except its not really a "fee for service" (where in the fee varies with the amount of service provided), but a commission based arbitrarily on a percentage of the price

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SITUATION: MOISTURIZED
thor must be failing -

Ummm, why not just hire a real estate attorney for the paperwork at a small fixed fee?

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Think of how stupid the average person is, and realize half of them are stupider than that. -George Carlin

It does happen. It can happen. It is not popular. I'm pretty sure it is not illegal, but I'm no attorney. The RESPA "kickback" rules refer to paying a kickback to a 3rd party like a mortgage lender, home inspector, banker, etc.

Per http://www.hud.gov/offices/hsg/sfh/res/respamor.cfm
If you want to read the actual rule:
http://www.hud.gov/offices/hsg/sfh/res/resp2607.cfm

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-Tim K

Licensed PA Real Estate Salesperson

MILES & GENERALIS, INC. GO REAL ESTATE
20 N. 3rd St.
Philadelphia, PA 19106
215-928-0221 (office)
215-928-0584 (fax)

www.PhillyLoftHouse.com : Loft-style living in a single-family home

www.LoftOn12th.com : A REAL loft in Center City

It's not arbitrary at all. The fee for service, commonly called a commission, is negotiated between the seller and her agent before the property even goes on the market. That fee is generally paid by the seller at settlement, and is split between the seller's agent and the buyer's. Sometimes that's the same person; most of the time it's not. Many agents who find themselves representing both parties in a transaction will take a smaller fee since they're not splitting it with anyone but their broker. While 6% is the standard fee, that figure is highly negotiable, and often a seller and her agent will work out a "tiered" fee system, whereby commissions paid will change based on market activity, the number of days the property is on the market, or who brings the buyer to the table. There are companies who charge a flat fee just for listing a property on the MLS and do no marketing whatsoever. There are agents who list property at 8% and even 10% commission to entice buyer's agents to show their properties first. There's nothing arbitrary about it.

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-ct

Democracy is four wolves and a lamb voting on what to have for lunch.
~ Ambrose Bierce

I bet the IRS and mortgage lenders affiliated with HUD would like to examine this more closely. When a buyer states his assets, how exactly should he account for the funds that are coming from his agent at the table? How should the agent account for the exchange at tax time?

And while agents might not be held up to RESPA scrutiny, we need to stick together on this issue. Our services are valuable and important, especially when shepherding a buyer through to settlement, and to let people undermine our livelihood in the name of competition and innovation would be bad for the whole industry. It's hard enough to find a competent agent in today's environment, in which everyone and their sister has a real estate license. If we allow buyers to pressure agents to undercut the standard, many competent agents will leave the business when the see that their hard work will result in less reward. Eventually the consumer will suffer because incompetent and underpaid agents will start taking advantage of the very people they're obliged to help. What most buyers probably don't realize is that we pretty much work for them for free. We get paid by the seller. We do most of the legwork and we solve all the problems. For us to allow a buyer to turn to us and say, 'oh, by the way, you guys are a dime a dozen, so YOU, Mr. Realtor, have to pay ME if you want to represent me' might be profitable to the consumer in the short-term, but in the long run it will result in more regulation of the industry and fewer ways for people to use real estate to generate wealth. But since people are greedy and stupid and really can't see past the ends of their noses it's not surprising that this issue won't go away. I wonder how consumers who support this arrangement would feel if someone came to their workplace and said, 'hey buddy, I know your job is hard and everything, but you have to start paying your employer if you want to keep your job.'

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-ct

Democracy is four wolves and a lamb voting on what to have for lunch.
~ Ambrose Bierce

A similar thing happened to web and graphic design in the CraigsList era. There are so many people around the world willing to do it cheaply. It cheapens the industry, but the reality is just as you stated - most folks simply see a lower figure and assume no quality or method preservation is lost.

Market forces will ultimately determine the fate of this issue.

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"He taught by example that part of respecting another person is taking the time to criticise his or her views."

--Melissa Lane, The Guardian; obituary for philosopher of science Peter Lipton.

Farewell Eddy Arnold...Make the World Go Away...

MAGIC THEATER
ENTRANCE NOT FOR EVERYBODY
FOR MADMEN ONLY!

I could see that happening: buyers who want attentive and knowledgable service and protection from lawsuits will pay competent agents or attorneys for their services. Buyers who want to save some money and are willing to gamble with the most important purchasing decision of their lives can use a part-time or inexperienced (or shady) agent who will work cheap and only look out for themselves. They deserve whatever they get, just like in any other sector of the economy.

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-ct

Democracy is four wolves and a lamb voting on what to have for lunch.
~ Ambrose Bierce

I don't know if I'd put it like THAT. I'm sure there are many people who had agents that earned 3% or more that would have been just as well off as they had a knowingly shady or inexperienced agent...just because an agent is paid full price doesn't mean that the agent is good.

Most buyers in the market are first-time homebuyers and simply put, they don't know what to expect and if they have a bad agent that isn't acting on their behalf, they won't know any better. A good agent, however, can save you oodles of money...and perhaps save you from buying a house that you really should avoid. So I wouldn't fault buyers for trying to save money...we all try to...it's just lack of experience and lack of knowledge of what agents are actually suppose to do that causes this in my opinion.

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Resident of Fishtown, Moderator of Fish/No. Libs/Kenzo forum, Real Estate Agent-Prudential Fox & Roach

Brooke, first I have to say that I totally respect your opinion and perspective.

But...When we're talking about buyers who demand that their agent pay them a portion of the commission, we're not talking about people who don't know what to expect from an agent. We're talking about people who know exactly what to expect, and who are using that knowledge to their advantage. The worst-case scenario long-term effect of that, in my opinion, will be that real estate agents will need to act more like hourly service wage earners and less like talented and competent commissioned salespeople. Marry this scenario with the proliferation of flat-fee MLS FSBO services like helpusell.com and buyowner.com and real estate becomes just another eBay. Democratized and distilled to the lowest common denominator. This will result in an overall decrease in the quality of service offered, and will end up costing everyone more money in the long run. The only people who will truly benefit are the attorneys who will earn their fees mediating and litigating on behalf of the do-it-yourself buyers and sellers. Of course, that's a worst-case scenario. If you look at services like craigslist and eBay, you'll see there are lots and lots of people out there who are transacting goods and services, and even real estate, without the help of middlemen or agents, and who don't end up in court.

To get back to the original point, about an agent giving a portion of his commission to the buyer: it IS an illegal contribution and a violation of the National Association of Realtors' Code of Ethics. So unless that changes, whether by statute or case law, that's the primary obstacle to the OP's dream of getting cash back at the settlement table, at least from his agent.

__________________
-ct

Democracy is four wolves and a lamb voting on what to have for lunch.
~ Ambrose Bierce

Again, I have no desire to give up money I've earned, I don't support the practice, and I don't want to see the business turned into an agent pricing war....but I've seen NO evidence that this is illegal. If the BROKERAGE plans to rebate commissions, it can easily be included ahead of time on the HUD1 just like a seller assist, seller credit, or anything else. As for the agent/brokerage offering a rebate, this is something that the broker would HAVE TO approve of and is not up to the agents. The "rebate" would be deducted from the compensation paid to the brokerage at settlement so there is nothing to "account for". The agent would be paid his/her % of that amount just like every other transaction.

I'm not a CPA, but what does the IRS care how much you paid for your house out of pocket, what the selling price was, and where the funds came from? The only thing that should matter to them is the amount of interest you will be paying on your mortgage and thereby deducting every year.

I don't claim to be an expert, but I don't see any evidence of what you are claiming. If you can find the applicable section in the code please copy and paste it here. I skimmed through the whole thing and found nothing.

Code of Ethics:
http://www.realtor.org/mempolweb.nsf...ntable2007Code

__________________
-Tim K

Licensed PA Real Estate Salesperson

MILES & GENERALIS, INC. GO REAL ESTATE
20 N. 3rd St.
Philadelphia, PA 19106
215-928-0221 (office)
215-928-0584 (fax)

www.PhillyLoftHouse.com : Loft-style living in a single-family home

www.LoftOn12th.com : A REAL loft in Center City