Absurd. That's like saying the first rule of marriage is not to fall in love with the fiance.
A home is the stage setting for your life. Ignore that at your own peril.
Clearly, you're more interested in this rather tedious excersise of yours than purchasing a property or even listening to the advice you've asked for. Good luck to you.
As for choosing a good agent, get a referral, or choose one from trulia.com. We're already ahead of the pack because we care enough to be involved, give out advice, and stay on top of what's going on in the marketplace.
Be more positive about the process. The bottom line is that you want to get a place you love at a good price. How much commission the agent makes is not a factor.
2) That's why we use a sliding scale for our rebates
3) Bingo! That's a real problem. The most important attribute in an agent is intelligence. Can you determine that by talking to someone or checking out their Web site? I bet you can.
Lastly, it is a complicated relationship to develop between buyer and realtor because it is based upon trust. That's the real problem: how do you trust someone with your financial information, your personal thoughts, hopes and dreams that you met in a day and it wasn't love at first sight? It's tricky and it's a leap of faith. All I can really say is that I feel your pain. :-)
But that's true regardless of how much you pay - the idea isn't to pay more or less, the idea is to get value for your money. Personally, I'd rather get $20,000 of value from someone who charges $20,000 than get $5000 of value from someone who charges $7000.
My parents have a traditional stock broker: Commission on $25,000 transaction is over $250. I can only reach the broker between about 8:30 and 4:30. If the broker is on vacation or sick I'm SOL. I can't do online trading and I can't get authority on the account. And if I want to buy an open ended mutual fund I'm limited to funds with high loads. Oh...and very limited online information.
Fidelity: $8 trades, online trading, tons of data, 24 x 7 x 365 access to a human, authority on my parent's account, access to thousands of no-load mutual funds.
There is the old way of doing business and the new way and the old way is usually more expensive and less efficient. And of course, the entrenched players resist the change to the bitter end.
A great agent is worth their weight in gold. They will save you money & you won't even think about what they are making, as you'll be so happy with the deal you are about to get. That's the agent you want.
Ask for referrals, check them & use someone whom you like & can get the job done.
It all comes down to finding an intelligent, honest agent you mesh with who first an foremost wants to develop a long-term business relationship with you and not be out to just get a one-time deal. If you read up on the agent and meet with a few you will find this out quick enough.
When it comes to buying a rehab property, find an agent with a background in architecture, construction, or development who can run CAP-rate for you.
Best of luck! There ARE great agents out there. The worst were weeded out by the market.
Not sure how agency works in your State and/or if your agent/broker is also a member of REALTOR..
Depending on the agency agreement a listing agent owes complete loyalty to the seller. (Dual agency is a option but how does that really work?) An exclusive buyer's agent/broker has a fiduciary responsibility to the buyer and in helping them get the best deal- not in getting the agent /broker the most commission!
(FYI I've posted below a link to the agency disclosure form that we must give at first contacat to prospective buyers, sellers, tenants and landlords here in NYS state
Licensed Real Estate Broker & Brokerage
"The Upper West Side's Buyer Broker"
331 Columbus Avenue, New York, NY 10023
Office: 212 721-3301
I just glanced at the paper. Let's ignore for the time being how in the hell he could have coded all those factors for thousands of transactions and let's assume everything is statistically significant. The biggest flaw in the research could be the assumption that some malicious process is at work here. What about the possibility that there is imperfect communication between the agent and the seller that is not a problem when they are one and the same? What about the possibility that the agent is afraid of causing the seller to lose the best offer they will get? Guess what...the one time I got in the biggest trouble with a client was with sellers who walked away from their first offer because they told me they just didn't have the money to bring to the table at the price. When no other offers appeared it was my fault that I didn't tell them how bad the market was because it turns out they really could have come up with more money. They ultimately did a short sale with another agent that they previously hated. So they must have really hated me.
But anyway... the research is on the sell side, not the buy side so you really don't know what effect may exist there. In reality I think the incentives are aligned well enough. If I really was clairvoyant (which Levitt assumes in his explanation) then why wouldn't I hold out for that next better offer that I'm sure is coming in another 10 days?
I'll check out the paper.
There aren't many buyers that don't get emotional about a purchase. Maybe your different. But I can tell you stories of people in tears over losing a home. Even my wife and I kicked ourselves over one home we didn't think we wanted and let it go to a higher bidder.
But if your goal is to get a home at the lowest price possible then you will never know if you achieved it or not because you only know when you bid too low. I think you will only feel successful if you lose several homes before you actually get one.
It also depends upon whether or not you are in a multiple bid situation - you won't get the lowest price possible in those cases but that doesn't mean you will overpay. Much longer discussion.
I think the structure of the business relationship is much less a factor than the integrity of the individual you are dealing with. You can't design a structure that will protect you from an unscrupulous realtor. Perhaps you would be happiest with our 100% commission rebate program where we charge you by the hour. We do offer such a program. But then how would you know if we're not just stringing you along, throwing out lowball offers to rack up the hours? BTW, an attorney or doctor could do the same thing.
All - I haven't seen any good solutions to my original question yet - how to best align agent's financial incentive with that of the buyers. is flat commission the best option? even with flat commission, agent's desire to close the deal fast is still at work and in many cases works against the interest of the buyer.
Checking references from a few highly qualified agents in your area of expertise will likely align you with the perfect agent for your needs.
Chicago Real Estate Artists LLC
Managing Broker & Realtor
I think it's clear that there is a lot of entrenched thinking in this industry and that's why we entered it. And when we designed our business model it was with buyers like you in mind. You have a right to be skeptical. Call me at 312-738-0232 to discuss further or just check out our Web site. You can also request our White Paper that explores the economics of this industry.
- Gary Lucido, President
I'm assuming people act in their own best interest. This is a very reasonable assumption of how this world works and it's been proven many times. If you read freakonomics, you'd know it's empirically proven that agents behave differently when selling their own property vs selling clients' property.
"The impact of an extra $10K on the price of your home is not significant"
that's correct and I'm not suggesting buyer's agent would intentionally want a higher price. However, agents want to close deals as soon as possible, therefore agent has no interest in advising the client to bargain harder (as the market valuation may suggest) when the agent's interest is to close faster and with the added benefit of a slightly higher commission.