In California, the buyer's agent commission is paid by the seller. When the listing agent and the seller sign the listing agreement, both parties agree on a commission - typically between 5% - 6%. As many of my colleagues mentioned, everything is negotiable in real estate. However, generally speaking, the listing agent will advertise 2.5% - 3% commission to the buyer's agent.
Since you found the property on your own, you may request a portion of the buyer agent's commission be credited to you. With that said, most good real estate agents will not agree to a reduction of commission.
Finding a property is becoming a much smaller part of the service that agents provide. The internet has empowered buyers to shop the inventory. In addition, many San Francisco agents will hold their listings open each Sunday from 2pm - 4pm.
The service we provide is much more of a professional consultative expertise. In order to really be at the top of one's game, a good agent will invest in continuing education, effective client education materials and portals, and the infrastructure required to provide the highest quality service.
With all due respect to you as a home owner and seasoned real estate investor, the process is constantly changing. California has a very litigious system and San Francisco has an even great hyper-sensitive to real estate sales. A good real estate agent will save you much more money than his or her commission.
Paragon Real Estate Group
Speaking of insulting the intelligence, don't use San Fran as the name of this City. Five more letters is not a lot and it will not mark you as lacking the class that the City conveys.
Be aware that many many people who are very iintelligent use full service agents to good effect. Many of us agents are more experienced at negotation than the client is and when in a transaction it is very beneficial to have an advocate that is operating for the clients benefit. One can ask for the moon and stars above much more easily when you, the principal, can send in a surrogate to do the asking. Professional, removed from the emotion of rejection and able to fathom the nuances of the reaction of the other side. Smart people use agents to good effect.
You should definitely try to use these 3% as an additional leverage. I am thinking of two options:
(1) Hiring a real estate lawyer who writes up the offer. The offer limits the sellers commission to 3% and asks for a price reduction of 3% ( = buyer's agent commission). Lowering the purchase price by 3% will also save you some property taxes over the years. (You will save $342 per year on a 1M property in San Fran- not much but something!)
(2) You could use a commission rebate/refund company. Just sign up on their web site, submit your preapproval letter and they handle the offer process. Once the deal closes they collect the 3% buyer's agent commission and refund e.g. 2% back to you. For instance, on a 1M property you will get a check of 20K in one or two weeks. Here are two of the bigger, established firms:
PS: Posts like "The agent is typically paid by the seller and there is no out of pocket cost to you..." are an insult to intelligence of educated buyers. Only really dumb buyers would not tap into the 3% buyerâ€™s agent commission.
Why don't you just call your former Agent directly? He or she should be happy to help since you have been a good loyal client. If that is too awkward, then just ask him/her (upfront) to write with offer for a certain commission amount and refund the remainder to you (as the Seller pays both sides of the commission). If that is unacceptable to your former Agent, then contact others. But give your first Agent a chance!
Hire a lawyer or look to the fee for service brokers. Full service brokers can negotiate fees but they can't negotiate the fiduciary service they owe you and everyother party in the transcation. The brokerage has to carry the E&O insurance on the transaction etc.
If you think that you are as knowledgable as an agent and therefore do not need the expertise and protection, then go to the other options mentioned.
If you want the protection of an agent, then go ahead and negotiate. If you did the work to find the property there is no reason why many of us would not be willing to do the remainder of the work for a negotiated amount.
Beware of solutions that no one else knows and also be prepared to point out that although the brokerage fee is paid out of the sellers proceeds it is the buyer that brings the dollars to the table.
I'm a native from the city and work S.F-San Mateo. Visit my personal web site and take a look at my testimonials. I can give you names and numbers from past client who will speak on my behalf.
My entire business plan is "The Art of Negotiation, with the results achieved".
Dave Tap Tapper
Pretty much everything is negotiable in Real Estate, including commissions. However, there is usually a lot more to representing a Buyer than just writing an offer, and once we represent any client regardless of scope there are also liability issues. In my opinion you should be more concerned with your Agent/Broker's negotiating skills and experience in the business than having them reduce a fee that the Seller has already agreed to pay. A good negotiatior will get you the best deal, and a knowledgeable representative will help you avoid getting into a unit/building that may have issues. You also need a representative behind you that knows San Francisco as business is done differently here. I would interview a few agents/brokers and see who is the best fit.
We are happy to provide no-strings consultation. Our contact info is below:
Lance R King/Managing Broker