Here’s a truly fascinating question from an agent working in Nassau County, Long Island, New York. The idea of buyer brokerage is just being introduced there, and our interlocutor is understandably mystified:<\/p>\n
I am a bit confused, to say the very least.<\/p>\n
If I write up a listing contract with a seller, traditionally, when offering compensation to a sub-agent that agent was working in the best interest of the seller as well — working to get the seller the best price and terms.<\/p>\n
However, If we are now offering compensation to a Buyer Broker, we know that the other agent is going to be representing the interests of the Buyer — working to get the price as low as possible.<\/p>\n
Why would a seller agree to compensate the Buyer Broker for any part of the commission?<\/p>\n
Where traditionally the sub-agent would negotiate the best possible price for the seller. It seems to me we are telling the seller to pay a party who is going to negotiate against their favor? Isn’t this unethical?<\/p><\/blockquote>\n
So far, to my knowledge, there has been one actual rigorous argument against divorcing the commissions. We do what we do for practical reasons, and I have offered practical solutions to these problems<\/a>, but, so far, no one has been able to defend seller-paid commissions as a matter of equitable rectitude to both principals. If I’m wrong about this, cite the link to the argument.<\/p>\n
Meanwhile, our interlocutor makes defending seller-paid commissions that much more difficult. I don’t think there is any way to dispute the argument that buyer brokerage, as compared with sub-agency, induces sellers to act against their own interests — even as the seller’s hands on the purse-strings provides incentives for buyer’s agents to betray their clients.<\/p>\n
Does anyone have any thoughtful answers to these questions?<\/p>\n
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\n<\/p>\nTechnorati Tags: real estate<\/a>, real estate marketing<\/a><\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Here’s a truly fascinating question from an agent working in Nassau County, Long Island, New York. The idea of buyer brokerage is just being introduced there, and our interlocutor is understandably mystified: I am a bit confused, to say the very least. If I write up a listing contract with a seller, traditionally, when offering […]<\/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":[12,6,5],"tags":[],"class_list":{"0":"post-1999","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-ask-the-broker","7":"category-marketing","8":"category-real-estate","10":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"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":1999,"position":0},"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":[]},{"id":2179,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2179\/a-consumers-guide-to-the-divorced-real-estate-commission-why-buyers-and-sellers-each-paying-for-their-own-representation-is-the-most-significant-reform-that-can-be-made-today-in-residential-real-estat\/","url_meta":{"origin":1999,"position":1},"title":"A consumer’s guide to the divorced real estate commission: Why buyers and sellers each paying for their own representation is the most significant reform that can be made today in residential real estate","author":"Greg Swann","date":"November 7, 2007","format":false,"excerpt":"Part I: How we got into this mess in the first place Can we be straight with each other? I'm not a soft and subtle kind of guy, and my working assumption is that you are sick to death of being hustled -- handled -- lied to. We yammer all\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":550,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/550\/smashing-the-idols-understanding-market-value-in-full-context\/","url_meta":{"origin":1999,"position":2},"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":1999,"position":3},"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":296,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/296\/securing-the-home-buyers-place-at-the-table-how-two-simple-reforms-can-finally-result-in-a-full-uncompromised-form-of-buyer-representation\/","url_meta":{"origin":1999,"position":4},"title":"Securing the home-buyer’s place at the table: How two simple reforms can finally result in a full, uncompromised form of buyer representation . . .","author":"Greg Swann","date":"September 6, 2006","format":false,"excerpt":"Executive summary: This is long, and it's written (I hope!) for ordinary people, not real estate professionals. But I want for real estate professionals to be aware of this argument, because I think it solves several of the knottier problems affecting our industry. Here's a quick summary of the essay:Buyers\u2026","rel":"","context":"In "Enduring Interest"","block_context":{"text":"Enduring Interest","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/enduring-interest\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":650,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/650\/an-argument-for-dual-agency-%e2%80%93-part-1\/","url_meta":{"origin":1999,"position":5},"title":"Dual Agency Smack-Down: An Argument FOR Dual Agency – part 1","author":"Russell Shaw","date":"November 18, 2006","format":false,"excerpt":"This is a stupid subject. This is a necessary subject. There are a lot of different viewpoints on this subject. A lot of the viewpoints that seem to matter came from lawyers, court decisions (judges who are also lawyers), and other people who are also wrong. 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