Realty Q&A: Can I ask my agent to take a lower commission?
Lew Sichelman
Aug 24, 2006
Washington (MarketWatch) --Question: I listed my house with an agent at a price of $1.515 million with a 5% commission. A week later, I received an offer for $1.5 million from a buyer who had driven by the house, saw the yard sign and called the listing agent. The buyer was not working with an agent, so my guy told the buyer that he could prepare an offer but could not represent him since he was representing the seller.
When my agent presented the offer to me, I said it was attractive and asked him to reduce his commission by $10,000 since the house had sold much more quickly than anticipated (reducing his cost, expenses and time) and therefore, he was earning a much higher commission than anticipated. No advertising has been done other than developing a flyer and posting a sign in the front yard.
I told him that I thought it would be reasonable for him to share in the good fortune of identifying a buyer so quickly and not having to share the commission with the buyer's agent. But he became indignant and told me it was inappropriate to ask him to lower his commission since a "deal was a deal." He also told me that his agency did not allow him to offer a rebate on his commission.
Lew, I would appreciate your opinion on this. Is it reasonable to reduce the commission under these circumstances or was I completely out of line? Needless to say, I will never use this broker again. The worst part is that I thought this person was a friend. He has been in the business for only a year and has never listed a property near this price range. I listed it with him to give him a break. Karl Smith
Answer: I'm going to pop your bubble on this one. Totally off-base here! Left field and beyond!
You should have negotiated the commission before the fact, not after. I don't know what you do for a living, but if MarketWatch.com came to me and asked me to take less money because your question was easier to answer than most others, I'd be so angry my eyes would pop out of their sockets. And I'd say heck no!
I know exactly how you feel. He didn't have to lift a finger. The place sold itself. You're giving away a lot of dough. But you should have considered these possibilities beforehand. Perhaps a 3% commission if the house sold prior to any paid advertising, or 4% if you accepted an offer within the first two weeks it was on the market. And your agent-friend is right when he says his boss is the one who makes all the decisions when it comes to setting commission rates. He works for the broker, and he can't cut his fee unless his broker is willing to do so or he makes a deal to rebate some of his share (typically 25% of the total commission if he represents just the seller, or 50% if he "represents" both buyer and seller) at or after closing.
Realty agents usually work hard for their money, so they deserve a cream puff every once in a while. Yes, hundreds - no, thousands, maybe even millions - of buyers and sellers have stories about how their agents dropped the ball in one way or another. And I have my pet peeves about those who say they represent the buyer when they don't have a clue what that really means.
But guess what? Agents have just as many horror stories about their clients. Consider the following e-mail in response to a recent item on buyer-brokers.
FEEDBACK:
It is easy to slam Realtors but why don't you turn the light on buyers? There is a saying, "Buyers are liars." Realtors work hard to show buyers what the buyers say they want. Then they'll buy something else. They'll denigrate you to your face if something doesn't pan out -- one renter locked the screens and doors so we couldn't show the condo. Out of our control. One husband and wife said they would only buy east of a certain street. I showed them a house just west. They went behind my back and bought a house in the subdivision I showed them, without me. We work hard for commissions and frequently are shafted. We work hard for no pay many times. Would you do that? How about a lawyer? Don't be a jerk by just showing one side. How about paying Realtors $100/day to show you the houses? Out of the field and happy. Jerry Lee
RESPONSE:
Perhaps you should be outta the field. Most good agents tell the same tales as you. But they know it's par for the course, part of the game, and they just roll with these kinds of set-backs.
MORE FEEDBACK:
Realtors will always have to defend themselves until they decide to do the right thing by consumers (Realty Q&A, Aug. 11, 2006). I got a kick out of the guy who admits he is not impressed with the knowledge and professionalism of the majority of agents he meets but can easily defend dual agency because consumers save on commissions as he mediates the deal.
Some consumers will need real representation and they lose their chance for that as soon as they agree to dual agency. The first-time buyers, I suspect, have NO CLUE what they give away when they sign that paper. Although I practice flat-fee MLS placement brokerage for FSBO sellers, I am a huge fan of true buyer agency.
I am totally offended by the new minimum service laws passed in this country on the conviction that home sellers need representation and assistance and yet the laws do not even mention home buyers and, in particular, first-time home buyers. If these laws continue to spread (New Mexico rescinded theirs, thank goodness) then I will have no choice but lobby for inclusion of buyers.
My experience as an information manager/owner of a 15-agent exclusive buyer agency office convinced me that home buyers need representation much more so than home sellers, in general.
So keep up the good work! Tell it like it is! Consumers will win this game yet. Pat Rioux, ListForLess.com.
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