Home Buying in 54311>Question Details

West Indian, Home Buyer in 54311

How can I trust my "buyers agent" to get me the best deal when they get a percentage of what the house sold for, not what they managed to?

Asked by West Indian, 54311 Wed Apr 7, 2010

save me??

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9
If you hired a buyers agent to get you the best deal, then I hope you set guidelines to how you would measure your success ... before you got started!

Jimmer
0 votes Thank Flag Link Tue Nov 23, 2010
West Indian,

That would be great. But the seller pays the commission. Put yourself as the seller and I come to you as the buyers agent and say " I just saved my client 50K reducing your net by the same 50K now you need to pay me an additional % not likely to happen.
0 votes Thank Flag Link Thu Apr 8, 2010
Good idea, but.

The problem is in figuring out the basis.

Fair Market Value is defined as the price a willing buyer and willing seller agree upon. The fact that the Seller may have listed the property for 25% above fair market value doesn't mean that your agent "saved" you 25%; the fact that the Seller may have listed it for 5% BELOW fair market value doesn't mean that your agent "cost" you 5%.

I think it is an overstatement to say that we have a "passion" for getting buyers the best deal. We may have passions, but it's usually not about gouging another $500 out of a seller.

In residential real estate where we're helping people buy a home to live in, finding the best home is usually our true passion. Putting that deal together is a very necessary step, but there is a balance between fighting for the "best deal" and having to go settle on another house!
0 votes Thank Flag Link Thu Apr 8, 2010
Thank you all for your very insightful answers. My professional background is from the Quality field (med devices more specifically) and what I sense is that there is a true passion by the buyers agents to get you the best price for your house; but, the the total reward does not encourage this,,,,, long term reputation is positive the more you save the buyer, short term payout is decreasing the more you save the buyer.

What I would like to see is both rewards be positive, i,e. long term and short term...and one way to do this is base the commission not on the total sale price but on the price they managed to save you versus the asking price (maybe on a variable scale based on dollar amount), that way, the more you save me the bigger your commission!

Any thoughts!?
0 votes Thank Flag Link Thu Apr 8, 2010
West Indian,

I am sure when you met with your agent, they sat you down and asked you what your specifications for the home you want to purchase is and based on this information they have begun the search.

Now what constitutes a good deal is up to you. Finding your ideal home at the price you can afford? Getting your offer accepted when you are competing with multiple offers?

If your good deal is based solely on price then get in line. If it is really good the investors have beat you to it with their cash offers and limited contingencies.

If your question is based on your agent asking you to add x amount of $ to the listed price and you think "oh he wants to make more money because the more I pay the more they make" you are mistaken and you will realize this once you have put in numerous low ball offers and none of them get accepted.
0 votes Thank Flag Link Thu Apr 8, 2010
West Indian - If you are interested in getting the BEST DEAL ...then you may want to understand the powerful financial impact of a Seller Funded 2-1 Temporary Buydown. It's simple! Instead of negotiating a standard reduction in price, you ask that the Seller pays discount points at closing to lower your interest rate and payment.
You can learn more about the Benefits and the substantial savings for Buyers at the link below.
Good luck with your purchasing decision!
0 votes Thank Flag Link Thu Apr 8, 2010
We do take a perverse pride in getting our clients a good deal. The more we save our clients, the happier they are, and if they are truly thrilled with our service, they will recommend our services to friends and family.

That's worth more than any potential gain we might get, if you paid a little more. Keep in mind, $10,000 only represents about $250.00-$300.00 in our pocket before taxes. That's just not worth the potential loss in future business.
0 votes Thank Flag Link Thu Apr 8, 2010
Alan May, Real Estate Pro in 60201
MVP'08
Contact
Hi there.

I think Patrick has a valid opinion on most agent's motivation - that they thrive on negotiating a good deal.

He also points out that an agent would have to negotiate the price down considerably in order to really effect their commission. I believe this is the root of your question - is there any incentive for an agent to work harder on your behalf if he will get paid the same anyway? In terms of the income he actually receives from your transaction, no.

The incentive, in my mind, comes from the future potential for sales. If he does a good job for you then you are likely to recommend him to friends and family, thus increasing his chances of future business. If he does a poor job then all hope is lost for future referrals.

The only way he can do a good job for you is by seeking your best interest, protecting you from common pitfalls in the contracts & process, and negotiating the best price possible.

There are alternatives; however, other business models, one can argue, suffer from different incentive problems. Maybe the solution is finding an agent who works on commission but also works for less than others or is willing to rebate money back to you.
Web Reference: http://www.atlistings.com
0 votes Thank Flag Link Wed Apr 7, 2010
A buyers agents job is to get the best deal for the buyer. Many agents thrive on getting that best deal.

An agent does get a percentage of the final sale price, however, the difference in sale price would have to be quite a bit to make a large difference in the commission the agent will receive. An agent could save you tens of thousands in sale price and it would only be a few hundred dollars to the agent.
0 votes Thank Flag Link Wed Apr 7, 2010
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