Oct. 13, 2006: For-sale-by-owner home sellers can help move the real estate market into a new world for buyers
For now, if you want to negotiate a lower buyer's agent commission, you have to assert yourself by saying those five little words: "How much do you charge?"
Even though buyers traditionally have not done this, asking that question will be doubly profitable. You could save thousands of dollars and you will learn right away whom you are dealing with. Does the agent think you exist for his or her benefit, like a cow to be milked for commissions? Or does your Realtor know that you are the boss and you have every right to exercise a boss' authority over your employee's compensation?
There is an even better way to do this, but it's one that will require a change in the Way Things Have Always Been Done.
Instead of offering a hefty "co-broke" commission, sellers could offer a nominal commission in the MLS, then concede 3 percent of the sales price directly to the buyer -- to be used at the buyer's discretion to pay for representation, closing costs, etc.
With that one simple reform, we would go from buyers having to initiate fee negotiations with reluctant agents to agents very eagerly bringing the topic up themselves. In essence, buyers would be on the same playing field as sellers, bargaining with agents who know they are applying for a job.
Will this reform be put into effect? Not easily, and probably not soon. The "co-broke" commission predates buyer's representation, and sellers -- and many listing agents -- still treat it as a bribe to get the buyer's agent to betray the buyer's interests.
But there is one type of seller who has no stake in the Way Things Have Always Been Done: for-sale-by-owner sellers. Homeowners selling through limited-service brokerages also can afford to take a chance on a new idea.
These sellers are essentially unrepresented, and they don't care if their buyers come with or without a buyer's agent. The buyer's agent commission is still built into the price -- but it's under the buyer's full control. This is a whole new world of real estate.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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