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As you've noted yourself, many buyers already currently think they are getting something for free (which is why some buyers treat it like doughnuts at an auto shop and help themselves to as much as they want). This means that anything different from the standard x% of salesPrice means that the buyers agent has to spell out the amount for the buyer in order to do the jumping through hoops to disentangle it from the listing agent's pre-negotiated arrangement. When the price is spelled out and presented as a price (and negotiated as such -- see below), I would think buyers would be less likely to make the mistake of thinking it's free.
The buyer and agent should negotiate on maxPrice and minPrice with each other with the full knowledge that minPrice effectively determines the agent's base commission. This is no different than any two parties negotiating a price for a good or service.
An agent that is bad at negotiating with a buyer over their commission probably wouldn't be very good at negotiating with listing agents over house price.
Buyers WANT to believe it is free. People really really WANT to believe they can get stuff for free, in all consumer venues. Shattering that delusion can be painfully expensive when others aggressively cater to it.
Why do we have ongoing Craigslist rental scams and Nigerian email scams? They successfully play to the common human weakness for free stuff,even when the free stuff is obviously not free.
That crap comparing negotiation between client and broker revealing the broker's skills at negotiating broker to broker has been floating around for years. It is a tiresome weak agent presentation script canard, and means just as little there as it does here.
So, if the agent agrees to sign on with the buyer for less than the buyer thinks he should, the buyer should fire the agent and find someone who demands higher payment without compromise, so the buyer knows he has harnessed a real estate stud because the buyer cannot crack him?
Absurd.
Just wondering how much dumber this argument can get.
Good grief. OP, admit it's a non-starter, or go prove yourself in the market. Your idea has been floated, and it sinks like a lead balloon. You are not going to change the real estate commission structure with your proposal. Both buyers and sellers overwhelmingly like it the way it is, as do the agents. The fee is 100% negotiable between Broker/client, so those wishing to pay less can easily do so by either notating a lowed fee, using a discount Broker, or using a rebate Broker.
... An agent that is bad at negotiating with a buyer over their commission (where they can be armed with market data not available to most buyers) probably wouldn't be very good at negotiating with listing agents over a house price.
Quote:
Originally Posted by austin-steve
Just wondering how much dumber this argument can get.
Good grief. OP, admit it's a non-starter, or go prove yourself in the market. Your idea has been floated, and it sinks like a lead balloon. You are not going to change the real estate commission structure with your proposal. Both buyers and sellers overwhelmingly like it the way it is, as do the agents. The fee is 100% negotiable between Broker/client, so those wishing to pay less can easily do so by either notating a lowed fee, using a discount Broker, or using a rebate Broker.
Steve
I have deduced that the real point of the scheme is to cull out weak agents from the herd, to remove from consideration any agent who would fall for it....
Buyers WANT to believe it is free. People really really WANT to believe they can get stuff for free, in all consumer venues. Shattering that delusion can be painfully expensive when others aggressively cater to it.
Why do we have ongoing Craigslist rental scams and Nigerian email scams? They successfully play to the common human weakness for free stuff,even when the free stuff is obviously not free.
And if you think it's crap, then it's important to explain why when somebody is arguing it. Even if austin-steve knows what you think about it, there are other people reading this thread who might find his arguments convincing. If it's that important to you, you ought to be arguing against it at every opportunity. In terms of misaligned incentives upon my field, I bring it upall thedarn time (that last thread is a particularly long discussion).
You suggested it ought to be my mission, but it sounds like it's something you care about more than me. I would guess the easiest way to go about it would be to have the Ethics Board take it up. Change, even for the better, is often painful and disruptive, just like moving from an apartment to a house.
Quote:
Originally Posted by MikeJaquish
So, if the agent agrees to sign on with the buyer for less than the buyer thinks he should, the buyer should fire the agent and find someone who demands higher payment without compromise, so the buyer knows he has harnessed a real estate stud because the buyer cannot crack him?
Absurd.
Quite simply, no agent should agree to be paid less than they think their services are worth, and no buyer should agree to pay more than they think the service is worth.
Neither the standard scheme nor my proposal results in either party unilaterally determining the compensation. An agent is free to offer my proposal as if the minPrice is set by the agent and non-negotiable. This is equivalent to a store with a product and a price sticker that says "take it or leave it" or a home seller not willing to budge from their list price. This still works fine because anybody who sets that price too high will merely lose market share to competitors.
Last edited by perfectlyGoodInk; 09-07-2012 at 12:13 PM..
This still works fine because anybody who sets that price too high will merely lose market share to competitors.
Not entirely true as you are aware. Nordstrom's has not lost market share to WalMart because they service a different type of clientèle. There are people who might need the discount of Walmart and then there are the people who pay for the quality and hands on service of a Nordstrom's. Then you have everything in between like a Macy's or Dillard's for the average consumer.
I learned years ago price is not everything. A person is seldom disappointed in quality and good service. Most people understand you pay for that level.
I agree with Steve ... you're trying to sell a program that you can't even get professionals to believe. You'd never sell it to the average public.
I learned years ago price is not everything. A person is seldom disappointed in quality and good service. Most people understand you pay for that level.
Of course. "Too high" means too much for the value you are offering, and is not a fixed number. My x% * (maxPrice + minPrice - salesPrice) allows for different agents to either allow the client to specify minPrice, for agents and clients to negotiate a minPrice (agents can thus talk buyers into raising their minPrice based on market data), or for agents to set a minPrice and not budge from it because they know they're worth it. The agent is also welcome to change the x%.
This whole buyers "unilaterally" setting the commission under my proposal is not true.
You suggested it ought to be my mission, but it sounds like it's something you care about more than me. I would guess the easiest way to go about it would be to have the Ethics Board take it up. Change, even for the better, is often painful and disruptive, just like moving from an apartment to a house.
Ethics board? What ethics board? Are you talking about the REALTOR boards that control 82% of the MLS's across the nation? Excuse me while I go laugh hysterically if that is what you are referring to.
Honestly I don't get it. You love your formula, and that is totally fine. You have found an agent that is willing to work with your formula. What's the problem? Why do you care that the rest of us don't like your forumla? It works for you, it works for the agent...no problem exists.
You suggested it ought to be my mission, but it sounds like it's something you care about more than me. I would guess the easiest way to go about it would be to have the Ethics Board take it up. Change, even for the better, is often painful and disruptive, just like moving from an apartment to a house.
....
Understood.
You have contrived a Rube Goldbergian scheme empowering the buyer to set the agent commission via trickery, and something simple and straightforward would not fit into the scheme.
That is quite clear.
Understood.
You have contrived a Rube Goldbergian scheme empowering the buyer to set the agent commission via trickery, and something simple and straightforward would not fit into the scheme.
That is quite clear.
How is the buyer "tricking" the agent. I'm simply suggesting that the agent offers buyers these three choices (answering any questions the buyers ask about them):
Quote:
Originally Posted by perfectlyGoodInk
[] flat fee of $XX,XXX
[] x% of sales price
[] x% of ($YYY,YYY - sales price)
...Once the buyer tells you their range, you can add the min and max together to produce $YYY,YYY for them in the form.
How can the buyer use trickery? The agent has all the paperwork and is the one presenting forms to the buyer. The buyer can argue with them, but the $YYY,YYY in the contract paperwork can actually be unilaterally decided by the agent if they choose to do so (the "take-it-or-leave it" pricing strategy).
Ethics board? What ethics board? Are you talking about the REALTOR boards that control 82% of the MLS's across the nation?
You don't have an ethics board? Why not?
Licensing has some negative side-effects, but it's totally toothless without such a board.
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