Replies to This Discussion

Permalink Reply by Richard on December 10, 2011 at 2:49pm

Hi Janis,

I'm glad you opened this question up for opinion.  I'm a buyer myself and I agree that buyers should not pay for this.  Buyers continue to get hit with all sorts of fees and costs, while everyone else gain profits.  My basis for this reasoning is buyers are making these transactions possible.  Further, I believe that the negotiating skill is a part of the real estate profession itself, therefore it should be part of the 6% commission.  As a buyer, any offer I make will only represent what I perceive is the value of the home, incidental costs to my lender and final sale.  Anything else, comes out of someone else's profits.  If we can't agree on that, then I don't even pursue the sale. 

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Permalink Reply by Richard on December 11, 2011 at 12:56am

Let me pose a question for the great people in this forum.  It's the same question that was brought up here locally amongst some agent friends for debate. The question is:

• If the buyer should pay additional fees for negotiating, then shouldn't the buyer's agent have a voice in the negotiating process?  Third party authorization?  In other words, a dog in the fight?

The logic is, if the buyers are paying for these services, then the service should be in his/her best interest. 

If you pay for an attorney, engineer, accountant etc. to represent you, then you're paying for their service in your best interest.  If you're paying for civil/municipal services in your county or city, you are expecting that those services are not being spent in other jurisdictions, right? 

I don't buy the easy reply that real estate is just different, because that is just not an answer to the question.  I don't buy the story that it's dictated by others such as lenders, etc.  Most professional services are set up as such as the 4 examples that I mentioned above.  You represent your paying client interest. So why should real estate be any different?  What industry basis and justification for this? 

This is the reason why negotiating should be a part of the LA commission. If it's included in the purchase price of the home and the base commissions, then I don't think some buyers such as myself are reluctant to pay it.

Any thoughts?

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Permalink Reply by Smitty on December 11, 2011 at 10:18am

A negotiation fee is no different than a seller requiring a buyer to pay inspections, fire certs, septic inspections, fees for getting the property up to code.  If it's disclosed in the listing agreement, CLEARLY, then the buyer can make the decision if they want the house or not.  It's all part of the purchase contract and if the seller has put it out there that the requirement for the purchase of the home is to pay X fee - whether it's septic, negotiation, fire, etc., then the buyer has every right to opt not to go forward.  The negotiation fee is only due if the property closes.  Most of those other fees which are typically seller costs, DO need to be paid up front before the property closes.

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Permalink Reply by Kristi Service on December 12, 2011 at 9:42am

Hello Richard, I absolutely see your point. Here is another perspective to consider. If the seller hires an attorney, the attorney represents the best interest of his/her client only, not the buyer. If the buyer is purchasing a short sale, it could be scary to leave your fate of your purchase in the hands of the listing agent. I don't believe that real estate agents got into this business to negotiate short sales, but rather help sellers sell and buyers buy: to connect the two and fill needs in a professional manner. Negotiating is a skill, it requires a deep understanding of the lenders' processes and the investors' needs. I have set up my negotiation company where the buyer pays, as I represent the transaction, not the seller. I fight for the buyers best purchase price and interests, too. Not all sellers receive money at closing. Many truly do not have the funds to hire an attorney. And an attorney doesn't necessarily have your needs and interests as a buyer in mind. The "path of least resistance" which I have witnessed many listing agents take because they just simply don't know better, usually costs you in the purchase price as a buyer and the seller kicking in funds to get an approval. That is why hiring a professional short sale negotiator to represent the transaction is a good idea. Even though the buyer pays, it gets you to the closing table faster with your needs being met, not just the seller. I also think agents deserve every penny they earn and shouldn't pay out of their commissions. It is a double negative to take on short sale listings then: wait for your commission, jump through lots of hoops per lender and take a reduced commission. That doesn't make it a win-win for everyone. I am coaching a listing agent right now, trying to earn the partnership, who has only worked 1 short sale before. She has NO idea what she is doing. I feel so bad not only for her seller she was hired by, but the poor buyer that is waiting on the other end of the transaction hoping and expecting a specific result that I doubt this LA will be able to provide. 

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Permalink Reply by Bryant Tutas on December 10, 2011 at 2:57pm

1. The sellers can pay at time of listing.
2. You can reduce the amount of the co-broke rand just pay out of your commission.
3. The buyer can pay and the seller can contribute an equal amount to the buyer's closing costs.
4. You can handle your own negotiations and stop paying a 3rd party.

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Permalink Reply by Kevin - Greenville, SC on December 11, 2011 at 12:23am

#4 LIKE!

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Permalink Reply by Richard on December 11, 2011 at 1:04am

Seems to be the best way...........an agent with negotiating skills. A one-stop-shop.

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Permalink Reply by Donna McClelland on December 12, 2011 at 1:41pm

I would disagree that this is the best way.  I do negotiations for sellers through their listing agents.  The agents who refer their negotiations business to me are too busy getting listings and servicing those listings to be tied down to a phone and computer all day doing all the short sale negotiations work.  I also get negotiation business from buyers' agents that do transactions with us (like Smitty does) and to me, also, this is a fabulous compliment!  I charge my listing agents a portion of their commission when we close escrow.  They usually make up a little bit for this by giving the buyer's agent 2.5% and they take 3.5%.  We do not charge the buyer or seller any fees at all.    

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Permalink Reply by Jeff Payne on December 12, 2011 at 2:23pm

Donna, please that old argument of agents are too busy and should not spend all of this time on short sales is a sales pitch as best by 3rd party negotiators.  An educated and efficient agent should not be sitting tied to a phone and computer all day long, if they are they are not educated and efficient doing short sales.  If short sales took the time that many 3rd parties claim they do, you as a 3rd party would be working for a few dollars an hour.  Sorry but I don't buy the time thing.

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Permalink Reply by Darlene Root on December 12, 2011 at 2:29pm

As broker and agent the highest and best use of my time is not spending time on the phone with lenders negotiating short sales.  It doesnt matter how much time it takes.  I know what my talents are, and that is not trying to appeal to a lender who has an agenda.  Being a "master of all" gets in the way of what I do best. 

Just a thought. 

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Permalink Reply by Harry Clay on December 12, 2011 at 2:46pm

I'm a broker & agent, & I personally love handling my own transactions the entire way, & doing the job right.

I see it as a matter of quantity vs quality.

I know I can make an excellent living closing a few transactions a month, & giving my clients 1st class service.

Others prefer to go for volume, & delegate like crazy.

I ran my Los Angeles swimming pool construction company for two decades the same way. I designed, sold, & supervised everything myself.

Other competitors had multiple employees, & sold more volume.

But at the end of the year, I made more money than they did, & my projects looked better, & I had more referrals. 

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Permalink Reply by Donna McClelland on December 12, 2011 at 3:41pm

Hi Harry,

I can understand why you want to do your own negotiations as an agent.  I would certainly want to have that control over my transactions, too.  And when you're not going for volume, you can certainly do a fine job yourself.

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