Who should pay the realtor?
Last update: 09.24.2017
Funny question! Buyers often believe that Sellers should pay, saying that the realtor sells their property, and they pay him for this service. Sellers do not remain in debt and assure that Buyers must pay, since the realtor is looking for an apartment for them and checking the documents. What do realtors themselves think about this?
And realtors quietly think that it would be nice to rip off the commission from both. This is aerobatics! If a real estate agent succeeds in this, then he receives not only double material reward, but also powerful moral satisfaction (I am a genius! I am a superstar!).
They don't say this out loud, though. An experienced agent is guided by the situation: if there is a chance to take money from the Seller of the apartment, then he will; there is a chance to take it from the Buyer - he won’t refuse either. It happens that neither the Seller nor the Buyer even know which of them is paying the realtor (secretly hoping that “it’s not me”). How can this be?
ABOUT! This is the real skill of a realtor! And not at all in searching for apartments, and not in checking documents, as many people think. After all, finding a suitable apartment on the Internet using open databases is not difficult. It is better to entrust work with documents to a specialized lawyer, due to his specialized education and practice. A realtor is not a lawyer (with rare occasional exceptions).
But what then is the skill of this very realtor, for which both Sellers and Buyers of apartments are willing to pay him money? The answer may seem surprising to the average person. The number one task of a realtor is to convince the client that without him (without a realtor) he is helpless and defenseless in the real estate market. Then set him a suitable price tag for your services.
For such persuasion, various techniques are used - personal charm, complex legal terms, listing a mass of incomprehensible documents, and simply intimidation (they say, recently one Buyer decided to buy an apartment on his own, and was left without an apartment and without money - hmmm... ). A competently treated client, after such an attitude, begins to think hard, his self-confidence sharply fades away, and in his mind he already begins to calculate how much it will cost him to hire a “real professional” who will certainly not leave him “without an apartment and without money.” .
It is this part of the realtor’s work that is considered key, and it is on this that his fee largely depends. But what about searching for an apartment, checking documents, contracts, registration and all that? The fact is that this entire technological process of buying and selling an apartment has long been worked out and follows a well-worn track. And any literate person can study this process, just like any literate person can go to work as a realtor.
The rules for buying and selling apartments can be studied using the online manual Apartment-without-Agenta.ru
If I sell my apartment and buy another, what should I do? How to organize an alternative transaction - see the link.
But what about the guarantees from the real estate agency, the “legal purity” of the transaction, the responsibility of realtors? After all, in fact, it is the feeling of safety and security in the transaction of buying and selling an apartment that makes clients agree to their services and pay commissions to realtors.
Here is what the famous St. Petersburg notary Alexey Komarov thinks about this (quote):
... The bottom line is that we get the following: judicial practice for resolving conflicts between realtors and their clients has not developed. The agent and agency, in fact, are NOT RESPONSIBLE to buyers and sellers of real estate for the consequences of the transaction.
Comments, as they say, are unnecessary.
We certify the Apartment Purchase and Sale Agreement with a notary. Who needs this and why? About this - in the note at the link.
What to do if the developer does not pay the realtor a commission?
The real estate agency "KVADRO REAL ESTATE" decided to sue the developer "LSR.Nedvizhimost-M" for not paying a commission for the referred client, who eventually bought an apartment in the Grunwald residential complex. In fact, such situations are a sore subject for the new buildings market. RealEstate.ru decided to ask market participants about who is right in this conflict, and how to learn to avoid such financial and reputational losses.
Everyone knows that developers prefer to sell their new buildings in different ways. There are more and more developers who organize their own sales departments and stop using the services of third-party realtors. Some people prefer to enter into an agreement with only one agency on an exclusive basis. But there are also forms of sales when the developer involves the maximum number of different agents in the sales of his apartments, while also conducting sales on his own. The conflict under consideration refers to the latter option. By the way, it is precisely this option that also leads to conflicts between the real estate agencies themselves, who are tempted to compete unfairly. RealEstate.ru wrote more about this in August 2011. Such attracted agents initially find themselves in a weaker position when the conditions in business relations are dictated by the developer. Even when concluding an agreement with a developer, a realtor cannot always include clauses in it that are beneficial to him and guarantee the payment of remuneration. On the other hand, there are cases when a broker brings a client, but then the developer himself works with him, and in the end the question arises: what exactly should he pay a commission for if he did everything himself? And here a lot depends on the terms of cooperation - whether they were clearly stated in the contract or not... However, in addition to the legal side of the issue, which in this case is very imperfect, there is also a reputational component. There are already established traditions in this market. Unwritten laws, so to speak, according to which agreements between the developer and agents can generally be oral, but high reputational risks force them to comply. If someone did not pay someone or performed their services poorly, then this becomes known in the market: bad reputation leads to the loss of a number of contractors, and, consequently, sales.
We decided to discuss the problem from all sides, so we cited not only the positions of the parties to the dispute, but also the comments of an independent lawyer, as well as the opinions of developers and realtors. We must give them their due - everyone tried to assess the situation objectively, regardless of which side of the barricades they were on.
THE ESSENCE OF THE CONFLICT, THE POSITIONS OF THE PARTIES AND THE LAWYER'S COMMENTARY SEE. HERE
OPINIONS OF MARKET PARTICIPANTS
DEVELOPERS
“There is no damage to the developer’s reputation in this situation. The agent only partially did his job."
Roman Semchishin, head of the investment department of the development company TEKTA GROUP:
— The situation that occurred between “KVADRO REAL ESTATE” and “LSR.Nedvizhimost-M” indicates that the developer and the agent did not fully work out the terms of their cooperation.
To avoid mutual claims, the parties need to stipulate in the contract the services provided by the agent and the amount of their payment. Often the developer and agents ignore this stage. The fact that the client bought the apartment through the developer suggests that the agent has only partially done his job, since he receives a commission for referring the client and completing the transaction.
Litigation is possible if the contract addresses such a situation. Then, as a rule, when selling an apartment without the participation of an agent, the developer is obliged to pay the remuneration stipulated by the contract in full, as if the buyer had been attracted by an agent. It is almost impossible to prove in court that a specific agent brought the buyer, especially considering the fact that the apartment that was sold was not the one that the agent presented. There is no damage to the developer's reputation in this situation.
“The situation will negatively affect the image of the developer. He shouldn’t take the matter to court; it’s better to meet the broker.”
Igor Bychenok, head of residential real estate sales service at Hals Development:
“Such situations have not arisen in our company.” In this case, apparently, the relationship with the agents was initially built incorrectly. From a legal point of view, relations with agents are regulated by a client retention system, which guarantees the broker that he will be paid a fee if his client buys any apartment in one of our complexes. In this situation, the developer should not take the matter to court, even if a disagreement arises. A company that wants to continue to operate in the market must always find a peaceful resolution to the dispute. Today, the relationship between brokers and developers does not have established rules; each developer has its own system of work and its own conditions. Most likely, this situation has developed due to the lack of clear regulations for relations with partners. There have been precedents in the market for paying commissions through the courts, however, these are quite rare cases - large companies prefer to make concessions, but not take them to court. Of course, such situations have a negative impact on the image of the developer; if the company does not behave conscientiously with agents, after some time the market will stop working with it.
REALTORS
“The developer’s reputation will suffer, but this will not affect his sales”
Vladimir Kushnarev, director of the luxury real estate department at Est-a-Tet:
— As far as can be seen from the information provided, the realtor learned about the transaction after the fact and did not participate in the negotiation process for the purchase. If so, this is a key mistake - both on the part of the realtor, who “did not have his finger on the pulse,” and on the part of the developer - perhaps even then he decided to remove the realtor from this transaction.
Of course, a lot here may depend on the reputation of the realtor, how large the company is, on the relationship of the developer to the realtor - if the realtor really makes sales and brings in a lot of clients, the developer will not spoil the relationship with the broker because of commissions on one transaction. As for the developer's reputation, it will certainly suffer, although I regret to say that such cases have not yet affected sales at the sites where they occurred.
“The realtor has a chance to win the trial. We already have similar positive experiences.”
Sergey Popravka, director of the legal department of Penny Lane Realty:
— If I were a real estate agency, I would also go to court. We pay maximum attention to every attempt at deception and seek justice in court, and in the overwhelming majority of cases, the courts take our side. Our activity pursues two main goals: to get honestly earned money and to discourage unscrupulous contractors from deceiving people and using other people’s work for free. And I would like to note that, in my opinion, attempts to deceive are becoming fewer and fewer every year.
The agency should also go to court because, by and large, the court is one of the few civilized tools for resolving disputes. Having studied the available materials (I’ll make a reservation right away - I, of course, have not seen the entire case) I can assume that the chances of satisfying the real estate agency’s claims are very high. Just on January 23, the Federal Arbitration Court of the Moscow District upheld the decision to recover funds in favor of Penny Lane Realty from Master-Garant Insurance Company LLC. The situation was very similar to the conflict described. Moreover, we managed to receive not only a commission, but also a fine in the amount of the commission for failure of SK Master-Garant to fulfill its contractual obligations. I would like to note that, in an effort to bring things to an end, we also filed a new claim against the LLC to collect a penalty for late payment of remuneration.
“The realtor could agree to a reduced commission “for the drive” - this is normal practice”
Maria Litinetskaya, General Director:
— We work under an exclusive contract, so we don’t have such problems. However, if the developer has his own sales department, then in any case it’s hard for realtors to work. Our people have such a mentality that it is psychologically more comfortable for them to buy an apartment directly from the developer. And very often they come to a realtor, who shows and tells them everything, and then they go to the developer and buy an apartment from him. All these situations, as a rule, are prescribed in an agency agreement, which is concluded “onshore”. This document states, in particular, that the client is assigned to a real estate agency if he came and looked at the property, regardless of what apartment he looked at. When showing an object, a viewing act is signed, where the client is recorded. Another option is allowed in the contract - if the client came from a realtor and nevertheless bought another apartment in this complex, then he is paid a reduced commission “for the transfer”. It is normal if the client did not like the apartment that the realtor showed him, and he can switch to another apartment. They pay for the client, and in this case a reduced commission is established. The reduced commission is a good compromise and normal practice. It gradually developed in the market precisely because of such controversial situations. The hope of success in court is very slim; it is impossible to prove the fact of proper presentation of the agent in court. And the choice of a different property by a new buyer will most likely be a confirmation of the competent work of the developer with the buyer, who, as a result of this work, chose a different property. But for the developer, such disputes with realtors are risks, since this is a signal to the market that working with this developer is dangerous. Therefore, it is better to negotiate with realtors, and to do this, write down all possible options in the contract.
“The developer did not have the right to give a discount to the buyer on the realtor’s percentage”
Irina Mogilatova, General Director of the real estate agency TWEED:
— In such a situation, we would also sue. Today such cases are actively won. And if the realtor fully complied with the client registration procedure in accordance with their agreement, then he will win 100% in court. We had a similar precedent on the very eve of her bankruptcy: the developer simply refused to pay commissions to the realtor, and we won the case. Another question is that no one returned the money to us, because at the same moment “MIAN” filed a lawsuit for bankruptcy.
In addition, the development company did not have the right to make a discount to the buyer on the realtor's percentage; it had to make a discount at its own expense. We had such a case at a country market: a buyer was faced with a choice of which property to buy, and in order to attract a buyer to his project, the developer offered him a discount. At the same time, he called us and offered to also make a small discount on his commission. This is a civilized way of communication between a developer and a realtor.
In general, many buyers still believe that if they come to the developer, they will buy an apartment cheaper by deducting realtor commissions. In this case, a normal developer must inform the realtor that his client has come to him and pay a commission for the work done. Many people do this, they call us and say: “your client came to us, let him think that he cheated you, we will pay you later.” Therefore, to avoid conflict situations, a civilized developer does not make a difference between a buyer who comes with a realtor and a buyer who comes without a realtor. Otherwise, none of the realtors will work with him in the elite market.
If we talk about some kind of recipe against such stories, then we do not work with developers who do not pay commissions to realtors. And in the high-end market, this is quite easy to figure out. And we always sign an agreement with the developer and follow the entire procedure clearly stated in it.
“Work exclusively and you won’t have such problems”
Yana Sosoreva, Deputy General Director for Sales:
— The reason for this conflict lies in the fact that both the realtor and the developer were involved in sales. Now each side is trying to prove that they are right. In such cases, a struggle for the client unfolds, which can only harm the reputation of both the object and the companies themselves. To eliminate possible conflicts, we work with developers on exclusive terms. We sign the sales plan, and the developer concentrates on construction. Such cooperation is most effective - the realtor studies the project, gives recommendations on it, and conducts a high-quality advertising campaign. And the developer guarantees a fast pace of construction.
Olga Alexandrova The image of the house included in the first illustration above has nothing to do with the events described
So who pays the realtor - the Seller or the Buyer?
For those who have decided to hire a real estate agent, let us tell you that the market has adopted the following default rule. For apartment owners (Sellers), realtor services are free, because... here the agent understands that he is already given an expensive object at his disposal, and how he can beat it without offending himself is his problem.
The buyer is also made to understand that he has nothing to worry about, since the price of the apartment stated in the advertisement already includes all the agent’s commissions, and he will not have to pay anything additional. It seems that everyone is fine, everyone should be happy!
But there is a catch here too! “Free services for Apartment Sellers” is an excellent advertising ploy that pleasantly warms the ears of property owners. But few of them think about such a paradox - what is the interest of a realtor in working for free, because he also does not announce the cost of his services to the Buyer, and does not issue an invoice to him? Only the price of the apartment is announced to the buyer.
This is where the real estate agent's sleight of hand begins. He needs to set the price and organize the transfer of money for the transaction so that both the Seller and the Buyer receive what they ordered, but at the same time have as little contact with each other as possible (ideally, only during the transaction itself, and then under the supervision of a realtor) . Why is that?
How money is transferred when buying and selling an apartment - see the Glossary at the link.
And so that a scandal does not happen. After all, it’s easy to guess that the price of the apartment that is quoted to the Seller and the price that is quoted to the Buyer are different prices. And sometimes they differ very significantly. So significant that if the Seller finds out how much his apartment actually cost, he can cause a scandal (here are the “free services for the Seller”). The realtor’s task is to control the transaction process, to separate the Seller and the Buyer of the apartment into different corners, and not to allow “extra information” to surface at the most inopportune moment.
To be fair, it is worth clarifying that these rules of the game are more often used by small and medium-sized real estate agencies and private realtors. Large agencies (in big cities) can openly announce the amount of their commissions both for the sale of a property and for its purchase. Traditionally, the size of such commissions ranges from 2 to 4% of the transaction amount.
However, we should not forget that agents work in a real estate agency. And these, by their nature, are adventurous and independent people who are not paid a permanent salary (or are paid a symbolic minimum), and they deliberately do this. The agent's main income is a percentage of the transaction he carries out. And this forces them to dodge and build combinations in order to create as much income for themselves as possible. To do this, there are a number of techniques that help them confuse the size of the commission so that neither the Seller, nor the Buyer, nor even the agency itself knows the exact amount of the realtor’s earnings.
But the story about such techniques is a separate story from “SECRETS OF A REALTOR.”
Rosreestr and registration of an apartment purchase and sale transaction - terms, conditions, state duty, documents.
The rules for preparing and conducting an apartment purchase and sale transaction are on the interactive map STEP-BY-STEP INSTRUCTIONS (will open in a pop-up window).
How much do realtor services cost in St. Petersburg?
—The cost of a realtor’s work depends on the complexity of the transaction structure, the price segment of the property, and the terms of the agreement between the owner and the agency. On average in St. Petersburg, realtor services amount to 4-5% of the sale price.
Deputy General Director of the Nevsky Alliance Group of Companies (member of ARSP) Yuri Polishchuk also says that tariffs for realtor services depend on what kind of service is provided to the client. And, of course, on the cost of real estate.
—The lower the cost of housing, the higher the commission percentage. The higher the cost, the lower the percentage. Of course, there are exceptions. For example, one of the most difficult sales is selling a room. The cheaper the room, the harder it is to sell it
, because the cost of the room, as a rule, directly depends on the conditions of sale. Most likely, the cheap room is a former hostel or a room in a densely populated apartment. An experienced realtor understands that there will be a lot of work,” the expert comments.
In addition, the percentage depends on the exclusivity of the rights to sell real estate, adds Yuri Polishchuk.
Managing Director of the NAI Becar Residential Real Estate Department Katerina Soboleva notes that tariffs for realtor services depend largely on the volume of services that the client needs. This includes: collection of documents, professional expert negotiator, display of the object, services for advertising the object, “packaging”, development of promotion concepts and advertising campaigns, support of the payment scheme between the buyer and the seller.
—On average, a realtor’s services for a seller will be 4%
of the cost of the apartment, for the buyer – 2%. Moreover, the higher the class of housing, the lower the percentage will be,” the expert adds.
When a client receives a discount
Since the price of services is individual in each specific case, it is not possible to use the concept of “discount” itself. After all, in essence, this is a discount from a specific fixed cost, notes Elena Ledovskaya.
However, you can still get a discount from a real estate agency. For example, when contacting again (but the client and the realtor must agree on this individually). And also - if the client performs part of the work independently, as an option, he carries out showings of the object.
—The client can receive a discount if he enters into an agreement with a real estate agency for both the sale and purchase of objects. In this case, in total, instead of 6%, he will pay 4-5%, says Katerina Soboleva.
In addition, the cost of real estate can lead to a discount for the client. When a client deals with a liquid and expensive object, he will receive a discount on the commission. The exclusivity of the option in terms of location is also a reason to get a discount.
—An apartment, relatively speaking, with a view of the Neva, historical monuments, or in the “Golden Triangle” is a unique object
, he always pleases an experienced realtor with the opportunity to sell it. Thus, the more interesting the property, the more willing the realtor is to give a discount,” shares Yuri Polishchuk.
In addition, realtors love it when a client comes through a recommendation. And in this case they also provide a discount. Thus, in Nevsky Alliance, upon recommendation, a client automatically receives a 1% discount.
Smart Real Estate
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