NOTE TO JOHN:
All businesses absorb loss, and those losses must be figured into the pricing component of the business. The restaurant that you eat at charges you, in their pricing, for the food that gets discarded. The insurance company bases itâ€™s premiums on the losses and the scams. The mortgage industry bases interest rates on costs of money and losses from those who donâ€™t or canâ€™t pay. The retail store charges you for clothing based upon damaged goods, items that didnâ€™t sell and shoplifting. Rental rates for residential and commercial buildings are set based on anticipated loss and vacancy rates. The list is nearly infinite.
The loss and unproductive time of the typical Reatlor is high, and yes, that does drive the pricing. The average income for full time agents is not high. The median income for agents is not high. And, the margins for brokers is very lean. There are a few who make some very nice incomes. The pubic often believes that agents make stellar income across the board, and that is simply not true. The loss factor from unproductive time is very high and includes assisting buyers for months who never buy, and servicing listings for months that never sell. It comes with the job, and yes, the fees for the transactions that close do offset that. If everyone, or even most of those I ever came in contact with went to closing and I got paid, yes, I could reduce fees by quite a bit. Since many properties donâ€™t sell, but still cost time and money to promote, and many buyers opt not to buy, common sense explains that this will factor into the pricing. Why would you think that the profit and loss sheet in real estate follows a different format than the accounting sheets and P&L than the rest of all businesses?
FRANK AND JOHN:
The time to negotiate is before utilizing the services, time and expertise of the individual. When a seller considers listing his/her house, the seller can discuss options for representation and marketing and compare that to the fees associated with each. A buyer can negotiate for buyer representation, but the time to do that is before beginning dialog on properties. From the brief description here, it seems that Frank has been working with an agent to see and learn about both the property and the seller. Upon the agent failing to concede to Frankâ€™s attempt to modify the listing agreement, Frank decides he will find another agent. The agent who assisted Frank may have a claim for procuring cause. There is not enough info here to make that assertion, but it is worth pondering as a possibility.