Hello Folks,
We jsut put our house on the market a couple of days ago. My question has to do with the realtor acting as a dual agent. If the buyer is represented by the same firm that I am represented by, then my agent no longer solely represents me, he represents both of us in a limited capacity. If he is representing the buyer and seller, then I would think the commision should be reduced because he's not splitting it the same as he would if the seller was represented by a different firm. What do you guys think?

Thanks,
Bill

I have always thought that in a dual agency situation, the buyer should pay the buyer's portion of the commission. But it doesn't seem to work that way. Before the dual agency scam became prevalent, all brokers and salesmen were fiduciaries of the seller. Now your own broker can divide his loyalty and still collect a full commission from you.

Commissions today are much too high as well. There is no justification for a $21,000 commission on the sale of a $300,000 house.

At this point you've already signed the agreement and you've accepted his standard contract. That means he gets the full amount (more likely, he gets a portion and the other agent that is working with the buyer gets a chunk.) Once you agree to the contract, you're in it for the 90 days or 6 months it runs. Try to renegotiate it, but you probably won't have much luck.

Part of the problem is that if he's not getting the full commission, he'll probably only work half as hard at selling it. He'd much rather have the sale go down within his own firm. I have friends and others that I just know that are in the real estate business. Note that I refrained from suggesting that they work at it. Some actually do, but not on all listings. Some seem to be a disgrace to the line of work (note again, I refrained from saying profession.)

When an agent gets a fish on the line, they often spend a day or two with them showing them available houses. Guess what? They show houses that they've got listed and only rarely one that another firm lists. They want that double payday. Experienced buyers just note the streets and addresses of other homes that interest them and often go back on their own (or call the firms/agents that list the other homes.)

The reality is that buyers are free to go anyplace they please. Sellers are pretty much stuck for the duration.

I tend to put realtors in the same bucket with lawyers, generally speaking.
I've known excellent examples in both professions, but the opposite is also true.
The commission was explained to me this way. 3% to the "other" realtor + 1.5% to the "company" + 1.5% to "my" realtor = 6%. I'm with you, somehow it doesn't really add up.
I've also been told there's franchise fees, office overhead, etc.
Unless you're willing, and have the time to sell it yourself, they are a necessary "evil".

The justification the agent uses is that 6% is going to be paid by the seller. What difference does it make how it is split up?
When we sold our house in Seattle, our realtor (ReMax) agreed to a lesser percentage if they were both the listing and buying agent.
Of course you could go through a service like this: http://lib.store.yahoo.net/lib/buyself/commission.htm

Dick, I haven't signed the dual agengy agreement yet, so I don't think I'm bound to it. I have signed a right to sell contract, but that's it. The realtor is bringing the dual agency agreement later today.

Bill

quote:

Originally posted by mtb1bkr:
Dick, I haven't signed the dual agengy agreement yet, so I don't think I'm bound to it.

Then its time for you to do some serious negotiation. If you sign it willingly, you're on the hook.

Mtb1bkr-----Unless the property sells at the exact listing price, commission is negotiable. Standard listing agreements have 7% to be split between the realtors involved. If the offer is less than list, the realtors should only get 6% if from different agencies, 5% if a dual agency transaction. I was licensed in Nevada, have done this many times for customer homes, and my own.

Here in Florida they have 4 different types of agency. See below.


Real Estate Agents
Most people interested in buying a home work with a real estate agent. Real estate agents help to bring buyers and sellers together, assist in the purchase process, and typically are paid a commission by the seller based on the purchase price of the home. In the past, real estate agents represented only the interests of the seller. Today, however, real estate agents have more flexibility in terms of whose interests they represent. A real estate agent can represent a seller, a buyer, serve as a dual agent representing both parties or as a transaction broker putting the agreement together without representing either party. Whomever an agent represents, he or she has a duty to disclose that relationship to the buyer and seller. If a buyer hires an agent, that agent will often split the commission with the seller's agent.

Also, the type of agency being used must be disclosed in writing at the beginning of the process so there is no misunderstanding who is owed a fiduciary relationship.

If he finds a buyer, why would you care whether he gets both sides of the commission? You're not going to pay any more than you've already agreed to pay.

Plus, your realtor will be doing twice as much work, viz. listing/showing your house + bringing prospective buyers to see your house.

You can negotiate these percentages on commissions sometimes, but be advised, when a realtor is looking for houses for a client, when he sees the posted commission is less than others homes are giving, he's going to cross that house off the list.

Wouldn't you? If, in your job, you had the option of performing one of two functions. One function would provide you $3000 and the other function would provide you $2000, which would you perform?

When your realtor lists your house, he's going to put it on an areawide posting called "multilist." Multilist will give the specifics about your house, including the commission provided.

Realtors will study the description of your house. Which do you think would motivate them the most? A commission which says, "2 1/2%?" "3%?" Or, "3 1/2%?"

(That percentage represents his/his broker's half of the commission. The other agent/broker gets the other half of the commission.)

Those percentages, by the way, represent only a fraction of what he receives. His broker splits it with him. Sometimes the split is 50/50. Sometimes more. And for the realtor who has the seller's side, he's paying office fees, sometimes franchise fees, the areawide multilist fees, advertising fees, keybox fees, broker's open fees.

If the realtor is handling the buyer's side, he's providing gas to get these people to the respective houses. Plus he's also paying the above overhead fees.

It's simple economics. Real estate is not a benevolent enterprise. So don't expect your realtor to jump through too many hoops to get your business.

Oh, and be further advised, realtors do talk among themselves. Some homeowners are so controlling and anal about their houses that realtors will simply avoid them.

I've know a few agents(evil w/o the necessary) The agents split the commission with the selling agent retaining 3.5% and buyer getting 2.5% +/-.
A good agent will reduce thier commission and advise you of the what, where and why's.
Believe me, they are getting their $ one way or another.
I'd say reduce it a full % atleast on your end, if the buyer wants to pick it up, let them.
The have to disclose the dual agent info/ conflict of interest. You hold the cards, I f they refuse to broker the deal, I believe it is a breach of contract on their part and your free to find another agent.( better check that out, though)

Anybody that has lived in S.Florida over the last 10 years has seen what they have done.
As much as a 400% increase in home cost(not VALUE) in under 10 yrs, Let'm eat cake. Guess I got an axe to grind, sorry.

SEG is full of misconceptions. If the realtor is handling both sides of the transaction, there's no "conflict of interest." Yes, he is required to disclose it, but it merely means the realtor ceases to be a "single party broker" and becomes a "transaction broker."

And, this scenario (single party vs. transaction broker) will exist even if it's only another agent in the listing agent's office who brings a buyer. It's no big deal. Don't try to make it one.

He's already given you paperwork that explains it all. You really need to study it.

Oh, and, SEG, realtors had nothing to do with Floriduh's inflationary market. It was fueled by panic buyers and speculation.

California (where I was living) was the same. If you lost money, it's because you were stupid.

Everybody with any sense knew that the inflationary markets had to adjust. It's economic law. It's called "equilibrium." Experts warned about it.

But people in kalifornistan and floriduh continued to buy homes at ridiculous prices with ridiculous financing terms, demanding that the market would continue to escalate. It didn't.

If your realtor sold your house for a price you agreed to, and for the amount of commision you agreed to, I'd have to say that your realtor has held up his/her end of the deal. I think you should gladly pay the commission. What difference does it make to you how the commision is divided?

You all make some good points. I think I'll stick with it this time and next time just say no. This area is a large buyers market so most houses sell at asking price with the seller not paying closing costs and little negotiation. I'll have to do some more research. There's not really anything our realtor is going to find out from me that I would be worried about him passing on to the buyers. Our house is damn near perfect now. We spent almost 3 years getting it to where we want it just in time to sell. We are moving to komifornia and probably going to buy a house there as well, but the area, 29 Palms, has seen a huge drop in home prices just in the last 6 months. Hopefully it stays there, or goes down further.

Bill

Ideally, a realtor "earns" his/her commission. Their service, advice, and ability to command top dollar for your property should more than offset the cost of their services. Sadly, this is often not the case. There are still good realtors out there, but they are getting harder to find.