Showing Buyers - Commission Rates

[RESteve]

I've been noticing listings are beginning to post commission rates that aren't want I'm accustomed to. In one case, a client wants to see a $315k home, but the commission rate is 1%.

What would you do in a scenario such as this?

My gut tells me to show the home, and don't worry about commissions. The business side of me says that you have to run a business, and if the commission paid cannot cover the bills then you can't show the home.

[Tim Shepard Destin]

In the short term, I think your options are:
1. Call the listing agent prior to showing the home and try to negotiate another co-broke.
2. Get your buyer to sign an agreement that will pay the difference.

In the long term, the listing agents business model will be fail because:
1. Many agents will not show his listings.
2. Most sellers that put la's in the position of co-broking at 1%, typically price their home above market and aren't willing to negotiate. These homes don't typically sell.
3. Many agents will show these listings but "sell" against them by pointing out unfavorable neighborhood characteristics, damage to the home, how overpriced the home is, etc.
4. If the seller is lucky enough to get an offer, the pissed off buyers agent will negotiate so agressively that its unlikely to ever result in a signed contract.

I show these homes if my buyers want to see them.

I don't worry about the commission too much because my experience tells me that these homes just aren't attractive to most buyers.

[stevetrang]

A 1% listing tells me that they aren't really serious about selling the home. Have you asked why it is so low? I'd show it if my client wants to see it.

[satxproperty]

Getting a buyer to pay your commission doesn't always work out too well.

Regardless of what your "Buyer's Representation Agreements" say, I got stiffed by the lender that said no deal if the buyer was to pay my commission. (So, I worked for free.)

[Mitch]

Our policy in our office is that we show all homes regardless of commission. It's important to do what is best for our customer.

With that said, a few of my Agents have had success calling and renegotiating the cobroke. We have also had a few Agents who have written it into the contract. I'm not sure how I feel about that yet, but it has worked.

[RJO Salt Lake]

I don't have a problem not showing the home.

The 1% offered means that the listing agent does not want me to show the home (but wants to double-side the listing), and I will respect his or her wishes.

[satxproperty]

As a Buyer's Agent with a signed buyer representation agreement or buyer broker agreement, aren't you obligated to show all homes, even FSBO's?

[rvolk75]

Ron, I like your evaluation of the 1% commission. It can very well be true.

But, since our obligation is to look out for the best interests of the buyers, we have to show them any home they wish. If that's the one they wish to buy, then you just made a small commission. Better than nothing at all.

I know it sucks, especially when you see that similar listings offer 3%, but that's real estate and your options in this case are limited.

[stevetrang]

Given the inventory in most markets, I would say that your options are not limited. Additionally, I would argue that not only is the seller not motivated, but they probably won't even pay buyer's closing costs or a home warranty. People that are difficult in one way tend to be difficult in many ways as well. I guarantee you that will be your roughest transaction.

[RESteve]

I just found out it's actually a new home builder. I'm still showing the house; that was my plan all along. It just sad to know that there are some agents out there that won't show it because of this.

I did clarify with him via email to make sure that wasn't a typo. He told me it was because of the down market.