How are we agents paid? I know y’all know about commissions. That’s not exactly what I mean. I mean, on a deal by deal basis, how do we know what to expect in terms of pay? After all, we have bills to pay and food to buy. How do we know if our income will cover our expenses?

On the face of it, it’s pretty simple. The listing agent looks at the Listing Contract and sees what the seller agreed to pay.

Same with the Buyer’s Agent. One look at the Buyer Agency Agreement and both the buyer and the agent know exactly how much the buyer’s agent will get paid.

Except for one little thing. Most buyers expect the seller to pay the commission. In fact, most Buyer Agency Contracts spell out how much the buyer agrees to pay his agent, and then says that it’s okay if the seller actually takes care of it.

So, Mary Buyer finds a house she likes. She knows that she’s obligated to pay her agent a 3% commission and she’s anxious to know how much the seller is willing to pay of that 3%. If it’s the full amount, she’s good to go.

But what if it’s less? Is she obligated to make up the difference?

It pretty much depends on what Mary and her agent have agreed to. But Mary will know before she even sees the house if she has to pay any commission out of her own pocket.

And the agents know up front how much they’ll make, which certainly makes budgeting easier.

(C) 2009 Susan Pruden.

I have a buyer in from out of town today and I've made appointments to show 12 properties. The listing agents I've spoken to have sounded like they're about to fall on the floor from shock that someone is actually showing their properties.

The hope and despair in their voices is almost painful to hear. And I know exactly how they feel.

(C) 2009 Susan Pruden.

I use a showing service to set up showings on my listings. I called today to ask a question and was told that they were absolutely swamped Friday, yesterday and this morning. They operate over a multi-state area, so I don't know what areas were getting the most showings, but still.

Good news for our market? I hope so!

(C) 2009 Susan Pruden.

In one five-hour period this week, I came across an entire spectrum of situations that highlight the realities in today’s market. None of them,separately, was remarkable (well, maybe one). But to have them all happen in one transaction was pretty amazing. Over the next few blog posts, I’ll break it down.

First, about the buyer – more so, how this buyer is typical of buyers in today’s market, first time buyers in particular. Sellers - take note.

This buyer stated very clearly the opinion of many buyers today. In looking at a particular house, he wanted to make an offer that was 25% below the asking price – not unusual given today’s declining market.

In a nutshell, what he said that stood out was this, “Any seller should be thrilled to have me as a buyer. My credit is excellent and I have a good job; I have sufficient funds for a 20% down payment and can pay my own closing costs. If the seller is not interested in my offer, that’s fine, because there are plenty of other houses on the market. I’m not willing to pay more. I really like this house and want it, but not enough to pay more for it.” It came across as arrogant, but not unreasonable.

To these buyers, the seller’s situation is irrelevant, except as it shows the amount of desperation the seller may feel to accept any offer that comes along. In short sales and foreclosures, there is also a perception that banks should just suck it up and take whatever they can get, regardless of the loss.  Again, possibly a valid point given the cost of carrying a house on the books with no payments coming in.

There seems to be no small amount of surprise in buyers with this mindset that more sellers aren’t willing to accept deep discounts on their sales prices. Their opinion is usually that sellers who are caught in this bad market did it to themselves and deserve whatever they get. I’ve even worked with buyers who have stated out loud that sellers needed to be punished for their bad decisions.

Please understand, I’m not saying this is a bad strategy for buyers to use these days – it’s the reality of the market we’re in, after all. And buyers have a very legitimate worry that values will drop even further, that by the time they’ve been in the house a year, they’ll be in the same situation as the seller they bought from.

(C) 2009 Susan Pruden.