This one's the beginning of a theme which I'm anticipating covering in a handful of smaller posts. Some will be here, some will be on my secondary blog on www.activerain.com (which, ironically given the weather out my window, is down at the moment.)
Another local real estate agent in his blog discussed the idea of buyers negotiating the commission they pay their agents, just as sellers negotiate their commissions. (And for those who believe there is a "standard" commission, commissions in real estate are negotiable. That is to say, any agent is free to charge whatever amount they believe they deserve and that the market will bear. Many of us, myself included, have made the personal business decision to standardize what we as an independent contractor may charge our clients.
Without getting too deep into his argument, one of the ideas he floated was the concept of buyers' agents providing service to their clients on an hourly basis. On the surface it seems like a good idea ... but there's something not quite right with the picture, something out of focus or something with the potential of being problematic.
When thinking about the ramifications of such a system I feel like I do when I get a migraine headache - I skip the pain but lose a portion of my vision for a period of time. When it starts, there's a slight blurry area in the center of my vision, so minute as to be all but unnoticable. But then it grows and grows until there's a gaping hole in the center of my field of vision. (Oddly enough, it then drifts out through the side of my vision field like a storm front moving across weather radar, but that's another story.)
And that's what I sense with the idea of payment per hour ... there's a slight hole in the argument at its genesis: under such an arrangement, it seems logical that the real estate agent would expect to be receive compensation under a "pay as you go" system - we spend x number of hours together and you as the buyer pay x in compensation, most likely through some sort of billing set up. This differs considerably from the current system where a real estate agent is compensated only upon completion of a successful purchase (unless some sort of retainer was put into place before the working relationship started.)
The devil is in the details ... and often those details are what lead to unintended and unforeseen consequences.
Question 1: would your average buyer be willing to pay an hourly rate to employ a real estate agent for their home search, or would they be more inclined to do it themselves and go at it unrepresented.
Question 2: if a real estate professional loses their financial incentive to help a buyer find the right house for them, the proverbial pot o' gold (not filled anywhere as much as most people believe, incidentally) at the end of the rainbow escrow, isn't it logical some agents would subtely lengthen the search process in an effort to maintain their personal cash flow? Not the majority, mind you, but some - there are rotten apples in every business, though many in the real-estate community seem more inclined than other professionals to cast a wide blanket over our peers and toss us under the bus.
On the latter question, it would seem logical to assume a buyer would know instinctively when the process is being prolonged needelessly. Of course, for anyone who has shifted papers on their desk in the corporate world, the idea of activity in lieu of productivity shouldn't be anything new or shocking.
Clearly it's late if I'm rolling out the cliches of the second question with the ease of a 15-year major-league veteran. And so I'll bring this one to an end with the two questions and respectfully request your views.
(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes | 
