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0 pointsdsp12349y ago0 comments

the incentives between the negotiator and client will be perfectly aligned.

I'm not sure that this is the case when talking about such low amounts.

Taking hints from a similar "agent with percentage", think real estate agents. Unless an agent is working with pretty high level homes, the 3% they are getting is not significantly effected by a something like 20k up or down on a $300k house. It's an extra $600, but often their time is better spent getting the deal closed as quickly as possible for as many people as possible. If that $20k for the client takes an extra few days the haggle, the agent could have been working with another client on another $300k house deal.

In both cases, the thing that throws the agent and client out of alignment is the fact that the deals come through very infrequently, thus from the agent's perspective, they need to keep clients hustled through the door in order to be able to keep their own cash flow going, and working extra hard for a minimal gain isn't going to generally effect future gains. Most engineers would just use the same agent regardless unless the agent was spectacularly bad.

(and there are way more rules for real estate agents than there would be for a hypothetical engineer's agent)

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2 comments · 2 top-level

mindslight9y ago

A better compensation structure would take into account that the majority of the price is a given, and compensate say 30% of the price over $270k.

But that would require realtors to give accurate and competitive assessments of property values, distracting from their primary hustle which is getting their client to sign an exclusive contract.

bryondowd9y ago

Could still be room for a win for people who are just exceptionally bad negotiators. Non-confrontationalists who can't bring themselves to ask for more and the like. Basically, a half-assed job by a professional, minus a significant cut, could still be significantly better than just taking a first offer or meekly saying 'Is that the best you can do?' and getting a token 1/2% bump.

Not sure if that would pan out, or that's a large enough target audience. Just a thought.

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