Also, as someone who will probably sell a home and buy another home soon, I hate the current system. I think the current system creates several conflicts of interest between the buyers agent and their clients. For example, if I listed my house at a reasonable price, but with a 2% buyers agent commission, then I’d bet that very few agents would show my house to their clients – even if it met their requirements and needs.

I enjoy your blog. Keep up the good work.

To do so I charge a retainer and keep track of hours on the fifteen. I’m expensive since the advice I’m giving also deals with their largest investment assets. And I get paid through all the analysis process regardless of whether or not the client decides to move forward.

I put my professionalism on par with an attorney and expect to be paid well. Asset managers, as well.

Either way is fine with me. I throw that out all the time and every once in a while someone takes me up on it.

Real estate is perhaps the only profession where the person hired gets paid only in the event of a successful transaction.

Talent Agents. You don’t get the client a job, you can’t collect the commission. No Salary. Instead you get a “Draw” against anticipated commissions (which are paid out at the calendar years end). If you don’t earn enough commissions to cover your draw you’re out.

As to the meat of the topic. It sounds like an interesting idea. Lots of things to think about.

With the hourly-fee model, there would be no way to determine that before the process starts, and the cost to the consumer would be an unknown. Personally, I don’t like unknowns, particularly with my clients.

No surprises is a good path to take with clients.

I suspect the answer lies in somewhat blanket measures like “a tour of homes = x $”, “writing up a purchase offer = x $”, or something similar to that.

I think the first step would be introducing “per hour” alternative as an option – not a complete disregard of the traditional model. The “per hour” alternative would have to be clearly spelled out.

Sounds like Sean is someone that would take advantage of the alternative model.

What about this scenario: Buyer hires a Realtor on per-hour basis. They write up an offer, proceed to close..but somewhere down the line the deal falls through (title issues, etc.)…. Buyer needs to find another home…. the process starts all over again. Buyer’s costs keep going up. Attorneys have issue with this too – what constitutes an hour? Is a question/answer e-mail an hour? Lot’s of details to work through for this to work well.

I can’t speak for the NAR, but my question holds – would you be willing to pay a Realtor an hourly fee, even if your house didn’t sell, or if you didn’t buy a house?

Also, a lot of people have been talking about the possibility of hourly-fee or set-fee real estate agents… it even seems more fair to agents who don’t work in ultra-wealthy neighborhoods. But the NAR is lobbying heavily for that not to happen, aren’t they?

Say I need to make $6,000 in the next couple months as an agent, and I have three buyers I’m working with. I’m driving around and around showing houses and putting in lowball offers that get rejected for two buyers, and driving around and around and get an offer acceptted for the third buyer.

The first two buyers take up 2/3 of my time and pay me nothing, so I have to get a $6,000 worth of commission from the third buyer.

If buyers were paying for my time, as an hourly rate or whatever, then I might get $1,500-2,000 from each of the first two buyers, and $2-3,000 from the third buyer to equal my $6,000 commission goal.

For an actual serious buyer, willing to buy, a divorced commission makes a lot of sense. It works for the agent because there is no risk of unpaid time.

Thanks for commenting again. Here’s an offer for you – if you are interested, I would welcome the opportunity to talk to you offline or in person about how we could do something like that. If you’re interested, please let me know.

If not, please do keep reading and commenting.

Why shouldn’t the buyer’s representative be paid based on the actual work (hourly rate) and expenses they put in?