Home Buying in Boca Raton>Question Details

Johnathan Bl…, Other/Just Looking in Aventura, FL

I have quite a bit of exp in negotiations and some exp in RE and would like to if no buying agent is used can you reduce the purchase price?

Asked by Johnathan Bluhm, Aventura, FL Thu Nov 3, 2011

I have been in corporate negotiations for years and have been part of about 5-6 real estate transactions (family and close friends) and I'm very financially savvy...is this possible I'm reading and I'm not quite sure given all the intricate rules around the RE space as far as brokers, etc go...any advice would be greatly appreciated...

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Marc Jablon’s answer
If you're thinking that you'll be able to negotiate a lower purchase price on a home in Boca Raton in today's market, the answer is, "To some extent." If you are also thinking that you will be able to further reduce the price by the percentage that the buyer's agent would be paid, then your answer is a resounding "No."

That is because the seller's agent will collect the entire commission on the sale of the Boca Raton home you are thinking about purchasing.

Also, bear in mind that the seller's agent with whom you may be negotiating works for the seller. He or she does not have your best interests at heart. So while that Boca Raton real estate agent may work with you to lower the price by some small amount (which is expected in today's market), that seller's agent is not going to work very hard on that discount.

A buyer's agent, who costs you nothing (because buyer's agents are paid by the seller) works for you, the buyer. It is your buyer's agent's job, and also a point of pride, to help you, the buyer to obtain the best possible price on your new home in Boca Raton.

Is your buyer's agent smarter than you? No. Is your buyer's agent financially savvy? Maybe and maybe not. Is your buying agent more experienced that you in negotiating the price of homes? Probably. But most important, does your buying agent care about the seller's feelings or the seller's agent's feelings? No, because your buyer's agent has no emotional involvement with the house in Boca Raton you are looking at and has no obligation to the seller.

Your buyer's agent, who is working for you, is focused only on making sure you get the best possible price on this house in Boca Raton.

And, if for some reason the deal does not work, your Boca Raton buyer's agent is able to locate several other homes for you, thus saving you the time and effort of calling a couple of dozen seller's agents.

In addition, your buyer's agent saves you time and energy because that agent sorts through listings to make sure you're looking only at homes you want to see, and your agent brings you to five or six homes at your convenience, instead of your having to meet with scores of seller's agents at different times and days of the week.

If you're still looking for homes in Boca Raton, consider using a buyer's agent. He or she can help to make your home buying experience much better that it might be on your own.

Marc Jablon, The Jablon Team
Realty Associates
JablonTeam@gmail.com
561-213-6139
http://www.JablonTeam.com
Web Reference: http://www.JablonTeam.com
1 vote Thank Flag Link Thu Nov 3, 2011
Answer: No.

It has nothing to do with your negotiating skills or financial savvy. It has to do with preestablished terms and conditions. Here's how it works:

When someone wants to sell a property, he/she lists it with an agent (the "listing agent"). At that time, the seller agrees to pay x% commission. Generally, the seller agrees that if a second agent (a "buyer's agent") is involved, that the commission will be split among the two agents.

But the important point to remember is that the seller has agreed to pay x% commission whether or not a second agent is involved. If it's only the listing agent, the listing agent gets the full commission (which often then has to be shared with the agent's broker).

So you come in later without a buyer's agent. Unfortunately (for you), that's not saving the seller a penny. The seller has already agreed to pay x%. So you're negotiating from a position of absolute weakness. You have nothing to offer the seller.

The only exception is IF the seller, in the listing agreement, has specified that if the buyer lacks an agent, then the total commission is reduced. That could be included, but very seldom is.

Your question reflects a common misconception, and seems to be the reason why many buyers make offers through the listing agent.

To get a better deal, negotiate on price, terms, and conditions. There are lots of variables, lots of different things you can offer in return for a lower price. Not to sound like a sales pitch, but a good buyer's agent can help you with that strategy.

Hope that helps.
1 vote Thank Flag Link Thu Nov 3, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Johnathan,

I'll be brief and to the point. You handle corporate negotiations, so in other words, you represent an entity buying/selling/trading/renegotiating etc... They come to you for representation and I'm sure pay well for your knowledge and expertise. Being that this is what you do, why would you sell yourself short on your own personal representation when purchasing real estate by not having representation?

You may have been involved in RE transactions in the past but this is a completely different market. You need a professional who is aware of all the constant amended laws and regulations and someone who will protect your interests to the max. Is a price reduction now, worth you having to possibly come out of pocket later? Also keep in mind, if you misrepresent yourself, the only person you can hold liable is yourself.

And Marc is correct, you can waive the representation of an agent or refuse dual agency from the listing agent, but in the end he/she most likely will still get the full commission from the seller. It's actually an even sweeter deal for the listing agent if you refuse dual agency because he/she is now getting paid double commission for half the liability.

Please don't misinterpret this response, I'm just being as straight-forward as possible with you.

Best of luck.
0 votes Thank Flag Link Thu Nov 3, 2011
Jonathan,
There are only two people that can reduce the purchase price. The two principals buyer and the seller.
The agent is only an instrument and is working on behalf of his client. On his own he is incapable to do anything without permission of his principal and without a signed document authorizing it.
Agents that claim otherwise are not playing by the rules.
Remember realtors present all offers t than support the offer to their best abilities. Than shut their mouths and wait for the response.
Does their negotiation skills help in getting their buyer's offer accepted ? Confidence is strengthened by knowledge. A Realtor that is forceful and manipulative usually looses the first round and eats humble pie.
Sometimes being kicked out of the house and told never to return when the buyer's offer gets rejected.
But a soft spoken realtor polite and full of empathy returns to the negotiation table and is successful in putting the contract back on track and getting a counter offer.
So in essence negotiation creates the potential for buyer and seller to agree.
Reducing the price and accepting it becomes the final decision of all parties concerned.
Perhaps you were wondering as all negotiations fail and there is no hope for the deal to be made the realtor may offer to reduce his commission just to break the ice. Does that help? Most of the times.
0 votes Thank Flag Link Thu Nov 3, 2011
HiJohnathan,

I see written in quite a few listings that the bank, who is part of the negotiation, will not allow a commission to be paid to an agent buying for themselves. This would be a consideration for you also. It stink to suffer through all the work and then still not get paid for it.
0 votes Thank Flag Link Thu Nov 3, 2011
Probably not, as the selling agent would then keep 100% of the commision. You might get them to help with the closing costs. But with no representation you will probably pay a higher price and not get as good terms. What you will end up with is an agent who has a contract to represent the sellers not you.
0 votes Thank Flag Link Thu Nov 3, 2011
Getting your Real Estate licence, you'd have to be with a Brokerage to have your licence Active. Until then it is in Inactive Status. Brokerages, either have fees or take a percentage of your sale. Having an active licence means other fees too, MLS, NAR, FAR & local RE Board. Being an agent isn't cheap. Johnathan, have you done the research on what it costs to get your licence? Starting with the Application fee and getting fingerprinted, then 72 hours of class after which you must pass the class test with a 75% score. Then the fees for the state exam, and you must pass with 70%. Not everyone gets through on the first try. Some take several. Depending on the value of your sales, you have to decide if your time and effort and money are best spent elsewhere.

Good Luck! Hope you got answers here that helped.

Genevieve Ramachandran
0 votes Thank Flag Link Thu Nov 3, 2011
Many people think that they could be a real estate agent. There are quite a few part time real estate agents out there now. Those of us who are full time, professional realtors cringe when we find out that's who will be on the other end of the transaction. Can you get your license? Sure! Can you conduct the transaction, including negotiations, as well as a full time, professional? No. Would I ever tell someone who managed their own transaction, or hired a part time agent, all of the things they missed or neglected? Why? What point would that serve after the fact?
0 votes Thank Flag Link Thu Nov 3, 2011
I would agree and disagree (a lawyer that has to represent himself did something foolish to get there in the first place LOL) but yes I see what you are saying...I've witnessed the houses buying process get extremely emotional, but luckily I'm not one of those...once you realize there are other houses out there it makes the risk of losing a house not as emotionally charged...but as Linda said you have to be part of a brokerage to accept commissions and they will get their cut as stated...which brings me to the bottom line question...if you are NOT part of a brokerage how can you be compensated for your own efforts in finding the property, negotiations, etc?
0 votes Thank Flag Link Thu Nov 3, 2011
Also, keep in mind that if you are working under a broker, they will most likely get their cut as well. Are you really saving? Don made some very valid points as well. And remember the old saying, a lawyer that represents himself is a fool. Don't mean to imply that you are a fool, but it is food for thought.
0 votes Thank Flag Link Thu Nov 3, 2011
Sure.

If you're a licensed agent, representing yourself (the buyer), then you are entitled to your share of the commission. So while you wouldn't be reducing the price of the house, you'd be receiving a commission which would offset a portion of the cost.

Lots of agents do that. Some, however, advise against it, noting that purchasing tends to be emotional, not just factual/logical. Sometimes it helps to have a buffer in the form of your own agent. That's a decision you'd have to make.

Hope that helps.
0 votes Thank Flag Link Thu Nov 3, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
I guess I forgot to clearly ask the question...I was wondering if it would be worth while to get my sales associate license...it's my understanding that the commission would be split between the buying/selling agents...but if I represent myself on the buy side if my portion of the split commission would be able to reduce the purchase price of the house...to me it seems like a win-win aside from the selling agent not getting the entire commission (which I don't think should be the case in any scenario)...I have been apart of 2 short sales and 3 regular purchases in the last 5 years...so my experiences aren't 20+ years old but I would imagine getting a sales associate license would boost my RE knowledge sufficiently to be able to know if things are going astray and what to look for as to not be taken advantage of in the process...
0 votes Thank Flag Link Thu Nov 3, 2011
I have to agree with Linda, especially in this market with the amount of foreclosures and shorts sales on the market. These types of transactions are very different then traditional deals. The landscape of the real estate market has changed quite a bit over the last several years. I'm not sure when the last transaction you were involved in. If you have the right buyers agent that posses excellent negotiation skills and has a tremendous amount of knowledge about today’s market I’m sure they will be able to get you a good deal but it all depends on the type of property you are going after.
0 votes Thank Flag Link Thu Nov 3, 2011
You have reduced our jobs down to an very basic level:
While we may not have to volume of knowledge/Information of a Law Degree, we do have a lot of things that we need to know, and the amount is growing on a daily basis.
Some people are overwhelmed.
And just like every position, we have had to serve our apprenticeship:
I don't know of anyone who stepped in and was an instant success.

When a Client asks a question; they expect an answer.

Good luck and may God bless
0 votes Thank Flag Link Thu Nov 3, 2011
Not sure about Florida, but around here the real estate commissions on a sale are set by a contract between the Seller and the Listing Agent. You can try to negotiate around it, but I wouldn't expect much. A lone agent involved in the transaction bears the brunt of the liability, work load, and is unable to share those responsibilities with another licensed and insured professional. The value that a good agent can provide in a transaction is far beyond just some general knowledge of the local market and negotiations. So if you hired a professional Buyer's Agent to represent you, you may get more than you anticipated/bargained for.

This is especially true when a transaction goes south, as they sometimes do. We have an arsenal of tools at our disposal to right wrongs, mediate disputes, and help you make the right decisions.
0 votes Thank Flag Link Thu Nov 3, 2011
If you have some experience in real estate, then you should know how valuable it is to have an agent representing only YOU whether it is for negotiations or just getting through the process to a successful end. There is much more that your agent brings to the table besides negotiation. The answer to your question is yes.
0 votes Thank Flag Link Thu Nov 3, 2011
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