Incentives in Real Estate
Tomorrow morning I head out for Northern California to spend New Year's Eve in San Francisco. But I wanted to get one last post in before I head out for a few days.
Currently I am having a discussion with a friend of mine regarding the incentives in real estate. For example, the parties involved in a real estate transaction are: the Agent(s), the Seller(s), and the Buyer(s). Below are the general motivations of each:
Agent - Receive the highest commission that he/she can.
Seller - To sell for the highest price possible (unless he/she is a desperate and motivated seller).
Buyer - To buy for the lowest price possible.
The Agent needs to first get a listing from the Seller in order to obtain the exclusive authorization to represent the Seller in the sale of the property. Agent tells Seller the qualities that make him/her the best person to work with in order to sell this property 'quickly' and for the 'highest' price possible. Agent fields a few calls, if they work full time, and attempts to get the Seller the highest offers. However, the Agent has the incentive to receive the commission ASAP. Waiting around isn't fun for a check lying in wait. The Agent then takes the offer from the Buyer, which is lower then listed price, and then presents offer to Seller. Agent then has the incentive to convince the Seller that this is a good priced offer and any counteroffers should be near the offer.
The incentive for the Agent to get the highest commission still exists... but the Agent's need for speed on the commission also comes into play. The fastest commission is not always what is best for the Seller. Often times you will see a Seller receive much less than if he/she had waited to work for a highly skilled and honest agent.
I just thought I'd throw this out there for the hell of it.
