1% sell side, thanks a rant load!Created by:
Date: December 10, 2007, Number of Replies: 35
First off, I support alternative business models. I’m glad I have the choice between a $6.00 Carl’s burger and one off the value menu. I like being able to choose a Hyundai or a Cadillac, both have 4 wheels, but approach the market with different appeal. Second, I would never suggest that .99 cents be the lowest price a business should sell a cheeseburger, or that the interest rate on ‘the car you can’t ignore” should go no lower than 7.0%. That would constitute price fixing, which we all know is not only illegal, but something we should all oppose at our core.
The home my clients really like is listed on the NWMLS by MLS4owners.com. In the listing the broker for MLS4owners has disclosed that the 1% SOC is set by seller. Great, so we have a FSBO who pays 1% on the MLS getting full exposure to the market via all our IDX systems we pay for on all our web sites which we also pay for. All of our clients get to view, inquire, tour, and perhaps buy properties which are basically FSBO. The MLS4owners business plan also refers to XA-Rule 4(e), which they state on the listing, requires the selling broker to work directly with the seller, and all information is provided by the seller and is not verified by the broker. I would say that by snapping a couple pictures and putting a listing on the MLS they have earned their 1% list side in its entirety. They will get paid their worth in accordance with the job they have done.
That being said, a 1% sell side makes for a skinny paycheck. I don’t know about how things are where you live, but where I live clients who are shopping homes in the 300,000 range are at a premium. 300K is well above the medium price for a home in our area, and clients who can actually qualify to purchase in this price range are even rarer. God bless these clients, and I will do my best to get them any home they want. I have heard it said by many Realtors that they don’t even look at the co-broke when they show properties. Generally speaking, I also show my clients what they want to see regardless of the commission. Actually I am showing this home regardless of what the commission is, but that does not mean I am blind. I do know how to calculate how much my family has to live on based on the sale of a home. You can figure out for yourself how much you would make on this deal. For myself, I have a 60/40 split with my broker, I pay 1.5% Business and Occupation tax, and I am around the 25% federal tax rate, the home lists for 345,000. Individual also are the fees, costs and expenses each of us occurs for the privilege of having one of the greatest jobs on Earth.
I can hear many of you asking now, why doesn’t this guy have a buyer/agency agreement guaranteeing a minimum commission on properties which he has shown? The answer is, at least in this case, that I met my clients via a web search. We have exchanged emails for the past couple months. They have been keeping an eye on the market too during this time. I send them information on new listings and research property for them as they are out of area. By the time we went on our first showings we had already established a relationship in which I was comfortable. This property came into play on our third outing. Could I have at some point had them sign a buyer/agency agreement? Yes I could have. Would a buyer/agency agreement have prevented me from working a low commission deal? Yes, perhaps it would have. I have chosen not to use buyer/agency agreements in my business. For that I pay occasionally.
If you have any comments I would appreciate hearing them.