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I hear that all the time down here...

people think that they, the buyer, are getting robbed with their own agent!

they think that THEY are paying because it HAS to raise the price of the house and that FSBO means price without that commission added to it

they don't know that the seller's eyes look more like this -------->  $  $  $  $  $  $  $  $  $  $

when they show up at the door...

I tell such people that homes are priced with a commission already imputed in the pricing structure.  The buyer's cost is more or less unrelated to the fee that the seller is paying to their LA, and in any case the same fee is usually paid whether or not whether or not the LA has to split a fee with a cooperating agent.

Then I ask whether the buyer realizes that the listing agent will be by definition representing the seller.  Don't they realize that working with a buyer agent that represents THEM can save them much more than trying to interfere with a private contract of which they are not even a principal? 

I say something like - you pay the same price for a home whether or not you use a real estate agent: The seller usually has already agreed to pay the listing agent a fixed commission - say 6%. So whether you buy the house by yourself or through an agent, the listing agent gets a 6% commission. Therefore, in most cases you cannot approach the seller for a discount, since the seller is paying 6% no matter what - either 6% to the listing agent, or a split of 3% to the listing agent and 3% to your agent.

If you work with the listing agent, that agent is actually negotiating for the seller, not you the buyer.  The best way to be certain that an agent is working in your best interests is by signing a buyer representation agreement with me. The buyer's representative works for, and owes fiduciary responsibilities to the buyer and has the buyer's best interests in mind throughout the entire real estate process. 

Trust me to negotiate a lower price and a much better deal than you would get by trusting someone who is contractually bound to represent the seller of the home you are interested in.

I also ask if they have access to information about recently "sold"  homes in that area. If the say yes, I ask them where they got their info. Most say no, I reply why would you want to blindly negotiate the price, does this make good business sense to you?

Sometimes I get lawyers telling me their clients think the contracted fee is too high because I didn't have to do too much and I should take a commission cut.  Should the lawyer be talking to me like this?  Especially after they check out the listing agreement and see that it is Ok.  Shouldn't they tell their client that he can't get involved in conversations like this?

If I find out they want to go to the listing agent I end the conversation. If they just want to ride around I give them a list of homes with the address and even a street map. If they are going to go the listing agent and are successful at keeping me from finding out this saves me from driving them around first.

I sell resort homes and there are a lot of wanna be buyers to weed through. It has not been a problem. Actually it has made me a lot of money.

Jim,

I hope my MLS doesn't start like yours. Addresses are available on MLS public site and most broker sites, but not Realtor.com. Addresses are available on Realtor.com starting this summer.

I get lots of people with the same impression. My response has just been I don't do that. Never thought of the interferring with a negotiated contract.

Love the "I tell them this is where the adventure begins." line.

Boy, your MLS dues re expensive! These buyers obviously do not understand the LISTING AGENT WORKS FOR THE SELLER. Of course these are the same buyers who want to cheat you out of a commission. I guess I have provided the information before but with the intention of trying to capture the lead. I have yet to meet a Realtor who works for free but when I do, I will conduct an interview for Active Rain!

Jim,

These buyers are trying to save a buck, but in doing so, they are trying to save the same buck the seller is trying to save. If we could just get to a point where each side of a transaction paid their own agent, things would work so much better! Sending dollars across the centerline in a sale is the root of the problem, and using a Buyer Broker Agreement is the first thing that NAR should be pushing on in this arena. We'll see!

JIm, out here the buyer does not pay and we do not even discuss it with them

Wow!  A lot of great comments here!  Atlanta FMLS is broker owned,  That is the major reason for pricing. 

Actually one observation i have made...when the buyers do this try to go directly to the listing agent...they have no money!  The best story I ever had with a buyer was one that in the end cut me out, and purchased with a builder without representation.  Two days later she called up and said she had issues with him.  I asked who he was, how much she put down, and told her to see a lawyer.  The builder was a sleaze, declared bankruptcy a few days later..with her 60K deposit!  That is what a buyer gets for being too greedy!

Jim -enjoyed  your post - I had no idea you guys paid so much in fees - do you see a lot of realtors getting out in this market?

Cyndee I hope they get out. No, what I see until now as the ones that leave are being replaced faster.

Jim: Maybe it is time to charge an hourly rate for information, attach a 900 number for the buyer to call ?? LOL. For an appointment call 800-000-0000 for information and unrepresented tours call 900-000-0000

Buyers (and sellers) need to understand that the price that is paid for the home, the market value, if you will, is based upon the fact that real estate agents are involved. We've all seen buyers overpay and sellers undersell when they are unrepresented, simply because they are uneducated about the property value or assume that they are "getting a good deal." So much of our time can be wasted by individuals that don't value our services...that is the hardest part of this job!

You know, that not only do random buyers not understand how this works sometimes your relatives don't understand either. For instance I had my cousins (My Mom's side of the family) go to my Aunt (Dad's side of the family) because she was the Listing Agent on the house. They thought it would cost more money to go threw me.???

Thanks all! 

Phylena Yes it is good to be reminded for our fees in Atlanta that I do not give it away for free!  Buyers that do not need a buyers agent to represent them like I said earlier...enjoy the adventure!

Mary  Many are so obnoxious with the "It's all about me attitude..."  You couldn't pay me enough!

Kelly There is no free lunch, but it is OK to waste our time?  I don't think so!

Chrissi  The rules have all changed from subagency, to buyer agency, and transaction brokerage... You are right, especially when many of the agents don't even undestand it!  Where are the brokers?

Great posting James my friend.

Perhaps they should know that they will have you representing them and let the listing agent represent the seller.  Given that, maybe they should think about whose interests are most important to the listing agent?  The buyer who just walked in the door, or the seller who has employed the listing agent (OK so it is the brokerage who has the agreement with the seller) to sell the home?

Neither the seller nor the buyer pay the commission either.  It is the transaction itself that does.  No settlement, no commissions!

Thanks Ed!  It doens't make sense, but this is a common scenario.  Almost everyday in the week we get one caller with this request. 

First of all our fees are contingent upon performing our duties successfully and are at no cost to the buyer anywaysince they are paid by the seller. The buyers that don't get it or have a high level of distrust are probably not the type of client I would want to work with anyway. For those types of people I would ask for a specific buyers agreement for the homes that they are interested in. Otherwise they can go somewhere else. Trust is a two way street.

Great comment, that trust is a two way street.  The original premise of this blog is that a supposed buyer calls you because of IDX, and when they find out you are not the listing agent...only want info.  Their intent is to cut out a buyers agent's commission off the top of the price, do not want representation, and only want you to provide the info.  Let the adventure begin!

Jim we pay about $1,500 a year. You need to move to Texas! :)

I know! Isn't that the highest fee you ever heard of for MLS?  WE had years where we paid 12 - 15K in fees.  That is just to MLS.  I do not know if I could move to Texas.  I am an east coast sort of guy from Brookly New York.  I am almost outside my element here in teh deep south!  I have to disguise my voice with a suthin drawl y'all now!  LOL!

We are selling one of our own properties and when I wouldn't budge on a listing price as much as a potential buyer wanted me to, they yelled at me about how I "didn't even give them the X%" because they didn't have a Realtor!  As if it was a given that they would just "win" that much off of the price.  Needless to say, we didn't come to terms!

I agree with the above:  Next.  If they are already in that mindset, they will go into contract, or almost and then start hammering your fee.  No way, deal with clients who appreciate ALL of your services.

And PS, glad I don't live in Atlanta

Janie  Thanks for the comments.  When we only represent one side legally and contractually, and even though we offer misisterial ervies to an unrepresented buyer, sometimes the work we perform for them is is incredible.

FMLS in Atlanta is a great profit center for the broker/owners.  They get away with these fees because there is no monthly/access fee.  The fee is calculated as a percentage on sold properties and the brokers get a lovely dividend check back once a year effectively lowering every agent's commission split.  They are trying hard to move into the Athens, GA area but having alot of difficulty due to the business model they use.  Many of us in Athens, GA are members of GA MLS, but very few on FMLS ...yet!  At the beginning of every month, when I write out checks to 3 MLSs I really wish for 1 statewide MLS but I don't see that ever becoming a reality.

Agents need to do the math!  Let's see monthly access fee of $495 - $1000 is the avg. annual fee in most parts of the nation or as in Atlanta we can pay 10 - 15K a year?  There would almost have to be a revolt. Since there are so many part timers that do not even understand the concept...it will never change. They do not even know what is at stake here!  I've been licensed in several states, and I am a national speaker and trainer!  No one pays the fees we do in the Atlanta area.  No one out of state can believe the fees we pay whenthey hear it!  Example $800,000 house x .00125 = $1000 fee to MLS.

Jim, I had two this week who thought they were speaking to the listing agent. One who told me he didn't use an agent last time he bought. What he meant was, he used an agent, just not his own. He bought a new build. In Indiana many agents put in the MLS the commission will be less if  limited agency. What the buyer doesn't understand is the seller will save the money, not them. I tell them this and guarantee them I will save them more than 1-1.5 % as their buyer agent.

I can't believe your MLS is that expensive! That's unbelievable! I guess that's one way to keep the competition down.

 

 Paula that is very interesting!  That is the first I've heard of that concept but I like it.  If an agent isn't ffering full survice to an unrepresented buyer or are acting as a transaction broker,,,why no tpay less than full compensation?  Their statement of liminted representation under the law is also limiting the amount of service they are offering...just ministarial duties...  Wow!  Some real food for thought here!

Lisa Keep the competition down?  We've grown from 13000 agents 2.5 years ago to over 44000 today!

Wow those are High MLS Fees! Seems to me like there is some thieves running your MLS Office.

We pay $280.00 a year in Boise, ID for the SouthWest MLS Information. However it may also be that there are more Realtors in the Boise Area per capita then any other city.....

 

Jim,

I'm curious from your above dialogue with a caller how you transition "I advise them I only provide detailed information for our CLIENTS" and then tactfully turn them into a client?

Megan You Live inthe real world!  MLS fees should not be more than that!

Jared We try to do that!  These days a lot of them are very arrogant.  I tell them "Enjoy your adventure!"  When they ask what is that?  I say "You trying to find out who the listing agent is!"  Have a nice Day!

Since I don't do dual agency, I tell my sellers that I'll charge them 1-1 1/2% less if I sell their house to a buyer customer.  I also let them know that there's only a 20% chance that it'll happen as most transactions take place agent to agent.  My sellers can net more this way.

Pat I do not do dual agency either!

Jim, I think it's time for a move.  The MLS dues for you are really high in your market area.  Our MLS dues are less than $1000 a year.  Why do you not do dual agency?  The consumer has become just smart enough to be stupid enough to think we will give up commission and addresses easily.  Great answer about giving up the address.

Kay Please do not tempt me! It would not take much for me to go ans set up a new practive!  BTW If you wanted to do dual agency you couldn't not with 45000 agents! It will never happen!

I tell those buyers that the commission was set in the contract and is legal and binding.  I also try to point out that buyers don't pay for my services.  But I do know the types that think if they can get the commission down then they will get a better deal.  To be honest in my 5 years of doing business I have not come across one Realtor that would drop their commission to keep a deal together so I am sure they won't drop it from the start.

Linda thanks so much!