How Much Would a Buyer’s Agent Cost if the Buyer Had to Pay?

$950 according to a new web service called SoloPro, who connects home buyers with buyer’s agents. You think about that the next time you are told you MUST pay a buyer’s agent $15,000 to help a buyer buy your $500,000 home.

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To use their service, SoloPro attracts home buyers by promising to give them a 3% rebate on the purchase of their home. And where does that 3% rebate come from? The home seller of course. So, the home seller puts aside thousands of dollars of their hard earned equity to pay for the buyer’s agent and instead the money goes directly to the buyer, effectively lowering the selling price of their home by 3%. At a time when most sellers overprice their home in the hope of selling it for top dollar, why would they voluntarily lower their selling price by 3%?

SoloPro is just the latest in a line of new companies that promise to give some or all of the buyer’s agent’s commission to the buyer, proving once and for all there is no need to offer 3% commission to the buyer’s agent. They don’t need it; they don’t keep it; they’re willing to do it for less. Why would any seller offer 3%?

It is time to put an end to the outdated custom of having the seller pay for the buyer’s agent. It is economically wasteful and leads to needless conflicts of interest. Every other country on the planet, besides the US and Canada, does not ask the seller to pay for a service that benefits someone else, and they manage to buy and sell homes just fine. Let’s join with the rest of the world and subscribe to the crazy notion that the person receiving the service should pay for the service. Of course if that happens, companies like SoloPro will cease to exist. Oh well.

 

 

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

Hey Home Seller, How do Those Buyer Rebates Make You Feel?

It is all the rage in the real estate industry today: buyer rebates. One of the consequences of too many real estate agents is that they really have to try and woo clients. And what better way to do that than with cold hard cash? Today, it is not uncommon to see buyer’s agents offering to rebate a chunk of their commission to the buyer in an effort to get their business. There is even a startup service called UpNest that pits agent against agent to see who will offer the biggest rebate to prospective buyers.

With the advent of online home searches, and buyers finding homes to purchase on their own, the buyer’s agent’s job has been dramatically reduced. For many transactions, agents do little more than some paperwork and a few hours of consulting. No need to be so greedy.

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In essence, what these agents are saying with their rebates is, they make so much damn money for their level of effort, they can afford to give thousands (or tens of thousands) of dollars of their commission away, and still make a pretty fair living. There is really only one problem: it should not be their money to give away in the first place.

Am I the only one who thinks the person receiving a service should have to pay for it? It is only in the topsy-turvy world of residential real estate that the home seller is expected, by custom, to pay for services received by the buyer. As a home seller, how does that make you feel? That part of your hard-earned equity is actually going to pay for services the buyer receives? It is like having to pay for a lawyer who is suing you.

It was one thing when they seller believed that the commission they are forced to pay to the buyer’s agent actually resulted in services the buyer received. But now, it is clear. A portion of it is just thrown-away equity. Money rightfully earned by the seller, which should be sitting in the seller’s bank account, but instead, goes to supplementing the buyer’s purchase of their home—involuntarily reducing its sale price.

Buyer rebates do not make the seller’s home any more appealing. They only make the real agent more appealing. Which raises the question: why the hell do sellers tolerate this? They must not know what to do. So I will tell you.

Here is what to do if you are going to sell your home. Go figure out what the average buyer rebate is for homes in your price range. Let’s say it is $5000. Then, when you fill out the listing agreement with your agent, just subtract that amount from the buyer’s agent’s commission. If you are comfortable offering the buyer’s agent 2% commission, just stipulate that the buyer’s agent’s commission is 2% minus $5000, with the $5000 rebated back to the seller. (You must add that last part or, by custom, your listing agent will get the extra $5000).

Sellers, please stop throwing away your equity so carelessly. You worked years to accumulate it. Why give it away in moments? To learn how ReaListing puts an end to all the real estate shenanigans sellers have to deal with, click here.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.