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Question of the Day: What are the Pros and Cons of getting paid at closing?8644

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DanSmigrod private msg quote post Address this user
Quote:
Originally Posted by @Tommy629
Also, if you're having issues closing clients, consider offering payment through escrow. I just signed up a brokerage with 150+ agents with this pitch. Every agent is going to get a 3D tour and when the house sells I get a check cut. Nothing out of pocket for the agent so no brainer there, just my time and in this case the monthly GeoCV fee.


Hi All,

The following WGAN Question of the Day for Wednesday, 6 February 2019 is inspired by the post above from this WGAN Forum GeoCV discussion.

What are the Pros and Cons of getting paid for 3D Tours at closing via escrow?

Best,

Dan
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Chemistrydoc private msg quote post Address this user
#1 Con: House doesn't close with listing agent, but a subsequent agent who has no interest in your services.

#1 Pro: If you can afford to finance it, you stand to earn more in the long run (assuming that the agent pays a premium to pay this way)
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hometakes private msg quote post Address this user
Pro - You get to charge a lot more (this is needed to cover the major con's

Cons -
1. You get a listing that's overpriced and doesn't sell. The seller gives the listing to another agent.
2. The seller cancels the listing as they decide not to sell it.
3. Seller not happy with the listing agent and cancels the listing.
4. Listing takes 18 months to sell (yep, I've had them take that long, normally the seller doesn't listen to advice on price and learns the hard way that you were right in the end and finally lowers the price.
5. Keeping track of when the house goes under contract so that you can ask the agent who the closing agent will be.

Is short, if you want to be paid like a Real Estate agent gets paid, then quit doing tours and become a Real Estate Agent and make more money if you can do it good.
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hometakes private msg quote post Address this user
I forgot to say, you should ask the Brokerage how many listings they got in 2017. Then ask them how many of them closed. You'll be surprised at the ratio of listed properties vs. closed sales. And when I mean closed sales, I mean the ones that were listed with the brokerage that sold and not agents that acted as a buyers agent for a buyer on a listing that didn't belong to the brokerage.
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rzphotoman private msg quote post Address this user
I think a better way to do something like that would be to offer the agents 60, 90, or 120 days payment option for a small additional fee. If it's a hot market most homes will sell within that time frame.
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Tommy629 private msg quote post Address this user
So not every state works Escrow and closing the same. Here in Arizona our contract is with the brokerage and we are paid directly from the escrow agent at closing, so no need to keep track of the closing agent. We simply collect checks in the mail every day. Yes it can take 18 months to sell sometimes and some agents never sell the home and the work was for naught. However, I use this technique to get in the door then upsell different packages that pay upfront. With this approach I now have the ear of 150+ agents with no out of pocket marketing expense in an office that sells 100+ homes that they listed every month. That's 100+ 3D tours every month before any of the up sold packages. It's not for everyone but it does work for us.
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hometakes private msg quote post Address this user
@Tommy629. Just curious, how long have you been doing this arrangement? Most brokerages average not closing on about a third to two fifths of the homes that their agents list. Thats a heck of a lot of 'naughts' to swallow. Are your fee's making up for that or are you only just trying this out recently?

Also, what happens when the seller insists on using the escrow agent that they have used previously and the brokerage doesn't get to refer to the closing agent they normally use (there are RESPA rules where brokerages cannot be the closing agent)?

RESPA RULES
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Tommy629 private msg quote post Address this user
Just since November with this plan, we also live in a very hot market with most homes selling within 60 days and a lot within the first 30. We're right at a 50/50 split between agents that chose to pay up front vs payment at closing which we charge an additional 35% for. 74% of every agent we meet with has opted for additional services that are payed up front like drone footage, virtual staging or landing pages. We also offer full service direct marketing so again at the end of the day its a way for us to get in front of new clients. I suppose time will tell after a year or two.

It doesnt matter what escrow company the buyer picks, the contract is with the brokerage so when the house sells there are instructions on how commissions and fees are paid out and funds transfered. Our fee comes out of the agents commission at closing and is paid through whatever escrow company was used. I will share and upload one of our contracts when I get back to the office on Monday. That might make it a little clearer how we have it structured.
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DanSmigrod private msg quote post Address this user
Quote:
Originally Posted by rzphotoman
I think a better way to do something like that would be to offer the agents 60, 90, or 120 days payment option for a small additional fee. If it's a hot market most homes will sell within that time frame.


How about the price is based on 120 days payment and the agent can take a discount for paying either upfront or within 10 business days?

The pricing is the same - either way - but the positioning is taking a discount rather than paying an additional fee.

Your thoughts?

Best,

Dan
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