Of course not. I just question the choices you are making.
On the heels of the “hard-hitting” report presented by 60 Minutes this past Sunday, there has been renewed on-line chatter about alternative real estate business models. I am dangerously close to tiring of the subject, but before I move on to more worthy topics, I want to fulfill my promise of last week to revisit our recent encounter with the customer of one of these rebate brokers.
I am not bringing this up as an argument for or against, this is not a rant, and I am all for the consumer’s right to choices and to chose. I bring it up because we found ourselves in a bit of a conundrum this past week, and I am sincerely interested in hearing opinions from other agents, but mostly from sellers on how to address these situations in the future.
I am considering writing an offer…
By way of background, I received a call over a week ago concerning one of our new listings. It was a Sunday evening.
Him: My wife and I are considering making an offer on (the home). In retrospect, and I am embarrassed to say, much later, I recognized this as an actual line from the Redfin script.
Me: Have you seen the home?
Him: I saw it when it was the model. It was indeed a former model for the builder.
Me: I would be happy to schedule a time for you to see the home. Are you working with an agent?
Him: I will be using Buyside Realty.
Me: That’s fine. You should know that another agent called this afternoon and said he would be submitting an offer for his client tomorrow. When would you be available to see the home?
Him: I am busy this week. Maybe next weekend. We will submit an offer in the next day or two. We will probably make it contingent on seeing the home later.
The eagle’s in the nest…
The following day, I do indeed receive an offer from the other agent. As our client’s fiduciary, I feel it is my obligation to pursue every lead on their behalf. I leave a courtesy message for Buyside Guy, and I suggest to the seller that we delay responding for a day until we have given him an opportunity to submit his own offer.
A full two days later, I receive a return call.
Him: We spoke on Sunday about (the home).
Me: Yes, that is why I called you. We received the expected offer on the home and are in counter offer.
Him: (An aside, to his wife, “Oh, they have an offer and are in counter offer”). We would like to see the house, but I am very busy this week. I can only see it tonight.
Me: I have an appointment (across town, during what is now rush hour). How about tomorrow?
Him: I can only see it tonight. Now.
Him: You hate me, don’t you?
So, here is the conundrum. Showing another agent’s client was not, strictly speaking, my job as the listing agent, but I was willing and even happy to do it. Yet, the other agent’s client was now dictating the terms of the showing and had me over a barrel. I could drop everything, rearrange my schedule and accommodate him, or I could say that I wasn’t available (which was the truth). Either way, I lose. My impetus to move the earth and the stars to meet him during his 1-hour window (he is, after all, a busy-busy guy) was solely to provide service to my clients. If he indeed writes the offer, we now are in a multiple offer situation, and the resulting competitive offer scenario could very well result in a better price for my clients. If I refuse to drop everything to get him in the door, we could very well be merrily in escrow by next weekend when his schedule frees him up to see the home on my terms, and we will never get the opportunity to know what he might have been willing to pay.
I’m a sap, and my sense of duty to my client prevailed, so I did what any self-respecting agent would do. I kept my appointment and made Steve open the home. Steve consequently canceled his appointment, and our children were told to “forage” for dinner. The punch line: Buyside Guy showed up 15 minutes late and stayed for about five minutes. We never heard from him again.
I’ll use my lifeline…
So here it is - I will Ask the Audience. These are not loaded questions. I am sincerely looking for answers. What is a listing agent to do?
- Sellers - How should I have handled this? To what extent do you expect me to do another agent’s job on the outside chance that an opportunity may be missed because they aren’t doing their job? When you authorize, or more correctly, instruct me as a term of our listing agreement to offer a designated percentage to cooperating agents, does it matter to you that the income is unearned, or is it immaterial so long as the goal is accomplished? As a person and as a professional, it bothered me tremendously that I was relegated to the role of Pop Tart by a person with whom I had no agency relationship and to whom I owed nothing. I did it for you, but I compromised my principles in the process. Did I make the right decision?
- Agents - What would you have done? To what extent do you believe we are morally and ethically obligated to be on call to serve at the pleasure of another’s client so that that agent at the on-line call center can turn a profit?
- Buyers - This will be more of a rhetorical question, I suppose. If you are opting to use an on-line, limited services model, and if you feel compelled to ask, “You hate me, don’t you?”, how can you argue that you have not put yourself at a competitive disadvantage? If you find yourself in a multiple-offer situation, or even if you have submitted the lone offer, do you think you are negotiating from a position of strength when you have inconvenienced, shown a lack of respect for, and generally pissed off the other side? And, as a caveat, this particular buyer clearly didn’t understand the process in general and the implications of multiple offers in particular. Unless you are going to blind the seller with the shear largess of your checkbook, how might an offer “contingent on seeing the home some time next week” be viewed by the seller compared to a competing offer from someone who has actually walked through the front door? Finally, wouldn’t it have been a good idea, under the circumstances, to at least show up on time?
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Doug Quance
05.16.07 at 9:55 am
I solved that problem months ago.
When the Buyfin customer comes a calling - we do everything possible to show our clients listings.
And we generously offer 1% of the sales price to the Redside agent for submitting the offer.
This arrangement is in our listing agreements as well as the MLS.
It’s working just fine for me, now.
Kris Berg
05.16.07 at 10:05 am
Doug - How do you do that? Our Board prohibits conditional offers of compensation, so it is either all or nothing. Some tried this during the crazy days and were shot down.
Reuben Moore
05.16.07 at 10:06 am
Hi Kris,
As the listing agent, the problem with dealing with Redfin and their ilk is three-fold:
1. The listing agent cannot compete for business on equal terms.
2. As the listing agent we must accept at least some of the responsibilities of the buyer’s agent.
3. We then get to pay the buyer’s agent, in full, for the privilege.
Note: It has NOTHING to do with their rebate marketing strategy.
Now last year, I had a very similar experience to yours. Afterwards, I started thinking about how to handle this type of situation in the future, all the while staying within the bounds of our state Real Estate Commission, our MLS rules, and yes, my duty to my client, the seller. As you and I have previously discussed, what I came up with is not allowed in all markets. But, FWIW, I will share it here.
1. When initially discussing the listing with the seller, we offer a “Sales Proceeds Estimate.” No big deal, many agents do this. But, on ours, we actually break the commission into two components, the buy-side payout and the list-side commission retained. The benefit of this is that it makes it crystal clear to the seller just how much money is being turned over to the buyer’s agent.
2. Also when initially discussing the listing with the seller, we explain the logistics of the typical real estate transaction. That is, we explain what we are paid for and what the buyer’s agent is paid for (typically). In our situation, since the buy-side payout is almost always greater than the list-side retained, it is pretty easy to explain to the seller, that he or she is paying the buyer’s agent for several things, first-and-foremost, showing the property.
3. We explain to the seller that if the buyer’s agent does not do these things, that is to say, does not render service, that is fine, we may take on part of their role - their traditional duties and their responsibilities. And, we may either keep a greater portion of the total commission, or we may give some back to the seller, or both. But, in any case we will NOT fully compensate any buyer’s agent unless they render the service for which they are paid.
In other words, we tier our buy-side payout. One small, set amount for procuring cause (why fight about it?) and one larger amount (2-3%) for services rendered.
4. We memorize this in our listing agreement.
5. We state our policy in our MLS.
6. If we find ourselves showing property to some other firm’s clients, per our MLS rules, we send that firm our payout policy in writing.
Doug Quance
05.16.07 at 10:19 am
We are able to offer variable commissions in Georgia. The variable is outlined in the listing… and, as I mentioned above, it IS written into the listing agreement.
Jeff Brown
05.16.07 at 11:07 am
Kris - Are you trolling for BawldGuy as sport?
My answers to your questions.
1. As a seller who’s employed you as my agent I expect you to spend your time marketing my property, and making time management choices geared to the sale of my home. Dealing with self-important boobs who openly behave as six year olds don’t fall into that model.
2. Seriously? I would have asked him to perform a physical impossibility. He would’ve understood my position clearly. And once I was done he may have never called another listing agent to show their property to him.
3. I approach “You hate me, don’t you?” as a golden opportunity for personal entertainment. I might respond with, “Yes, as a matter of fact I’d have to go up a couple levels to be apathetic about you. What’s your name again dirtwad?”
Giving these folks the time of day will yield the same results as trying to placate a bully. You need to verbally knock them on their collective asses without mercy. It’s important to take advantage of entertainment opportunities when they fall into your lap.
Ask yourself Kris - Remember the last time you finally had your fill of an unpleasant person who was rude and disrespectful to you on a regular basis? When you finally either struck back and/or surgically removed them from your world, didn’t you experience a wonderful sense of relief? Why not skip all the bad experiences with them after the first one? The sense of relief is the same, and you’ve saved so much time and grief.
Jonathan Dalton
05.16.07 at 11:30 am
No matter what I say, I like Jeff’s answer better …
I’ve got no issue with showing one of my listings to such a client. However, I can’t be in two places at once. If I have another appointment with or on behalf of another client, I would be doing them a disservice to cancel that appointment to work around this buyer.
Ninety-nine percent of the sellers I’ve worked with understand this concept. The lone exception believed I should answer my phone 24 hours a day in case a call for a showing came in, even though she wouldn’t show her home 24 hours a day.
At the end of the day, this buyer does in fact have an agent. If his agent is unwilling to show the property even when his busy time schedule conflicts with your already scheduled appointment, then perhaps they should reconsider who they have hired before they lose another house they may want.
That’s more general … specifically to this situation, if the buyer really wanted the house he would have found a way to see it. You don’t need an advanced degree to understand that “we have an offer coming” means “you may not have another 10 days to wait.”
Sock Puppet
05.16.07 at 12:35 pm
Redfin charges its clients $125 to show a single property.
Whats good for the goose is good for the gander one would think.
-Athol
Kris Berg
05.16.07 at 1:06 pm
The problem in my case was the possibility that the home could sell before the Buyside Guy got in to see it. Is this my problem? Potentially, because he might have been truly interested and truly willing to write the highest offer. The “his loss” argument could be flipped to be “the seller’s loss”, and as the seller’s representative, I need to be careful about this. From Redfin’s website (although this was only a Redfinish company): “If you have any trouble scheduling a tour with a listing agent, just call us… We’ll make sure you get into the property”.
I could just hear the buyer or his agent on the phone with the seller. “Do you know that we wanted to make an offer on your home, but your agent would not allow us access?”
According to Sandicor’s Rules and Regulations:
Kind of backs us into a corner, doesn’t it? I am going to take a wild stab here that the rebate brokers were familiar with this language.
Doug Quance
05.16.07 at 1:39 pm
Looks like Sandicor needs to revisit those rules.
Maybe some lawyer will figure out how to call it “price-fixing”.
Jeff Brown
05.16.07 at 3:00 pm
I can think of no legal or ethical obligation whatsoever compelling me to even consider the idea of showing the home to this guy. My first question could be, “If you’re represented by X why aren’t they showing you the home?” When he comes up with the scripted answer, I say, “Not good enough, try again.”
These brokerages only enjoy success to the degree listers employ round heels. I realize that’s can be construed as a harsh position, but from my view, ‘if it quacks like a duck…”
Viewed from afar, this is really the false premise Redfin and their ilk want you guys talking about. It keeps your collective eyes off of the real ball.
The real ball?
They’re the pimps and the rest of the real estate world are in their employ. As long as the majority of agents play along, Redfin types will keep on keepin’ on - not only because they can, but because you let them.
Reuben Moore
05.16.07 at 3:02 pm
Kris,
For comparison purposes, the relevant paragraphs of our MLS rules:
The listing broker retains the right to determine the amount of
compensation offered to other Participants (acting as subagents, buyer
agents, or in other agency or nonagency capacities defined by law) which
may be the same or different.
This shall not preclude the listing broker from offering any MLS
Participant compensation other than the compensation indicated on any
listing published by the MLS, provided the listing broker informs the other
broker, in writing, in advance of his producing an offer to purchase, and
provided that the modification in the specified compensation is not the
result of any agreement among all or any other Participants in the Service.
Jeff Brown
05.16.07 at 3:16 pm
Rueben - Great job!
You now can each make your own choice - tell them to pound sand, (thanks for the high five Steve) or bend over.
Frankly, if I was in the house side of real estate, it wouldn’t take long for the Buyersides of the world to be avoiding me like the plague.
Kris Berg
05.16.07 at 4:21 pm
Bawld Guy - So you are really on the fence on this issue, right?
Norm Fisher
05.16.07 at 10:04 pm
Kris,
I find people like your caller who are inflexible and demanding rarely make an offer even if I am available to show them the home. They are often miserable and almost always closed to building a rapport. I would politely explain that I’m unavailable and suggest that he contact another agent who is able to work with his schedule. If he really is interested he’ll do just that.
RayNLA
05.17.07 at 12:51 am
Lady…Do you want to eat Ramen for the next 2 years?
Haven’t you heard?
There is a CRASH happening before our very eyes.
Get out of this industry. Your kids will love you for it!
Chris Lengquist
05.17.07 at 8:51 am
Without fail, each and every time I have met such a time constrained demand the person who was demanding the issue was a flake. Every time. So, I just don’t do it any more.
Yes, I have a fiduciary duty to my client. No, that does not include unreasonable requests including doing the other party’s job.
We don’t have these limited service companies…that I know of…here in Kansas City. We had them all over the place in Tulsa. I got used to saying on listing appointments and to limited service companies that I do not do your job for you and expect to not get compensated.
Sure, I’ll show your buyer the listing for a 25% referral fee. Need me to talk directly to your seller. 25% referral fee. We’ll need that in writing before I meet them. Understood?
Sock Puppet
05.17.07 at 12:59 pm
Why open yourself to an ethics charge of interfering with someone else’s client by showing them the house without their agent present?
-Athol
P.J. Dean
05.17.07 at 11:25 pm
I have to agree with the overwhelming sentiment by the rest of the posters. I am all for consumer choice in our wonderful country but you reap what you sow. If the guy is going to enlist a limited service brokerage then he can expect (and deserves) just that. It’s not your problem that his agent was nonexistent to show properties. Furthermore you were already in a counteroffer situation and on the verge of a transaction that obviously was suitable for your seller anyway so your job had been done. I respect and admire your dedication to the matter and it’s a decision that all of us full-service agents would have most likely struggled with but you have to draw the line somewhere. Had there been no other offers on the table and you were blessed with a free afternoon to blow on a prospect then it could have been a different story. The notion of a possible higher offer from a possible new buyer when there was a perfectly good deal in the works was simply pie in the sky at that time and you owe yourself to your clients (unlike Buyside guy) . Jackasses that expect rebates of hard earned commissions and others to bend over backwards for them deserve to be left out in the cold. Perhaps now he can and will appreciate a full service agent.
Speaking of Jackasses…..RayNLA, no one buys your rhetoric here. She sold the house (it does still happen). Head over to housingpanic where you will be welcomed by all the other bubbleheads.
Lisa Yates
05.19.07 at 10:13 am
Kris you made the right decision. It would have weighed on your conscious had you not made the attempt. Having the opportunity now to think it over with more clarity, and of course the time to absorb the wonderful opinions expressed here, I have a feeling next time the scenario may play out a bit differently- without the fear of compromising your fiduciary duty to your client.
P.S. Stop worrying about bugging your buyer’s agents. I will gladly assume the role of resident “Pop Tart” so your children get a decent meal.
Kris Berg
05.19.07 at 2:31 pm
Lisa - Thanks for your generous offer. (What a kiss-up).
And, you are right. Next time will be different!
Dave Lopez
05.20.07 at 1:32 pm
I use to do that but no more. Why? After many cancellations of my appointments: the no shows, no offers, false information, no return calls, not to smention how my family time was cut short, I said no more.
The truth of the matter is: If a buyer really wants to see it and wants it, they will do what is necessary including sending a family member, come at lunch or very early in the morning.
There’s some truth also to the “bird in a hand” saying. Yes, we want the best offer for our sellers but if I had a nickle for every offer that was coming in… Waiting sometimes back fires on the first offer and your client looks at you with “where is the other offer and now waiting has weaken my position” I now go with what we have on the table; you can always do back-ups or other strategies.
I agree with the other comment on the fiduciary issue. I find that the buyer always starts asking qouestions and it’s best not to even show the buyer the property. I always suggest to the buyers that if their agent is unavaiable to call s/he to have another agent or office manager show them the property. They choosed the agent and firm and it is the other side who must set the expectations and if they don’t, well there is nothing I can do as my relationship lies firstmost with the seller. That is just my business practice.
Regarding “you hate me” No, I don’t hate, I don’t even know you. You have a fiduciary relationship with your agent and I would suggest you two work out how to best see the property as that is one of his/her responsibities in representing you.
This really applies as well to agent who do not belong to our MLS and come in from other counties and want the local agents to “open the homes” cuz their buyers really want to buy it. I already have bought one bridge and swamp and I don’t need another one!
Kris Berg
05.20.07 at 7:53 pm
The out-of-area broker you speak of, Dave, continues to be an issue here as well. Probably another post for another time, but there is a similarity in that it results in a shifting of duties.
I think I am getting the loud and clear message that it may be time to draw the line. I kind of knew it all along, but needed to be sure. Thanks for the comments!
Sven
05.28.07 at 11:48 pm
Redfin has been expanding very quickly. As have the other discount brokers (Buyside Realty, ZipRealty). Even in a deflating market, they have expanded into new regions. The mere fact that they are so successful tells you that people ARE buying and/or selling many homes through these services.
With the exception of actually showing the property itself, these services handle everything else. Seems like a good compromise would be to just schedule the visits when you would be in the area anyway. You can simply explain that by using a discount broker that they have to see it when it’s convenient for you to show it. Obviously, this would have to be on a reasonably near term timeline, and I doubt the seller would really fault you for asking to show it the next day.
BTW, you should check out some of the new features Redfin is offering. They definitely beat realtor.com in the detail offered on their site for property searches. I can see why they are so popular. I didn’t know about the $125 showing fee, but that really makes a lot of sense. If I was seriously looking at places to purchase, having to pay a small fee to see them would be completely resonable in my opinion. Especially if I was getting 75% of the buyer commission back to cover that expense and more.
Kris Berg
05.29.07 at 7:56 am
Thanks for the public service announcement. Now back to our scheduled programming.
Sven, I do not yet see Redfin as “so successful”. They are doing almost zero business in San Diego County. I have had just one call since their coming out party where the buyer has mentioned Redfin, and it was in the context of using their site to search for properties. He admitted that he had a Buyer-Broker Agreement with a traditional agent. Time will tell.
RayNLA
06.04.07 at 6:45 pm
PJ… How do you know about Housing Panic?
Jenea
08.18.08 at 11:26 am
This thread is more than a year old, but I wanted to add my voice anyway. A few months back my husband and I bought our first home, using Redfin as our buyer’s agent. We deposited our refund check without guilt, as we did a hell of a lot of our own legwork, work that would normally have been done by a full-service agent. In other words, the sellers got their money’s worth.
All that being said, I would agree with the rest of the posters here. You would have been well within your rights to tell that guy where to stuff it. “You hate me, don’t you” indeed!
My husband and I never imposed upon a seller’s agent to open a home for us. We went to open houses and took advantage of Redfin’s field agents instead. If we had found ourselves requiring a seller’s agent to help us out by opening a home, we would have been more than willing to compensate said agent.
Times they are a changin’, and the real estate market is long overdue for a shakeup. Just because some Redfin buyers are jerks doesn’t mean we should throw out the baby with the bathwater.