Reply to Sellers, pls stop offering pay buyer's agent commission!

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Why not offer to pay Buyer's commission...but of course, you would expect that Buyer to submit a higher offer compared to a buyer where you aren't paying the commission.

Certainly, there is value to a Buyer to be able to wrap that commission into a mortgage payment vs. paying cash out-of-pocket via hourly rates or a lump sum at closing.

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Yes, wrap that commission into the mortgage! Do the math and that $30k commission becomes $75k by the time you are done paying it off. [/quote]

Well, why does anyone get a mortgage then by that logic? [/quote]

DP here. By your logic, why limit the mortgage amount at all? Why not just pay you realtors 25% since the loan amount doesn't matter according to you???[/quote]

Well, this is a silly argument.  At some level the mortgage payments, no matter what they are composed, become too unaffordable for someone.

The only salient point is that many buyers don't have $10k+ sitting in their pocket to pay a buyer at closing, but they can easily pay the $25/month in added mortgage costs to pay the buyer's fee over 30 years.

Let's face it all...the new structure isn't a great deal for the buyer unless they are paying less for the house...which I don't see happening.[/quote]

The new structure is a much better deal for both buyers and sellers, as now buyers are not obligated to use buyer agent. [b]If the person wants to save 2.5% in fees paid via his mortgage and save $25/month for 30 years [/b] I don’t see how it’s not beneficial. 
 Of course a multitude of unrepresented buyers will drive the cost of housing lower! By 2% ! It’s a lot of GDP savings. But the point is the net will be the same for the seller or better vs represented buyers who ask to cover their agent commission. See the simple math above

Sellers just need to press their selling agents work harder marketing their real estate and delivering all offers to them. Yes it’s a selling agent job to provide a standard offer template to an interested buyer - this is what they are paid 2.5% on gross total !!

Fire your selling agent if they don’t bring direct buyers [/quote]

How do you make this straight line statement.  If my home is worth $1MM, I sell it for $1MM, not $975,000 just because the buyer represented themselves.

I guess it helps the buyer in a competitive bidding situation where I have to choose between two offers...one where I pay a $50k total commission and one where I pay a $25k commission...but the buyer is still paying $1MM for the house.  Just they win the house compared to the next person.[/quote]

It works like this:

I am the seller. I list for $1 million and indicate I am willing to negotiate on buyer agent commission.

Buyer 1 offers $1 mil plus 2% agent fee.

Buyer 2 offers $1 mil plus 1% agent fee.

Obviously I go with Buyer 2. [/quote]

Let's assume seller has already offered their selling agent 2% fee.

With Buyer 1, the seller nets only $960K ($20K to seller agent, $20K to buyers agent).
With Buyer 2, the seller nets $970K ($20K to seller agent, $10K to buyers agent)

But unrepresented Buyer 3 comes along and offers $990K. In this case the seller nets $970,200 ($19.8K to sellers agent). This is the best deal that results in the highest net for the seller because (1) they are not paying a buyers' agent commission and (2) the base amount upon which they calculate the sellers' agent commission is lower. So they are saving money twice.

This is the real reason agents hate unrepresented buyers. They are getting dinged twice with a lower price from an unrepresented buyer, but the sellers' net price is actually higher (assuming the numbers work out).[/quote]

You are correct...but I still don't get the point of this thread.

I would offer to pay the Buyer's commission so I am shown all three offers and then I can choose.  I guess the belief is that agents are all shady and somehow my selling agent will prevent Buyer 3 from walking in the door.

Assuming that is not the case, still don't get why I wouldn't offer to pay the Buyer's agent and see any and all offers.[/quote]

Because when you offer to pay the buyer's costs, it's a financial guarantee in the contract. There is a strong economical incentive for the selling agent to fill in the gap (and thus de-facto double the selling agent commission!) by bringing an affiliated person as "buyer's agent", and not allowing those buyers who are unrepresented to the bidding process.

This creates an incentive for the the selling agent to act on this inside information from your contract with them, bring a colleague, a friend with RE license and basically double their commission. It's not the buyer's agent who gets your money, it's your SELLING agent who doubles their commissions thanks to this kick-off opportunity that YOU created.

The buyers can still bring their agents, and pay themselves but don't create an incentive based on conflict of interest to abuse the financial transaction over your property

[/quote]

In $$$s and cents that net to me...why do I care?

Again, your premise is my agent is shady...if that is how you view agents, not sure I can change your mind.

But if I trust my agent to do right by me, and they will do nothing to dissuade any and all offers, why do I care about what you say above if the net price to me is the highest of any and all offers?[/quote]

Don't trust agents that they won't explore and abuse the financial opportunity created by you in the contract. Agents are strangers driven by their economic interests in the first place, and double commission is a huge incentive! They DO press buyers to hire their affiliated persons as "buyer agent".

This is exactly what multiple buyers are experiencing in the market right now and what PPs are telling you[/quote]

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