BiggerPockets

Hey all -
A friend of BiggerPockets, Greg Swann of Bloodhound Realty, recently put together a free e-book on divorcing real estate commissions that I thought you might be interested in.

According to Greg, As long as consumers know nothing about this, the fleecing will go on.

Here's an excerpt:

Question #1: "Potential buyers for our home ($800K - California) have a realtor but he did not find our home for them. The buyers did and have visited both times without him. He has played no role whatever in bringing us these buyers. If we accept their offer why on earth should we give him 3% ($24K) of our home's equity for contributing nothing whatsoever?"

Question #2: "When looking at homes on our own and calling the listing agents ourselves to set up appointments, does that obligate us to go with the listing agent if we decide to place an offer on the property?"

Question #3: "Since the amount of work involved doesn't really differ according to the value of the house, financially, it seems like the percentage commission would make higher prices more favorable from a buyer's agent's perspective. If this is the case, why would the buyer's agent be motivated to help negotiate the price down?"

Now, there are nice, long, complicated answers for each of those questions, and nice, long, complicated answers are the very essence of a certain type of salesmanship. It's called Tap-Dancing, and it works - at least if you're easily confused. But here are much shorter, much more truthful answers to those three questions:

Find out more about the ebook or Download the free PDF here.

Any thoughts on the subject?

Dear Joshua,

Let me begin by saying I'm a Realtor. Not all Realtors are worth their commissions but I think most are.

Here is my opinion about your questions:

Question #1--With the internet these days, many times buyers see properties first, although I look on the MLS at least 3 times per day for new listings for my buyers so it's rare for me to miss something my buyer found. Unless a buyer stumbles into an open house on their way to do an errand, most agents escort their buyers to properties. There is always the bottom 5% of agents who are lazy bums and don't show the properties but in my experience it's pretty rare. Additionally, finding and showing properities is about a third of my job. I also have to negotiate the offer, work through the disclosures and due diligence (in CA this is a lot of paperwork), manage the timelines with the lender and escrow, make sure repairs are completed, and that we close on time. IF real estate transactions were as simple as buying a gallon of milk at the store, I'm sure my job would have been phased out decades ago. Again, some agents are lazy and don't follow through but these agents don't last in the business because clients don't refer them to friends and family.

Question #2--Calling agents and making your own appointments with them does not obligate you to use them but you should be upfront with them that you will be representing yourself. However, unless you are experienced in buying property are you sure you don't want some representation?? Just because you are not using an agent doesn't mean you will necessarily get a better deal--maybe yet, maybe no.

Question #3--Again, a good agent who is in business full-time as a career is not going to do very well if clients don't feel like they negotiated well. Most agents depend of referral business so we want our clients to be happy. Buyers aren't stupid plus after seeing dozens of properties, they learn values. A good agent will help get an even better value. I recently had a buyer whose price range was up to $1.25m. The house they loved was listed at $1.25m. This could have been a slam dunk for me, however, I thought it was overpriced so I suggested we offer quite a bit less. In the end, the buyer got the property for $100k less than list. An extra thousand bucks in my pocket isn't worth losing a customer for life.

Additionally, sometimes a transaction for a low-priced home is extremely complicated and other times a high-priced property is a breeze. Ironically, it is the buyers and sellers themselves--not the property or it's price-- that cause complications that create many sleepless nights for agents.

Yes, these are long answers--just part of my "salemanship."