whom that firm is also working as a seller’s agent or subagent.

A real estate licensee working as a disclosed dual agent must carefully explain to each party that, in addition to working as their agent, their firm will also work as the agent for the other party. They must also explain what effect their working as a disclosed dual agent will have on the fiduciary duties their firm owes to the buyer and to the seller. When working as a disclosed dual agent, a brokerage firm must have the express permission of a party prior to disclosing confidential information to the other party. Such information includes the highest price a buyer can afford to pay and the lowest price a seller will accept and the party’s motivation to buy or sell. Remember, a brokerage firm acting as a disclosed dual agent will not be able to put one party’s interests ahead of the other party and cannot advise or counsel either party on how to gain an advantage at the expense of the other party on the basis of confidential information obtained from or about the other party.

If you decide to enter into an agency relationship with a firm which is to work as a disclosed dual agent, you are advised to sign a written agreement with that firm.

------------------------------------------------------------------------------------------------------------------------------------

JR....I can't answer your question, but I hope the information helps.

Deborah
1 vote Thank Flag Link Mon Aug 18, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
EGR Home Buyer, again as another agent said the brokerage fee is a contract between a seller & a broker and only they can change that. Really though there are some excellent deals out there right now to the point I would say in many cases you can gain immediate equity no matter what the commissions are. It certainly can't hurt to ask the question though if an agent or agents are willing to cut you a deal. I would definitely read over dual agency and to make sure you are comfortable with what that entails. While you are reading that over, I would also encourage you to read about buyers agency and transaction coordinators and pick what you are the most comfortable with. Making informed decisions is always a good way to go! I hope this helps and best wishes to you!
Web Reference: http://www.gomelinda.com/
1 vote Thank Flag Link Wed Feb 20, 2008
The listing agent negotiates the commission with the seller, whom they represent.
1 vote Thank Flag Link Sun Feb 17, 2008
This seems to be a question be an on going question. Since answers this question originally asked in 2008 continue to be added. In today's real estate environment (2012) you can find people to do just about anything for a lower fee. In this case the buyer's had already done their homework, found the home, reviewed the home and decided to buy the home. So why pay a full commission to a real estate buyer agent or broker for less work and effort on a sure thing? The issue not mentioned in this real estate transaction is liability. Getting a deal or lower cost repair for a car, electrician, roofer, window anything usually has a trade-off.

The option of negotiating a lower fee is certainly within reason. How low may be more of the question. The broker not the real estate agent has to approve a reduced commission fee. The broker and agent share independent liability for the real estate transaction. Michigan is a state that allows commission rebates as long as the party given the commission is directly involved in the real estate transaction. Either as a buyer or the seller.

If you are a buyer and know the property you want to buy, give me a call we will discuss openly what your real estate buying and representation options are, and how to best achieve your goal.

You can negotiate the commission paid for services. The quality of service becomes the issue. You don't want a boat mechanic to do brain surgery. You also do not want an under qualified inexperienced buyers agent missing options that could save you thousands of dollars in your home purchase.

Gary L. White
Broker/Owner
Flexit Realty "Flexible Real Estate Options"
Grand Rapids, Michigan
0 votes Thank Flag Link Wed Feb 15, 2012
You are good, Elvis! Thanks for the smile. :-)
Deborah
0 votes Thank Flag Link Tue Aug 19, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Maureen,

Have you been notified 25x today? I guess Stephen answered yesterday, and it mushroomed from there. It's been an informative thread, but seems to be winding down now.

Deborah
0 votes Thank Flag Link Tue Aug 19, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Michael,

Oops…..my apologies! Glad to know you like Trulia. You stated Zillow, and, although I am a Trulia fan, more so than Zillow....I don't think Zillow is trying to put us out of biz either. I think they just aren't as good as Trulia at making friends with the industry. Trulia has it's number of detractors who are wary simply because they are an intermediary.

I think Zillow wants agents to support and participate on Zillow….much like Trulia.

I probably spoke of Trulia, simply because I know it better. Gosh….I should with all the time I have invested on Trulia.

I have some questions for you….also.

Deborah
0 votes Thank Flag Link Tue Aug 19, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Hi Elvis,

I know that you were not advocating negotiating your listing side commission. You were not unclear. I was simply trying to make a point that third party intervention from a buyer agent or buyer on a seller/broker listing contract is wrong. I wasn’t confused. I was illustrating that inappropriate intervention does not become OK simply because you support the end result (reduced fee due to absence of buyer agent).

Deborah
0 votes Thank Flag Link Tue Aug 19, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Stephen,

I didn’t read any article on Realty Times, and I am not an attorney.

I would be interested in a reference link if you have one.

Tx
Deborah
0 votes Thank Flag Link Tue Aug 19, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
As the buyer writes the check to the seller that the seller uses to pay the commission...
....and we wonder why the consumer doesn't trust us...
~~~~~~~~~~~~~
I guess I'm going to disagree with this one again. Rarely have a found a seller who was willing to give the buyer a discount because the commission was less. What do you do with your profit, Tman? When you sell one of your "investments" using one of those "thousands of agents" you know who will do it for 2% rather than 6%, do you sell it for 4% less? Or do you make 4% more profit?
0 votes Thank Flag Link Tue Aug 19, 2008
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