Author Topic: Offering a Higher Commission to Buyer's Agent - is this really a thing?  (Read 1745 times)

Zero Degrees

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49 DOM and I asked my realtor if I should consider another price adjustment.  I was advised to not drop my price and instead offer a higher buyer's agent commission, all out of my pocket of course. This would be thousands of dollars we are talking about here. I am sure I will still have to lower the price anyways so I would be double screwed.

Sorry, but isn't it the buyer who decides what houses to tour and which one to buy; not the agent who drags his/her clients to a house because the commission is higher. I would rather offer an incentive to a buyer and have suggested things we could do on that end instead. I also asked him to run a new CMA and reprice to just below the market rate. Sometimes I wonder why I am paying for this "service."

Someone please enlighten me.  Is this even ethical?

Another Reader

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #1 on: August 24, 2017, 05:22:20 PM »
What you agent is suggesting is to get buyers' agents to steer their clients to your property over others because of the increased commission.  That rarely works, often ends with unhappy buyers that pull out of contracts, and is not the way to solve the problem.  The money is better spent either improving the property or lowering the price.  The saying in real estate is "price fixes everything." 

How hot is your market?  Is it seasonal and you are past high season?  If you are past prime selling season and the market is cool or cold, drop your price.  Taking time to make improvements could put you in the late Fall, which in many markets is not a good time to sell.

Optimiser

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #2 on: August 24, 2017, 05:35:33 PM »
My wife is an agent. I have noticed that houses in our area usually offer 2.5% or 3% to the buyer's agent. I have asked my wife why the discrepancy and if it influenced agents' decision of what houses they show to clients.  She said it is completely up to the seller's agent how much they want to offer. However, from what I've seen when the buyers agent gets more the sellers agent gets less, the seller pays the same 6% commission either way. She was also adamant that it would be seriously unethical to not show a client a house offering 2.5% or try to steer them toward a house offering 3% and said no one she works with does anything like that. I'm sure it affects how some agents act though.

I suspect your agent doesn't want to drop the price because he/she will get paid less, but if you pay more commission to the buyer's agent your agent does lose out on any money.

My non-professional opinion: If you want your house to sell faster, lower the price.

Zero Degrees

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #3 on: August 24, 2017, 05:54:17 PM »
My wife is an agent. I have noticed that houses in our area usually offer 2.5% or 3% to the buyer's agent. I have asked my wife why the discrepancy and if it influenced agents' decision of what houses they show to clients.  She said it is completely up to the seller's agent how much they want to offer. However, from what I've seen when the buyers agent gets more the sellers agent gets less, the seller pays the same 6% commission either way. She was also adamant that it would be seriously unethical to not show a client a house offering 2.5% or try to steer them toward a house offering 3% and said no one she works with does anything like that. I'm sure it affects how some agents act though.

I suspect your agent doesn't want to drop the price because he/she will get paid less, but if you pay more commission to the buyer's agent your agent does lose out on any money.

My non-professional opinion: If you want your house to sell faster, lower the price.

Thank you and tell your wife thank you too for her professional input. 

Yes, he said it was to convince the buyer agents to work harder to sell my house.  I thought that is what MY agent was doing. Actually I know that houses sell themselves.

Also, to clarify - my agent is suggesting that I up the buyer's agent commission in addition to the already 6% we have in the contract.  My agent did not offer up his commission and I would be paying over 6% for any transaction. So it is additional expense out of my pocket. That sounds shady to me and it actually makes me want to cut and run.

I think I will ride out this contract (which is almost done) and then go off and relist with a new agent at a new price.  My area is a hot, sellers market, but seasonal and slowing down now.  I need to sell this house ASAP and I am willing to cut my losses now rather than carry a mortgage for more months, possibly without a job in the near future (damn merger)! I will be bringing a check to closing and my agent knows this. I  am over the "what I need to get" and accepted the "what a buyer will pay" today versus what they paid in May/June.  Prices are falling.

I have another post with all my history called "when to drop the price on home" from last month if you are interested. I do not need to make any updates at this time, but I know I need to reconsider the price...again. 
« Last Edit: August 24, 2017, 05:58:12 PM by Zero Degrees »

Another Reader

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #4 on: August 24, 2017, 09:09:07 PM »
In the context of your previous thread, the answer is to lower the price.  You own the property that is neither fish nor fowl and has few interested buyers.  Price fixes everything.  Once the contract with this agent is finished, find a more enthusiastic, realistic agent.  This one has not helped you to get the property sold.

Optimiser

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #5 on: August 24, 2017, 09:58:10 PM »
Told my wife about this thread and she said get a new agent ASAP.

MommyCake

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #6 on: August 25, 2017, 04:49:27 AM »
Yes, you need a new agent.  This agent is not acting in your best interests.

The agent agreed to sell your house at a 6% percent commission, and agreed to it in a written contract.  He is essentially telling you to increase the commission, which would be an alteration of the original agreement/contract. 

In my area it is not unheard of for the sellers agent to DECREASE their own commission (for example, offer 4% to the buyers agent instead of 3%) to get houses to sell more quickly.  I know sellers agents who automatically offer this 2/4 split on every listing, taking the smaller percent for themselves.  I HAVE NOT heard of asking the seller to increase the commission in order to sell faster. 

Your best bet is to insist that the agent lowers the price.  He should not refuse if you insist.  Contact the broker if you have to.

Finallyunderstand

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #7 on: August 25, 2017, 08:39:00 AM »
Realtor here of 10 years.  I would never ask my sellers to pay more commission as an enticement to buyers agents.  It makes no sense.  Buyers either like a home or they don't.  More commission to a buyers agent won't do anything.  I've seen realtors list their own homes in my area and offer 4-5% commission to the buyers agent since they weren't paying themselves and they still haven't sold any faster than another listing. 

Reduce price.  I'm not sure what your price is but I try to make is crystal clear to sellers that a small reduction in price doesn't do anything.  For example, a $299k house dropping to $294,900 might as well not drop at all.  $5000 doesn't make buyers all of the sudden think the home is a great deal.  Typically I say it needs to be at least 5% to do anything. 

Cwadda

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #8 on: August 25, 2017, 09:16:38 AM »
Another vote for dropping your agent ASAP. Your story is rage-inducing.

Zero Degrees

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #9 on: August 25, 2017, 03:50:34 PM »
Thank you all for the feddback.  I am NOT going to do a buyer's agent incentive.  I am considering a buyer's incentive though.  If this house doesn't sell by the end of this contract, I will be changing things up drastically.
 
One of my friends at work said that she had a house that wasn't moving back in the mid 90s and her realtor was so discouraged and felt horrible about it, so he offered up ALL of the commission to the buyer's agent.  The house had an offer in less than one week. I guess that shows that there are some agents out there who do go for this type of incentive.

Gibbelstein

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #10 on: August 28, 2017, 04:20:52 PM »
I'm curious what your realtor's response would be to "Sorry, my understanding was that any change in commission to the buyer's agent would come out of the 6% we agreed to in our contract."

Agreed, this sounds unethical and it certainly doesn't reflect well on this person.

Car Jack

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #11 on: August 29, 2017, 09:33:19 AM »
I am going to disagree with everyone.  We found a listing like this when on a house hunting trip.  We made it very, very, very clear that we only wanted to look at single family houses and had zero interest in any condos.  This agent insisted and drove us to the condo anyways, saying it was on the way to our first house and would only take a few minutes.  While driving, I had the MLS listing and read through it.  It listed the commission (10%) which told me why he was bringing me there.  While we had no interest, he pushed the place hard.  We looked at another 5 houses that day and put in an offer on one.

Buyers can absolutely be swayed to look at a higher % house by an agent.  Whether you pay more to sell or take less when offers come in from less potential buyers, it's all the same.  I wouldn't think twice to raise my price and put a higher buyer-agent % in place. 

Zero Degrees

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #12 on: August 29, 2017, 08:37:09 PM »
I am going to disagree with everyone.  We found a listing like this when on a house hunting trip.  We made it very, very, very clear that we only wanted to look at single family houses and had zero interest in any condos.  This agent insisted and drove us to the condo anyways, saying it was on the way to our first house and would only take a few minutes.  While driving, I had the MLS listing and read through it.  It listed the commission (10%) which told me why he was bringing me there.  While we had no interest, he pushed the place hard.  We looked at another 5 houses that day and put in an offer on one.

Buyers can absolutely be swayed to look at a higher % house by an agent.  Whether you pay more to sell or take less when offers come in from less potential buyers, it's all the same.  I wouldn't think twice to raise my price and put a higher buyer-agent % in place.

I appreciate your perspective. My point being - you didn't buy that house. You had no interest and he basically forced you to go and you know why. Didn't that piss you off?  So it was pointless for him to bring you there. He was hoping you would take it and get his big pay day. If an agent did that to me as a buyer I could never trust him/her.

Also, you can't raise your price after you list a house. I mean, you can technically, but if no one is looking or making offers at the current price, why would they look/make an offer at a higher price? The buyer has to like the house.  So you would only get the shady agents dragging their buyers there wasting their time and the sellers.

I am still debating if I should stay listed or take it off. My job may be going away soon and I am not sure if I should deplete every penny I own to get out of this house and go to a cheap apartment, or hang onto my savings and struggle to stay in this house until I find a new job.

 

jwright

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #13 on: August 30, 2017, 08:17:31 AM »
We see buyer's agent incentives fairly regularly, but my understanding is that the cost is paid by the seller's agent.  For example, the seller's agent will give a $500 bonus to a buyer's agent.

As everyone else has said, it comes down to price.  Someone would buy your house for $1.  You just need to find the magic number that works for both of you.

Zero Degrees

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #14 on: August 30, 2017, 03:18:52 PM »
I am  in the last week of my contract and I slashed the price.  So hopefully that will get it done.

sequoia

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #15 on: August 31, 2017, 07:00:04 AM »
I am going to disagree with everyone.  We found a listing like this when on a house hunting trip.  We made it very, very, very clear that we only wanted to look at single family houses and had zero interest in any condos.  This agent insisted and drove us to the condo anyways, saying it was on the way to our first house and would only take a few minutes.  While driving, I had the MLS listing and read through it.  It listed the commission (10%) which told me why he was bringing me there.  While we had no interest, he pushed the place hard.  We looked at another 5 houses that day and put in an offer on one.

imo this sounds like a pure waste of time. If my agent insist on driving me to see property that I have zero interest, that agent would be fired on the spot. I am surprised you let your agent do that. That's like getting kidnapped.

Optimiser

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #16 on: August 31, 2017, 02:54:16 PM »
I am going to disagree with everyone.  We found a listing like this when on a house hunting trip.  We made it very, very, very clear that we only wanted to look at single family houses and had zero interest in any condos.  This agent insisted and drove us to the condo anyways, saying it was on the way to our first house and would only take a few minutes.  While driving, I had the MLS listing and read through it.  It listed the commission (10%) which told me why he was bringing me there.  While we had no interest, he pushed the place hard.  We looked at another 5 houses that day and put in an offer on one.

imo this sounds like a pure waste of time. If my agent insist on driving me to see property that I have zero interest, that agent would be fired on the spot. I am surprised you let your agent do that. That's like getting kidnapped.

Yeah, that's shady AF.

Zero Degrees

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #17 on: September 02, 2017, 01:51:55 PM »
Got a shitty offer yesterday.  This morning, before we could even officially submit a counter, the buyer agent called mine to say "oh by the way, this is our final offer."

WTF. So if it doesn't say "final offer" in their contract, shouldn't we still counter?  My agent said not to take it, but then I don't think he sent anything back.  I have not seen the offer and he never did send me the counter that I was supposed to sign. He just said their offer will be ongoing if I want it.

He has been negotiating (without a contract) with this other realtor off/on for weeks without anything in writing.  I am beyond mad. I really feel like I am going to go crazy with this whole process.  This house is just unsellable and I am ready to delist today and just be done with it. If I lose my job and I can't pay  the mortgage, the bank can just take the damn thing for all I care.


Another Reader

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #18 on: September 02, 2017, 04:45:24 PM »
Based on what the agent that presented the low offer did, you have a terrible agent and the agent for that low ball buyer knows that.  The fact your agent accepted what he was told by that buyer's agent and did not work with you to counter proves s/he is not capable of representing you.  Wait the agency contract out and look for an agent that can sell a property like yours.  Talk to several that work in your neighborhood and sell lots of properties.  Ask them to show you what they think your unusual property will bring, and to explain the basis of their estimate.  Ask them who the likely buyer is and how they will market the property to find that buyer.

Your property is not unsaleable.  You don't need to give the property to the bank.  You just need to find a better agent.

tralfamadorian

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #19 on: September 02, 2017, 05:54:25 PM »
Your property is not unsaleable.  You don't need to give the property to the bank.  You just need to find a better agent.

+1 

In your first thread, I believe I remember you mentioning that a very similar property to yours sold for a good price- that the realtor listed it as SFH though it was technically a condo to bring in the buyers looking for that type of property, etc.  Basically that realtor got the job done.  Your contract will be up soon with your incompetent realtor.  Find out who sold the house across the street and call them. 

Joel

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #20 on: September 02, 2017, 05:56:40 PM »
I would get a new agent.

sequoia

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #21 on: September 02, 2017, 08:35:24 PM »
Another vote for getting a new agent. We have worked with agent that was not good before so I feel you OP.

Zero Degrees

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #22 on: September 03, 2017, 09:19:30 AM »
Thank you all so much. We are still trying to work with this buyer to see if she will come up on her price.  When my contract ends in a few days, I don't think I'll relist with anyone. I cannot take this stress anymore. I think I actually have a stress hangover today. 

Also, if I do lose my job I will at least have some money in the bank and I think I will have to miss a few payments before they kick me out. I am certain I can find a new job before I run out of savings.

I feel like all signs are pointing to me not moving.  Right now I don't really trust my own judgement though. 


Another Reader

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Re: Offering a Higher Commission to Buyer's Agent - is this really a thing?
« Reply #23 on: September 03, 2017, 09:57:09 AM »
In your shoes, I would step back and take a deep breath.  This is a business transaction, albeit a stressful one.  The person currently representing you is not capable of completing the transaction.  In a few days, you will have the opportunity to engage someone that can sell your property effectively.  Relief is on its' way!