3 ms·

> A good realtor can guide you through the market Sure they can, but the entire incentive structure creates a situation where it's in the agent's best interest

> A good realtor can guide you through the market Sure they can, but the entire incentive structure creates a situation where it's in the agent's best interest to get the sale done regardless or the outcome to the buyer/seller.

DANmode 3y ago
Yes. Why give a complete picture to a seller when they may turn into a non-seller, or a later-seller, if you do?!
deleted 3y ago
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civilitty 3y ago
Especially in competitive markets where everyone waves inspections and stuff to even get a deal considered. Build quality basically had no impact on housing prices because no one could do a proper inspection.
pradn 3y ago
There's also the Principal Agent problem here. If the seller's agent gets the home sold for an extra $50,000, the agent only makes an extra $1500. If this takes an extra month of work, it may not be worth it. And what guarantee does the agent have that their extra work will actually pay off? Good agents do get referrals, which is a good incentive to do a good job. But are homeowners even able to tell apart a good agent from a bad one? If someone's slick and kind, the bed-side manner might be enough to be considered a great agent. But they might just be less competent compared to a more gruff one.
- kangaroozach 3y ago
  There is no incentive at the margin. And only the margin matters in real estate transactions. The first 80% is usually a given based on location. Total racket. There should be waterfall hurdles like in Real Estate investing. Or variable commissions above certain thresholds or rolling sqft averages in that location. If they can get that last $50k then split it 50/50 with them. All of their money should be made at the margin. Also there should be full transparency such that the buyer agent loses money when this happens. So there is an overt battle for the pot between buyer and seller agent incentivizing them to advocate for their client, not just get the deal done.

DANmode 3y ago

Yes. Why give a complete picture to a seller when they may turn into a non-seller, or a later-seller, if you do?!

deleted 3y ago

[deleted]

civilitty 3y ago

Especially in competitive markets where everyone waves inspections and stuff to even get a deal considered. Build quality basically had no impact on housing prices because no one could do a proper inspection.

pradn 3y ago

There's also the Principal Agent problem here. If the seller's agent gets the home sold for an extra $50,000, the agent only makes an extra $1500. If this takes an extra month of work, it may not be worth it. And what guarantee does the agent have that their extra work will actually pay off? Good agents do get referrals, which is a good incentive to do a good job. But are homeowners even able to tell apart a good agent from a bad one? If someone's slick and kind, the bed-side manner might be enough to be considered a great agent. But they might just be less competent compared to a more gruff one.

kangaroozach 3y ago
There is no incentive at the margin. And only the margin matters in real estate transactions. The first 80% is usually a given based on location. Total racket. There should be waterfall hurdles like in Real Estate investing. Or variable commissions above certain thresholds or rolling sqft averages in that location. If they can get that last $50k then split it 50/50 with them. All of their money should be made at the margin. Also there should be full transparency such that the buyer agent loses money when this happens. So there is an overt battle for the pot between buyer and seller agent incentivizing them to advocate for their client, not just get the deal done.