RealTown's RealTalk

Sean,

I don't think this is a big developer issue. I have seen some smaller local builders insist that you use their contracts, and they are always geared towards the builder.  I have never had an issue with a builder's preferred lender or title company like happened to you on this one.

I think the concern about the high commission, is just the appearance of impropriety.  Obviously your buyer liked the condo and wanted it.  I think what Jim was getting at (although I can't speak for him), is the excessive nature of the commission. Not that it is wrong for a builder to offer it or for you to want it.  Heck, I'd love a 12% commission on some local condos ($12,000 vs $3,000) gee...

It just appears on the surface that you might be putting your personal needs above that of your client.  I just think buyers should be aware that a large incentive is built into the price of the condo.  I think it just makes for a honest relationship between the two of you. 

What if the deal did go through, and 6 months from now the developer dropped the commission to 6% and dropped the price in order to sell the condos.  If your buyer found out via the gossip line about that, they might think you were not acting in their best interests.  I am sure you were, but it would hard to explain that post close...

Melina Tomson, MS
ABR, e-PRO
melina@tomsonburnham.com
www.TomsonBurnham.com
ph: 503-371-6515
fax: 503-588-1628

1. WHAT KIND OF STATEMENT IS THAT?
2. Do you Robert King speak for every Realtor?
3. Where in the Code of Ethics does it state Realtors are here to drive the market up?

Robert,

Obviously, you don't know the definition of EBA.

Since there is only one EBA in my association (me) I will try to put this as succint as possible.

EBA's are not the problem.

Transaction brokering is the problem. Counterfiet buyer agents are the problem. (in my opinion)

This EBA (me) was advising most if not all buyers, that he could, NOT TO BUY during this hyper-inflated price boom period.

In the event they had to find housing in my area, we found brand new homes that were looking for a tenant. After analyzing the rent vs buy numbers and taken into account what I perceived as a "correction in value", it was a no brainer to advise my clients to rent vs buying.

I must admit though that not every client was willing to rent, they wanted to buy.  These buyers were usually AAA credit or cash. They also informed me that they would be in the house at a minimum over the next 10-15 years. They knew what was happening in the market place. We then hunted and scoured the market for the elusive great deal. These clients were extremely patient and they were rewarded with a purchase price that were last seen before the transaction brokering listing agents started to hyper-inflate the values. I would say before 2004 for my area.

Robert, in your posts you use the term EBA very flippantly. I don't think you know the true definition due to the substance of your response.

In your post you also state: "So now you change your mode of operation and put on your listing uniform and drive this former clients values down just like you did the last owner of that same property, because you were looking out for your client?"

Robert, I would hate to be the one to burst your bubble. EBAs do not take listings, they never represent the seller of real estate.

Your use of the Exclusive Right to Buy Buyer's Broker Agreements does not make you an EBA! In my opinion your activity is what perpetuated my theory of legalized insider trading within the real estate industry. It is my opinion that the buyers you have under an Exclusive Right to Buy Buyer's Broker Agreement are thinking that they are getting more then what you are able to deliver. That Robert, would be an ethics issue. Even in your message you state several times.

YOU CAN'T DO BOTH!!

Deede Wockenfuss states: Our office has sold several new homes in the past year that had commissions as high as 7%.  But, the important thing is that the BUYERS were also getting a smoking deal. 

Jim Bourgoin responds: Does Deede Wockenfuss have a magic crystal ball. Only time will tell whether the buyer got a "smoking deal"! I would be willing to bet the farm that those buyers are now in a negative position.

Deede Wockenfuss continues:  Before we go visit, we let the buyer know that builders are offering unbelievable incentives to BOTH Realtors and the Buyer. 

Jim Bourgoin responds: Buyers get incentives, Any amount above what the buyer and Realtor agreed to with regards to compensation which comes from a party not associated with the agreement and is not disclosed to the buyer is considered a bribe, in my opinion.

Deede Wockenfuss continues:  We NEVER push the buyer into ANY home, because of the commission offered, but we definately show them, if they meet the buyer's criteria.

Jim Bourgoin responds: Right! I believe that one. I am also willing to bet she never pushes a builder onto one of her buyers that does not cooperate with Realtors even though that builder has discounted the price of all bribes. See Deede and RTers, when you have an agreement to represent your buyer with your fee outlined it does not matter what your buyer buys. All buyer agent fees are financeable provided you are in fact engaged by written agreement to represent your buyer.

Deede Wockenfuss continues: We let the Buyer know that there is an 'incentive' to the Realtor, but we do not go into what our check will be.  To do so, is to set ourselves up to be asked to "split" that commission with the buyer.  We just don't want to get into a conversation about our income.  It really is none of their business.  Yes, they will see what we are paid on the HUD1, but we TOLD them in advance that we were receiving an 'incentive', AS WERE THEY.

Jim Bourgoin responds: I guess it is ok in your area to withhold information which is pertinent to the transaction. The conversation about your income should have already passed when the buyer signed the buyer broker agreement. The Realtor is not collecting an incentive, the Realtor involved is accepting a bribe.

Deede Wockenfuss continues: I don't feel the least bit guilty taking this commission.  The day will come again when all is well in the market and builders will start cutting us out again.

Jim Bourgoin responds: It is truely amazing that Deede uses the word "taking". I know she didn't earn it. A bribe is never earned. A bribe is always taken when dangled in front of those that are not truely honest with themselves or their clients.

The COE states that all representation agreements are to be in writing. In Florida the Statute states that all representation agreements are to be in writing. The mere disclosure of agency does not make a written agreement for representation.

Jim Bourgoin responds with a question:

1. Who does Deede think ultimately paid the incentive?

It is my opinion that not having an agreement in writing with the buyer which handles bribes in the market place is grounds for an ethics case and should also be investigated by the licensees respective division of real estate. A bribe is a bribe folks. Only the buyer can get an incentive to buy. The Realtor involved in these activities should not be self serving or looking out for their own self interests.

In my opinion this activity of taking bribes is nothing more then a con job being perpetrated upon unsuspecting consumers by Realtors in todays market place. It should be exposed and stopped immediately.

Deede Wockenfuss says: "Our office has sold several new homes in the past year that had commissions as high as 7%.  But, the important thing is that the BUYERS were also getting a smoking deal."

Jim Bourgoin responds: What does the market now say about the "smoking deal"? Only time will tell whether the deal was good for the buyer. We already know that Deede's office got a great deal.

Deede Wockenfuss continues: "We let the Buyer know that there is an 'incentive' to the Realtor, but we do not go into what our check will be."

Jim Bourgoin responds: Realtors, should really call the incentive to a Realtor, a bribe, especially when the amount is kept secret from the buyer. Well, since you are in a relationship with the buyer. Is that relationship in writing? If it isn't why isn't the relationship agreement in writing? This agreement will dictate to the customer or client what your agreed upon fee will be at the completion of your agreed upon services. It should also outline what will happen to any overage. Not discussing this amount is serving your own self-interest.

Deede Wockenfuss continues: We just don't want to get into a conversation about our income.  It really is none of their business.  Y

Jim Bourgoin responds: WHAT? When you as a Realtor takes on the duties to represent someone in any capacity, that consumer needs to know how much you are charging them for your services.

Deede Wockenfuss continues: I don't feel the least bit guilty taking this commission. 

Jim Bourgoin responds: The incentive to the buyer is something tangible to the consumer. In my opinion, the "incentive" to the Realtor is nothing more then a bribe.

THE REALTOR COE and MOST, IF NOT ALL, STATES REQUIRE ALL AGREEMENTS TO BE IN WRITING. WITHHOLDING A MATERIAL FACT FROM A CUSTOMER OR CLIENT SHOULD BE AN ACTIVITY THAT IS INVESTIGATED THOROUGHLY.

 Jim Bourgoin, CEBA, ABR, ABRM

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Robert King asks many questions, Jim Bourgoin will attempt to answer the most pertinent ones, so here goes. (If any one sees a question that goes unanswered please let me know)

Robert King asks: "Why don't you enlighten all of us with what an EBA actually does other than drive people around, wine and dine, hoping to over come all their mis-informed opinions they seem to be so unaware of and in need of your expertise?"   

Jim Bourgoin responds: An EBA's standards of practice can be found at this link. These standards are higher then Robert King has ever seen. Hopefully, he will be able to absorb this information and become better informed.

http://naeba.com/naeba/standards.htm

Robert King then asks: Tell us all, what does an EBA actually offer? 

Jim Bourgoin responds: An EBAs Code of Ethics can be found here

http://naeba.com/naeba/codeofethics.htm

Robert King then asks several questions:  Any value other than what I just mentioned?  Who actually determines what the Lowest and best price really is?  Who can actually Guarantee what the lowest price will be other than the Buyer?  Can it be anything other than what the buyer believes is the lowest?  Or are you such an expert you can get a lower price for what they are willing to spend? 

Jim Bourgoin responds with: These are the reasons a real estate buyer/consumer should use the services of an EBA.

http://naeba.com/buying/why.htm

Jim Bourgoin wants to make a statement before Robert Kings next question is answered.

AN EBA NEVER TAKES A LISTING NOR EVER REPRESENTS A SELLER IN ANY CAPACITY. THE SELLER IS ALWAYS A CUSTOMER NEVER A CLIENT.

Robert King now asks: Further more, if you happen to decide to continue with a professional relationship with this buyer, once they become a seller, are you willing to put on your Listing Uniform, switch hats, and try and get them the lowest price now being they are the seller of that great deal you got them last year? 

Jim Bourgoin responds: EBAs do not take listings.

Robert King then attempts to add an arguement that just does not make any sense: "Unfortunately Jim you are out of the old school of Arms Length Transactions and have failed to realize, both parties must find common ground if there is going to be a deal, it's call mutual cooperation, something that got lost with EBAs and IDX.  I believe that an EBA can only provide what ever is acceptable for both parties to agree upon, that is the best they can provide regardless of the acceptable price!  That's the same thing a Listing Agent provides." 

Jim Bourgoin responds simply: A listing agent can not provide to the buyer the level of service an EBA can provide.

Robert King is now asking a serious question: "So if you are really an EBA why not just decline any compensation on behalf of the listing agent and demand your payment directly from the person you claim you represent, your client?"

Jim Bourgoin responds with: Thats exactly what I did do. In 1994, three years after opening, Jim Bourgoin, Broker of The Buyers Broker of Hernando-Citrus County Inc., dba Buyers Advantage, rescinded his acceptance to any compensation from the listing company. The buyer when under a written Exclusive Buyer Broker Agreement is responsible for the payment of my fee. This written agreement also outlines the method with which the payment is included within the purchase price. The exclusive buyer agent agreement is conditioned upon my fee being included in the purchase price. In 13 years, the buyer has always insured that I be paid our agreed upon fee.

Robert King then makes an outlandish and unsubstantiated statement: "I know why because you don't have the courage to tell the buyer they are paying your bounty regardless of how much the seller accepts." 

Jim Bourgoin responds: I charge the buyer a fee for services rendered. In no way do I ever describe it as a "bounty"!

Robert King further rants: "So..... how does a buyer really determine if they got a dimes worth of representation if you accept what a listing agent offers you?  You may think or convince the UNAWARE buyer that you are representing them as an EBA but as long as the seller pays you through the buyers consideration YOU ARE WORKING FOR THE SELLER!!!!!!!! 

Jim Bourgoin responds: Robert King really needs continuing education....can someone other them me explain to Robert King why his statement is not true. I know one can find it in Chapter 475 of the Florida Statutes

Robert King further states: "Everybody works for the seller, doesn't everybody know, the HUD-1 shows the commission was paid on behalf of the seller's side of the statement, so it must be true, the seller paid you for an acceptable offer."

Jim Bourgoin responds: The real estate industry has made this a common practice years ago. The real estate industry should really separate the compensation and let each and every licensee work from the written agreements they have with their client, also known as their principal.

Robert King then attempts name calling:  "Don't be a moron Jim,

Jim Bourgoin responds: I am not the one that does not understand. 

Robert King then says: "it's always been that way,"

Jim Bourgoin responds: It does not make the activity right.

Robert King states further:

1. "Why do you think short selling lenders want to dictate our compensation?
2. "Why do think it takes them so long to get back with the short offer?  

So go on represent your investors at the expense of the ignorant sellers.

Jim Bourgoin responds: Those short selling lenders do not use the terms of the contract to interfere with the buyer's broker agreement the buyer has with my fiirm. I don't condtion the contract on lenders approval. It is the seller's position to convince the lender to short the loan or come to the table with the difference. Of course, that would be cash or certified funds.

Robert King again looks in his magic crystal ball and states: "But when next year rolls around and the market looks like it did last year, your former clients may have learned the same lesson the former owner learned."

Jim Bourgoin responds with: I have been through 3 cycles, each one lasted approx. 3 years. The one the industry just went through stopped around November/2005. 2006 was the year the listings agents could not any longer convince the buyers that property values were going to continue to rise. The number of years between cycles have been somewhat predictable. It is now amazing as we witness history repeat itself. It is my opinion that the market will be in a downward trend with appreciable levels hovering around the 3-6% range. This is after values recede back to 2003 values.

Jim Bourgoin responds with: Good night to those who read through this. In the event there is additional comments or questions please feel free to submit them.

Oh wait a minute, Robert King asks one more question" "Guess who provided the funds for Compensation?  I'll be waiting for your answer? Jim!

Jim Bourgoin responds: THE BUYER PROVIDED ALL FUNDS, unless you are talking about a short sale where in the seller had to come to the table with cash.