No hostile phone calls today, which is not usually the case. But here is another email from another testy real estate broker. For what it’s worth, I think these brokers deserve credit for standing up for their opinions, rather than hiding behind anonymous phone calls.

But: I think the argument quoted below is fatuous — if the buyer’s agent disclosed that he was getting paid 10% by the builder, there would be a “meeting of the minds” right then and there. But, of course, agents in Arizona don’t have to disclose commission payments to buyers.

Mr. Swann, It was with great amazement that I read your article in this morning’s edition of the Peoria Republic. The headline you chose is not only mis-leading but also is disrespectful to the Realtors that provide a very much needed and necessary service to new home buyers. They need representation in the transaction as much, if not more, than any Buyer. The statement by you as to the Realtors fees being paid by the Buyer is also extremely mis leading. In most real estate transactions, the commission dollars come to the Agent only through escrow where the Buyer’s funds, usually a combination of cash and loan proceeds, are transferred and become the Sellers. In this way the funds are the Sellers to distribute to the Agent and pay any other related transaction costs. As to your statement that 2% would be more than enough compensation, I stress to you that if proper representation is made on behalf of the Buyer, everything is negotiable and the other costs involved will still be reduced with a fair and reasonable fee paid to the Agent. For you to say that a certain fee should be enough compensation for any Agent is ludicrous. It appears that you have truly found the value of your particular services, but please don’t set the bar for the value of services supplied by other Realtor professionals. The last time I checked, we still lived in the United States of America and buyers and sellers needed a meeting of the minds to proceed with a transaction and when that was reached, value, both for product and services, was determined. I hope that in the future, your column will speak more favorably about the professionals that are in this industry and the services they provide.

Joe Aimone
Associate Broker/Manager
RE/MAX Professionals

Mr. Aimone is gracious enough to illustrate the mental gymnastics necessary to turn money — every dollar of it brought to the table by the buyer — into funds belonging to the seller, who in turn disburses those funds to the buyer’s agent — with no one disclosing to the buyer how much “his” agent is being paid. Does anyone believe that, if the buyer knew that “his” agent was being paid as much as 10% in sales commission, that he might rather that “his” agent were to be paid 2% and the home sold for 8% less?

There is more to this. From the buyer’s point of view, the buyer’s agent’s compensation can be thought of as a risk premium. An important benefit the agent brings to the transaction is a reduction in the risks the buyer takes on in purchasing a home. There is certainly a value to this, but that value cannot possibly be infinite — nor even terribly elastic. For a brand new $200,000 home, does the buyer’s agent’s involvement really offset $4,000 worth of risk — 2% of the purchase price? Even if the answer to that question is yes, can the exact same risk somehow be equated to $6,000, to $8,000, to $12,000, to $16,000, to $20,000 — 3%, 4%, 6%, 8% or 10% of the purchase price?

What has changed — the buyer’s risk or the builder’s desperation to sell? Why should the buyer have to pay as much as 8% more in sales commission — not to address any added risk but to make it rain in the builder’s sales office?

As far as I’m concerned, this in indefensible on its face. I think these brokers do themselves no favors by striving, however obliquely, to defend it…

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