Author Topic: Let's invent a new commission structure  (Read 927 times)

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Offline Cornflakes

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Re: Let's invent a new commission structure
« Reply #15 on: February 12, 2021, 08:37:22 PM »
I question the whole non-liquid asset class designation to residential real estate. Vast majority of homes are more like commodity (with varied degree of quality) than unique. jUst like used cars, most of them are just run of the mill and KBB helps there, some are vintage, rare etc. and their pricing requires more human touch.

If you have an excellent condition honda accord with low miles and no scratch/dent, you will score a few more $ than your competition. you can choose your convenience level and get cash tomorrow at a dealership or take 2 months to sell yourself.

Accord....home
dealer ....redfins and zillows of the world
middle of the road solution is a seller agent
cheapest option taking its own time...FSBO

Let there be KBB like service that can provide analysis and even review docs, provide fraud insurance etc. for a small fee so that buyers can rest easy.
If I am buying new home from builder, I may choose minimal services from this business. If I am buying a 100 year old home in Pasadena that has been through 25 owners, I may want full analysis and insurance to protect myself.

Let FSBO seller spend all the time and energy to show the house to 100 parties if he so chooses
Let buyer visit 100 homes if he wants and not buy anything after all if he chooses

Offline irvinehomeowner

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Re: Let's invent a new commission structure
« Reply #16 on: February 14, 2021, 12:11:03 PM »
So buying side, there should be some nominal fee for accompanying you on showings if you don't end up buying with that agent or else all that work goes for naught.

At the same time, you don't want to be stuck with a bad buying agent so I wouldn't want there to be some extended contract.

Just don't know what a fair arrangement would be.
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Offline Jarule046

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Re: Let's invent a new commission structure
« Reply #17 on: February 15, 2021, 01:57:25 PM »
Most agents would love compensation for buyers tours. Many agents get very frustrated and exhausted with buyer situations. Unfortunately many buyers and sellers choose their agents emotionally and end up with bad experiences. An agent should always educate you on pros and cons.

If buyers paid an agent to show them homes this would also ameliorate the issue of realtors pressuring you to buy. One of the reasons they pressure you to buy is so that you make the purchase with THEM. There are stories of people using one agent to show properties and then they find out a friend or a friend of a friend is an agent, or after some time the buyers choose to stop looking and resume with a different agent "just because" and they use the new agents to buy the property. Agents want to avoid buyers thinking things over because a sale is a sale. Short term thinking, but it's true.

Offline eyephone

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Re: Let's invent a new commission structure
« Reply #18 on: February 15, 2021, 02:26:18 PM »
It won’t work: buyers will never pay to to tour a house. If that was the case. What if agents show houses that don’t fit the criteria. Does the buyer get a credit or chargeback if they prepaid the tour?

« Last Edit: February 15, 2021, 02:56:34 PM by eyephone »

Offline USCTrojanCPA

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Re: Let's invent a new commission structure
« Reply #19 on: February 15, 2021, 02:42:06 PM »
It won’t work: buyers will never pay to to tour a house. If that was the case. What if agents show houses that don’t fit the criteria. Does the buyer get a credit or chargeback if they prepaid the tour.



I agree that buyers will push back on paying an agent to view homes.  There's no perfect commission model that works in real estate but there are ones that better align the interest of the client with the agent.
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Offline qwerty

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Re: Let's invent a new commission structure
« Reply #20 on: February 15, 2021, 07:48:34 PM »
It won’t work: buyers will never pay to to tour a house. If that was the case. What if agents show houses that don’t fit the criteria. Does the buyer get a credit or chargeback if they prepaid the tour.



I agree that buyers will push back on paying an agent to view homes.  There's no perfect commission model that works in real estate but there are ones that better align the interest of the client with the agent.

But there needs to be a give and take. If buyers don’t want to pay for using someone’s time then the buyers are no better than the agents who don’t want to move away from the existing commission structure.  Then we end up with the status quo.  By paying a fee perhaps buyers won’t just string along agents and go look at home they aren really considering. Back in 2010-2011we saw a variety of homes with USC and felt bad after we put our search on hold. We then bought new construction and USC got his commission. But we felt bad during that pause that we wasted his time. I don’t think I would have felt as bad if we were paying him for each home we saw.

The buyer could pay $100 per showing and if they end up buying the agent could credit back the 100 per showing. Or you could run a tab and if you dont buy within 3 months, the seller pays up for the visits over the last three months.

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Offline daedalus

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Re: Let's invent a new commission structure
« Reply #21 on: February 15, 2021, 08:08:54 PM »
Do you need an agent to view a home?  Is this a builder requirement?  The only time I've ever been in a home with my agent was after the offer was written up. 

Offline USCTrojanCPA

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Re: Let's invent a new commission structure
« Reply #22 on: February 15, 2021, 10:57:07 PM »
Do you need an agent to view a home?  Is this a builder requirement?  The only time I've ever been in a home with my agent was after the offer was written up. 

Here's a big difference in seeing new home and resale homes. If you go to a new home the first time without an agent and give the sales office your name then your agent will not be eligible to receive the commission for the new home transaction.  Pre-covid buyers, buyers could go to broker or public open houses themselves to see resale homes but otherwise appt needed to have been made with the seller and/or the listing agent.  Also, only agents can open Supra lockboxes with their Supra eKeys using their cell phones.  I think it's a liability issue by having random buyers go view the home themselves.  What happens when things get damanged or stole if there is no agent controlling the showing?  Who's responsible for that loss?  Also, things like gate codes and/or seller contact information is kept private in the private remarks that don't end up on Redfin, Zillow, etc for a reason.  In the post covid world, all showings are by appt only and Covid PEAD forms need to be submitted to the listing agent prior to showing with all the adults that will be entering the home. 
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