Clients a Good Agent Does Not Want

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This email exchange is worth another article on a different subject. Everything down to "Afterwards" is a straight out of the email except that I deleted any information that might identify a particular individual or company. The context was that he wanted my ability to locate and recognize bargain properties.

I am currently working with a coworker with no agreement. However, she has offered to rebate 50% of her commission. Are you negotiable with your commission?

I am very ready to buy a place at a bargain or discounted price. I have been pre approved by DELETED for $550 but I do not want to spend more than $525, preferably around the $450 range.

I have sufficient liquid funds for 10% down and have an excellent credit score...score 3 months ago was 752.

Let me know.

I do have lower cost packages for when you do part of the work, starting with finding the property.

When I find the property, I retain the entire commission.

Yes, getting half the commission back is cool with most folks. But consider: Did your current agent find you something like this? Does she spend enough time shopping the market that she even knows what is and is not a bargain, or does she just say "Here is the living room."? What value is she providing you? If the answer is, "not much," then no wonder she's willing to rebate half the commission! As far as she's concerned, the half she does keep is free money for going around and looking with you. My goal is that my clients end up with at least 10% they would not have had without me - either a better property for the same money, or the same value property for a lower price, or some combination of the two. Now, if getting half of a two point five percent commission via rebate sounds better than saving 10% of the value of the property, by all means keep doing what you are doing. If getting a property that is worth more, or paying less for the same property, is what you are after, you need someone who is likely to deliver that.

Yes, I'm one of the deepest loan discounters there is. That's because a loan is a loan is a loan, as long as it's on the same terms. A thirty year fixed from National Megabank is the same loan as a thirty year fixed from the Bank of Nowhere in Particular, provided the rate, costs, and terms are the same. Only difference is who you make the check out to.

No two properties are alike. Especially in the current market, the difference between shopping smart and not doing so is tens of thousands of dollars, far more than a commission rebate. I don't rebate buyer's commissions because I provide more than that in value.

Now, I've got some bargains I've found. If you'd like to work with me and get shown these bargains, or have me go looking for bargains specifically for you, give me a call and let's make an appointment to meet and get my contract signed. It's non-exclusive, so if you don't like what I find for you, you're free to stop at any time and go work with someone else. If I don't perform, as in find the property you want, I get nothing. I put a lot of work into every client or prospect I work with, with the idea of getting them a better bargain. I'm confident enough of my abilities that I don't need to tie you to me exclusively. But you do get what you pay for. If you want a Yugo agent that breaks down in the middle of the transaction and leaves you stranded, that's no skin off my nose, but you are not the client I'm looking for and the bargains I find are for my clients.

Consider that your boss could probably hire other people to do your job more cheaply, but his additional investment in you probably makes him more money than that cheap replacement worker would save, and that's same reason is why I am worthy of my pay.

By those characteristics, you are a very qualified buyer. You should be working with someone who knows how to use that as leverage to get you a better bargain.

Or you can pay full price for a mediocre property, and console yourself with 1.25%.

If you decide you would rather have the real bargain, here I am, ready to go to work for you.

It may be true of what you are saying, however, if you want to win over are going to have to change the tone of your communication. You come across very demeaning. Even if you were giving your services away free...I wouldn't be interested.

I took the time to explain the situation to you, rather than a flat answer. That's just a small taste of the value I provide. I am paid to be the expert, and I earn my pay. If you are an expert, you don't need me. If you don't know about all the stuff you don't know about and are stuck in denial about "Agents don't even need a college degree!", you won't see the value of a real expert - which is part of the point of what I wrote. Believe it or not, there are clients a good agent does not want, and you appear to be one of them by your response.

If all you're interested in is that rebate, that's fine with me - I am not looking for penny-wise and pound-foolish clients. I am looking for people who understand and are willing to pay for value when they find it, in order to save more money in the long term. But if you won't pay for value, don't be surprised when you don't get it. If you don't believe skill makes a difference, by all means go with the commission rebater.

Good bye and good luck.

You are an idiot. And I am going to report to the board.

There are plenty of agents that want my business. I haven't even tried to contact any agents yet.

You are the one that needs the good luck.


Afterwards: This guy is working with a weekend agent who isn't good enough or confident enough to quit her real job on the largest transaction of his life. No wonder he doesn't realize what a difference a good buyer's agent can make! Furthermore, it's highly unlikely that working forty hours per week somewhere else, she has the time, energy, and inclination to keep up with the market and its changes, let alone screen out properties that aren't worth the client's time. Value provided? Letting him into the property and saying, "Here is the kitchen. Here is the living room." Most people really can figure that out for themselves. Improvement in outcome over just doing something incredibly stupid and calling the listing agents? I can't see that there is likely to be any.

Now this guy was hoping I'd reduce my commission, and it's okay to ask. It's not okay to get upset when someone won't. It's counterproductive to get upset and claim I'm being "demeaning," by explaining to him what he plainly had not considered, that the value provided by a good agent far exceeds the commission rebate. He probably thought that that was "hard negotiating," not understanding that he had marked himself as someone that cannot be dealt with on the basis of mutual profitability, both of us coming out of the exchange better than we otherwise would have. If you don't understand that there is a problem or challenge, you are unlikely to understand the solution. On paper, the Yugo looks like a good idea. But once you deal with one, you know it's no bargain. Maintenance, reliability, performance, noise, lack of room, etcetera, etcetera, etcetera. I see a lot more original VWs on the road, marketed to the same demographic over twenty years earlier, than I do Yugos. Problems in real estate transactions happen, and they're often much better buried than anything purely mechanical. Furthermore, there's no real "lemon law" equivalent in real estate, and if you fail to deal with the issue at the proper time - most preferably, before it's a problem at all - it's far more costly to go back and fix. You saved $4000 on agent commission! Yay! You bought the wrong property, paid too much, can't afford necessary repairs, and have to sell at a huge loss and pay bigger commissions out of that than the person who sold you the property did? Not so good. Definitely not so good. Not to mention that with the prices of real estate being what they are, anything you "saved" in compensating the person who is supposed to be the expert on your side is likely to be lost several times over because the person who will work cheaper isn't worth as much.

In certain quarters, it's practically an offense against humanity to claim that you provide more value than another agent might, but it is nonetheless true that some agents provide more value than others. Get offended if you want. It makes zero difference to the facts. It is more constructive to employ techniques to find those agents who provide more value. Agents need to know the market segment they are serving, and this person is not part of mine. My business model does not permit me to do business with this sort of client and stay in business. You want cheap service with a commission rebate? The weekend agent is the way to go, not me, however much it might anger you to be told so. You want someone who is actually going to find you a better property at a better price, and provide more leverage in negotiations? You may be the client I'm looking for, and the discounter with the commission rebate is as inappropriate for you as an agent as I am for his ideal client. The discounter might want my clients, but they are not set up to serve the needs of those clients. I occasionally do business with one of the discounters preferred clients, but I have no interest in seeking them out, and I cannot stay in business spending as much time and effort on them as someone where I make the full commission. Truth be told, the existence of such clients dilutes the value of my reputation, when somebody who has persuaded me to offer them a discounted package for lesser services tells someone who might otherwise be a good prospect that I did a good job, but nothing special. My target client is someone who's not only looking for excellent value, but recognizes it when they see it.

Caveat Emptor.


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This page contains a single entry by Dan Melson published on May 31, 2008 7:00 AM.

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