Buyer's Agent

[WebBoard]

From: Mike .


How does a buyer agent get paid ?
From: Ross
Date: 27 Feb 2001
Time: 19:06:54

Hi Mike,

How does a buyer agent get paid ?

Very complex question with about 30 different answers. But I'll give you a quick outline of how I do it...

(Why don't the other buyer agents do it the same way? Why? Because they don't know how to !!!)

Firstly, the payment of commission is a matter of contract law... NOT agency law. Therefore, a buyer agent gets paid according to their "written buyer agent agreement".

Secondly, I sell my buyer agent services from the "NO ADDITIONAL COST" marketing angle. In very simple terms, I normally split the transaction fee on a 50/50 basis.

Thirdly, I get paid inside the total purchase price. I negotiate the listing agents fee to 50%, then I insert my fee... (which is 50% of the maximum fee in QLD.) Unless... i buy direct from the seller, then I get paid a 100% fee.

It almost sounds too simple. (Doesn't it !!!)

So when more people start doing what I do... then the traditional real estate industry will change very quickly. (And become easier for both the buyer and seller...)

Well... That's it for now... I'll finish the arguement with the traditional real estate industry over the next 5 to 10 years...

See ya

Ross Sondergeld ~ Buyer Agent

QC.RE, Dip.Bus, B.Bus, PGDip.Property

Buyerside Real Estate... on the Gold Coast

 

[WebBoard]

Bill

Reply: 1
From: Mike .


Re: How does a buyer agent get paid ?
From: Bill
Date: 28 Feb 2001
Time: 19:39:21

I have always considered a buyers agent to be for the naive or over capitalised home buyers.

I would love to hear from any investors that have ever used the services of a buyers advocate, Personally I don't know any. I certainly would never consider it and really see sourcing good property as an integral part of the property investment process

 

[WebBoard]

TBA

Reply: 1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: TBA
Date: 27 Feb 2001
Time: 21:42:15

Hello Ross

You are right when you say there many ways for a buyer's agent to be paid and yes it is true that being paid is a matter of contract law and not agency law.

But why would want to complicate this matter, surely it would be more transparent if your fees were the party you you are representing(the buyer)

If you were doing your job correctly as I know you do, then whenever an agent sees you coming they will be thinking "Oh no here he comes again"

He wants to negotiate the lowest possible price, reduce my commission in the process and then hold his hand out for half of my commission!

No wonder most agents would rather not enter into such an arrangement with you.

If I were one of those agents I would politely (of course) tell you to go take a long jump of a short pier.

It seems to me that what your trying to promote is the idea that there is a free luch going for buyers who use your services.

Luckily more and more informed consumers are beginning to understand that there is no such thing as a free lunch ...at the end of the day someone is going to pay!!!

The Buyer's Agent prefers the fairer and more equitable "User Pays Principle"

Regards, TBA

 

[WebBoard]

Sim

Reply: 1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: Sim'
Date: 28 Feb 2001
Time: 08:25:46

TBA, when you say "User Pays", do you mean "commission" or "fee for service" ?

I personally have doubts about anyone who works on commission... as there becomes room for influence in the decisions made and questions about the integrity of the agent.

What I mean is that if you are paid a percentage of the purchase price, but your goal is to minimise the purchase price for the buyer, then that is surely a conflict. It then comes down to the honesty and integrity of the buyers agent in question.

Of course, I am being negative and cynical here, and I am not in any way asserting that you or any of the other buyers agents are dishonest !

BUT, I am naturally distrustful of people paid on commission (and this includes financial advisors) as I have seen all too often how powerful an emotion greed can be.

I would not have such a problem if I new the buyers agent personally and could make my own judgement about their integrity, but I would always be wary of someone else put in such a position of conflict.

Thoughts ?

Sim'

 

[WebBoard]

The Wife

Reply: 1.1.1.1
From: Mike .


DITTO!!
From: The Wife
Date: 28 Feb 2001
Time: 09:42:43

 

[WebBoard]

TBA

Reply: 1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: TBA
Date: 28 Feb 2001
Time: 09:42:07

Good morning Sim

Thank you for raising an issue which many buyers would be thinking about, even if they do not verbalise it.

The Buyer's Agent has a practice of negotiating our fees to suit the needs of our buyer-client eg;

1) A percentage based fee or a fixed dollar amount
2) Based on the level of services provided
3) Based on the value of the property sought
4) Whether the buyer has found the property
5) If we are required to merely attend and or bid at auction
6) Any other factor the buyer considers relevent

But if I may I would like to address your specific concerns of paying a buyer's agent a fee based on % of the purchase price.

It really comes down to this, TBA would much rather save our buyer client $10,000 - $20,000 than us earn an extra $100 - $400.

We strive to produce a result that our will be very happy with, because we would like them to refer us to their best friend who may be in the market to buy also.

If we don't achieve the above then we will have failed to grow our business, sure we will have earned a fee hundred dollars but will have lost any opportunity to earn a few thousand.

I hope that clarifies your concerns and allays any fears you or other forum users may have.

Regards, TBA

 

[WebBoard]

LB

Reply: 1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: LB - TBA
Date: 28 Feb 2001
Time: 14:37:22

Hi, You say you would rather for go $100 - $400 for your client to get a discount of $10,000 - $20,000. I don,t mean to be too negative but YEAH SURE. We all like to give good service but are you running a buisness or a welfare office?

And as far as the free lunch goes is it in your contract that after charging your client commission you then won't take half of the real estate agents commission too. The client would never find out about that as it is a deal done with the two agents that has nothing to do with either clients. just adding fuel to the fire! LB

 

[WebBoard]

TBA

Reply: 1.1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: TBA to LB
Date: 01 Mar 2001
Time: 16:54:36

Hello LB

What I am saying is that the bulk of our fee is paid regardless of whether we buy for $230,000 or $250,000.

eg; Our total agreed fee may be $5,000 if the is property at $230,000 or $5,400 if it is purchased at $250,000.

As already mentioned we would far rather save our buyer client the $20,000 than earn the extra $400 and by the way our agreement does state that we will not take any additional fee from another source without the prior knowledge and consent of our buyer.

Additionally we would refund to the buyer any balance of any fee received by TBA which exceeds the agreed fee for acting as a buyer's agent.

I trust that this clarifies the position.

Regards, TBA

 

[WebBoard]

Ross

Reply: 1.1.1.1.1.1.1.1
From: Mike .


Secret commission...
From: Ross (Gold Coast Buyer Agent)
Date: 28 Feb 2001
Time: 16:32:46

Hi LB,

LB said, "And as far as the free lunch goes is it in your contract that after charging your client commission you then won't take half of the real estate agents commission too."

If a buyer agent had a written agreement to be paid a certain way... then collected an additional fee. Then that would be a breach of fiduciary duty (i.e. duty to account).

Then the buyer agent would void their right to get paid, and the buyer could sue for damages, loss of real estate license, etc, etc.

Collecting a secret commission... now that is an extremely dangerous business practice.

Ross Sondergeld ~ Buyer Agent

Buyerside Real Estate... on the Gold Coast

 

[WebBoard]

Sim

Reply: 1.1.1.1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: Sim'
Date: 28 Feb 2001
Time: 10:06:13

Hi TBA,

I was thinking something along the lines of what you have just articulated:

The nature of your (relatively unknown) business makes you rely on a lot of repeat business and referrals. If your customers are not happy, you will not get more business from them or their friends. This should (in most cases) be enough to keep you honest... and I don't have a problem with that at all.

If you compare to the financial advisor industry, which has been around for quite some time, advisors are pretty much a dime-a-dozen these days, and there are common stories of advisors being offered prizes of cars or overseas trips for selling X dollars worth of a particular product to their client. It is this practice that makes me extremely wary of these types of services.

Of course, Buyers Agents are not in this position yet (although there may be room for collusion with selling agents or indeed the vendor themselves), so for now I'm prepared to give you the benefit of the doubt.

I do see the need for this service in the market, particularly for time poor and inexperienced investors, even if more experienced people like TW really do not have a need for it.

That said, I certainly would want a referal from someone I trusted before I chose an agent ;-)

Sim'

 

[WebBoard]

Jacques

Reply: 1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: Jacques
Date: 28 Feb 2001
Time: 09:05:06

Hi Sim'

I understand your concern, and as you say, knowing the agent (or any broker) personally and his or her integrity could allay my fears. But my concern goes one step further: as it is a fee for service or a commission, (and TBA requires an upfront non-refundable fee if I recall Mike's notes) I would be worried of the outcome of putting forward a brief that would be too hard in the buyer's agent's view, and then having him or her come back to me and tell me that "it can't be done but thank you I am keeping your fee".

Is a buyer's agent really working *for* you to the extent that they will go and find what you want? Say I wanted a residential IP returning high yield, with good capital growth, near new or new, high tax advanatges, all the stuff that TW, Gee Cee, Pierre, yourself, and many others posts here show that it can be done, would they pull out all stops and find it? Or would they add "within reason" to the contract, with their own definition of "within reason"?

I guess this is where I should follow what TW says: do it yourself. (But I am sh*t scared of making a huge booboo for my first IP!)

Cheers Jacques

 

[WebBoard]

The Wife

Reply: 1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: The Wife
Date: 28 Feb 2001
Time: 10:05:26

Hi Jacques

I cant tell you how important it is for you to stuff up a bit on your first couple IP's.

Now I know you dont want to, and you CAN minimise you're risks/stuffups, but you really need to do at least one yourself from beginning to end, then you can make an educated decision about using a buyers agent, or whatever other service you need.

I tried renovating once, oh geeze...never again! I now know how to factor my buying price for reno's, as I wont be doing any of the work.

I tried my own conveyancing once, * bangs head on keyboard*, STUPID STUPID WOMAN*....never...ever...again..

In short, I guess I tried a lot of things, I have now refined a lot of what I look for and do, ( still got lots of room for improvement).

Which brings me to buyers agents, I am fairly confident in what I would like to see in a buyers agent, If I could use a buyers agent, it would save me having to deal with the hassle of it all.

But I know what to look for and what to expect because I have done it myself, and I know what kind of standard I am looking for.

I havent decided on using a buyers agent yet, because I have to many unanswered questions, and they sound to much like you're typical salesperson, ( which really narks me, cause IM a salesperson, and I feel like the salesperson getting the sales fluff, it doesnt go down well, except for the girl agent on the forum, I like her style in posting so far, she is playing cool, and not giving a sales pitch, which makes me feel more confident in her approach, hey...the other ones could be just as good, but I'm the customer right....right...right...customers always right..right?)

So anyway, another example I would like to tell you about is soap.

I have a staff who make hand made soap, very nice girls, but I felt they were to slow....they challenged me to do it faster, so I got in there, and showed them how to make BAD soap by rushing the process...i was wrong, BUT, I did it myself and what I found was, my 'system' needed refining, not the girls speed. The business makes more money cause I actually knew what was needed, I tried it myself.

 

[WebBoard]

Jacques

Reply: 1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: Jacques
Date: 28 Feb 2001
Time: 12:56:16

Hi TW,

You wrote: "I cant tell you how important it is for you to stuff up a bit on your first couple IP's."

Yep, the key words are "a bit"! I certainly don't want to stuff up big time! So that's why I am looking for help (a flipper - Robert?, a buyer's agent - the girl?)

And you wrote: "Which brings me to buyers agents, I am fairly confident in what I would like to see in a buyers agent, If I could use a buyers agent, it would save me having to deal with the hassle of it all. "

Please, continue. Don't let me hanging there: what is it that you would like to see in a buyer's agent?

You also wrote: "[...] except for the girl agent on the forum, I like her style in posting so far, she is playing cool, and not giving a sales pitch, which makes me feel more confident in her approach"

And I trust women's intuition (I am married!!!). And I agree that the girl agent (it's going to stick!) is not pushy. And she is patient. Hopefully she will also be gung-ho and find that gem I am looking for!

Cheers Jacques

 

[WebBoard]

The Wife

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: TW-Jacques
Date: 28 Feb 2001
Time: 15:33:59

well....

I want a mimi me in a buyers agent......

that means, patient, sensitive, curious, able to ask questions, able to get answers, able to talk about price, able to sniff out a good deal, honest (ie: isnt going to swipe a great deal out from under me), believes quietly in their self worth, therefore not coming over with a major sales pitch, ( you should try seeing a male do a major sales pitch on another male, especially, when the vendor is going to be getting less money than he had hoped, men get all chesty, and talk of price goes out the window, it becomes an ego 'thing'.

Not saying men cant talk price, they most certainly can!, just that the most successfell ones are a little more humble in their approach, and throw the text book sales pitch out the window, they just want the price!

And then I have seen people use the sales pitch successfully, the trick is to know WHEN and WHO to throw it at, thats why you have to listen, and be sensitive, to pick up the kind of person you are dealing with, if you can BB someone, ( Baffle with Bullsh*t) then go on, give em the hard sell.

So I guess thats what I want in a buyers agent, all the above.

I dont need my hand held, I dont need to be walked thru anything, I just want my price, I want my house , and I want it with a minimum of fuss, I have other things to do, lets just get on with the job.

I want to hear whats going on, I dont want to be shielded from ANYTHING, I want to hear a report on things as it goes, how else can I base my judgements on where I should or shouldnt be buying for the next one.

Basically I still want to be in control, I dont like giving the control away, I only like to delegate out the jobs, but I'm still driving!

I think if I find a buyers agent like this, it will save me a tremendous amount of time, and it would nearly complete my team.

Hows that Jacques?

Oh and the buyers agent would have to be sweet, drop dead gorgeous and an all round nice person, just like me )

 

[WebBoard]

Robert

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: Robert
Date: 28 Feb 2001
Time: 13:25:42

G'day Jacques

I know what you mean about women having that special touch. Should see my partner, Tracey, in action....

Where I will only get so far with a deal she will jump in and do the rest. It is actually a really good working relationship.

And as for "The Girl" (Kristine) keep up the good postings. though I think you should start signing off as "The Girl" now, what do you think...

Cheers, Robert

hehehehe

 

[WebBoard]

Kristine

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: The Girl to The Wife
Date: 28 Feb 2001
Time: 12:16:34

Dear Wife

Am I The Girl on The Form to whom you refer? The 'cool' buyer's agent? Whoo -oo I've never, ever, been referred to as 'cool' before. Remind me to buy you a drink next week at the Cashflow game in Ringwood.

But Girl?? My dear, I've seen fifty summers come and go and am coming up to my fifty first winter. It's been a lovely journey with lots of fascinating travel companions on the train, and my ticket is good for a while, yet.

Hard sell? Never. Any why would I want to deal with a reluctant client? Buyer's agency work is quite different to 'working a postcode - where are the punters' type real estate. And no offense to any of my professional companions. However, my experience in real estate is a bit like the promised land "all the land that my eye can see" is my emotional territory and the more people in that promised land, the better I like it.

And anyway, how many agents have you met who consider the Estate Agents Act to be bed time reading, and uses copies of legislation as reference material? The consideration and structure of legislation is there throughout society so that we don't have to keep on inventing the wheel. The law provides protection to the weak and uninformed, but also provides protection to the supposedly sophisticated, to protect them, too, from mistakes of innocence, ignorance or zeal.

But Justice, although blind, is not stupid, and I see my role (pardon me while I tune my violin) -(and not just in real estate) as encouraging people to seek the truth in any situation, to act with caution, but to really be prepared to act when the opportunity is there. So sometimes there is a very long lead time before any action occurs.

Gosh, Wife, look what you've gone and done!!!

Maybe I should make that, two drinks!

Anyway, looking forward to meeting with you next week

Kristine

[email protected]

 

[WebBoard]

Sim

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: Sim'
Date: 28 Feb 2001
Time: 17:16:17

Wow... what class !



Sim'

 

[WebBoard]

The Wife

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: How does a buyer agent get paid ?
From: The Wife
Date: 28 Feb 2001
Time: 15:13:26

yep...you're the girl )

cept you're email address seems to be getting longer and longer....

Look forward to meeting you in Melbourne,

Cheers TW

 

[WebBoard]

Kristine

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


From: Girl to Wife re name
Date: 01 Mar 2001
Time: 13:58:15

Wife:

As my personality is still developing and I am yet to hit mid life crisis, you can't expect that my email address would have settled down, either.

How about this one

kristine@gorsafawddachaidraigddanheddogleddollonpenrhynareurdraethceredigion.com

Except, of course, that all my emails would go to that railway station in Wales!

By the way, I got that from the Guiness Book of Records (1986) Page 84 'Language & Literature' (teehee)

Perhaps I should make that, three drinks?

Anyway, all views expressed are not necessarily the views of the management

Next email will be back to the serious stuff, I promise

Kristine

[email protected]

 

[WebBoard]

Sim

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Some people have too much spare time ;-)
From: Sim'
Date: 01 Mar 2001
Time: 18:38:59

I can't beleive you had the patience to type that name in !

Then again... I haven't checked that you got it all right !

And I'm not going to either !

Sim'