James Thorner, St. Petersburg Times Staff Writer, penned an article last week titled, “Paying a 6.5% commission made sense“.
Looks like Mr. Thorner instructed his real estate agent to offer a “higher” commission to the buyer’s agent in order to motivate buyer’s agents to show his home.
I’ve discussed buyer’s agent incentives here before, and my opinion on this is clear — any agent that specifically sets out to show their clients homes with higher buyer agent commissions/bonuses is doing their client a disservice. Your job as a buyer agent is to find your client the right home, at the best price for THEM, not for YOU. Period, end of story.
Mr. Thorner makes some interesting points in his article. Yes, he is a journalist and part of his job is to sell newspapers. But what I find disturbing here is Mr. Thorner is writing from the perspective of a home seller. That he feels the way he does should be a wakeup call to every agent out there. I have no doubt that Mr. Thorner is not alone in these thoughts:
A commission is prize money.
Interesting. I wonder how many people out there think of their own paycheck as “prize money”? I work my ass off for the commissions I earn. This so-called “prize money” pays my mortgage, clothes my children and allows my family to live.
All things being equal, a buyer’s agent will show a home paying a 6.5 percent commission to one paying 4 percent.
Undoubtedly this is true in some cases, but certainly not in all cases. I know countless agents that don’t consider the buyer side commission and/or have their buyer clients sign buyer broker agreements (BBA) up front that outline all commissions paid. In most BBAs, the buyer’s commission is offset by the commission the seller pays. For example, if I have a signed BBA at 3%, and the seller is paying 3%, then the buyer owes no additional commission. If the seller is paying less, the buyer makes up the difference. If the seller is paying more, then that additional amount is rebated to the buyer at close of escrow. This is all clearly discussed and disclosed up front. The buyer knows exactly what the numbers are before they even see the home.
Less than two weeks after my Realtor and I signed the contract for 6.5 percent, we had a deal on my house. An acquaintance living nearby who offered 4 percent hasn’t sold his house in a year.
Congratulations. I’m not completely familiar with the real estate market in St. Pete, but I suspect two weeks on the market is well below average. However, it would be interesting to know how your acquaintance’s home was comparatively priced, its condition, and the seller’s motivation. Commission is just one of many factors involved in the sale of any home.
Call it luck if you must. I priced my house toward the lower end and left it spic and span.
Hmm. Isn’t plausible that the condition of your home and the aggressive pricing were just as responsible for the quick sale (if not more so) than the extra half a percent of commission? Pricing your home at the low end and keeping it spotless isn’t luck. It’s smart.
But you can’t go wrong playing to an agent’s self-interest.
As hard as it is for many to believe, real estate agents are human beings (well, at least most of them are). And yes, some will put their own, short-sighted interests first. The savvy agent however will realize that taking care of the client, assisting them in every step of the process, and getting them the best deal possible will over time serve their own self-interests far more than pocketing an extra half a percent in commission. It’s called building a loyal client base, gathering repeat business and getting client referrals. I’ll take that any day over some “extra” commission or bonus.
To the agents reading this, think about Mr. Thorner’s perspective the next time you talk to a potential client. There is a very good chance they feel the same things he does.
To the folks out there that may be considering buying or selling a home, think about Mr. Thorner’s perspective when you interview agents. Do you want an agent to help you that is motivated by the highest commission they can get? Find an agent interested in you as a person, interested in helping you get the best deal you can. Of course your agent is going to be concerned about the commission, it is their paycheck after all. But you can find an agent with enough business acumen to realize that putting your interests first and foremost will also help their own business in the long run (not to mention it’s just the right thing to do. Something about that Golden Rule… it has worked for a really long time…).
[tags]real estate commissions, buyer broker agreements, public perception of realtors[/tags]
I'm Jay Thompson, and I have a little blogging problem... Welcome to The Phoenix Real Estate Guy, or "TPREG" as I fondly refer to it.
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