{"id":8456,"date":"2009-05-15T04:30:00","date_gmt":"2009-05-15T11:30:00","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=8456"},"modified":"2009-05-14T23:22:53","modified_gmt":"2009-05-15T06:22:53","slug":"skinning-elephants-the-lifelong-salutary-benefits-of-negotiating-your-compensation-with-your-buyers","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/8456\/skinning-elephants-the-lifelong-salutary-benefits-of-negotiating-your-compensation-with-your-buyers\/","title":{"rendered":"Skinning elephants: The lifelong salutary benefits of negotiating your compensation with your buyers"},"content":{"rendered":"<p>Here&#8217;s how <a href=\"http:\/\/epicinspections.com\/\" target=\"_blank\">Mike Elsberry, my home inspector<\/a>, charges for an inspection for one of my clients:<\/p>\n<ul>\n<li>A sliding-scale price based on square footage<\/li>\n<li>A sliding scale price based on the age of the home<\/li>\n<\/ul>\n<p>Bigger homes take somewhat longer and entail somewhat more work to inspect than smaller homes. Older homes may have more wear and tear, also resulting in a longer, more arduous inspection. Mike has a little pricing grid, and taking those two numbers, square footage and age of the home, he can plot the precise price point on his matrix.<\/p>\n<p>You could argue that he could come up with a more predictive pricing scheme, but the genius of his system is obvious: It&#8217;s reasonably objective, making it hard to argue with, and Mike can price a job from his cell phone, while driving, with his mouth half full of burrito. Lo-tech don&#8217;t mean no-tech.<\/p>\n<p>Okayfine. Now let&#8217;s sell a couple of houses.<\/p>\n<p>I&#8217;m about to do a Facebook deal with an old friend from high school. I will be representing her son in the purchase of the condominium he will live in while attending graduate school. Approximate purchase price: $80,000. Gross commission to me: $2,400.<\/p>\n<p>I&#8217;m also about to help a very nice couple buy a small hacienda in Paradise Valley, one of the wealthiest towns, per head, in the United States. Approximate purchase price: $800,000. Gross commission to me: $24,000.<\/p>\n<p>Obviously the differences between the two transactions are myriad, but here&#8217;s the one that matters most: The $80,000 condo will almost certainly take a lot more of my time than the $800,000 hacienda. I&#8217;ll get paid maybe $50 an hour for the condo, and possibly as much as $1,500 an hour for the hacienda.<\/p>\n<p>How does that make sense?<\/p>\n<p>Home inspector Mike Elsberry&#8217;s pricing scale makes sense, even if you could argue that something more complicated might make even more sense. The compensation buyer&#8217;s agents receive bears no relation to the time and effort expended. <a href=\"http:\/\/freakonomics.blogs.nytimes.com\/\" target=\"_blank\">As the Freakonomics boys point out<\/a>, the incentives are misaligned, as well: I get paid more if my buyers pay more, even though their best interest is to pay less. But even <a href=\"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/8456\/skinning-elephants-the-lifelong-salutary-benefits-of-negotiating-your-compensation-with-your-buyers\/#more-8456\" class=\"more-link\">Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Here&#8217;s how Mike Elsberry, my home inspector, charges for an inspection for one of my clients: A sliding-scale price based on square footage A sliding scale price based on the age of the home Bigger homes take somewhat longer and entail somewhat more work to inspect than smaller homes. Older homes may have more wear [&hellip;]<\/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":[24,6,5,30],"tags":[],"class_list":{"0":"post-8456","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-egoism-in-action","7":"category-marketing","8":"category-real-estate","9":"category-supplanting-the-nar","11":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":445,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/445\/blogoff-post-68-many-factors-affect-homes-value\/","url_meta":{"origin":8456,"position":0},"title":"Blogoff Post #68: Many factors affect home&#8217;s value . . .","author":"Greg Swann","date":"September 26, 2006","format":false,"excerpt":"This is from my Arizona Republic column:Buyers will try to compare homes on a price-per-square-foot basis, but this is useful only for highly comparable homes - similar square footage on similar lots in similar neighborhoods. Same subdivision is good. Same builder is better. Same exact floor plan is best. The\u2026","rel":"","context":"In &quot;Marketing&quot;","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":9173,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/9173\/on-mortgages-and-moral-compunction\/","url_meta":{"origin":8456,"position":1},"title":"On Mortgages and Moral Compunction","author":"Sean Purcell","date":"July 14, 2009","format":false,"excerpt":"What would it take for you to walk away from your mortgage?","rel":"","context":"In &quot;Lending&quot;","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":564,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/564\/want-to-stop-sprawl-stop-subsidizing-it\/","url_meta":{"origin":8456,"position":2},"title":"Want to stop sprawl? Stop subsidizing it . . .","author":"Greg Swann","date":"October 23, 2006","format":false,"excerpt":"There's an article in today's Arizona Republic documenting, at least subject to inference, how the sprawl machine works. First, developers put up houses on remote farmland, because the land is cheap. There are no roads, schools, libraries, fire stations, etc., but the developers know that the new residents will clamor\u2026","rel":"","context":"In &quot;Marketing&quot;","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":17763,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/17763\/real-estate-agents-may-work-against-buyers-interests-with-shortened-contract-contingencies\/","url_meta":{"origin":8456,"position":3},"title":"Real Estate Agents May Work Against Buyers&#8217; Interests With Shortened Contract Contingencies","author":"Brian Brady","date":"January 22, 2021","format":false,"excerpt":"If you are reading this, you are probably a real estate agent or broker.\u00a0 Most of the people who read Bloodhound Blog are industry folks rather than consumers.\u00a0 Consumers DO read Bloodhound Blog but, all in all, our audience is mostly comprised of the industry grunts who show or list\u2026","rel":"","context":"In &quot;Lending&quot;","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":16851,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16851\/the-trick-to-pricing-real-estate-it-aint-comping-houses\/","url_meta":{"origin":8456,"position":4},"title":"The trick to pricing real estate? It ain\u2019t comping\u00a0houses&#8230;","author":"Greg Swann","date":"September 1, 2020","format":false,"excerpt":"For a year-and-a-day, I was an iBuyer pricing algorithm. When Zillow announced they were going into the cash-incineration iBuying business, I looked for opportunities to find out more. Amazingly, I lucked into a job doing CMAs for Zillow's pioneer broker on the ground. What's amazing? Until then, I had never\u2026","rel":"","context":"In &quot;iBuyers&quot;","block_context":{"text":"iBuyers","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/ibuyers\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2020\/09\/pablo-merchan-montes-wYOPqmtDD0w-unsplash.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":595,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/595\/government-needs-to-stay-out-to-stop-sprawl\/","url_meta":{"origin":8456,"position":5},"title":"Government needs to stay out to stop sprawl . . .","author":"Greg Swann","date":"November 3, 2006","format":false,"excerpt":"This is my column in today's Arizona Republic (permanent link). Presumably, there's nothing here to annoy Realtors or brokers, so I can have a Friday free of vitriolic anonymous phone calls. We're back to money again next week, though, so my relief will be short-lived. \u00a0Government needs to stay out\u2026","rel":"","context":"In &quot;Marketing&quot;","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/8456","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=8456"}],"version-history":[{"count":1,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/8456\/revisions"}],"predecessor-version":[{"id":8457,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/8456\/revisions\/8457"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=8456"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=8456"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=8456"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}