Real Estate ethics question

[Azazello1313]

Quick note: I didn't ask for any discounted commissions from the agent for buying this house; she told me that it was imbedded in the deal she struck with the seller up front and was simply disclosing this fact to me.

 

 

this seems like a good arrangement.

[wiegie]

There is a flaw in your analogy. In your example there are really 5 parties with the 5th party being the one paying $400.

 

That doesn't equate to what is really happening (making it a flawed analogy). In a real estate deal A and C are paying the $400 to B and D ... there is no fifth party involved. Your argument has been that since there is no D in the transaction and C is acting in that capacity that he is entitled to what would he himself would have paid to D. Whomper's arguement is that B is doing the work of D and as such C is still required to pay B as if he were D.

 

I have no problem with B getting D's share of the money if B is doing all of the work that was previously done by D. But I do have a problem with B thinking that he is entitled to all of D's share if B ends up not doing all of the work that D had done (because C is doing some of that work on his own).

 

I know what the contracts say, my argument is not about what is legal (at least in part because I think the real estate industry has lobbied to have the laws written in their favor). My argument is about what is morally right.

[Grits and Shins]

I have no problem with B getting D's share of the money if B is doing all of the work that was previously done by D. But I do have a problem with B thinking that he is entitled to all of D's share if B ends up not doing all of the work that D had done (because C is doing some of that work on his own).

 

I know what the contracts say, my argument is not about what is legal (at least in part because I think the real estate industry has lobbied to have the laws written in their favor). My argument is about what is morally right.

 

 

I understand ... none-the-less your analogy is still flawed.

[Big Country]

I have no problem with B getting D's share of the money if B is doing all of the work that was previously done by D. But I do have a problem with B thinking that he is entitled to all of D's share if B ends up not doing all of the work that D had done (because C is doing some of that work on his own).

 

I know what the contracts say, my argument is not about what is legal (at least in part because I think the real estate industry has lobbied to have the laws written in their favor). My argument is about what is morally right.

 

 

If another agent finds a buyer, the selling agent basically pays the other agent out of his pocket for bringing a buyer to the table, as the agreement is that the seller will pay the selling agent X% for selling the house. My understanding (and perhaps one of the REA on the site can clarify) is that the selling agent is under no legal obligation to provide the buying agent with any money, though it is customary to do so. In a sense, it is little more than a finder's fee for bringing in a buyer. If the selling agent finds the buyer (or the buyer comes on their own without an agent, though, without seeing any advertising or an open house, I don't see how any buyer finding out about the property could not be a result of the actions of the selling agent), then they have no obligation to pay a finder's fee, and thus keep the agreed upon fee in it's entirety.

[wiegie]

How does a buyer's agent get paid if his clients buy a FSBO home?

[whomper]

How does a buyer's agent get paid if his clients buy a FSBO home?

 

 

He doesnt unless the seller agrees to a 1 day contract

[wiegie]

He doesnt unless the seller agrees to a 1 day contract

 

So I'm guessing that this means that a buyer's agent wouldn't be very likely to take his clients to see FSBO homes... correct?

[whomper]

So I'm guessing that this means that a buyer's agent wouldn't be very likely to take his clients to see FSBO homes... correct?

 

 

 

It is understood that if a client is looking for a FSBO they will do so without the aid of a realtor

[wiegie]

It is understood that if a client is looking for a FSBO they will do so without the aid of a realtor

 

What if it is understood that the client is just looking for the best available house for sale?

[whomper]

What if it is understood that the client is just looking for the best available house for sale?

 

 

 

Weak sauce here..I knew you were baiting me so you could post that line . Although most realtors arent anywhere near the snakes they are portraited as on these boards they do want to make money as anyone in a sales profession would. A realtor is hired to scour the MLS/ or word of mouth listings that meet the specifics given to them by a client. They arent expected to look for listings that are not listed in the MLS. If you want to see those listings dont request the services of a RE agent. If I am a car salesman and I work for Toyota and someone comes into my dealership. Should I say dont buy a car from me even though you came into my dealership because there is a guy selling a toyota in the newspaper that is a great deal ? Im not expected to show you FSBOs because that is not the reason you requested my services. You are using me for the access of inventory at my fingertips since I am a member of multiple MLS services not for FSBOs.

 

 

Edit to add: If a client does find a FSBO and asks me to look into it for them I contact the homeowner and ask if they are interested in a one day contract. If they say no I step aside and they can make their own deal. Why would I open myself or the broker I work for for any liability due to my actions for nothing ? And why would I use my resources for a deal that would mean nothing to my office ?

Edited May 13, 2007 by whomper

[alexgaddis]

Weak sauce here..I knew you were baiting me so you could post that line . Although most realtors arent anywhere near the snakes they are portraited as on these boards they do want to make money as anyone in a sales profession would. A realtor is hired to scour the MLS/ or word of mouth listings that meet the specifics given to them by a client. They arent expected to look for listings that are not listed in the MLS. If you want to see those listings dont request the services of a RE agent. If I am a car salesman and I work for Toyota and someone comes into my dealership. Should I say dont buy a car from me even though you came into my dealership because there is a guy selling a toyota in the newspaper that is a great deal ? Im not expected to show you FSBOs because that is not the reason you requested my services. You are using me for the access of inventory at my fingertips since I am a member of multiple MLS services not for FSBOs.

Edit to add: If a client does find a FSBO and asks me to look into it for them I contact the homeowner and ask if they are interested in a one day contract. If they say no I step aside and they can make their own deal. Why would I open myself or the broker I work for for any liability due to my actions for nothing ? And why would I use my resources for a deal that would mean nothing to my office ?

 

Many FSBO's ARE listed on the MLS thanks to the internets...and people nowadays are realizing THEY can list their home on the MLS without the aid of a realtor

Edited May 13, 2007 by alexgaddis

[whomper]

Many FSBO's ARE listed on the MLS thanks to the internets...and people nowadays are realizing THEY can list their home on the MLS without the aid of a realtor

 

 

 

 

Maybe on a realtor .com type of website that is open to public viewing but if you are not a member of the mls the info available to you is limited on the main MLS services (at least it is in NJ). Im a member of the njmls and garden state mls. A non MLS member can view a portion of a listing without being a member but its just a teaser. The info is is basically to get you to call. Listing your home without the aid of a realtor is not very uncommon at all but expecting a realtor to guide you to a FSBO is unrealistic.

Edited May 13, 2007 by whomper

[Grimm74]

The fact that it doesn't seem morally obvious to you (or to the rest of the real estate people on this board) that is is wrong for a broker to decide to give a cut of money to a buyer's agent when they wouldn't give the same cut to a buyer who isn't using an agent (via a reduction in the sale price of the home) shows just how unethical the entire real estate industry is.

 

(Edit to add, if the selling agent has to do extra work because the buyer's don't have an agent, then of course the selling agent should be compensated for this extra work.)

 

 

 

 

I do understand your point about the buyer bringing themselves to the table. What you need to do is ask the representing agent to DISCOUNT the commission for you the buyer. Not I want all..... Commissions are negotiable. You will need to give them something in return though...like completely handling your side of the transaction which brokers DO NOT LIKE. The selling broker/agent will go down LEAGALLY as your agent no matter how the transaction takes place. So if you do not represent yourself well you can sue the agent..........CRAZY right....but it can happen. A broker pays for insurance for such things. So by taking you on as a self representing client you are now a liability in which they should be compensated.

 

We the people set up a system to orderly buy and sell RE. The government has decided to regulate it to protect the consumer. The government feels unlicensed people are not educated enough to represent themselves in a RE transaction. If you do not like the law then do something about it. Quit throwing folks under the bus for just following the law. Remember they are MORALLY following the LAW. Good old big government...

 

 

Remember you can always buy homes outside of this system, lobby...or continue crying.

[wiegie]

Weak sauce here..I knew you were baiting me so you could post that line . Although most realtors arent anywhere near the snakes they are portraited as on these boards they do want to make money as anyone in a sales profession would. A realtor is hired to scour the MLS/ or word of mouth listings that meet the specifics given to them by a client. They arent expected to look for listings that are not listed in the MLS. If you want to see those listings dont request the services of a RE agent. If I am a car salesman and I work for Toyota and someone comes into my dealership. Should I say dont buy a car from me even though you came into my dealership because there is a guy selling a toyota in the newspaper that is a great deal ? Im not expected to show you FSBOs because that is not the reason you requested my services. You are using me for the access of inventory at my fingertips since I am a member of multiple MLS services not for FSBOs.

Edit to add: If a client does find a FSBO and asks me to look into it for them I contact the homeowner and ask if they are interested in a one day contract. If they say no I step aside and they can make their own deal. Why would I open myself or the broker I work for for any liability due to my actions for nothing ? And why would I use my resources for a deal that would mean nothing to my office ?

 

I wasn't baiting you. I honestly didn't know how the whole real estate agent thing works (I've never bought or sold a home). I must say, though, that I am actually more confused than ever because now I have no idea what extra value a buyer's agent brings into the mix since MLS listings are easily searchable on the internet. (I certainly know why they were useful ten years ago, but not why they are useful anymore.)

[whomper]

I wasn't baiting you. I honestly didn't know how the whole real estate agent thing works (I've never bought or sold a home). I must say, though, that I am actually more confused than ever because now I have no idea what extra value a buyer's agent brings into the mix since MLS listings are easily searchable on the internet. (I certainly know why they were useful ten years ago, but not why they are useful anymore.)

 

 

 

Agreed there are many sites that let you put a listing up but there is a difference between those listing and listings we see on the mls we are members of. The debate to use or not use a RE is always a good one on both sides..as a buyer I would always use one.

[wiegie]

as a buyer I would always use one.

 

fwiw, when I do go buy a home, I will very likely use a buyer's agent (if for no other reason, than this thread shows me how real-estate people think and how their cartel is going to basically prevent me from cutting a better deal for myself without one).

[whomper]

fwiw, when I do go buy a home, I will very likely use a buyer's agent (if for no other reason, than this thread shows me how real-estate people think and how their cartel is going to basically prevent me from cutting a better deal for myself without one).

 

 

 

My work is done here

[wiegie]

My work is done here

 

Well, now that I saw the 60 Minutes piece and found out that there are buyers agents who will give me back a cut of their commission, I might use one of them instead of a traditional agent.

[whomper]

Well, now that I saw the 60 Minutes piece and found out that there are buyers agents who will give me back a cut of their commission, I might use one of them instead of a traditional agent.

 

 

 

Im exhausted Wiegie..I wish you nothing but the best when you buy your home and will help you in any way possible. What you described above is a kickback..The realtor can lose their liscense. But if you can find one to give you some of their money. Godspeed.

 

edit to add. I just read your other thread..In NJ what they are doing is completely illegal. Its a kickback. I pay close to 1200 dollars a year to be part of the MLS services I am a part of as well as keep my liscence current and pay insurances. A friend of mine tried to fsbo his place for about 5 months. every saturday he was stuck home doing open houses. His phone rang a lot and he would rush hoime from work to show his home. But he kept striking out. He finally threw in the towel and hired a realtor. His house sold in 2 months . The flip side is TimC who fsbo\ed and had great success..Its an endless argument..I personally would go broke before I kicked back a buyer or seller. I work in the garment center which is an industry of animals. I have been asked many times to kick back for big programs and every time I tell the person the same line. "Once you let someone in your pocket they never get out". I would consider that compromising myself and would rather miss the sale..I know guys that do it all day long though. To each his own

Edited May 14, 2007 by whomper

[Azazello1313]

Agreed there are many sites that let you put a listing up but there is a difference between those listing and listings we see on the mls we are members of. The debate to use or not use a RE is always a good one on both sides..as a buyer I would always use one.

 

 

so we should pay an agent 3% because they have access to the super insider MLS? maybe you can get some more info on that one, but IMO the blurb you get on realtor.com or any other free MLS search usually gives you enough info that you can decide 1) if you want to see the house, or 2) you don't. once you're in the house you're getting TONS more info than you would from ANY version of the MLS. i'm not seeing that particular reason to pay a buyer's agent as a very persuasive one.

 

there are other reasons why they can be useful. and if most seller/agent contracts are the ones where the seller's agent gets 6% if there's no buyer's agent and splits it if there is one, well then you may as well have one. but if it's a situation like muck's, and the seller's agent takes a <6% commission, then not having an agent puts you in a stronger bidding position as a buyer. i'm curious as to how prevalent those types of arrangements are these days.

[muck]

Another question for the RE agents out there...

 

I'm considering getting an agent to list at least one of our two houses (mainly because we have SO much going on, I really don't think we'd do a very good job of selling either one). However, the terms I'd be interested in would be atypical, to say the least. Here's an example of what I'm thinking:

 

FOR EXAMPLE ... The RE Agent is trying to get the listing by overestimating the value of the house ... and she wants to list the house for $120,000 ... I think it's really a $100,000 house if I sell it FSBO, but will let them really put their checkbook where their mouth is with this, as seen in the following:

 

I tell the agent that I think her price is high, and that I could FSBO it for $100,000 ... but, if she thinks it's a $120,000 house, I'll let her earn an outsized commission if she's right. So, we list it at $120,000 and set it up so that the buyers agent gets 2.5% of sale price.

 

Listing agent and I split everything that I net (after paying the buyers agent) over $100,000 ... so, if the buyer and I agree on a price at $120,000, I would pay the buyers' agent 2.5% of $120k (or $3,000) ... and the selling agent and I would split the $17,000 over the $100,000 I really thought it was worth...getting her an $8,500 payday ... a commission for her part along of 7% (plus the 2.5% I paid the buyer's agent). And, if the selling agent finds the buyer who pays the $120,000, then the selling agent would get a $10,000 pay day (about an 8.3% commission) and I end up $10,000 (net) ahead of where I thought I'd be on a FSBO, with quite a bit fewer headaches along the way.

 

However, if the buyer comes in at $105,000, I pay 2.5% to the buyers' agent ($2,625) and the selling agent and I would split the $2,375 that she would have netted me above $100,000.

 

This sort of transaction would protect me, and put my selling agent and I firmly on the same page ... however, as I ran through this sort of idea with someone, they told me it was illegal in KS to do residential real estate on a "performance basis" ... which seems totally asinine to me, but I digress.

 

Any RE guys have any thoughts on this type of arrangement as a listing agent (assuming it is, in fact, legal in KS to do this sort of thing)?

[whomper]

so we should pay an agent 3% because they have access to the super insider MLS? maybe you can get some more info on that one, but IMO the blurb you get on realtor.com or any other free MLS search usually gives you enough info that you can decide 1) if you want to see the house, or 2) you don't. once you're in the house you're getting TONS more info than you would from ANY version of the MLS. i'm not seeing that particular reason to pay a buyer's agent as a very persuasive one.

 

What Alex described was not the MLS that I am a member of . What he described is internet real estate that are listing fsbos at those low rates where you do the work and they take a small cut for putting your house of their website. What I was describing above is yes a non MLS member can view the MLS's that I am a member of but A. you will only see a blurb (I understand your point about that not being worth 3%) but B. and more importantly there are no FSBOs on those MLS,s. They are all done through RE agents so yes you can view it but a RE agent will be involved . If its a straight commish no matter who brings the buyer then as a buyer I would use an agent

 

 

 

 

 

 

 

 

there are other reasons why they can be useful. and if most seller/agent contracts are the ones where the seller's agent gets 6% if there's no buyer's agent and splits it if there is one, well then you may as well have one. but if it's a situation like muck's, and the seller's agent takes a <6% commission, then not having an agent puts you in a stronger bidding position as a buyer. i'm curious as to how prevalent those types of arrangements are these days.

Edited May 14, 2007 by whomper

[Grimm74]

Another question for the RE agents out there...

 

I'm considering getting an agent to list at least one of our two houses (mainly because we have SO much going on, I really don't think we'd do a very good job of selling either one). However, the terms I'd be interested in would be atypical, to say the least. Here's an example of what I'm thinking:

 

FOR EXAMPLE ... The RE Agent is trying to get the listing by overestimating the value of the house ... and she wants to list the house for $120,000 ... I think it's really a $100,000 house if I sell it FSBO, but will let them really put their checkbook where their mouth is with this, as seen in the following:

 

I tell the agent that I think her price is high, and that I could FSBO it for $100,000 ... but, if she thinks it's a $120,000 house, I'll let her earn an outsized commission if she's right. So, we list it at $120,000 and set it up so that the buyers agent gets 2.5% of sale price.

 

Listing agent and I split everything that I net (after paying the buyers agent) over $100,000 ... so, if the buyer and I agree on a price at $120,000, I would pay the buyers' agent 2.5% of $120k (or $3,000) ... and the selling agent and I would split the $17,000 over the $100,000 I really thought it was worth...getting her an $8,500 payday ... a commission for her part along of 7% (plus the 2.5% I paid the buyer's agent). And, if the selling agent finds the buyer who pays the $120,000, then the selling agent would get a $10,000 pay day (about an 8.3% commission) and I end up $10,000 (net) ahead of where I thought I'd be on a FSBO, with quite a bit fewer headaches along the way.

 

However, if the buyer comes in at $105,000, I pay 2.5% to the buyers' agent ($2,625) and the selling agent and I would split the $2,375 that she would have netted me above $100,000.

 

This sort of transaction would protect me, and put my selling agent and I firmly on the same page ... however, as I ran through this sort of idea with someone, they told me it was illegal in KS to do residential real estate on a "performance basis" ... which seems totally asinine to me, but I digress.

 

Any RE guys have any thoughts on this type of arrangement as a listing agent (assuming it is, in fact, legal in KS to do this sort of thing)?

 

 

 

What you are looking for is a NET LISTING...It is illegal in South Carolina and in most states.

[spain]

What you are looking for is a NET LISTING...It is illegal in South Carolina and in most states.

 

More laws put into place by realtors, to protect realtors and screw the customer.

[Grimm74]

More laws put into place by realtors, to protect realtors and screw the customer.

 

 

Nice knee jerk....but actually it was put in place to protect the consumer from a broker screwing over a consumer...the buyer not seller...Can you not see that logic in the very nature of a net listing or is you predjudice to blinding.