Entry by Carolyn Shipp

Broker is Worried About Me Chasing Business Away


Last week I felt I had the perfect opportunity to use the consulting model.  A gentleman contacted me and had some questions about a property that is for sale about 30 miles from here.  (We are a very large county, but with only 25,000 people so 30 miles is not out of the area for me.)

Anyway, he told me that he had already seen the interior of the property and was interested in writing an offer if my answers were satisfactory to him.  I took that brief pause to explain that the property had a pending contract, so that any offer would be a backup contract.  I answered his questions and he still wanted to write a backup.

At that point, I thought this would be a very good time to explain my rate schedule and for writing a contract my fee would be $50.  If the contract went through then I would refund the $50 to him.  If it did not go through, then the $50 would be for the time we spent writing the contract and anything further that would take place.

He agreed and we scheduled a day for him to come in and sign the contract. 

About ten minutes later his mother calls me.  "I bought a house just a few months ago and I never had to pay a fee!  You are lazy and don't want to work for your money."

So, I explained the way I work and my rate schedule.  Her response:  "I don't care if you get paid or not!  My son is not going to pay for you to write up a contract.  You get paid by the seller not the buyer!"

From what I understand she called another agent to have her write the offer, but that agent for whatever reason chose not to help her.  I found this out from the listing agent.

Unfortunately, this is the feeling of many people who reside in our area and it is difficult to sell real estate even in a traditional setting.  It's not unusual for someone to walk away from a purchase at closing...it has already happened twice this year and we've barely gotten started!

Any thoughts on whether or not consulting is going to work here?  Even though my broker is not against my trying this, she is worried that because I am the only agent trying it that most people are going to be like the lady above and I might drive business away because they will want to use someone from another company who doesn't charge any fees, whether refunded or not...


What advantage did you give to the buyer? 

Just writing up a contract is not necessarily 'consulting." It's writing up a contract. You need to explain to the buyer why you are charging this fee and how you work and what benefit it is to him to pay you for this. 

His mother is right. He can call another agent and ask for her to write it up. At some point somebody will, taking the chance it MIGHT go thru. 

This only works if you are truly consulting and offering the buyer something for his money. Your brain. Your expertise. Your advice. Not just paper pushing.

I did explain to the buyer's mother that I would refund the fee back if the contract went through.  I also explained what I would be doing in order to help her son with the transaction.  He had actually agreed to it and didn't see a problem with it.  She was the one that decided she didn't like the structure. 

I have since found out that the loan for the current contract is approved and the property is scheduled to close in about two weeks. 

But, this is all a mute point now because my broker came to me about 20 minutes ago and said that she doesn't want me to use the consultant model because she feels that it is going to drive people away.

Ditto Erica and Glenn. If you don't set yourself apart from the other agents and make it a win/win for both parties (you and the buyer), it's perfectly reasonable that the buyer (or his mother) would balk. 

There are several ways to do this, but you MUST first look at it from the buyer's perspective. Of what benefit to HIM is it to use you... and pay your fee? (those are two separate questions).

And I still want to emphasize that writing a contract or showing a home or doing anything that we do is not necessarily consulting just because you itemize it or ask to be paid for it. 

Ditto again, Erica. 

Remember, part of consulting is about offering intelligent, transparent choices in the services clients can receive and how they pay for them. Perhaps this particular model of charging buyers to write up a contract won't fly in your market (although I'm very proud of you for giving it a shot!), but let's not toss out the whole concept of real estate consulting because one person balked at paying a $50 fee. 



I would be careful about charging buyers to write up a contract. It could be interpreted as practicing law. Additionally, using REALTOR® Association aproved forms for non-clients is no-no.

Michael - I'm not sure I understand your concerns... maybe they are specific to your state? How is charging upfront to write a contract practicing law if it's not practicing law to do it when paid contingently? 

Also - are you saying that in your area you must have an agency agreement in place to use state-approved forms? 

The biggest problem here in trying to define what consulting is or should be. It is hard enough trying to define it with the group here--so image how the average buyer or seller will feel when attempting to engage them with something so foreign.

Again, I go back to the framework in which the consulting model is presented.  It is almost impossible to ask buyers and for that matter, sellers to pay for something they are conditioned to get upfront for free.

In addition you have a two tiered system that is design to corral the innovation of forward thinking real estate professionals. The licensing body for the states and the NAR, have so fenced us in, to a degree that offering alternatives are filled with all types of  traps.

I would like for someone to explain to me the benefit in paying upfront. Unless in that explanation you use hard fact to show that your skills will limited my risk, give me a better marketing position and will bring to me more money. Paying for it upfront is not a cost I'm willing to carry. 

This is why I'm using the approach of Advance Marketing Prepaid Commission. And before you point out to me that people are still required to pay upfront, remember they are guaranteed a better ROI. ROI is only part of the program--when it is all said and done the property owner will in all likelyhood end up with a decent rebate at closing, in the end paying absolutely nothing to sell their home. 

A property owner keeping more of their equity will understand immediately what's in it for them.

I have tried for years to convince the industry that this is a good model all without success. I finally realized I was approaching it all wrong. It is not the industry I have to appeal to, but the property owners. They see the benefit of having access to a professional during their ownership and understand as more homeowners adopt the process the industry will follow. The initial guarantee is for every penny they pay for the program.

I have just recently add a rewards program to my offering that will roll-out this spring, where retailers will refund what a homeowner spends with them for the purpose of paying commission. 

I don't know about you, but I would rather have access to 75 million plus homeowners with a potential of selling than just 4.5 million looking to sell now.

Real Estate professionals only fill-in the blanks. Technically we never write an entire agreement. Most states would consider writing an entire purchase agreement from scratch as practicing law without  being a licensed attorney. Illegal!

I believe that is what Michael is referring to.

William, you're pretty much saying the same thing Erica is... you can't ask people to do something that isn't in their best interest (or they don't see a compelling reason to do it) and expect them to just go along with it. So, no... just telling someone you're going to charge them a fee when no one else does and there isn't anything all that special about you and your service isn't going to fly. 

Now, if you ARE a real estate practitioner who is in high demand because there is something really special about you and your service, and the cost of admission to work with you is a non-traditional fee arrangement that no one else charges, you'll likely be able to get that fee because people want YOU and don't consider you to be a commodity. 

Further, as you point out, if you can prove to your potential clients that there is a benefit in pre-paying or paying upfront FOR THEM, they'll sign up all day long... And there are plenty of models and approaches that we can offer our clients that make it a win/win - for them and for us. 

Carolyn, I appreciate you bringing this up and continuing down the path of conversation.  I believe this thread really exemplifies the total misnomer that most Acres practice The Consultin Model" as it was created to be.  It adds fuel to the idea that "Attestation" should be mandatory.  It may also argue that the very foundation of consulting that ACRES practice is not built on any concrete foundation? This will be another broker stating "Consulting" doesn't work when he/she never got the opportunity to even see it get up to bat!  Just my opinion, I could be wrong.  Glenn

PS:  Lester didnn't like the answers he got from his broker so he started his own! 

Jennifer, William is correct, writing a contract from scratch is illegal and would be considered practicing law.

I would never put in a consulting agreement that I will specifically charge for writing a contract. Writing or filling out a contract for a specific fee could be interpreted as practicing law. However, assisting a buyer with the necessary paperwork to complete a transaction would be appropriate.

I'm not saying you need an agency agreement to use REALTOR® Association approved forms. However, they should not be used outside of their permitted use.

Michael - I don't think Carolyn meant to imply that she wrote up a contract from scratch - yes that would definitely be a problem. But I'm still not seeing the distinction between putting an offer together with a client ("filling in the blanks" if you want to call it that) for an upfront fee versus being paid for your work at closing, assuming you're doing the exact same thing related to the preparation of the offer. 

And, not to belabor the point... but I'm curious what you saw in Carolyn's post that implied that she was using the state-approved forms outside of their intended use? Please clarify - thanks!

It's all in how you present your business model to people. For example, I am a licensed HUD broker. In our area not everyone can put offers in on HUD properties. We have put together a website promoting local HUD properties, and we market to these people.

Many buyers call in who want to screw around with lowball offers. For example, offer $1000 on a $30,000 house (yes that just happened). The paperwork involved is considerable. So we ask the buyer to come in, fill out all the documents with us and to prepare to spend an hour here. If he doesn't want to do that, that's fine. He can call another broker (again, not all brokers can do this, and the ones that do have agents on the roster who turn this work down as it's a hassle or they don't know what to do).

If buyer consents to come in, face to face we tell them to bring 2 checks. One made out for the HUD deposit, and one for our services for putting in the offer. 

If buyer says no, then again, they can go somewhere else. 

I had one guy recently ask what this is for. I explained that we consult with the HUD buyer, explain the process, and submit his bid for x. If he pays us right there when we submit the bid, the fee is x. Nonrefundable for our time/advice.

If he chooses to only pay if he gets the house, then the fee is 2x. It's his gamble. This weeds out the people who are messing around with our time with no intentions of putting in a solid offer.  And we get lots of those. 

So the guy who called in said he never had to pay for this before. It was Saturday at 4 pm. I had worked all day and just got home. I suggested he call around. An hour later he called me back and said nobody would take his calls and no agents wanted to put an offer in at 4 pm. I said I would return to the office, and to bring his two checks. He insisted that he's not going to pay me either when I put the bid in or at closing. I replied, "I'm now the only one to take your call twice on a Saturday afternoon, willing to do this and you still won't pay my fee?" He then understood. I returned to the office and submitted his bid, and he paid me for my time and advice. 

In another situation a buyer told me he called 7 offices and nobody could help him put in his HUD bid. He was glad to pay my fee and never questioned it. 

It works. If you know how to implement it. 

Carolyn specifically stated she was going to charge $50 for writing a contract. I would not ask anyone to pay me a specific dollar amount for writting or filling out a contract. Attorneys write and fill out contracts for a fee, we do not. We are paid on a consulting or contingency basis for providing a purchaser or seller a service. Consulting on a fee basis is great and it is nice to get paid for what we do. I think we just have to be careful on how we identify the tasks.

I didn't mean to say Carolyn was using the forms outside of their intended use. I should have made myself clearer. When the buyer asked another agent and was turned down, I was making an assumption the agent turned the buyer down becasue she was asking for the contract form. This is what I meant by outside of their intended use.

It seems that Carolyn was of $50 value to the son, but not a $50 value to the mom.  She did not differentiate herself from other agents.  I looked at her website, at the link entitled "Structure and Fees" and it is blank. Hmmm. No menu of fees and associated value.  My job is to keep buyers out of trouble, to avoid land mines, snakes and grass fires.  My clients are paying for my experience and knowledge.  Tell the MOM that they can find a free agent in the newspaper classified ads.

** Send MOM a link to your ACRE video discussing real estate consulting **

If it was a $70,000 sale, your commission might have been $2,100 and you could give MOM a $150 rebate at closing. The buyer is risking $50 to make $150. Better than Las Vegas.

Carolyn did not lose a client, because she never had a client to lose. She is fortunate and she saved her time. She was smart. 

Numerous times I have commented that we must stand out from the crowd, especially in this traditional real estate industry. I often add value by asking questions and by discussing defense against possible land mines.

We got off track a little talking about "filling out a contract". I am sure that your Buyer Representation Agreement discusses your obligations and fees. 

Yes, After 18 years, I had to leave a big major brokerage firm because they would not change.  They told me that rebates were illegal. NOT.

I get paid 90% of transactions that I work on, instead of the 25% close and funding rate of my agents. (once had a seller commit suicide a week before closing because he did not want to sell. Did not want a divorce. That is true.)

I can go on and on and on........


Oops correction .. meant to say most agents get paid only 25% of clients they work with.

I've been thinking about this some more...and I have a nearly obsessive habit of looking at such situations from the consumer's perspective and evaluating how I would have reacted under a similar situation.

So I'm picturing my son telling me that he's writing an offer on a house and the real estate agent wants $50 upfront to put it together. If I (as Mom) have any experience with real estate agents, I know this is unusual. It also occurs to me that the son mentioned it to Mom, so perhaps he thought it was a bit odd as well, but wasn't willing to fuss about it. 

Anyway, if I'm Mom, and I'm aware that most agents work on a 100% contingent basis (and there's nothing wrong with that - it's NOT the same thing as working for free), I'm certainly going to be curious why this particular agent is charging $50 on top of her contingent fee when no one else does. 

If my son (or the agent) has no compelling answer for me, I'm probably going to react similarly to how Mom did in this story (well, I wouldn't because I'm not a control-freak, but let's just pretend I am) - and tell my son to save his $50 and go elsewhere. 

So, what could an agent say or do to be compelling enough to assure Son and Mom that the $50 is money well-spent? 

Well... as Erica described... she could truly have something special to offer - a higher level of expertise or a demonstratable (sp?) higher level of service. 

Or, as Glenn, William and Lester mentioned, that $50 could be considered a "sharing the risk" arrangement in that the buyer takes a little risk upfront for a bigger reward at closing (invest $50 to make $150).

While I'm sure some agents can pull off "selling" upfront fees without any real corresponding benefit to the client, most of us cannot. Therefore, because we ARE trying to change the way real estate service is provided (and paid for) we MUST create a win/win for both parties. Perhaps in the future, it will be the norm for real estate service to be paid by fee and we won't have these debates, but today, for us to just say "I charge $100 upfront just because that's my business model" may very well chase away customers who, in my opinion, shouldn't pay a fee they don't have to pay elsewhere if they don't feel they're getting anything of value for that fee.

Yes, it's about value and the PERCEIVED value that a consumer/client has of your services. If you do not differentiate yourself from the crowd, there will be no reason to pay you differently. Period. That lowers us all to the level of stock clerks or order takers at McD's. We're all replaceable with the next agent in line behind us, right? NOT SO but the public doesn't know that! We have to teach them/show them we are not all alike. 

This has already been beat to death, but I'll add in my 2 cents anyway.  

Bottomline, Carolyn was NOT practicing ACREs style consulting.  She simply wanted to get paid upfront for her time and if the deal went through, she would get paid the traditional fee with the upfront money 'refunded' (in other words, included in the commission).

This is clearly not offering a value-based upfront fee compared to traditional commission.  In fact, this is simply trying to get the cake and the icing all rolled up in one.  If it doesn't work out, the agent is paid.  If it does work out, the agent is paid more.  Definitely not a value to the client.

Now, we have 2 agents that are of the mindset that "consulting doesn't work"  Carolyn and her boss, who has already 'outlawed' consulting in the office.

I think this shows that more focus on education in the model is needed.

Roger - I agree... but I'm thrilled Carolyn took the first steps toward implementing consulting! It may not have worked quite right this time, but I think this has been an extremely valuable discussion.

And speaking of "beating to death" the new ACRE Designation Course WILL address this issue over and over... that what we're teaching WILL NOT WORK if it's not perceived by our customers as being of benefit to them. 

I have not stated that I am of the mindset that consulting does not work.  I do believe it does, simply because there are many agents outside of our area that practice it, if what people are posting is true...which I would believe it is.

Basically, I went about the explanation wrong.  In our contracts we do have a place where transaction fees can be added.  So, I would have placed that $50 fee in that section. 

Also, I'm not sure where I would have been paid more as I would have returned the $50 fee to the son. 

So that everyone knows what the offer was...$40,000.  Based on my commission structure I would have made less than $700. 

I still wish to make the consulting structure work and I am still going to try and figure out a way to see if I can somehow implement it.  I may not be able to do it immediately, but I still might be able to show my broker that it can work. 

I have read some very interesting and creative ways to do this, but maybe because our homes are not priced very high, this may not be a structure that can work...just not sure yet.

But it is not only education that is necessary. There is a need for a more stable system in how consulting is conducted. The training has to go beyond just saying I'm using a consulting model that I believe is transparent and has a payment option different from what the traditional model offers.

Did Carolyn really know what the caller was asking? Did she take the time to probe and listen intently to the caller's anwser? Did she ask any question that would have revealed there was someone else helping him make the decision. Most people I discovered are never making a decision on thier own about any purchase. A question like: "So  are you available to do the contract now or are there others you will need to consult with before that happens? 

As professional we should first learn to build rapport before we feel the need to jump out their trying to prove that we are such experts in a field that has been reduce to a commodity in the eyes of the general public.

Yes education is needed, but we also need to learn how to demonstrate to the customer how the model works for them. If you are not setting down with them showing them how the flow of work take place and how the cost are applied and utilized in their best interest--it will never register properly for them. This is also necessary to keep a broker on board if you are a salesperson.

Carolyn is on the right track - good job! If this thing is ever going to work, then the ACRE designation itself must be enough differentiation to justify fifty bucks, or whatever.  It all depends on how you present the difference from the other agents and models.  See any problem with a dialogue like this?

“I am so glad you contacted me.  What I need to tell you is that in addition to being a real estate agent, I am a real estate consultant, an ACRE, which means among other things, that I am dedicated to only you as a client should we work together.  Other agents will be happy to “fill in the blanks” to “make an offer” and that is fine.  In reality, however, you are proposing to enter a purchase contract, and as your consultant, I will take the time to discuss the legal and market aspects of your potential purchase.  For that extra point of view, or service, I charge $50 up front for my service, which is refunded to you should your purchase be successful.  If you would like to proceed with me as your consultant, then let’s meet to prepare a proper potential purchase contract on this property.”

Of course, the client saw the value in this case.  Seems to me the only task is to explain it to Mom (and the broker.)  Change requires a constant effort

So much excellent discussion here. 

A couple more thoughts ...

This situation is not much different from what we probably all experienced the first time we went on a listing appointment. When the time came to discuss our fee, we may have stuttered and stammered and sent a clear message that we weren't quite sure of ourselves and our value, but the more experience we got (both in interviewing to list homes and actually listing homes), the easier these conversations became. As we gained confidence in ourselves and our value, the right words came, and perhaps more importantly, the right demeanor. 

I think I told the story on a previous thread about a friend of mine whose franchise charges a $195 administrative fee on top of the listing commission. There is absolutely NO benefit in this fee to the consumer (and therefore many agents balk at charging the customer and pay it themselves), but my friend had a confident-enough demeanor to pull it off. I'm not sure I could, but seeing her in action was eye-opening. 

I'm not saying I agree with the concept of an admin fee, but she had her rap down to the point where it was simply a non-issue during her presentation. But you know what? I bet the first time she presented it, she was nervous and unsure... 

I have also found out more about this particular mother.  It seems that she was already angry with our office because two other agents in the office had not agreed to work with her.  From what I understand is that she has been very unpleasant to everyone and that based on her comments and attitude, the other agents simply said that they would be happy to refer her to someone else and I am guessing (since she called our office back) that those agents that were referred did not want to work with her either. 

It's a big long story that starts back from a couple of months ago, as it has now been explained to me.

My belief is that I picked the wrong person to start my consulting with.  Based on the information I now have, nothing would have worked with her.  She was angry with all of our agents because no one else in the office was willing to work with her.

So, again.  I am going to keep on researching and learning and do think that eventually I can use the consulting model.

You hang in there Carolyn and don't be discouraged. Remember that it took Edison 99 failures on the light bulb before he got it. I dare say that it will not take you that many.

The MOM had the perception that your office is a bunch of agents. Carolyn appeared to be one of those office agents.  Yes, it takes practice to learn and remember the words of our consulting business, however nothing on your website shows that you are a consultant, nor explains the difference.

If we are to stand out from the crowd of agents, then we begin the education before the first meeting. When I meet with a potential client, I always asking if they visited my website and if they actually viewed the links and videos that I sent to them. The consulting website and videos explain much better than I do. We are often pressed for time at the first meeting. The first conversation is about asking questions to determine needs and ..... explaining that the potential client MUST see the important info and videos that I sent by email.

I have a webpage dedicated to a menu of ways for "Buyer Help". (Notice I do not call it Buyer Services"  I do not service clients, I help.

(after thought) Even in areas of low priced properties, if we charge little ($50) for our "Help" then they think little of our help. I would have been inclined to charge $150" upfront and given a $450 rebate at closing.

The OP states the potential buyer had already seen the interior of the property, which sounds like a potential procuring cause issue. Was that addressed at all during the discussions ? As stated above, you have to be extremely good and other people must know that to get a fee upfront without offering anything beyond what a client can get for free elsewhere. Money is the easiest benefit to give, but hard to do on a $40,000 sale. You really have to get above $200,000 for rebates, etc. to make sense. 6% commission on $500,000 listing can easily be considered to be overpaying. 6% on a $40,000 listing is a bargain considering all the time and effort that will go into it.

We are also in a low price area. Our local average sale is 80,000. I have charged fees to a buyer in as low as a $4000 sale! In that case I charged the buyer a $250 fee to represent him in the transaction, and he was more than willing to pay it. He even wrote me a testimonial at the end that is on my website. 

Carolyn, I think you're still missing the point that several (including me) are trying to make.  You asked for $50 upfront to write the offer and your full commission (minus the $50) if the deal went through.  This was a win-win for you, but not the buyer/client.  What was the incentive for him to pay you upfront if there was no benefit to him?  If there was no discount to the fee he would be paying (the full commission) then any agent was going to get the same pay, whether or not he paid them upfront.

Like Erica above, I too work in lower price range area.  And yes, if you're working in a similar area, you're going to have to work this differently.  Sometimes, if presented right, that can net you MORE money, not less.

For example, I have set a minimum fee of $1500 a transaction (traditional commission setup).  I have worked several deals with buyers where the commission would net less than that and they all have been fine paying the difference.  Why?  Because they knew that the level of service I provide was worth the extra.

After discussing this further with my broker, I am going to have to call TREC.  She now believes that consulting would be illegal in the state of Texas.  I'm goig to call the legal hotline of the Texas Real Estate Commission and find out if I can practice consulting without violating any laws.

For Lester:  I don't have anything on my website regarding consulting because my broker does not want me advertising anything about consulting at this time.  I was getting ready to put information on it, but she asked me not too.  She also wants me to contact our legal hotline with the Texas Real Estate Commission because she believes that the way I want to work is illegal in Texas.  With regard to charging the $150 and rebating the $450...that is what my broker thinks is illegal in Texas...I'll be checking that out.

To John:  The buyer had seen the property without an agent.  The home is vacant and she lives near.  She also knew the neighbors had a key and asked them to show it to her and her son.  The neighbors let her in.  She has not worked with any other agents.  From what I understand, no one has wanted to work with her.

Hopefully at some point I will be able to work this out.  As of right now I will need to continue on the traditional path.  My first step is to make sure that what I want to do will not be against any Texas laws as my broker feels this is.  I'll be contacting the legal hotline to start.   If everything is fine on that end, then I'll need to do a lot more research and learning in order to show her that this type of model will work.  Bottom line:  she still thinks I will drive business away.   

Carolyn I jumped on thinking I might give you some advice, but of course laws vary from state to state. You are doing what I hope we all would do and seek legal advice. Great Job!

Please keep us posted as to what you find out!!!

It is very tricky, how you word things.  Michael was write about not charging for "writing a Contract" or filling out a Contract.

I'm impressed that you are forging through to try to make this work . . .

And, I'm extremely impressed with the intelligent group of Real Estate professionals we are now all associated with.  In any other forum, we'd get some really stubborn and insulting comments regarding the consulting model.  (Because of their closed minds.)

P.S.  Michael was RIGHT about not charging for "writing a Contract" or fillingo out a Contract.  Sorry about using the wrong word the first time.

UPDATE:  I've spoken with the legal hotline and I can "rebate" a buyer as long as I have a BRA and the "rebate" is shown on the HUD as a contribution to the buyer's closing costs.  I'll need to get approval from the lender as well then.  I don't think most lender's would have a problem if I contributed a portion to closing costs.

With regard to charging fees:  That one was a little more vague when the attorney explained it to me.  If I charge a fee, I have to be able to show what services I charged the fee for...so I am a little unsure as to what she meant by "show."  Do I make a list of the services, do I need to have proof of what I did for each service?  I'm not clear on this and am going to call them back and speak with another attorney to see if I can get a better explanation.

THANK YOU Carolyn!!!! Please do keep us updated on what you find out... I'm thinking this little episode with your buyer might be the best thing that could have happened to you! 

What's a BRA - an agency agreement? If so, I wonder why you'd have to have that in place... could you not offer rebates to buyers with whom you do not have agency with? 

With most states they look at the real estate process in the traditional sense--most services an agent performs is settled at the end of the transaction. When you perform a service for, let said helping your client with and application for their mortgage. Well in that process (in some states) an agent was allow to be compensated as long as the relationship with the lender was disclosed in advance and the client was aware of the agent receiving compensation. Now, you just couldn't get paid for just referring someone (could be considered a kickback)--had to perform a definate service in order to get paid.

Just to add my 2 cents to the conversation.  Yes, I know... late to the party.  I don't introduce my buyer consulting fees over the phone at all.  I call this the "mailing a haircut" syndrome.  Buyer's don't expect to have to put any skin in the game as they are well aware their agent will be compensated at closing.  Rather, on the phone a simple "Yes! I have a great buyer consulting service that will enable me to assist you in purchasing your dream home! Would 10a or 2p be better for you to meet at my office?"

Next, I would also not recommend making it a requirement that a buyer work with you on a consulting basis when they have so many others willing to write up an offer for free (Of course this lady might be the exception, lol).  Had you written the offer for this nice young man, and realistically we are talking about less than an hour of your time, you would now be his Realtor and possibly earning compensation on the next house.  Mixing traditional brokerage services with consulting services is proving to be the right formula for success here in my market.  

My final comment is regarding Washington State law which stipulates a Realtor cannot just write an offer up without providing other real estate services as well. Otherwise, they are practicing law without a license.  However, from a consulting perspective, only writing an offer is a lot like only giving a seller MLS.  If you're going to write an offer without doing a market analysis on the property are you really consulting?  I don't think so. If we are going to work for FSBO's we need to have a systematic plan that results in the high probability of a successful outcome for ourselves and our clients starting with the initial phone call, the presentation, written agreements for a full understanding of what we are providing (attoney approved), etc.  I too applaud Carolyn for her assertiveness but I don't blame her broker one bit for being concerned about his broker's license.

Yes, the BRA is the Buyer's Rep Agreement.  In order to give a rebate I must represent the buyer and the only way to do that in Texas is by having that agreement signed...otherwise I still represent the seller.   I usually try to have the buyers sign one anyway and most of the time they don't mind because they want to have someone representing them during the entire process.


Ahhhhh... because it was your listing - that's why you would represent the seller? Or is Texas still a subagency state where all agents represent the seller as the default relationship? 

Sorry to ask so many questions - just trying to get a handle on the big picture. 

Yes, we still have subagency here.  I used to sell real estate in Tampa in the 90's and would have people sign BRA's.  The company I worked for did not take listings.  So, when I got to Texas I was surprised that the majority (at least in my area) don't use them.

Wow - I didn't know subagency was still around - I assumed it went out in the 90's!!! 


If you do not write a contract, but let the buyer write the contract and you do NOT represent the buyer ... you can charge an advisory fee (hourly or monthly) if you do NOT write the contract, but just give advise. I have a SEPARATE DIFFERENT CONSULTING CONTRACT for those clients who I do not represent in a transaction and do not write the contract, and who just want advise

I have not yet given a rebate to a home buyer, but have done some research. As I understand it, residential rebates can only be used for loan expenses, such as

paying down the loan amount.

Buying loan points

Paying loan origination fees

Since commercial real estate transaction are not regulated by FNMA and GNMA, rebates are not a problem.

In Texas, to advertise that you give rebates, all advertisements (digital or paper) need a hedge clause that says "Rebates are subject to consent of represented parties." If Texas agents represent buyer and seller, then seller must give written consent to the buyer receiving a rebate from broker. The buyer offer to purchase can be contingent upon receiving the rebate.

If I represent the buyer only, then seller rebate consent is not required.

In both residential and commercial transactions, the special provisions paragraph should say that broker is giving $X to buyer. (I do not use the word "rebate", because it is obvious that money from broker to buyer is a rebate)

On the HUD closing statement, it shows as a credit to the buyer

On the BRA (Buyer Representation Agreement) I have language that says

Compensation : The parties agree that Broker will receive a commission from seller, seller agents or other brokers. Upon Broker receipt of those commissions, Broker will rebate ______________% to Buyer, to the extent that it is permissible by law, title companies, lenders, and governmental agencies. Rebates are subject to consent of parties represented.

Buyer will pay Broker start up engagement fees (not refundable to buyer) in amount of $__ which ( check one ) will --- will not be credited to Buyer at closing when Broker receives commissions.

Additionally, I take listings and give $4 discounts for each $1 that I get up front. OR can do 6% listing with no upfront start up listing fee (minimum $4,000 fee)

My broker requires that I use the TAR form for our Buyer Rep Agreement.  Under compensation it specifies that although the broker will seek payment from the seller, in the event that the seller refuses to pay broker, then the broker will receive payment from the buyer. 

So, I believe that I would need to put the explanation regarding a rebate into the Special Provisions section of the agreement.  I don't particularly like the paragraph that explains the source of our commission in our agreement because it always scares the buyers when the read it.  Once I am done explaining how the process works, they usually feel better about everything, but I do wish it wasn't written like it is. 

I am trying to come up with a rebate program that could work well here.  Right now, my broker won't let me charge a fee on anything because she still believes that both buyers and sellers will just go to another company if I do.  The biggest fear being that she and her husband have worked hard to bring our company from nothing to the top listing and selling agency in town and second in the county.  I do understand their feelings, but I am trying to think of a way to implement being able to charge some sort of fee without the prospective client running down the street to another agent and saying that our company charges a fee to do anything.

Lester - that is good, except if you perform an Offer on-line for the HUD homes.  In THAT case, the consumer isn't allowed to enter their own offer on-line.

I have never in 17 years helped anyone with a HUD home.

I have never done it yet either (after 30+ years) but I figured it was time for me to expand my horizons.  :-)   Besides, I think I may want to try to do this for myself as well.  There are some great deals out there.  I just mailed my application for the NAID number and will have to wait for it, before I can finish enrolling as an agent with HUD.  The process is kinda intimidating, but I'm sure it will get easier with practice.  :-)   I have to think about the fee structure and how to do it with HUD transactions.  Anyone out there have any experience charging Clients for fees related to handling HUD transactions?


This page contains a single entry by Carolyn Shipp published on February 27, 2012 11:43 AM.

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