{"id":1669,"date":"2007-07-17T10:42:57","date_gmt":"2007-07-17T17:42:57","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1669"},"modified":"2007-07-17T10:43:25","modified_gmt":"2007-07-17T17:43:25","slug":"how-not-to-divorce-the-real-estate-commissions-la-buyer-figures-out-who-pays-the-commissions-but-seems-not-to-grasp-the-nature-of-the-listing-agreement","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1669\/how-not-to-divorce-the-real-estate-commissions-la-buyer-figures-out-who-pays-the-commissions-but-seems-not-to-grasp-the-nature-of-the-listing-agreement\/","title":{"rendered":"How not to divorce the real estate commissions: L.A. buyer figures out who pays the commissions but seems not to grasp the nature of the listing agreement"},"content":{"rendered":"

Via Freakonomics<\/a>, the L.A. Land weblog at the Los Angeles Times<\/i><\/a> has a shaggy-dog story about a buyer who came up with a brand new way to shoot herself in the foot: Pay all the commissions herself, regardless<\/i> of the terms of the listing agreement and the HUD-1 procedures currently in place:<\/p>\n

I thought it would be Super Smart to restructure the traditional home purchase offer. Traditionally, when you buy a house you just give the purchase money to the seller and the seller pays the 5% commission out of that. But when you think about it, you are agreeing to pay 5% more for the house, and that translates to a bigger down payment, a bigger mortgage and bigger property taxes every year. So I figured it would be brilliant to subtract the 5% off the purchase price and pay the agents’ commissions separately myself. Seems like no big deal, right? Wrong.<\/p><\/blockquote>\n

She actually worked it out to honest math, which is more than lenders and title companies can do. But of course the sellers couldn’t go along with this, even if they had wanted to, without being released from the listing agreement.<\/p>\n

Per the purchase contract, the buyer would pay 5% of the full purchase price outside of escrow (a RESPA violation?), and the seller would pay an additional 5% at the closing table, per the terms of the listing contract. The agents might well have hated this idea — it is<\/i> stoopid, after all — but not for financial reasons. Double-dips all around! Who could object?<\/p>\n

Even so, just because the buyer made a thoughtless mistake — no doubt against the better advice of her agent — this doesn’t mean she’s wrong. Except in a short sale, the buyer pays for everything that gets paid for at the closing table. It would be a boon to consumers to make our processes reflect this fact.
\n<\/p>\n

Technorati Tags: compensation for buyer representation<\/a>, disintermediation<\/a>, real estate<\/a>, real estate marketing<\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Via Freakonomics, the L.A. Land weblog at the Los Angeles Times has a shaggy-dog story about a buyer who came up with a brand new way to shoot herself in the foot: Pay all the commissions herself, regardless of the terms of the listing agreement and the HUD-1 procedures currently in place: I thought it […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4,6,5],"tags":[],"class_list":{"0":"post-1669","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-disintermediation","7":"category-marketing","8":"category-real-estate","10":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":550,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/550\/smashing-the-idols-understanding-market-value-in-full-context\/","url_meta":{"origin":1669,"position":0},"title":"Smashing the idols: Understanding market value in full context . . .","author":"Greg Swann","date":"October 17, 2006","format":false,"excerpt":"Nominate me Ikonoklastes, for I am come to raze this temple of half-baked ideas. I want to come back to the MLS later in the week, and I have a deep need to expose the motivations of brokers, as these are distinguished from the motivations of lesser licensees. But for\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1283,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1283\/who-pays-the-buyers-agent-once-weve-divorced-the-commissions-we-can-stop-worrying-about-it\/","url_meta":{"origin":1669,"position":1},"title":"Who pays the buyer’s agent? Once we’ve divorced the commissions, we can stop worrying about it","author":"Greg Swann","date":"April 9, 2007","format":false,"excerpt":"Joke Number one: Q: If you came upon the Buddha in the guise of a hot dog vendor, what should you say? A: Make me one with everything. Joke number two: Q: Top Drawer Listing Agent, why do you charge a 7% commission to list a home for sale? A:\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2198,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2198\/a-consumers-guide-to-the-divorced-real-estate-commission-were-just-sitting-here-at-the-closing-table-watching-the-money-flow\/","url_meta":{"origin":1669,"position":2},"title":"A consumer’s guide to the divorced real estate commission: We’re just sitting here at the closing table, watching the money flow","author":"Greg Swann","date":"November 9, 2007","format":false,"excerpt":"Part III: The who-pays-whom of real estate is not as simple as you might have thought... All right, let's go buy a house. I want to talk about the flow of money in a real estate transaction, and there is no better way of understanding that flow than wading right\u2026","rel":"","context":"In "Marketing"","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":144,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/144\/the-buyer-can-and-should-negotiate-the-buyers-agents-compensation\/","url_meta":{"origin":1669,"position":3},"title":"The buyer can — and should — negotiate the buyer’s agent’s compensation . . .","author":"Greg Swann","date":"July 28, 2006","format":false,"excerpt":"My phone hasn't rung yet, but my ears are already burning. My column in today's Arizona Republic: Buyer should negotiate compensation for agent. (A more-permanent link.) This is Ardell's turf, of course, although my take on The Big Picture is somewhat different. In any case, I expect to have my\u2026","rel":"","context":"In "Marketing"","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1660,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1660\/greg-swann-joins-redfin-kelman-rejoicing\/","url_meta":{"origin":1669,"position":4},"title":"Greg Swann Joins Redfin – Kelman Rejoicing!","author":"Russell Shaw","date":"July 15, 2007","format":false,"excerpt":"Greg Swann has joined Glen Kelman in the way they both think and talk about the amount of commission, the splits and how it can be divided and allocated. There isn't some \"set commission amount\" for groups and companies to \"divide for the public\". This kind of thinking is one\u2026","rel":"","context":"In "Marketing"","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":555,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/555\/defining-the-divorced-commission-a-short-hand-term-for-understanding-alternative-real-estate-compensation-models\/","url_meta":{"origin":1669,"position":5},"title":"Defining the Divorced Commission: A short-hand term for understanding alternative real estate compensation models . . .","author":"Greg Swann","date":"October 19, 2006","format":false,"excerpt":"I just spent a very informative hour on the phone with Jeff Brown, and I want to summarize what I took away from our conversation. First, Jeff has a very different understanding of the term \"co-broke\" compared to the way it is used in Arizona. When we went to essentially\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1669","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=1669"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1669\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=1669"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=1669"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=1669"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}