Home Buying in Raleigh>Question Details

watertravel21, Home Buyer in 27713

Does the listing agent get all the commission if we(buyers) dont use an agent?

Asked by watertravel21, 27713 Fri Aug 9, 2013

I found a property on my own and I think it will work for us. I contacted the listing agent and scheduled a showing. What is the protocol here? I dont need an agent at this point as i have found the home myself and have done all the research by myself. We have an attorney who will be reviewing all our paper work for the offer and the closing as well. There will be minimal paperwork as we will be doing all cash. In this scenario will the listing agent get all the commission? I am planning on asking the seller to less the buyers agent commission from the sale price. That would be fine right?

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25
Yes, they get all the commission, you didn't find it "on your own," the listing agent put it all over the internet so that you couldn't escape it.

They only have to share the commission if a member of their MLS is a co-broker. And, I don't mind telling you that if a listing agent is able to bring a cash buyer who will close quickly, the seller will be quite happy to pay that agent.

All the best,
1 vote Thank Flag Link Fri Aug 9, 2013
"if a member of their MLS is a co-broker" = propaganda. The listing agreement SHOULD state, that the seller will pay a finder's commission to any licensed agent, regardless of their MLS affiliation. Only offering a commission to a member of the same trade organization is not in the seller's best interest.
Flag Mon Jun 16, 2014
Speaking from real life experience, I did just what you are asking/doing!! I purchased my home in Mclean,VA about 10 years ago for $620,000 when the sellers were asking $660,000 for it. I told the listing agent that I am representing myself and I will pay the $620K and that is my final offer. They took my offer.

I told the listing agent to tell the sellers that I do not have anyone represent me- I made sure that the sellers knew that I was representing myself at the closing as well. I paid an attorney $600 to review and help with the transaction and I paid $450 to have the home inspected.

Now as we speak, I am searching for a home to purchase in Cary/Raleigh ( $800-$900K) and I will NOT use any real estate sales people!! I look up the comps, tax value- using Wake county web site, what the sellers paid for the home, the condition to determine what I want to offer.

Also what I have found out in the Raleigh/Cary area that there are many many homes for sale and almost all of them are selling 20-25% BELOW tax value!!
1 vote Thank Flag Link Fri Aug 9, 2013
Rizzo, that's great that the listing company allowed a reduction in the commission (not the listing agents call unless she owns the company) and it worked out well for you. As Alan pointed out..and he's from a different state... that is NOT the norm. Congrats on your new home!!
Flag Wed Aug 14, 2013
Rizzo - If the listing agent agreed to reduce her commission from 7% to 3% that's quite an accomplishment. But not all (and in my opinion not MANY) listing agents/agencies will be willing to do that. They are not obligated to do so... and the fact that you got her to drop her commission by 58% seems a bit odd...

And I don't disagree that 93% is a good purchase price... you did well!
Flag Mon Aug 12, 2013
Alan May,
The listing agent, Tracy, received 3% commission since she agreed to reduce her initial 7% commission!! And 93% purchase price is extremely good/attractive when dealing in my zip code which is 22102! Look up my zip code and you will see what I mean.
Flag Sat Aug 10, 2013
Not everyone is comfortable representing themselves. And anyone can do what you've described... (you negotiated a 93% purchase price)... but that does not mean that the listing agent didn't still receive the full commission.
Flag Sat Aug 10, 2013
I just need to point out to you that in Wake County at least, tax value is NOT always accurate as I have found in many cases. Having spoken with someone at the county several yaesr ago involving with the appraisal process, there are times when this amount is set by a simple driveby..never really viewing the property itself or taking accuratemeasurements. the amount may be set by a simply doing an average of home aroundit. Also, all residents have the right to appeal their tax evaluations and again, what I was told is this typically will always generate a minimum 10% reduction in most cases just to eliminate having to send an appraiser out to the home.
One other thing..the sales price is not reflective of an accurate purchase price. I just placed a home under contract that showed a sales price of $600K in the tax records. What it didn't reflect was the additional $100K the owner had paid directly to the builder for upgrades that he wanted as the house was being built.
Flag Sat Aug 10, 2013
If I found a home and I'm paying cash, how much commission should I pay a agent
0 votes Thank Flag Link Tue May 20, 2014
Yes the listing agent would get all of the commission.
0 votes Thank Flag Link Mon Mar 10, 2014
You exactly right, here is the biggest reason you don't want to use a buyer agent - They don't have any influence on the seller. However the selling agent doesn't, so when you let them have the full 6 percent, and you put an offer in on the low side, what do you think the selling agent is going to say to the seller...............? dah.
And don't let anyone bs you otherwise on here. Human nature is human nature, the selling agent getting 6 percent will come up with a dozen good reason to tell the selling why it's a good offer and they should hurry up and take it.
0 votes Thank Flag Link Mon Mar 10, 2014
Ernie
Flag Tue Mar 11, 2014
Ernie
Flag Tue Mar 11, 2014
fdasdflkst.... Obvious to me you were just exposed to a bad agent at some time. The risk of being accused of something like that and potential of loosing my license is much more in my forefront than making a quick buck. I guess human nature could be assumed right in some cases, but after 20 years of doing this myself, your reasoning does not even come into play.
Flag Tue Mar 11, 2014
Opps, I ment "However the selling agent DOES" and "to tell the seller why"
Flag Mon Mar 10, 2014
I would not make that assumption, how much the listing agent will be paid is based on the agreed contract between seller agent. The listing agent commission is based on her ability to bring a buyer whether you called her or she found you has no impact. Although you have done all the work yourself in terms of finding the property, have you pulled comps?, what is a good price for the house? more importantly you should get an appraisal? what if the house appraisal value is lower than the price you think is reasonable, will you get a home inspection, have you seen the residential property disclosure, Has the property been on the market before and if so how long...etc. Hiring a buyers agent does not impact your ability to negotiate a contract for sale it actually improves it. Best of luck!
0 votes Thank Flag Link Sun Mar 2, 2014
They will get the entire commission. You are also less likely to get any fair negotiating. Don't sign anything from them. Call a Realtor to work for you in the area. It really is in your best interest.
0 votes Thank Flag Link Sat Mar 1, 2014
I understand why that makes sense to you. If there were a buyer agent then that agent is typically offered compensation and you logically conclude that without a buyer agent that the seller can (and should) reduce the price accordingly. However, the buyer agent is not paid by the seller directly. It is paid by the listing agent as an offering to a buyer's agent who brings a buyer and manages the buyer's side of the process.. The commission fee the seller is paying is to the listing agent for selling the house. It is an agreement between those two parties. Unless they have agreed otherwise, the commission the seller pays remains the same no matter if there is a buyer agent or not. The selling agent typically has to work much harder when there is not a professional agent on the other side of the transaction and since the fee is based on the successful sale of the house the listing has earned their agreed upon commission. If the listing agent and seller have agreed to have the seller pay a reduced fee for a sale where there is no buyer agent then the seller is usually looking to save that money and increase their net equity from the sale. So, in your scenario, you are competing with the seller for the money that is "saved" by their reduced commission fee.
0 votes Thank Flag Link Sat Mar 1, 2014
If the sellers agent is the only one involved in the transaction then they typically get the entire commission negotiated with the seller when the listing agreement was signed.
0 votes Thank Flag Link Sun Aug 18, 2013
No,I think this scenario can be and is very confusing for buyers who feel they do not need representation (buyers agent). Many buyers feel a buyers agent will impede them from getting the home at a good price. In fact it's the opposite, the buyers agent job is to make sure you do not over pay. As a savvy buyer which you sound like you are, you are tasked with determining price comparisons and market conditions for the neighborhood 90,120, 180 days out, home inspection and independent appraisal etc. Going to the seller directly is not an option because the seller is bound by the listing agreement to refer all buyers to his/her agent. Now that doesn't mean that you can't have independent representation (a buyers agent) The sales price is what the seller has decided to sell the home for, now the REALTORS commission is built around that price and the net the seller desires. Now if you would have approached the seller prior to the listing date and was a serious contender then this scenario could offer some different options (the seller would be required to give your name as a buyer he/she was working with prior to listing the property and if they sell to you they would not be obligated to pay the REALTOR a commission). It doesn't cost you anything to hire a buyers agent, the listing agent can assist you in submitting an offer, and disclosing all material facts that's it. Paying cash, short closing are all positives for you if you decide to do it alone.... good luck.
0 votes Thank Flag Link Sun Aug 18, 2013
watertravel21,

The listing agent has a contract with the seller and the seller will pay all the commission to the listing agents company as per their agreement. If the listing agent prepared your offer he becomes your agent and the sellers agent..
0 votes Thank Flag Link Wed Aug 14, 2013
Hi Rizzo,

Congrats on your purchase!

It's quite common for the sales price of a home to be negotiable - however you likely didn't save the owner any money in commission, or get that rebated back to you. The listing agent simply took the full commission. Sometimes, although it usually "overprices" the home - the sellers will "build" the commission into their sales price.

People have been buying real estate for years without representation and will likely continue to do so. Most people however don't have the time, energy, or experience to go at it alone.
0 votes Thank Flag Link Wed Aug 14, 2013
I think this has been answered pretty well. To sum it up..the full negotiated commission then would go to the listing company where the listing agent would get whatever proportion they are entitled to based upon their employment contract. The seller doesn't have the option of lowering the agreed upon commission...however, does have every right to at minimum ask for some relief from the listing company if it means the sale or non-sale of the home. Hopefully your listing agent works for a firm that will negotiate some in light of getting both sides.
0 votes Thank Flag Link Fri Aug 9, 2013
A typical listing agreement specifies both a total commission and how much of that is to be offered to buyer's agents. The buyer agent commission offered is usually 2.4 - 3% of the sales price in this area. As a buyer, you have no "claim" on the buyer agent commission even if you choose to represent yourself. You can certainly ask the listing agent to work with you on the commission and you can make whatever offer to the seller you choose and let the seller and agent decide how to respond, but you have no way to force the listing agent to reduce the amount of commission the seller pays if they do not want to do that.

I offer hourly consulting programs that are designed for clients like yourself. You pay me for the services and time you need and I rebate to you the buyers agent commission. You get the benefit of experienced professional service and advice geared toward your best interests, I get the benefit of knowing I will be paid for my time. Real estate buyers can perform on their own many of the chores that previously had to be done by agents, but compensation models for agents have largely remained unchanged. I am happy to discuss how this works in more detail if you are interested.
0 votes Thank Flag Link Fri Aug 9, 2013
To answer your question directly. Yes you can ask. Will the agent and the seller agree? Maybe.

Or maybe the seller would have come down on their price anyway had a someone with knowledge of the market ran the comps and verified the price before offering. Maybe.
0 votes Thank Flag Link Fri Aug 9, 2013
"That would be fine, right?"

No, that would not be fine. The contract is between the listing agency and the seller. They have an agreed upon amount they will pay the listing agency in order to market and sell their home. If there is a cooperating broker (a buyer's agent), there is an agreed upon amount of that commission that the listing agency will pay.

If there is no buyer's agent, the listing agency does not have to pay out any portion of the commission... but the amount the seller pays the agency is not reduced.
0 votes Thank Flag Link Fri Aug 9, 2013
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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Have you considered that you are paying an attorney to do part of the job of a buyer's agent? It would help to know the price point. Obviously, if it is low, the house needs substantial work and the price reflects that, it may be ok not to know everything about the house. However, it behooves almost all buyers to have a home inspection and then to negotiate with the seller. I can't stress enough what a difference it makes when the person negotiating is not emotionally involved. Even though I'm an agent, I'm learning through my own experience that I would NEVER represent myself.

In the grand scheme of things, the relatively small amount of money that you save is insignificant in comparison to the risks.

Good luck with your decision.
0 votes Thank Flag Link Fri Aug 9, 2013
Listing agents typically negotiate a "total" commission, which the sellers pay to that agent regardless of "how" the property sells and if you are using a buyer's agent or not.

If a buyer's agent is involved, typically a portion of the total commission is paid to them by the listing agent in the form of a "co-op" fee. If there is no buyer's agent involved, the listing agent would keep the total commission as agreed. The listing agent is going to get the agreed upon commission regardless - it's just a matter of whether or not they have to share it with another agent or not.

Some listing agreements will have a stipulation that allows for the co-op commission to be saved, should there not be a buyer's agent involved. This would have to be in the listing agreement that was initially signed however.

Everything said, you could certainly "try" to get that commission portion knocked off the sales price, however the listing agent would have to agree to taking a lesser commission.

Hope that helps!
0 votes Thank Flag Link Fri Aug 9, 2013
Yes. Most of the time they do. It's free to hire your own agent so it would be silly not to have one. The seller always pays the commission so get yourself a buyers agent for your own protection!
0 votes Thank Flag Link Fri Aug 9, 2013
The seller may not be able to further negotiate any reduction in the contract with the listing agent, including the buyers agent commission. Depends on terms of the listing contract. What I would have done is signed a contract with the listing agent as my buyers agent, and gotten a full or partial commission for myself at the closing table. But you have to have an agent that has the flexibility to negotiate that type of brokerage. Call me if you need some help at 919-870-2999.
0 votes Thank Flag Link Fri Aug 9, 2013
Listing agent would get all commission. He has a listing contract with Seller for a certain percentage. He/ She will split with buyers agent if there is one, but if there is none like in your case, he/ she would keep it all. Seller generally has a contract with listing agent that does not differentiate who brings the offer
0 votes Thank Flag Link Fri Aug 9, 2013
You have no savings by not using a buyers agent. And it doesn't cost you a dime. Keep in mind the listing agent always works for the seller. If not using an agent your best plan is to get our attorney involved as much as possible. Good luck
0 votes Thank Flag Link Fri Aug 9, 2013
Yes if you use the Listing agent and agree that they can be a dual agent representing both sides of te transaction. But I always recommend a buyers agent to be sure all the documentation is correct and they can also offer unbiased advice on who to use for a home inspector as well as point out to you things that you should look into or further negotiate during the due diligence period. As well as coordinating all the people and items that will make a successful closing. You can always get your own or say you want someone else from the listing agents office to represent you. Good luck and if I can help let me know!
0 votes Thank Flag Link Fri Aug 9, 2013
YES. Actually all the commissions go to the company the agent(s) work for and the company then gives the agent the split commission they agree to pay their agents. A seller agrees to pay the company they list with a commission. It can be anything, let's just say it is 10% for this example (it is never that high though). If there is another agent from another company that brings a buyer then the sellers company gets the 10% at closing and that company then splits with the buyers agents company. So they each get 5%. The companies then each pay their agent the agreed commissions they agreed to, this can be 50% or more to each agent from the agents company. If there is no buyers agent then the sellers company keeps all 10% and splits with the agent that works for their company whatever commission they agreed to.
0 votes Thank Flag Link Fri Aug 9, 2013
You would benefit from an experienced Buyer Broker more than you imagine. Locating the property is one of the easier tasks, Successfully negotiating the transaction, ensuring the financing goes through, inspections are handled properly, and the transaction closes on time are just a few of the many things a buyer broker oversees, and the better ones are worth the commission they earn many times over with the resources they are able to put at your disposal. As is said,"You don't know; what you don't know"

The listing agent does keep all the commission, you aren't their client and they have no agreement whatsoever with you. Their agreement is with their client, the seller. If you decide to represent yourself, Always an option though you'd be making a mistake) they'll end up having to do the work a buyer broker would have to do, though they won't be doing it for your benefit, but rather for the benefit of the seller.
0 votes Thank Flag Link Fri Aug 9, 2013
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