muck Posted May 8, 2007 Share Posted May 8, 2007 A house my wife and I have had our eye on for some time just came on the market last week. We made an offer last night. Another couple is making an offer this morning. We don't have an agent and the other couple does. The listing agent has told us that if she finds the buyer, her commission is lower than if some other agent provides the buyer. We don't know by how much, though. Because of this, we can offer a lower amount, but still be a better "net" offer to the seller. We will need to sell our rental property soon after buying this one, and we'll want to go ahead and sell our current home too (I don't want to be a landlord any more). Here's the question: Would offering the listing on one of our pieces of property that we'll need to sell in exchange for a further reduction in her commission put the agent in an unethical position, or is it a good negotiating ploy on my part? Quote Link to comment Share on other sites More sharing options...
keggerz Posted May 8, 2007 Share Posted May 8, 2007 (edited) A house my wife and I have had our eye on for some time just came on the market last week. We made an offer last night. Another couple is making an offer this morning. We don't have an agent and the other couple does. The listing agent has told us that if she finds the buyer, her commission is lower than if some other agent provides the buyer. We don't know by how much, though. Because of this, we can offer a lower amount, but still be a better "net" offer to the seller. We will need to sell our rental property soon after buying this one, and we'll want to go ahead and sell our current home too (I don't want to be a landlord any more). Here's the question: Would offering the listing on one of our pieces of property that we'll need to sell in exchange for a further reduction in her commission put the agent in an unethical position, or is it a good negotiating ploy on my part? hmmm, sorta like a kickback...kickbacks are big part of many industries(even if they are frowned upon they happen)...in the end I see it as a business decison...you have plenty of people you can list your property with so you are giving them a shot at your listing if they can do something for you first...i voted good ploy Edited May 8, 2007 by keggerz Quote Link to comment Share on other sites More sharing options...
alexgaddis Posted May 8, 2007 Share Posted May 8, 2007 Its a fine line but I wouldn't say it's unethical...besides, real estate agents most often look out for themselves over their clients anyways...Homeowners want to sell their home for as much money as possible...agents want to get their commission as quickly as possible... Quote Link to comment Share on other sites More sharing options...
polksalet Posted May 8, 2007 Share Posted May 8, 2007 Think of it like this. I am a crackhead. I love smoking crack. I am looking at buying some crack from a low level pimp. Someone else has a higher level dope pimp that requires higher markup. Is it wrong of me to go through my low level dope slinger as he costs less. I work in the ghettos fairly often around dope slingers and even more often in the presence of real estate agents. I prefer the company of dope pimps. Ethics of realtors is an oxymoron imo. Quote Link to comment Share on other sites More sharing options...
bushwacked Posted May 8, 2007 Share Posted May 8, 2007 Ethics of realtors is an oxymoron imo. Good info here. Quote Link to comment Share on other sites More sharing options...
wiegie Posted May 8, 2007 Share Posted May 8, 2007 Here's the question: Would offering the listing on one of our pieces of property that we'll need to sell in exchange for a further reduction in her commission put the agent in an unethical position, or is it a good negotiating ploy on my part? Why would that be unethical? Although you will be paying less for the home, you aren't screwing the sellers out of any money (it would be very unethical if you negotiated with the agent such that the agent would try to convince the sellers to drop their price). You also aren't screwing over the other potential buyers. If their agent is willing to drop his/her commissions to help them out, then he/she is free to do so. Perhaps the best way to look at this is the idea that you paying part of the selling agent's commission (by giving him/her the opportunity to make money on selling your property). All in all, I just don't see a conflict of interest here. (The only way it could be unethical is if the home sellers end up getting less after-commission money from the sale of their home than if they had sold to the other people. You should probably stress to the seller's agent that you do NOT want that to happen. If he/she balks (or doesn't seem to understand where you are coming from) then that will tell you a lot about the agent's ethics.) Quote Link to comment Share on other sites More sharing options...
wiegie Posted May 8, 2007 Share Posted May 8, 2007 Ethics of realtors is an oxymoron imo. bingo Quote Link to comment Share on other sites More sharing options...
The Irish Doggy Posted May 8, 2007 Share Posted May 8, 2007 I think you have some risk in that the agent may not be looking at your best interests here. A bird in the hand... no matter what you have to offer down the road in listings. But, I think if you feel that you can trust this agent, you are right to negotiate a package deal, which happens in the industry. When I bought my house, the seller's agent took a hugh cut in percentage as the seller agent but made it up later as the seller was upgrading. If your homes are very salable, you are in an even better position. Quote Link to comment Share on other sites More sharing options...
detlef Posted May 8, 2007 Share Posted May 8, 2007 Why would that be unethical? Although you will be paying less for the home, you aren't screwing the sellers out of any money (it would be very unethical if you negotiated with the agent such that the agent would try to convince the sellers to drop their price). You also aren't screwing over the other potential buyers. If their agent is willing to drop his/her commissions to help them out, then he/she is free to do so. Perhaps the best way to look at this is the idea that you paying part of the selling agent's commission (by giving him/her the opportunity to make money on selling your property). All in all, I just don't see a conflict of interest here. (The only way it could be unethical is if the home sellers end up getting less after-commission money from the sale of their home than if they had sold to the other people. You should probably stress to the seller's agent that you do NOT want that to happen. If he/she balks (or doesn't seem to understand where you are coming from) then that will tell you a lot about the agent's ethics.) what he said Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted May 8, 2007 Share Posted May 8, 2007 it's not unethical on you part. it might be unethical on the agent's part, depending on how they present the info to their client. if yours is the better "net" offer to the client, then you shouldn't have anything to worry about in the first place. Quote Link to comment Share on other sites More sharing options...
polksalet Posted May 8, 2007 Share Posted May 8, 2007 I think you have some risk in that the agent may not be looking at your best interests here. A bird in the hand... no matter what you have to offer down the road in listings. But, I think if you feel that you can trust this agent, you are right to negotiate a package deal, which happens in the industry. When I bought my house, the seller's agent took a hugh cut in percentage as the seller agent but made it up later as the seller was upgrading. If your homes are very salable, you are in an even better position. the realtor always looks out for their best interests. That is what happens with commission based fees. Quote Link to comment Share on other sites More sharing options...
alexgaddis Posted May 8, 2007 Share Posted May 8, 2007 I put Real Estate agents about one peg higher than child molestors... Quote Link to comment Share on other sites More sharing options...
muck Posted May 8, 2007 Author Share Posted May 8, 2007 I think you have some risk in that the agent may not be looking at your best interests here. A bird in the hand... no matter what you have to offer down the road in listings. The agent isn't "our agent" ... she's the seller's agent. When I bought my house, the seller's agent took a hugh cut in percentage as the seller agent but made it up later as the seller was upgrading. If your homes are very salable, you are in an even better position. The house we'd give her the listing on is the one that would need the most help to get sold, probably. Both are nice enough, but the one we're living in is much better and therefore should sell faster and/or with less help. Quote Link to comment Share on other sites More sharing options...
whomper Posted May 8, 2007 Share Posted May 8, 2007 I am a liscensed Real estate agent in NJ and can tell you 100 % that the listing realtor would be acting completely unethical if she reduced the price of a listing based on getting a future listing for you. The fact tha she is telling you you can come in lower then the other people is very very suspect to me. I wont say its a lie because I dont know the state you live in and the comission arraingement that was made but normally you take a listing and the seller agrees to pay say 4%. You then put the listing on the MLS and offer maybe 2 % to the buyers agent if they bring in a client that buys the property. If a case comes up like yours where you come in and buy the house with no realtor usually the listing agent "double dips" and gets the full 4 %. again the arraingement could be set up that way but the fact that the agent told you you can come in lower since you dont have an agent leads me to believe (again just my opinion) that the agent is looking to double dip and being a little shady. She is obligated to be fair with those other people making the bid eventhough they arent her clients and she is not. Quote Link to comment Share on other sites More sharing options...
wiegie Posted May 8, 2007 Share Posted May 8, 2007 I am a liscensed Real estate agent in NJ and can tell you 100 % that the listing realtor would be acting completely unethical if she reduced the price of a listing based on getting a future listing for you. The fact tha she is telling you you can come in lower then the other people is very very suspect to me. I wont say its a lie because I dont know the state you live in and the comission arraingement that was made but normally you take a listing and the seller agrees to pay say 4%. You then put the listing on the MLS and offer maybe 2 % to the buyers agent if they bring in a client that buys the property. If a case comes up like yours where you come in and buy the house with no realtor usually the listing agent "double dips" and gets the full 4 %. again the arraingement could be set up that way but the fact that the agent told you you can come in lower since you dont have an agent leads me to believe (again just my opinion) that the agent is looking to double dip and being a little shady. She is obligated to be fair with those other people making the bid eventhough they arent her clients and she is not. Why can't the agent put it down in writing showing what his/her commissions will be that can be signed off on by both the sellers and muck so that everybody knows that the agent isn't double-dipping. Also, why can't muck just contact the sellers directly and tell them what the agent told him (about him reducing his reducing his commissions since muck doesn't have a buyer's agent)? Quote Link to comment Share on other sites More sharing options...
wiegie Posted May 8, 2007 Share Posted May 8, 2007 She is obligated to be fair with those other people making the bid eventhough they arent her clients and she is not. Why is this not fair? The buyer's are coming in with an agent and muck isn't. Why shouldn't muck get cut a discount? Or put it another way--why can't muck say "I am my own agent--pay me my 2% cut"? Quote Link to comment Share on other sites More sharing options...
polksalet Posted May 8, 2007 Share Posted May 8, 2007 Why can't the agent put it down in writing showing what his/her commissions will be that can be signed off on by both the sellers and muck so that everybody knows that the agent isn't double-dipping. Also, why can't muck just contact the sellers directly and tell them what the agent told him (about him reducing his reducing his commissions since muck doesn't have a buyer's agent)? because that would show the realtor business to be the shell game that it is. Quote Link to comment Share on other sites More sharing options...
alexgaddis Posted May 8, 2007 Share Posted May 8, 2007 Why don't they just change the commissions of realtors to a flat fee of $1000...they don't even deserve that much... Quote Link to comment Share on other sites More sharing options...
muck Posted May 8, 2007 Author Share Posted May 8, 2007 (edited) I am a liscensed Real estate agent in NJ and can tell you 100 % that the listing realtor would be acting completely unethical if she reduced the price of a listing based on getting a future listing for you. The fact tha she is telling you you can come in lower then the other people is very very suspect to me. I wont say its a lie because I dont know the state you live in and the comission arraingement that was made but normally you take a listing and the seller agrees to pay say 4%. You then put the listing on the MLS and offer maybe 2 % to the buyers agent if they bring in a client that buys the property. If a case comes up like yours where you come in and buy the house with no realtor usually the listing agent "double dips" and gets the full 4 %. again the arraingement could be set up that way but the fact that the agent told you you can come in lower since you dont have an agent leads me to believe (again just my opinion) that the agent is looking to double dip and being a little shady. She is obligated to be fair with those other people making the bid eventhough they arent her clients and she is not. I was hoping you'd see this thread. Hypothetical example: House price of $100,000 Full commission of 7% Commission if providing the buyer of 5% The other couple offers $100,000, a net price of $93,000 to the seller. My wife and I offer $99,000, a net price of $94,050 to the seller. Our price is more than 1% "net" better to the seller ($1,050 / $93,000), even though it's more than 1% less than the gross offering price of the other couple. And, if I offer a listing on a house of mine if she drops her commission to 4% on the deal so that I can offer $98,000 on this house, am I being unethical ... or is she being unethical? It seems to me that her only obligation is to get the best deal, all things considered, for her seller ... regardless of how that happens (within the bounds of the law). Edited May 8, 2007 by muck Quote Link to comment Share on other sites More sharing options...
wiegie Posted May 8, 2007 Share Posted May 8, 2007 Why don't they just change the commissions of realtors to a flat fee of $1000...they don't even deserve that much... It will be moving to that soon enough I expect. The internet is going to do to real-estate agents what it did to travel agents a few years ago. People use agents because agents are specialists in information--but the cost of obtaining that information elsewhere is becoming ever cheaper. Real estate agents have strongly ostracized other agents who have tried to go to the flat-fee model, but it's not clear how much longer they will be able to hold out. Quote Link to comment Share on other sites More sharing options...
wiegie Posted May 8, 2007 Share Posted May 8, 2007 (edited) It seems to me that her only obligation is to get the best deal, all things considered, for her seller ... regardless of how that happens (within the bounds of the law). bingo (It would be interesting to learn what other agents think about a situation in which an agent reduces his or her commission when dealing with people who don't use an agent. I'm guessing they don't like it one bit (which is why whomp thinks the other agent won't reduce his commission, but will instead stick it to the seller).) Edited May 8, 2007 by wiegie Quote Link to comment Share on other sites More sharing options...
Big Country Posted May 8, 2007 Share Posted May 8, 2007 I don't see anything unethical. The seller agent is offering to act as your buying agent (not unheard of) and as such would be willing to take a % cut. LEt's say instead of 4% coming out of the deal to cover the selling and buying agent, he/she will only take 3% out total for acting as both agents. Sounds like you don't need to offer the listing on your rental property, but, if you do, you may be in a good position to negotiate a lower fee there as well by giving this agent your business as a buyer on the current property and as a selling agent on your current property. Though, got to admit, and it worked out for the better for us, that my wife and I lost out on a house when the selling agent basically presented the offer of one of her clients as a better deal than our offer because she got both parts of the commission. Worked out better because that house needed a lot more work than the one we ended up with, which is in a better location and has a lot more land. Quote Link to comment Share on other sites More sharing options...
detlef Posted May 8, 2007 Share Posted May 8, 2007 Realtors provide a service. You might think that service is not worth the price they charge and are free to not use one (as muck has chosen to do in terms of hiring a buyer's agent). Certainly the web has made it way easier to buy a house, so the buyer's agent is going to be the first to go. If you have time to show your own house and the savvy to list it on-line and create a nice brochure, then you can save yourself that money as well. For those who don't, you pay. Nothing shady about that at all. It's funny, not long ago, I posted a rant about how credit card companies have not only managed to wrestle themselves into the middle of (and therefor got a cut of) nearly every transaction made today but have begun to pit consumer against merchant in new ways, thereby sucking money out of nearly everyone's local economy. I was greeted with a deluge of "America love it or leave it", "Guy's just trying to make a buck", blah, blah, blah. How is this any worse? To begin with, the money they make stays in the community and, unlike credit cards, it is a far more optional fee. If I, as a merchant, choose to not use the credit card industry, I'd be committing economic suicide. However, both buyer and seller can actually manage just fine in the current system going it alone. Certainly they've got to put more work and research into it, but they can manage. If you think they're crooks, don't use them. If the amount less that muck pays comes out of the realtor's pocket, what's the big deal? The client gets theirs and that's all that matters. Quote Link to comment Share on other sites More sharing options...
TDFFFreak Posted May 8, 2007 Share Posted May 8, 2007 Seems okay to me. You want the place and need a listing agent. Kills two birds with one stone. Quote Link to comment Share on other sites More sharing options...
whomper Posted May 8, 2007 Share Posted May 8, 2007 (edited) Please note my answers are based on NJ law. It may vary in other states. Why can't the agent put it down in writing showing what his/her commissions will be that can be signed off on by both the sellers and muck so that everybody knows that the agent isn't double-dipping. Also, why can't muck just contact the sellers directly and tell them what the agent told him (about him reducing his reducing his commissions since muck doesn't have a buyer's agent)? In the final contracts commissions should be listed. The commission rate is public knowledge. If muck has a friend in real estate the best way to see what the real deal is is for his friend to go on the MLS and see how the commission is listed. It should all be layed out. Why is this not fair? The buyer's are coming in with an agent and muck isn't. Why shouldn't muck get cut a discount? Or put it another way--why can't muck say "I am my own agent--pay me my 2% cut"? Muck cant say he is his own agent or get a cut because he isnt liscensed. You cant pay a fee from real estate commissions to someone that is not liscensed. As far as it not being fair it is not fair to the other buyers with a bid in for the listing agent to tell muck that he can come in lower because he doesnt have a realtor. I really hope Muck gets the deal I am just answering the ethics question. Muck isnt doing anything wrong here it is the agent who is acting shaky. In NJ you are legally obligated to be fair to all parties even those that arent your clients. Telling someone they can underbid because they have no realtor is not fair to the other couple but again I say good for Muck if it goes through I was hoping you'd see this thread. Hypothetical example: House price of $100,000 Full commission of 7% Commission if providing the buyer of 5% The other couple offers $100,000, a net price of $93,000 to the seller. My wife and I offer $99,000, a net price of $94,050 to the seller. Our price is more than 1% "net" better to the seller ($1,050 / $93,000), even though it's more than 1% less than the gross offering price of the other couple. And, if I offer a listing on a house of mine if she drops her commission to 4% on the deal so that I can offer $98,000 on this house, am I being unethical ... or is she being unethical?It seems to me that her only obligation is to get the best deal, all things considered, for her seller ... regardless of how that happens (within the bounds of the law). She is being unethical if she does that..Not you. Her commission rate for this home is totally unrelated to your listing that she doesnt have yet. If she drops her rate she is in essence giving you a kickback which is a capitol offense and can have her liscence revoked. You are not being unethical but you are presenting her with a deal that if she accepts would be unethical on her part. If she is going to deduct 1% from her commission it should go to the seller not the buyer based on a future listing. Edited May 8, 2007 by whomper Quote Link to comment Share on other sites More sharing options...
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