You gotta love how they do things in the New York / New Jersey area.
They don’t mess around.
I called a very experienced agent in the NY/NJ area yesterday to discuss her experience with one of her online service providers… as well as the usual real estate chit chat.
During our conversation, I asked her if she has had any experiences with the Redfin type of buyer brokers… you know, the kind that rebate money to the buyer.
According to her, the rebate is outlawed in New Jersey.
It’s the next item that just killed me (hence the title):
“Around here, if a buyer wants to see a house, they need to pay $150 and enter a buyer brokerage agreement. If and when they actually make a purchase, the $150 is given back to the buyer. It keeps the buyers from jumping from agent to agent,” she said.
Now that’s a shock. What a concept!
“And buyers go for it?” I asked, in disbelief.
“They have to. Everyone does it. It helps to compensate you for running around – and keeps you from dealing with buyers who aren’t serious. Show ten houses in a month, and you have $1500 to pay some of your expenses,” she replied.
I am not sure that I, as a seller, would approve of this…
I know you guys will have an opinion on this. 😆
Chris says:
Nuts, I can’t beleive it works!
January 16, 2007 — 8:49 pm
Christine says:
Never heard of that. I am in Queens and that has not even ever been a part of a way that we do business. She must be deep in NJ.
January 16, 2007 — 9:03 pm
Doug Quance says:
She’s in Newton… not sure where that is, Christine.
January 16, 2007 — 9:07 pm
Dave Barnes says:
Doug,
Was is too difficult to do: http://tinyurl.com/2ey3q2 ?
,dave
P.S. I hate captchas.
January 16, 2007 — 9:14 pm
Doug Quance says:
No, Dave… it wasn’t too difficult…
😆
You think captchas are bad… try dealing with comment spam when you’re operating a very active blog!
(I did google it after I responded, btw.)
January 16, 2007 — 9:19 pm
Drew Nichols says:
I have to say, the New Jersey way seems to make sense, if it really worked. It seems like competitive forces would jump in and keep that from being the “norm” but what do I know, I’m only in Greenville, SC (not known to be a fantatically “hot” market.
January 16, 2007 — 10:01 pm
Todd Tarson says:
I see no problem with the practice.. especially if they are crediting the buyer at the close of escrow for any monies paid up front.
If the market swings back to a more brisk pace of sales I am likely to do the very same type of thing.
I think it takes guts to do this though at this time.
January 17, 2007 — 7:29 am
Mike Thoman says:
Newton, NJ is in the NW corner of the state. About 15-20 north of Route 80, if that helps any. It’s a lot less “concrete jungle” or urban sprawl than some might imagine Jersey to be – I know I had a different vision of it before I lived there. It’s actually a nice area with many wooded rolling hills surrounding the town itself. In fact, all of Sussex county and other counties adjoining are like that.
That said, there’s quite a few homes in that area, and it *is* a competetive market, or at least home prices have upward pressure from the spillover from NYC and the more urbanized east Jersey. Interesting, though, that the upfront fee is done there, and not in NYC (apparently).
I bought a house in Newton, but the agent was provided as part of a relocation package, so I have never heard of the $150 down payment. I think it sounds like a great idea, and wouldn’t be opposed to sellers doing similar, but that might be a stickier situation.
Doug, why would you not approve of this as a seller? Are you assuming it gets “tacked on” to the settlement? I think that would be a little fishy, too. But I don’t see why the buyer’s agent couldn’t just return the check, uncashed, or write a check back to the buyers at closing.
Mike
January 17, 2007 — 9:06 am
Doug Quance says:
>Doug, why would you not approve of this as a seller? Are you assuming it gets “tacked on” to the settlement?
No, Mike… I am not assuming that… but I am thinking it might be an impediment to my home being shown.
Now if I was not an agent, I would certainly insist on having an agent that provided excellent online photography – so maybe I wouldn’t have a problem with it at all.
Anyway, it certainly would cut down on buyers wasting listing agents time, that’s for sure.
January 17, 2007 — 9:15 am
NVmike says:
Is it $150 per showing or $150 per agreement?
January 17, 2007 — 10:30 am
John says:
That’s what a local discount company does. They charge a $500 retainer, show up to 15 (or 20, i forget) homes and rebate everything from the commission except 1% for themselves. I think it’s about time. Too many honest clients have to pay for the hours of unpaid work performed for the tire kickers.
As long as there’s a contract, it’s all fair. If the seller really wants the home show to random looky-loos, they’re more than welcome to do it themselves.
January 17, 2007 — 10:44 am
Mike Thoman says:
I see your point now, Doug. I originally read your post and interpretted it to mean the $150 is a retainer fee, and you get to see X number of houses. If it’s $150 PER HOUSE I look at, I’d tell the agent to take a hike, but that’s what it seems like your agent friend is indicating. I somehow doubt that that’s the case, and it IS more like a retainer fee.
The $500 retainer seems a little steep, but if I AM serious about buying a house, I’ve done a little homework on the agent and the local market I’m looking at, and I’m qualified, there’s not much risk to my $500, is there?
The more I think about it, the more it makes sense: that $500 retainer probably prompts *me* to do *my* homework, making me a better prospect overall and potentially precludes me from picking the ‘wrong’ agent or possibly even looking at overpriced (for me) homes. Saves a few peoples’ time from being wasted, doesn’t it? And I certainly don’t begrudge people getting paid for their time/work.
Mike
January 17, 2007 — 11:20 am
Doug Quance says:
To clarify,
What she meant was that each buyer brokerage engagement would require $150… which is refunded to the buyer at closing.
She was simply saying if she had to go show her listings to ten different buyers, she would collect $1500 for doing so.
If the buyers wanted to see other properties, I am sure she wouldn’t mind. After all, they have already demonstrated that they are serious.
January 17, 2007 — 12:45 pm
Bonnie Erickson says:
That practice would keep the buyers from shopping open houses without their agent and writing an offer with someone else, thereby cutting their agent out entirely.
January 19, 2007 — 2:30 am
mike says:
hmm, I like the pratice… but would probably be better on the sell side. I’m not sure that $150 bucks would make me loyal… I’d just tell my new buyer’s agent they need to rebate me my 150 if I wrote an offer with them.
Asking buyers to fork over $$ would probably not make me want to talk to an agent until I knew what house I wanted to see or I may just knock on the door of houses I found on the internet… come to think of it… if I see a sign in the yard and call the #, do they say bring your 150 check to the house with you?
January 19, 2007 — 3:53 am
Doug Quance says:
I sent her an invite to clarify any misconceptions we might have about this.
It is an interesting concept – and perhaps one that’s well overdue.
Hopefully she will log in and give us some further insight.
January 19, 2007 — 5:36 am
Doug Quance says:
Well she declined the invite, but did respond saying that I could ask any Coldwell Banker agent in Lake George New York how they handle buyer agency.
I just might do that…
January 19, 2007 — 5:56 am
mike says:
I’d like to know how that goes…
Like the idea of a “Up-front fee”. Its a reason to give a consumer a discount. We typically are the ones that risk all of our capital in hopes of a sale, let the homeowner mitigate some of our risk and yes… I give you a deep discount.
January 19, 2007 — 9:17 am
Jeff Brown says:
Back in the early to middle ’80’s I charged $500 to be a client. It was not ever credited back, and was noted either in the listing and/or buyer’s broker agreement.
When asked what it was for, my reply was quick and to the point: It’s for going from your Levi’s to mine – which got their attention. 🙂 I then went on to explain that it generally took me 4-5 hours of analysis of their current financial position, which included interviewing them to gain the raw data for that analysis. I judged my hourly value back then at $100.
It also served to separate serious investors from the herd, as I was sick and tired of doing a solid job figuring out a plan for a guy who ended up telling me he’d found something on his own, or listed his units with someone else who didn’t provide half the service I would have.
I don’t charge that fee now, and haven’t for years because my skills and experience are either known by the prospect before we meet, or they discern that during our initial meeting. But the fee did exactly what I hoped it would, which was to establish an exclusive and serious relationship with clients who were as motivated as I was to get the job done.
January 19, 2007 — 11:34 am
jf.sellsius says:
I say try it and see if it works. If not, scrap it. I have not seen the practice used in NYC.
January 20, 2007 — 5:14 pm