It is simple, Give Buyers what they wish for and they come to you!



I am a Real Estate Broker in Fremont CA. About six month ago I had a final walk through with my buyer. The listing agent showed up! He was nervous because seller did not take care of home inspection. After client left, the agents sat on the stairs and almost fell in tears. He told me that he used to be successful agent and he has 4 listings. He was not able to sell any home in months. He asked me to go easy on inspection! So we can close on time. Anyway after further questions it was clear that he got his listing by giving discount to seller and is paying only 2.5% to selling agents. His lack of understanding of market forces was interesting. He told me, he has many years experience and right now he has bad luck. Right bad luck! There are thousands of Real Estate for sale in Bay Area and most of them give 3% or more up to 5% to selling agents and this guy expect other agents to show his property first. Myself I give 4% to the selling agents, because they are worth every single penny.

When there is shortage of buyers, seller has to step up and pay at least 6% commission so the listing agent can offer at least 3.5% to selling side. This way the property is selling faster and both seller and listing agents will benefit. I had a case with the guy took a listing for 3% last week. This guy will not be able to lure the selling agents to show the property. Believe it or not, seller who gave that 3% listing to the agents is the biggest loser in this drama.

Suppose you are a listing agent and you get an offer from a broker for a home. As part of offer selling agents will ask for 4% commission? By law you have to present the offer to the seller. You are in big trouble if the deal is not closing because of commission dispute.

Some brokers use this method to teach listing agents the meaning of buyer's market. If it is actually a buyer's marker, then it is the selling agent market as well. There is nothing in the world justify a listing agent to make 3.5% while the selling agent makes only 2.5%.

This article is not meant to ruin it for listing agents. My point if there is reality shift out there from seller's market to buyer's market, then that should change the way we do business. Otherwise market forces will crush somebody standing in the way.

Not only we should charge sellers more and pay selling agents accordingly, we can pass some of the money to the buyers as well. If a buyer needs money for closing cost, it is pure greed for selling agent not to pay that. As you might heard it before 100% of nothing is nothing. If there is no deal nobody get paid, seller, listing agent and selling agents are in the same boat.

Some brokers like myself go even further. We are making a marketing based on Cash Back or Cash Rebates to buyers. It means we actually pay our buyers from our own pocket to close. This might sounds stupid, to pay clients. After all we suppose to make money, but market will show in long run if this idea is smart or not. Right now smart buyer will search Internet for Cash Back or Cash Rebate. It might be only 1% of the buyers that are so smart. But as buyer's market evolves smart buyers will tell the story to others and soon enough there will be two types of buyer's agents. The ones who pay their clients and the ones who don't.

I am going to put a strange bet here. I will bet that selling agents will pay their clients are better off in long run as long as the buyer's market holds.

Let the dices roll!