Real Estate ethics question

[wiegie]

In most cases the commission rate is a set figure and doesnt change based on who sells the house . If the seller is paying a flat commission rate of say 5% the fact that you are using a buyers agent doesnt cost you or the seller an extra nickel. The 5% is either all going to the sellers agent or getting split between the 2 agents

And that is what is so f'd up about it. There is no reason that an agent should collect the entire 5% commission just because one party comes in without an agent. They fact that they get away with charging the 5% is why they can say that it isn't costing anybody any extra money, but that is just false. If they only took the 2.5% then either the buyer would pay less, the seller would get more, or some combination of the two.

[whomper]

And that is what is so f'd up about it. There is no reason that an agent should collect the entire 5% commission just because one party comes in without an agent. They fact that they get away with charging the 5% is why they can say that it isn't costing anybody any extra money, but that is just false. If they only took the 2.5% then either the buyer would pay less, the seller would get more, or some combination of the two.

 

 

 

Wiegie..The sellers agent doesnt get that 2.5 for nothing. They have to do work for you now as the buyer. They draw up all your contracts . Work with your lawyers on any preparation they will need to close. They in fact become your agent as well and are expected and entitled to work for both of you now.

[The Irish Doggy]

The incentives for realtors look like this (assume a $200,000 home and 5% commission for simplicity).

 

Realtor's options:

1) price home at $220,000 and bust but for two months until it sells. Commission = $11,000.

2) price home at $200,000 and work for about a months until it sells. Commission = $10,000.

3) price home at $180,000 and work for 1 day to sell home. Commission = $9,000.

 

As a realtor, which option do you take?

 

 

 

Whichever deal the seller accepts.

 

Your example isn't reality. It implies that the realtor accepts buyer's offers, which they don't. It assumes the owner is a complete wet noodle, which most people aren't when it comes to their largest investment. It assumes there are no other forces acting on the deal - like if the owner can accept 180K. Most people have to repay loans and need/want to make a profit on their investment so they can upgrade.

 

If I have someone who wants to under price a home and make a quick getaway, great, but come on, that just doesn't happen very often.

[detlef]

Whichever deal the seller accepts.

 

Your example isn't reality. It implies that the realtor accepts buyer's offers, which they don't. It assumes the owner is a complete wet noodle, which most people aren't when it comes to their largest investment. It assumes there are no other forces acting on the deal - like if the owner can accept 180K. Most people have to repay loans and need/want to make a profit on their investment so they can upgrade.

 

If I have someone who wants to under price a home and make a quick getaway, great, but come on, that just doesn't happen very often.

 

I believe Ouija's point here is that the selling agent has a lot of influence as to how much you should sell your home for. Nobody wants their house to camp on the market, so they're really going to listen to a realtor if they say, "I think you're asking too much for your home. Sure the comps say X but for this reason or that, I'm afraid you wont get that." Certainly you can tell them to piss off and ask what you want, but they will have an influence.

 

After all, putting your house on the market for too much can cost you a ton. My folks did this in a strange market and ended up chasing the market down. Had they put their house up for less to begin with, they would have sold it no prob. Rather, by the time they came down, the market was no longer supporting that price. This continued for a while.

 

Ouija's point is that the amount they lose for selling your house at a very attractive price and turning it over quickly is made up for by how little they have to work.

 

Worse still, of course, is the lack of incentive for the buyer's agent to get the price down and/or tell you to hold out and not buy it at all 'cause it's too much. Certainly if they're a good person, they'll do this, but both actions cost them money in the short term. As far as a bad rap, it will take a long time for that to catch up. If you like a home and over pay by a bit, will you ever realize this and resent your agent for not telling you to offer less? Most certainly wont.

Edited May 8, 2007 by detlef

[whomper]

Whichever deal the seller accepts.

 

Your example isn't reality. It implies that the realtor accepts buyer's offers, which they don't. It assumes the owner is a complete wet noodle, which most people aren't when it comes to their largest investment. It assumes there are no other forces acting on the deal - like if the owner can accept 180K. Most people have to repay loans and need/want to make a profit on their investment so they can upgrade.

 

If I have someone who wants to under price a home and make a quick getaway, great, but come on, that just doesn't happen very often.

 

 

 

Bingo

[Grits and Shins]

If I am selling my home and hire an agent I am paying that agent to find me the best deal.

 

I fail to see how it is unethical if MY agent negiotiates a better deal FOR ME with one of the prospective buyers that involves a reduction in his commission that was not offered to another prospective buyer. In fact I EXPECT a person acting as MY agent to get ME the best deal ... it is their job.

 

Where is it written that when I am selling my home I have to treat all prospective buyers equally?

[whomper]

If I am selling my home and hire an agent I am paying that agent to find me the best deal.

 

I fail to see how it is unethical if MY agent negiotiates a better deal FOR ME with one of the prospective buyers that involves a reduction in his commission that was not offered to another prospective buyer. In fact I EXPECT a person acting as MY agent to get ME the best deal ... it is their job.

 

Where is it written that when I am selling my home I have to treat all prospective buyers equally?

 

 

 

You dont have to but your realtor does. Not equally but fair..

 

edit to add a reduction in commission based on the promise of a future listing would be wrong. The other scenario if in fact the commission is reduced if there is no buyers agent I agree its not unethical as I stated in a previous post. As stated I misread mucks original post

Edited May 9, 2007 by whomper

[darin3]

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.

 

I don't even have to read through the rest of the responses. This is exactly what I think.

 

I do think that some of the lynching of real estate agents here is pretty wild though. Some of you must have had some real bad experiences and that's really sad. Not all real estate agents are scumbags. In fact, I'd venture to say that the majority of them have their clients' best interests at heart and are very ethical.

 

Oh, and I voted for the "unethical" choice. I think you answered your own question there, muck. Choice #2 uses the word "ploy", which by my definition is "an action calculated to frustrate an opponent or gain an advantage indirectly or deviously" (from Dictionary.com). Of course there are more benign definitions but this is what I think of when I hear or use the word.

 

Just my opinion.

Edited May 9, 2007 by darin3

[darin3]

edit to add a reduction in commission based on the promise of a future listing would be wrong. The other scenario if in fact the commission is reduced if there is no buyers agent I agree its not unethical as I stated in a previous post. As stated I misread mucks original post

 

I agree and this is the reason I voted the way I did.

[polksalet]

I don't even have to read through the rest of the responses. This is exactly what I think.

 

I do think that some of the lynching of real estate agents here is pretty wild though. Some of you must have had some real bad experiences and that's really sad. Not all real estate agents are scumbags. In fact, I'd venture to say that the majority of them have their clients' best interests at heart and are very ethical.

 

Oh, and I voted for the "unethical" choice. I think you answered your own question there, muck. Choice #2 uses the word "ploy", which by my definition is "an action calculated to frustrate an opponent or gain an advantage indirectly or deviously" (from Dictionary.com). Of course there are more benign definitions but this is what I think of when I hear or use the word.

 

Just my opinion.

 

 

I imagine I deal with more realtors than everyone else here, combined. I actually had supper with a couple tonight after the t-ball game. They were trying to get me to lowball some work with the promise of much more. I offered to do it for twice what they thought it was worth. I did not get the project. Sometimes being a surveyor sucks but with the amount of work available and everyone having a 6 month backlog, it can be quite pleasant.

[darin3]

I imagine I deal with more realtors than everyone else here, combined.

I doubt that, but OK.

Edited May 9, 2007 by darin3

[wiegie]

I do think that some of the lynching of real estate agents here is pretty wild though. Some of you must have had some real bad experiences and that's really sad. Not all real estate agents are scumbags. In fact, I'd venture to say that the majority of them have their clients' best interests at heart and are very ethical.

I don't think real estate agents themselves are necessarily unethical, but it is an industry in which conflicts of interest are just inherent the way the system is set up.

[darin3]

I don't think real estate agents themselves are necessarily unethical, but it is an industry in which conflicts of interest are just inherent the way the system is set up.

 

That has the potential to be true...

[Grits and Shins]

You dont have to but your realtor does. Not equally but fair..

 

edit to add a reduction in commission based on the promise of a future listing would be wrong. The other scenario if in fact the commission is reduced if there is no buyers agent I agree its not unethical as I stated in a previous post. As stated I misread mucks original post

 

If I don't have to treat prospective buyers equally and "fairly" and I hire an agent to act on my behalf why exactly does that agent that I hired to act on my behalf have to treat prospective buyers equally and "fairly".

 

What exactly is "fair" anyway? In the world of business by definition we are always trying to gain a edge over our competitors. As the seller I can choose to sell my house to anybody, even if it means I choose to take a smaller offer from one prospective buyer. I can choose to take a smaller offer for any variety of reasons including inane ones like I just didn't like one buyer ... is that "fair" to the buyer I turned down that made the higher offer?

 

Remind me again why the realtor that the SELLER hired is required to represent the interests of any and all BUYERS.

[muck]

Update:

 

The agent brought the paperwork over and told us "if you want to be competitive with the other offer, you'll have to increase the verbal offer you made last night."

 

We knew this going in and had already established a range for what we wanted to pay.

 

We told the sellers agent, "We want the house, but we don't want to pay a kajillion for it. Does that make sense."

 

She nodded, smiled, and said, "Tell you what, you make an offer and if I don't think it'll be competitive, I'll let you know."

 

So, we offered an amount half way between our verbal offer of last night and the asking price. The seller countered with an offer only about 1.5% higher. We took it.

 

Closing in the middle of June.

 

Anybody want a house in KC? I've got two to sell.

[Grits and Shins]

Update:

 

The agent brought the paperwork over and told us "if you want to be competitive with the other offer, you'll have to increase the verbal offer you made last night."

 

We knew this going in and had already established a range for what we wanted to pay.

 

We told the sellers agent, "We want the house, but we don't want to pay a kajillion for it. Does that make sense."

 

She nodded, smiled, and said, "Tell you what, you make an offer and if I don't think it'll be competitive, I'll let you know."

 

So, we offered an amount half way between our verbal offer of last night and the asking price. The seller countered with an offer only about 1.5% higher. We took it.

 

Closing in the middle of June.

 

Anybody want a house in KC? I've got two to sell.

 

Congrats ... that doesn't change the fact that you are an unethical bastard

[The Irish Doggy]

Congratulations, Muck.

[McBoog]

Congrats (I hope your "new" home experience is better than mine has been )

 

The one thing that always gives me pause in these deals is that the "Buyers Agent" is negotiating against their own best interest.

 

They want the "sale", but at the highest price without losing the sale. They too are earing commission for the deal.

 

Real Estate, like our legal representatives is just dirty bad oh-poopy!

[Azazello1313]

Update:

 

The agent brought the paperwork over and told us "if you want to be competitive with the other offer, you'll have to increase the verbal offer you made last night."

 

We knew this going in and had already established a range for what we wanted to pay.

 

We told the sellers agent, "We want the house, but we don't want to pay a kajillion for it. Does that make sense."

 

She nodded, smiled, and said, "Tell you what, you make an offer and if I don't think it'll be competitive, I'll let you know."

 

So, we offered an amount half way between our verbal offer of last night and the asking price. The seller countered with an offer only about 1.5% higher. We took it.

 

Closing in the middle of June.

 

Anybody want a house in KC? I've got two to sell.

 

kinda sketchy on her part, but the typical modus operandi of nearly all real estate agents. once they've got a good offer in hand, they will use it to drive up other offers. the first "bidder" is blind, the second one is anything but. "getting warmer....warmer...." :D

 

 

 

edit: but congrats on the new digs, nothing wrong with anything you did.

Edited May 9, 2007 by Azazello1313

[darin3]

typical modus operandi of nearly all real estate agents.

[Azazello1313]

 

do you disagree that it is the typical MO of most real estate agents to use one offer to drive up the other offers, giving an unfair advantage to later offers?

[Yukon Cornelius]

never used an agent never will ... when i bought my last bit oh land i told the owner to call me when and if he didnt sell .. after his a lotted time was up with his agent of course .... he made more money and i bought the place for less money....

Edited May 9, 2007 by Yukon Cornelius

[darin3]

do you disagree that it is the typical MO of most real estate agents to use one offer to drive up the other offers, giving an unfair advantage to later offers?

The typical MO of the real estate agents I know is doing what is in the best interest of their clients. Unfair advantage to later offers? Have you ever bought or sold real estate?

[Azazello1313]

The typical MO of the real estate agents I know is doing what is in the best interest of their clients. Unfair advantage to later offers? Have you ever bought or sold real estate?

 

i guess this answer means you DO think it is their typical MO, you just don't think there's anything wrong with it?

 

yeah, i have bought real estate. in 2005 i made an offer on a house that was verbally accepted by the seller (as conveyed by her agent to my agent)....and on the way over for her to sign the papers with her client (according to her, for all i know the papers were already signed and ready to be faxed over), she got a call about another person wishing to make an offer. of course, she says "well i already have a pretty good offer in my hand" and leverages that into a full asking price offer from the other people. no chance for me to match or re-offer, of course. again, typical real estate agent MO, and yeah on various levels it is not a fair process. it's like an auction where one party can see everyone else's maximum bid. if the seller's agent had any integrity, she would have honored the verbal agreement. my agent was actually pretty pissed at the seller's agent, got on the phone with her in my presence and cussed her out for being unethical. then when he was off the phone with her, he said "yeah, unfortunately, this is how most realtors will operate". if the profession in general had a little more integrity, maybe it would be somewhat self-policing, other agents would refuse to work with people like that, and it would no longer be the "typical MO". however, i am a realist, so i'll just hope that next time i'm on the good side of this bullchit like muck, and not on the bad side like the offer he was up against.

[Big Country]

Congrats ... that doesn't change the fact that you are an unethical bastard

 

 

Yeah, but that started long before he trid to buy this house.