I put my house on the market 2 months ago and hired a real estate agent on a 6 month contract. My agent is the head agent/owner of a small agency. I signed on for 6% commish assuming that 3% goes to the sellers agent, 3% to the buyers agent. Before signing the contract he threw in the fact that if the house sold quickly AND someone in his office represented the buyer he would be open to negotiating the commish down to 4%.
2 months later we have an offer from a serious buyer but it's a low offer. The contract listed her agent as N/A but she has worked with our agent in the past. They know each other and it is starting to sound like a conflict of interest. He has implied that I should just take her offer and be happy with it. Up to this point everything has been civil. The offer is over $45k off of my original price.
So I contact him and tell him that I'm willing to shave 10k off of my current price as a firm counter. I also inquire as to what the commission would be if the contract was accepted, not to be an asshole but to calculate my bottom line. The guy flips out on me, "asking me to reduce my fee before we have even come to terms on a sale might not be the wisest approach to positively motivating me to work for you." In his best snake-oil-medicine-show language he also lets on that he will also be representing the buyer. I should assume that his fee is 6%. He is planning on pocketing the whole 6%. How can I trust someone to represent my best interests or to convince the buyer that the home is worth my price when he's also working for her? The difference between her offer and my offer represents a mere $650 difference in commission for him.
This is my first time selling a house and I wish that I could fire this guy but I need to get this place sold. I realize that what he is doing is unethical, but legal in the state of VT. Any suggestions from my BBI brethren? I've already blasted both of them in the butt.
As a buyer, I would be hesitant to be involved in a transaction where my agent is also the listing agent.
At that point, we were just happy to find a buyer and get out as quickly as we could. The price of that home has never been as high as when we sold it eight years ago so did okay.
Due o all the wasted time, we lost a house we had our eye on for some time.
So yes, wouldn't recommend it.
WRT his office "representing the buyer", that's a bit of a technicality. If the buyer doesn't bring an agent to the deal, for most purposes you're in a dual-agency situation whether the buyer actually avails herself of the office's services or not. Normally there isn't a conflict-of-interest problem, but your case is a bit different, given the pre-existing relationship between the buyer and your agent and the agent's belligerence regarding the reduced commission.
i equate it to being sued and used the same attorney as the person suing you (which is probably a conflict of interest and not allowed).
the realtor has one goal, get the house sold, they are not concerned with anyone's protection, lowest on the list the buyer.
and if your realtor isn't lowering the commission what reason does the buyer even have to use them they're not getting a better deal and they're less represented?
many truly professionals won't do this, they feel it's impossible to fulfill the fiduciary duty to both sides.
It sounds like this happens more often than I thought. My conspiracy theory thought was, why in the hell would he try to sell to a buyer with another agent at 3% when he could bank 6% waiting for some buyer to walk into his office?
It happens quite frequently I would think.
you agreed to pay 6%, and that's what you're paying. the buyer is the one bending over and from the sounds of your question about their personal relationship could be in more ways than one.
The RE commission process leads to really questionable incentives. Take a $1 million listing (and in NYC, that's a 1 bedroom). At 6%, figuring a 50-50 buy/sell agent split, the seller's agent is expecting a 30k commission. What is his incentive to fight for another $25k for you? That's putting $30k at risk to earn another $750, and that $750 requires work. What you really want to do is give no commission on the first $800k, and then like 30% on everything over. Buy side incentives are even battier.
Selling a house - in any market - is all about proper pricing. When a house first goes onto the market, there are a defined number of potential buyers at that point in time (let's say 500 people). Those 500 people represent your entire world of potential purchasers. If one of them are going to buy your house, they are going to do so in the first 7-10 days (maybe 30 on the outside).
Once you go past 30 days, it means those 500 existing buyers have "passed" on your home. Now the only buyers you have available are "new buyers" entering the market for the first time AFTER your house went on the market. I don't know what percentage of the 500 we started with leave the market each week and how many new people enter the market each week - but I do know that YOU are now limited to the new people entering (and by definition their numbers are FAR fewer than the entire 500 that existed when you first listed your home).
The point is - if you don't sell your home within the first 30 days - it should tell you one thing - it is not properly priced.
If I were you - and if time wasn't essential - I would take my house off the market (if the contract allowed me to do so - otherwise I would not negotiate a penny off the price) .... then after the 6 months are gone, I'd get an appraisal of my home from an independent appraiser ($500) - then I'd negotiate a contract with a realtor and I would limit the contract to 30 days - and I'd try to negotiate down from the standard 6%.
Also, I've sold three homes - and each time I first went out with a realtor pretending to be a buyer to get a full sense of my competition. Then I made sure to price my home aggressively to be the best value out there to potential buyers. Selling for a couple thousand less was worth it when I ended up getting competing offers on all three homes I sold.
And I controlled the entire process. I controlled the pricing. The negotiations. etc. I limited the role of my "realtor" to marketing. I NEVER allow the realtor to have anything to say about the selling price or how I negotiate (and as I say, negotiations have been easy since I low balled the selling price and ended up with competitive bidding).
BTW - I recommend getting an independent appraisal before making a serious offer on a home you want to purchase).
I know the buyer wasn't paying commission, I'm saying the buyer is getting "bent over" in your terms only because the agent cannot possibly act in the best interest of both parties. there WILL be things that come that make that impossible. so the agent will pick the seller who is the one paying them.
I really don't think single agent sales should be allowed unless both parties acknowledge neither will be well represented.
examples, home inspection.
After a home inspection the buyers agent normally comes back and says you, the seller, need to fix a, b and c for my customer the buyer. and that's where most of the contention comes from. in your case the inspection is almost a formality, I can't see YOUR agent pushing YOU to make any changes.
that's one example
I am going to stick with my price and make some cash renting this winter if it isn't accepted. If he's going to pocket 6% he's going to get me the price I want and if he doesn't then I'll find someone else. I had a renter (from my old job) lined up as insurance anyway.
I am not shocked your agent knows the buyer. One of the reasons you get a local agent is that they know people and they keep their eyes and ears open. You may have the offer because the agent knew the buyer needed someplace to go and told her about your house. That's not a bad thing.
The agent was right about being premature talking about the commission. Agents want to get the seller and buyer as close as they can and then if they have to negotiate commission to make the deal work or take care of an inspection issue, they do. That's when you have the most leverage to talk commissions.
baadbill is correct about how the market works although I think he goes a little overboard in establishing pricing. Real estate is a market: your property is worth what someone is willing to pay for it. If you have one offer in that period of time, the market is saying you might be too high. If you have had no showings during that time, you are definitely too high. Ask the agent for a CMA before you counter. The CMA is generated using sales and listing information in the MLS (the same source the appraisers use).
This is a great strategy! Have you proposed this, and had it agreed to and executed by the agent(s), in an actual sale?
Also, if he said something about reducing commission - then that should have been in writing.
You can always call his bluff. Since he is getting double commission, then he will try extra hard to not lose the deal since it is his buyer. So force them up. He makes only half if a different agent comes with a buyer so he will do everything he can to make it work. Or at least should.
Put yourself in the listing agents shoes.... They bring a buyer to you. Should they not be rewarded for that? Would you be better off if your agent steered the buyer away from your home to another? By asking for a reduced commission you are effectively encouraging your agent to steer their buyers away from your home.
It might be that your agent is a snake.... But your home may also be overpriced and the offer you have might be the best you are going to get.
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What you really want to do is give no commission on the first $800k, and then like 30% on everything over. Buy side incentives are even battier.
This is a great strategy! Have you proposed this, and had it agreed to and executed by the agent(s), in an actual sale?
No, but I'd think you could talk a confident broker into it. Unless it violates some industry rule.
Meanwhile, you can make it clear to the broker that what he is doing is not right and that you will spend every free minute of time posting shit about his tactics online, in blogs, etc You can literally ruin someone's reputation if you put your mind to it.
I happen to own a couple of extremely popular, local FB pages. I have used that to my advantage quite a few times. Businesses trying to screw me....like a gym that wanted to nail me for three additional months of fees after I notified them in writing that I was ending my membership. Once they heard about my FB pages, all of the charges went away in about two minutes.
Just get creative and don't take any shit from this guy.
Maybe it's different in your area/country but with comfree and other companies offering identical services at severely discounted flat rates and people selling their own homes I can't believe what that jackass is pulling with you.