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Advice re: selling and agent compensation

5,809 Views | 54 Replies | Last: 2 mo ago by Sea Speed
WestGalvestonAggie
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10:05a, 8/26/24
In this new era, many realtors are happy to work for nontraditional compensation. Don't be afraid to offer something other than cash to them as payment, because durable goods and even collectibles such as Beanie babies and Pokmon cards have value. Just make sure to put whatever you are offering in the contract because it's unrealistic to expect for them to offer their expertise for free. Tips are also appreciated.
"I always thought Roy Acuff was probably an *******. I’m a Hank Williams fan."

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ktownag08
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In reply to ATM9000 • 12:33p, 8/26/24
AG
ATM9000 said:
ktownag08 said:
RustyBV said:
The general public does not realize how challenging buyer rep can be. Seller rep is 10X more desirable than buyer rep IMHO. Everyone thinks they're the ideal client where the buyer rep shows them 3 houses, the buyer picks one and boom 3%. The reality is for every ideal client like that, there are 5-10 others where you show them 15-20 houses, and they end up not buying any of them, or they wait a few years and you have to start the process over again. The funny thing is buyer rep is where the fee compression will be and that is the much more difficult side of the business...


Pay by showing or hourly rate plus success fee all paid for by the buyer makes the most sense. Aligns behaviors and incentives. So if a buyer wants to drag you all over town for weeks on end until they find the "perfect" home, you're happy to do it as getting paid that and then for the work of closing the deal the success fee kicks in.

On the other end, they can choose to use online tools (pics, video walk throughs, etc), open houses, and self regulate number of showings requiring a realtor to save money. Realtor spends less time but is still compensated for showings plus success fee.

Again, buyers and sellers pay for their own realtors makes the most sense.

Never understood the buyer gets a free ride model...



There's unintended consequences to this model that is worse for the vast majority of sellers. The impact will be all the buyers in an area will probably flock to the top 4 or 5 marketed homes in the area or the lowest few priced homes and everything in the middle will just sit on the market longer and struggle to get loads of showings. This means probably more cash out the door by the sellers or sellers agents to get the showings.


Most people aren't going to homes right now that are poorly marketed which I interpret as poor pictures, no video, and/or lack of details on MLS so those sellers are already probably losing money by hiring and eventually paying an inept realtor. I don't see how what I described would change that.

Note: I'm not inferring all realtors are inept. They are not. Every profession has high and low performers. I have used a realtor on every real estate transaction I've ever done and have been happy each time with their performance and agreed comp.

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ATM9000
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In reply to ktownag08 • 10:50a, 8/27/24
AG
ktownag08 said:
ATM9000 said:
ktownag08 said:
RustyBV said:
The general public does not realize how challenging buyer rep can be. Seller rep is 10X more desirable than buyer rep IMHO. Everyone thinks they're the ideal client where the buyer rep shows them 3 houses, the buyer picks one and boom 3%. The reality is for every ideal client like that, there are 5-10 others where you show them 15-20 houses, and they end up not buying any of them, or they wait a few years and you have to start the process over again. The funny thing is buyer rep is where the fee compression will be and that is the much more difficult side of the business...


Pay by showing or hourly rate plus success fee all paid for by the buyer makes the most sense. Aligns behaviors and incentives. So if a buyer wants to drag you all over town for weeks on end until they find the "perfect" home, you're happy to do it as getting paid that and then for the work of closing the deal the success fee kicks in.

On the other end, they can choose to use online tools (pics, video walk throughs, etc), open houses, and self regulate number of showings requiring a realtor to save money. Realtor spends less time but is still compensated for showings plus success fee.

Again, buyers and sellers pay for their own realtors makes the most sense.

Never understood the buyer gets a free ride model...



There's unintended consequences to this model that is worse for the vast majority of sellers. The impact will be all the buyers in an area will probably flock to the top 4 or 5 marketed homes in the area or the lowest few priced homes and everything in the middle will just sit on the market longer and struggle to get loads of showings. This means probably more cash out the door by the sellers or sellers agents to get the showings.


Most people aren't going to homes right now that are poorly marketed which I interpret as poor pictures, no video, and/or lack of details on MLS so those sellers are already probably losing money by hiring and eventually paying an inept realtor. I don't see how what I described would change that.

Note: I'm not inferring all realtors are inept. They are not. Every profession has high and low performers. I have used a realtor on every real estate transaction I've ever done and have been happy each time with their performance and agreed comp.



You conveniently left off the 2 biggest marketing factors when looking at a home: one you have no control over. The first 2 things anybody does when sincerely searching har or any listing website is zoom the map into and area and set the listing price. Location and price are way more important than pictures and descriptions when it comes to marketing a house. And both of those things are/were chosen by the seller NOT the realtor.

Every time I've been in the market for a house, there's like 10 houses that could fit my base criteria and probably 3 that stand out of those 10. A buying agent is probably going to want to show me more than 3 because it increases their chances of me buying a house. 7 of those 10 sellers and agents want me to see their house because at minimum they can get more market intel and at best they get a surprise purchase. As such, not paying per showing probably benefits most sellers a hell of a lot more than you think it does.
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Diggity
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In reply to ATM9000 • 12:00p, 8/27/24
AG
#1 issue with being a buyers agent is that it's tough to know how "serious" a buyer is. "Buyers are liars" is a pretty common refrain...as is "list to last"

When you list a home to sell, that's a commitment. There's no such commitment on the buyer end.

I promise you, a buyer's agent would much rather show the client 3 solid homes that are good candidates than drive around town looking at every available home. There's only so much time in the day.

I can't tell you how many times we would tour a home and a buyer would spend 30 minutes telling me why the home wouldn't work for them. Great, let's move on.

Agreeing on a showing fee would be a good way to 1.) weed out the "looky loos" 2.) pass over the homes that we know aren't real possibilities, but "we might as well see them while we're out"
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Ducks4brkfast
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In reply to Diggity • 1:04p, 8/27/24
AG
Diggity said:
#1 issue with being a buyers agent sales person is that it's tough to know how "serious" a buyer is. "Buyers are liars" is a pretty common refrain...as is "list to last"
Fify.

Welcome to the real world, pal.
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Diggity
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In reply to Ducks4brkfast • 1:08p, 8/27/24
AG
fair point.

100% commission gigs are tough.
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Taxman90
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1:37p, 8/27/24
AG
If I understand this correctly, the problem that I see, and was brought up early in this thread, is that this change further strains the disconnect between buyers and sellers when negotiating a price.

Some may say that the buyer was always paying half of the commission in the form of a higher price. But real estate is not like buying a hammer, where you can shop around and get an identical product for a lower price. Each property is different and there is rarely a perfect comp. Also, it can be an inefficient market where buyers and sellers are motivated for different reasons and you have an occasional overpay or incredible deal.

Buyers will want to take 3% or whatever they are paying in commissions off of what they see as a fair price and some sellers may just see the 3% less they have to pay as found money. Hopefully realtors will be educating their clients, buyers and sellers, to understand the financial ramifications to make deals happen.
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ATM9000
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In reply to Diggity • 2:58p, 8/27/24
AG
Diggity said:

I promise you, a buyer's agent would much rather show the client 3 solid homes that are good candidates than drive around town looking at every available home. There's only so much time in the day.

Agreeing on a showing fee would be a good way to 1.) weed out the "looky loos" 2.) pass over the homes that we know aren't real possibilities, but "we might as well see them while we're out"

Right… but 1 and 2 that you would not like to do (and for good reason because they likely are mostly a waste of time) are categorically beneficial for most sellers… hence, why it kind of works that sellers pay all the realtor fees.
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ktownag08
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In reply to ATM9000 • 10:02p, 8/27/24
AG
We might just have to disagree which is fine. I firmly believe that if you're a seller priced right for your location with good pictures, videos, and information, you will have no issues driving traffic to your house for showings. A natural effect of a buyer paying for their own showings would be a broad improvement of the quality of information provided on listings as you'll want to ensure somebody has a good enough idea of your home inside/out to want to spend the money to visit. A seller can always do open houses which don't require a realtor to be there if they don't
want as a benefit to buyers as well.
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Medaggie
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In reply to RustyBV • 8:44a, 8/28/24
RustyBV said:
The general public does not realize how challenging buyer rep can be. Seller rep is 10X more desirable than buyer rep IMHO. Everyone thinks they're the ideal client where the buyer rep shows them 3 houses, the buyer picks one and boom 3%. The reality is for every ideal client like that, there are 5-10 others where you show them 15-20 houses, and they end up not buying any of them, or they wait a few years and you have to start the process over again. The funny thing is buyer rep is where the fee compression will be and that is the much more difficult side of the business...
The vast majority of RE agents are not waking up, showing a few homes, wash their hands, and pick up a 15K check in 30 dys.

Do I think a RE is worth 3% because I am well versed at buy/sell? Absolutely not. I have had buying RE agents make 30K spending about 5 hrs on some of my properties. I have had selling RE agents make 20K spending 10hrs because I list at market and will negotiate to whatever the market dictates.

I am essentially paying for the other 10 Yahoos who just likes to spend weekends/weeknights touring homes who thinks they are in the market but only willing to buy if they find the hidden discounted Gem that does not exist.

Like Medicine, a few great insurance payers essentially pays for the other 75% that barely pays enough to turn the lights on.

If all buyer/sellers were like me, RE agents would be working 10 hrs a week making 500K/yr but 90% would be out of a job.
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TokinAg
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In reply to Medaggie • 10:42a, 8/28/24
AG
That's so well put... It's awful that "good" buyers are effectively subsidizing the market for "bad" buyers.

Change the fee structure for buyer agents in a way that makes sense. For example... 500$ for 6 hours of "showings" on a given day. Line up 4-6 homes to go see and get it done.

Then 2% of sale price for a completed purchase (to help with the buying process).

Let's see how many buyers are serious about buying a home when they're not getting free rides.
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Medaggie
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In reply to TokinAg • 11:04a, 8/28/24
TokinAg said:
That's so well put... It's awful that "good" buyers are effectively subsidizing the market for "bad" buyers.

Change the fee structure for buyer agents in a way that makes sense. For example... 500$ for 6 hours of "showings" on a given day. Line up 4-6 homes to go see and get it done.

Then 2% of sale price for a completed purchase (to help with the buying process).

Let's see how many buyers are serious about buying a home when they're not getting free rides.
This likely will never happen. The left would be up in arms because poor Jane who lives on a fixed income can't afford a RE agent out of pocket thus can not compete with the bad rich guy.

This is why I go with someone like Red Pear. Charge me $100 for each showing. A lower % for closing. If I am too high maintenance, be upfront and tell me that the % needs to go up or we both move on.

My time is valuable. RE agent time is valuable. This set up works out well.

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TokinAg
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In reply to Medaggie • 12:55p, 8/28/24
AG
Not really looking to get into politics.. but you're talking to a hardcore liberal.

This isn't a right vs left issue... this is a cost saving issue and I think both sides can agree that things have gotten out of hand (home prices & RE comp being fixed rate).
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Medaggie
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2:37p, 8/28/24
Sorry, not trying to make it political but a fee for service model would make it difficult to buy homes for those who can least afford it. This is coming from a middle right.
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TokinAg
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4:03p, 8/28/24
AG
The market will figure it out... I'm a strong believer that it makes no sense to have the seller paying for the buyer's agent.
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WestGalvestonAggie
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8:20p, 8/28/24
I tried to buy a place recently in another state. I went directly to the listing agent. I offered a fair, cash, quick close contract. The listing agent wanted me to sign a contract that would allow him to be my buyers agent on the deal, with a 3.5 percent fee to be paid by me, and the right to be my buyers agent for anything I might buy later in the NE region of that state.

Yeah. **** you very much...

Needless to say, that deal didn't work out.

I should add, he did nothing as a buyers agent to earn that fee. Nothing. Well. He did email me about 10 pictures of the basement. That's literally all he did, he was just trying to get a commission from both sides.
"I always thought Roy Acuff was probably an *******. I’m a Hank Williams fan."

-Steve Earle
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ATM9000
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In reply to ktownag08 • 11:20p, 8/28/24
AG
ktownag08 said:
We might just have to disagree which is fine. I firmly believe that if you're a seller priced right for your location with good pictures, videos, and information, you will have no issues driving traffic to your house for showings. A natural effect of a buyer paying for their own showings would be a broad improvement of the quality of information provided on listings as you'll want to ensure somebody has a good enough idea of your home inside/out to want to spend the money to visit. A seller can always do open houses which don't require a realtor to be there if they don't
want as a benefit to buyers as well.

We can agree to disagree.

Categorically, setting fees for showings will result in less house viewings occurring on the open market. It seems like you agree with this.

Your inference seems to be less viewings and traffic will result in better information and marketplace for the seller. It's just magical thinking. If I were to poll any other sales and marketing professional in any other industry and told them 'hey… great news. We've set up a program that's going to cut your potential client and customer base down by x%!' What do you think they are going to say?
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Medaggie
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In reply to WestGalvestonAggie • 12:40a, 8/29/24
This is what bugs me. If I find a place myself without a RE agent, contacts the seller, offer an agreed upon deal, why would they not sell the house and discount the buyer 3%? The seller agent is getting the same commissions. By not selling, is this not derelict of duty to the homeowner?

I don't understand how an ethical RE would not sell the house knowing that another offer may not be as good.

Here is my real life example. My buyer agent made 30K commission on a 1M purchase on a property I found on Zillow. I have my own inspector, mortgage broker, showed up to closing without needing her. I literally did not see her face after making the phone call. She did not even show me the inside of the property because I just needed to look at the outside which I drove my self.

I found another property and seller/me were off by I believe 4K on a 300K property. Neither side budged. The seller RE offered to put in 2K to bridge the gap if my agent would put in 2k. She would have made 7K instead of 9K. She refused, offer fell through.

Needless to say she was clueless and I never called her up again. She probably lost out on 5M+ worth of RE deals in the next 7 years.
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WestGalvestonAggie
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In reply to Medaggie • 7:40a, 8/29/24
Medaggie said:
This is what bugs me. If I find a place myself without a RE agent, contacts the seller, offer an agreed upon deal, why would they not sell the house and discount the buyer 3%? The seller agent is getting the same commissions. By not selling, is this not derelict of duty to the homeowner?

I don't understand how an ethical RE would not sell the house knowing that another offer may not be as good.

Here is my real life example. My buyer agent made 30K commission on a 1M purchase on a property I found on Zillow. I have my own inspector, mortgage broker, showed up to closing without needing her. I literally did not see her face after making the phone call. She did not even show me the inside of the property because I just needed to look at the outside which I drove my self.

I found another property and seller/me were off by I believe 4K on a 300K property. Neither side budged. The seller RE offered to put in 2K to bridge the gap if my agent would put in 2k. She would have made 7K instead of 9K. She refused, offer fell through.

Needless to say she was clueless and I never called her up again. She probably lost out on 5M+ worth of RE deals in the next 7 years.

Exactly. My guy was simply trying to play both sides and it killed what would have been a very favorable transaction for the seller. It wasn't hard for me to walk away from, but it was incredibly frustrating.
"I always thought Roy Acuff was probably an *******. I’m a Hank Williams fan."

-Steve Earle
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Sea Speed
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1:33p, 8/31/24
AG
It's crazy how many RE agents, buyers and sellers seem to make the stupidest most inexplicable and counterproductive decisions I have come across in my 40 years. Things that really just make you wonder wtf is going through their heads. I am certain we all have numerous examples. Emotion is a mofo, at least when it comes to the buyers and sellers.
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