Is This Normal?

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Is This Normal?

Post by DD » Thu Apr 25, 2002 8:13 pm

I just learned of a practice by a local mobile home broker which concerns me. It was surprising at the very least.

The broker in question, whom I had formerly been signed with, has apparently started to add a new clause to listing contracts. This company is now charging its clients a "listing fee", payable at the end of the listing if they do NOT sell the home. In other words, the seller is to pay the broker a fee at the end of the listing if the broker does not sell the property...does this sound right?

I have heard several figures thrown around in regard to this clause. One person I talked to agreed to pay the broker $300 at the end of their six-month listing if their house did not sell. Another person in the same park (but who signed a later contract) agreed to pay the broker $300 a month for the duration of the six-month listing...that's $1800 payable to the broker for NOT being able to sell the house. There has got to be something terribly wrong with this practice!

I'm lucky I guess. When I signed my six-month listing in September, there was no such clause in my contract, and I was able to walk away with no cash out of my pocket. It baffles me why any reputable business would institute such a practice. I've never heard of a realtor doing such a thing. I understand that times are tight and the market is down, but are things really that bad that some brokers have to resort to such practices to make a buck?


Re: Is This Normal?

Post by me » Fri Apr 26, 2002 2:54 pm

that's great! Wow, you can sit on your butt and not try to sell anything and still make a profit? It sounds unethical at the least.


Re: Is This Normal?

Post by rmurray » Sat Apr 27, 2002 4:39 am

Geez.....I thought I have heard it all....$ 300/mo to hold your listing....100 listings....30K/month...better than the way to make money...I would think this might be illegal....probably not....but sure should be...I would like to hear all the promises they make for what services they offer...I wonder how they collect????


Re: Is This Normal?

Post by DD » Sat Apr 27, 2002 8:20 pm

My guess is that they've come up with a new way to generate income in the face of declining sales. If you can't make any money selling houses, how about making money NOT selling houses?

It sounds unethical to me, but it's probably not illegal, as long as they can convince someone to sign on the dotted line and agree to pay them. I would like to see someone challenge it in court, though. I'll bet no judge would be inclined to uphold it. The problem is, the people I've talked to were led by the broker to believe that this is a completely normal practice, so they don't know any different. It's sad!

Dan O'Flaherty

Re: Is This Normal?

Post by Dan O'Flaherty » Sun Apr 28, 2002 2:42 pm

I would run from any broker who says if I don't make my commission I will charge you for not selling. I would tell that broker that his practice is as close to robbery as you get without wearing a mask.

Art Abrams

Re: Is This Normal?

Post by Art Abrams » Wed May 08, 2002 7:26 am

Of course this isn't "normal" established practice ---- but I'll be objective and present another point of view. Just for example, in the park where I live, 9% of the homes are for sale. They just sit there unsold for months and months. Why? -- because people have unrealistic expectations for the sales price of their homes. Meanwhile, the listing realtor shows these homes over and over again to prospective buyers ---- all wasted effort.
By charging a fee, even if the home is unsold, this is the brokers method of putting pressure on the sellers to ask a more reasonable price --- a price based on the market.
Nevertheless, I don't agree with the practice. Realtors are supposed to know that 85% (or more) of their time leads to a dead end. I would recommend checking with the local realtors association to see if this is an accepted practise. Finally, remember that in the good ole USA, this is a land of competition --- if you don't like that broker's fee, switch to someone else.


Re: Is This Normal?

Post by DD » Wed May 08, 2002 3:41 pm

Art - a few points in your argument I would like to address:

[They (the homes) just sit there unsold for months and months. Why? -- because people have unrealistic expectations for the sales price of their homes. Meanwhile, the listing realtor shows these homes over and over again to prospective buyers ---- all wasted effort.]

I'll admit, some people do ask unrealistic prices for their homes. Whenever I see a 10 year-old single-wide listed for $25,000, I have to laugh. However, most people (like me) are just trying to get payoff for their homes. Their sale price is dictated more by the amount they owe on their loans rather than what they think their property is worth (granted, a lot of folks find themselves in upside-down loan/equity situations, which is a risk you run when you buy a mobile home).

[By charging a fee, even if the home is unsold, this is the brokers method of putting pressure on the sellers to ask a more reasonable price --- a price based on the market.]

You know, I've never had a broker tell me what a "reasonable market price" is for my home, and I've never had one tell me that they didn't think they could sell my house because it was priced too high. Brokers don't like to tell you things like that, especially if they know that their commission is going to drive up the asking price of your house even more. They want you to sign on the dotted line, even if they have to do a little fuzzy math and talk a little hype to get you to do so. At least a realtor will tell you what you can expect to sell your house for, and if you decide on a price above what they recommend, you take your chances (and yes, I hold MH brokers to the same standard as standard realtors). If a broker were to tell me "Well, I don't think we can sell your house for what we would have to ask, including our commission...that would be a lot of effort, and quite honestly, we don't expect many results", they know I would have to reconsider my options, and most likely would not sign with them. To the contrary, I have never heard of brokers putting pressure on clients to LOWER the prices of their homes to market value. If anything, they will try to convince the client to RAISE the price, and hence, their commission (even if the broker knows the house isn't worth the asking price).

I would love to hear a broker say to a potential client "I realize that you want to list your house at $12,000 because of your loan payoff, and if you add in our commission, the price would be $14,500, but according to our market analysis, it's only worth $9,000, so I don't think it would be worthwhile for you to sign with us". The day I hear something like that from any mobile home broker, I will truly believe that pigs can fly!

Yes, it is the responsibility of the MH owner to know the value of their property, and have realistic expectations, but it is also the responsibility of the broker not to take the client for a ride. The broker needs to be realistic and honest about what they believe THEY can achieve, and not tell the potential client that they're going to part the Red Sea, when they know they probably can't cause a ripple (which they want to be paid $300 for).


Re: Is This Normal?

Post by augustaga » Thu May 09, 2002 5:49 am

2 quick observations...

Market price has nothing to do with the amount owed or whether or not there is a broker involved.....Any broker who says just add my commission to your desired will cost you nothing is decietful...or dumb...which ever..I would not bother with them any longer..

A professional broker may have some finance tools to help you get a higher price...he/she...should be selling you on convenience, experience and their "tool box" ....Not on the fact that they will get you more than the home is worth...

In this market...dominated by might be wise to wait a while to sell...I know that this is not always possible....You should contact your lender for help...some have excellent assumption programs now..designed to keep future repos down..Good Luck

Carl Davidson

Re: Is This Normal?

Post by Carl Davidson » Thu May 09, 2002 7:04 am

It isn't unethical in my opinion if the terms are disclosed in advance. This give you the chance to choose this broker or use another who does not use this syste,. That's what makes America great.


Re: Is This Normal?

Post by DD » Thu May 09, 2002 10:07 am

Carl, as a Libertarian, I have to agree with your basic point. In my opinion, if anyone agrees to pay a broker any amount of money NOT to sell their house, that's their problem. I personally would never sign such a contract.

However, on the other side of the coin...does it make what the broker does ethical just because both parties agree to it? I mean, I could sign a paper authorizing someone to come over to my house, beat me up, and steal my TV and all of my furniture, but does that make it ethically right for them to do so, just because I agreed to it? I guess my point is that people sign unethical contracts every day, and while they are legally bound to those contracts (and should be, if they don't take the time and effort to read the fine print), does that automatically make whatever is in the contract ethically right?

Anyway, in my opinion, the bigger problem is what brokers are telling sellers in order to get them to sign these contracts. I've dealt with both MH brokers and realtors over the past few years, and there are distinct differences where, in my opinion, there really shouldn't be. Dealing with a MH broker is more like dealing with a used car salesman (and yes, I've had dealings with them too...never talk to one alone).

For example, a realtor will do a market analysis and give you an estimate of what your property is worth before you list it. They will give you a price range for what you can realistically list your property for, and since they want to sell your property as much as you do, they'll be honest with you. A MH broker, on the other hand, will rarely offer such an analysis. They will ask you how much you want for your property, and if the price you give them is out of range, they are probably not likely to tell you so. Unlike realtors, MH brokers deal in volume. How many "trailers" can they move this month (just like used cars)? If they can find someone who's willing to pay twice what a house is worth, they'll sell it to 'em in a minute. On the other hand, I've actually had realtors turn me away from conventional homes because they thought they were priced too high. I believe the big part of the problem is the fact that MH brokers often represent both buyer and seller, so they're really not working in anyone's best interest (except their own). By comparison, a realtor will represent either buyer or seller, but rarely both, so you know they're working in your best interest, and will find you a home you want at a price that's right, or sell your house at a marketable price. Brokers, unfortunately, just don't have that individual concern for their clients.

I know it's a different business, and a mobile home is not a "regular" home, and so on, and so forth, but is it wrong to hold brokers to the same standard as realtors? Is the business of selling mobile homes REALLY that different than the business of selling stick-builts? Maybe it is. If so, someone enlighten me.

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