April 2010 Archives

Yesterday's Toronto Globe & Mail Report on Business grabbed me with an article about the duties of financial advisors to their clients and how they are paid. It's hard to miss the parallel to our business as this piece explores the need for the financial services industry to assume their appropriate fiduciary duties.

The takeaway from this is that if consumers want transparency from the financial services industry they want it from the real estate industry as well. Consulting is clearly the way to deliver it real estate clients!

Here's the link

If you scroll down far enough after reading the article,

If any of you wanted to listen to Joeann's interview with me yesterday (April 13th) but were not able to make it, I'm pleased to tell you that Joeann has kindly offered the recording to anyone who'd like to listen. Click the link:

http://recording.freeconferencecalling.com/mp3/624313/624313/IA9688_04132010110154600_1050055.mp3

A new Inman report that just came out: A New Decade in Real Estate. The report is based on a survey of Inman readers that got over 500 responses.

The report is fascinating: especially Part 1: The Future of Real Estate Fees. When asked what will change the most about real estate compensation, the largest share of respondents - 40.4 percent - said that fees will increasingly be based on the consumer's selection of services by the year 2020. Additionally, 17.4 percent of respondents said that brokers will increasingly charge a flat fee for real estate services. So, more than half of respondents (57.8 percent) believe that real estate services will increasingly be fee-based in the next 10 years!

If by way of example a consumer purchases a $400,000. home and has prepaid the consulting fee throughout the buying process and at time of settlement has no money owed to the Acre, how does the percentage of the sale price, normally reserved for the buyers agent, flow to the borrower? Is there a resistance from the lenders as to how to handle the transaction? Where does the rebate of 2-3% of the purchase price appear on the Hud 1? Thanks in advance,

Glenn

Homebuyers sometimes believe that since sellers pay the commission in most real estate transactions, their agents are really working for them for free.

But is that the case?

Agents and consumers often tap-dance around the topic of how much a buyer's agent makes (or nets, for that matter). Often, the commission - or any bonuses offered - are a bit of a secret. In many real estate purchase contracts, the amount the brokerage and agent make are omitted.

In a recent post on Active Rain, an agent posed this question and her answer was "Sometimes you need to make adjustments." Of course her "adjustments" were to simply cut her commission when a deal was threatened. She included an image of a tightly fitting corset.

I would answer the question totally differently: maybe it's time that we abandon the corset and start wearing underwear that fits with our times. In other words, maybe the adjustments we need to make are with how we're paid rather than continuing to loosen the corset more and more till it's lost it's usefulness.