Quote:
Originally Posted by TheMentat
I'm involved in Real Estate in Canada as well... That qualifies me as an expert! 
I think it is really all a matter of incentives. The problem in Legion's case is that his Realtor had already been paid, and therefore had no incentive to put any effort into closing the deal. For the same reason, I would expect that his Realtor could give a rat's a$$ about the commission for the cooperating broker.
Tobra's experience is also a perfect example of how incentives can mess up the process. |
As a listing agent: I would never consider a limited-service "flat fee". My Company wouldn't let me if I wanted to anyway. There is far too much liability to have your name attached to a transaction that you have limited/little/no oversight of. Doing so also promotes the (further) deterioration/marginalization of the industry and dilution of service. I would never give discounts on full-service commission either, and actually stipulate more than the industry standard (say 7% or 8% vs. 6%). By doing so I can offer a buyer's agent a greater incentive, cover extended (out-of-pocket) marketing efforts on the back-end, and still give myself enough incentive to take on the listing. I have happily turned down (or referred-out) countless listings from clueless/irrational sellers.
As a buyer's agent (my primary focus): While not a fix-all, an up-front buyer-broker compensation agreement solves many of these "issues". The problem is that most agents are too afraid to ask for them, or they lack the skills required to tactfully articulate their function. If an agent knows that their efforts are not going to be in vein, they will be more likely to give you their full attention.
The way that works:
You agree to pay X amount/percentage for services rendered ONLY if a commission is not offered by a seller (or you agree to pay the difference if the amount offered is less than specified in your buyer-broker agreement). That way if you buy a FSBO, you know going in that you will be on the hook for the commission if the seller won't negotiate one. On the same token, you may be able to make it up by negotiating the purchase price down by that amount (or more) on such a transaction.