Home Buying in 60010>Question Details

Srqmd, Home Buyer in 60010

Looking for advice on reducing buyer's agent commission

Asked by Srqmd, 60010 Sat Apr 16, 2011

My wife and I are interested in purchasing a house that is for sale in our neighborhood. It is a new house (2008); our neighbor is transferring jobs. We know the house, neighborhood, etc. What, of course, we'd like to do is save some money on the real estate commission (yes, I know the seller pays, but I know agents do rebates as well). I'd like to have a broker to represent us for 2 main purpose - help us come up with a reasonable offer, and to negotiate the final offer. We don't need someone to drive us around, etc. In my ideal scenario, I would like to offer a broker the following deal. I will pay you $2000 to help us come up with a reasonable offer and help negotiate it. If we successfully negotiate it, I will pay another $3000. I would even consider an arrangement to incent the broker to share any savings below a price we agree on. The main qualities I would be looking for in the broker would be a good knowledge of the market and good negotiation skills. I'm confident w

Help the community by answering this question:

Answers

31
And how much are you paying for advice on reducing buyer's agent commission??
Web Reference: http://www.321property.com
2 votes Thank Flag Link Sat Apr 16, 2011
As I posted earler, I searched for 2008 construction in Barrington zip code and most are in a toll bros over 55 community and then you get into several very exclusive, high end huge home in the $2-3M category. Even a 6M one! Tall grass is nice, I have sold houses in Lake forest and Long Grove over $1M and even NOW high end homes are going under contract. You would be surprised the number of cash transactions in the $2M category and in Lake Forest the good homes sell fast and close to asking price. The wealthy for sure are not hurting and a home that sold for $3M three years ago can be had for $2M, a bargain when you swim in that pool of buyers.

Aside from being a good negotiator, you need someone that has experience in luxury residential communities. Non price negotiation factors like allowing seller to live rent free for one month while transitioning their home goods. Terms and convenience and seller not feeling like he is getting worked over, nickel and dimed is the best strategy. I'm not giving away any more "free" advise. That house could sell fast and you end up in a multiple offer scenario, no kidding!

In short, a non guaranteed $5,000 cap on a probable $25-35K gross commission is not in the cards. I would be willing to buy you a new top of the line washer and dryer $3,000 pair as a closing gift, but not a $30k check.
1 vote Thank Flag Link Sun Apr 17, 2011
In addition, many agents & brokers are willing to write up a transaction and see it to closing for a set fee. However, if they do, you're probably under that fee, especially if you're asking them to negotiate on your behalf.

Also. A agent that's used to doing million dollar deals is also used to making tens of thousands of dollars per deal, so I'm not sure your numbers are going to make them drool in anticipation.

Best of luck,
1 vote Thank Flag Link Sun Apr 17, 2011
I agree with Mack, consultant is a lower standard of care and representation than agency. Car salesman is a consultant, don't confuse being a friendly knowledgeable salesperson with expressed agency care, client interests ahead of our own, confidential for life, A Broker owner for a small firm can do it for free if they want to.

Question for SRqmd, so you going to sell your current house FSBO? Buy and sell discount often applies to save the seller money if the same agent gets the buy side as well as the listing side.
1 vote Thank Flag Link Sun Apr 17, 2011
lela
Correction, a dual agent's first loyalty is not to a seller, read a dual agency clause in the standard MRED 5.0 contract. Both buyer and seller have reduced representation and that might be what this buyer has in mind if he thinks he can save money. Buyer is not party to the listing agreement and has no standing to tell the listing agent to lower his commission to the seller to make a deal work.

Mack, I agree this idea could make sense if the $2,000 negotiation fee was paid in advance regardless of outcome. and the $3k balance provided at closing. Agents are paid a success fee and if this is a one off that goes no where that agent gets nothing. It seems the buyer wants a really good negotiator in order to put forth an agressive offer price and a "good negotiator" can get a deal together perhaps 20% under asking price. To which I would say, why doesn't the seller lower the price to that level and generate a feeding frenzy?

Get a ministerial showing,from the listing agent, sign a no agency waiver and go it alone with the help of an attorney .
1 vote Thank Flag Link Sat Apr 16, 2011
We started UpNest (http://www.upnest.com) to help you compare top agents that compete to earn your business. Since agents compete for you, they offer their very best rates and services. You'll also get to "comparison shop" like you do for all the other things you usually pay for. It's free and there's no risk to try us out, Good luck! Our agents also offer buyer rebates which you can learn more about here: http://www.upnest.com
0 votes Thank Flag Link Tue Jun 21, 2016
if you are so concern on saving the commission, my suggestion to you, just go to real estate school, pay for the class, spend 30 + hour in class, pass the real estate exam and background check, become an agent, keep the whole commission to yourself !!!
0 votes Thank Flag Link Wed Jun 1, 2016
It's a weird question since buyers brokers are being paid by the Seller not buyer!!!
0 votes Thank Flag Link Tue Mar 3, 2015
The seller is paying the commission, therefore it will not come out of your pocket.
Reduction in commission often reduces the quality of performance.
0 votes Thank Flag Link Mon Mar 2, 2015
Right on Phil, each of us should get a $1,000 just for responding!
0 votes Thank Flag Link Wed Oct 31, 2012
If the home is listed in the MLS the commission that is going to your Buyer's Agent has already been determined and you, the buyer, only pay that commission very indirectly, as a part of the listing/sale price. Why would a Seller give away access to 30,000 agents with potential buyers to accomodate 1 buyer [you] AND dump seller representation to deal with you and your "armed consultant". Dream on MacDuff. You plan distorts the playing field. The sale of real estate is typically non-adversarial but you want to hold all the cards, ammo and a sledgehammer. Haven't the banks done enough to satisfy the imbalance. Greed is a dangerous thing.
0 votes Thank Flag Link Mon Oct 15, 2012
I don't live near Barrington, but I've worked all around the Chicago area. All real estate is local, but all agents in Northern Illinois have access to the same data; you just need an agent who knows how to access it an use it. But It sounds like you already have a pretty good idea of what you think the property is worth, so what you really need is a strong negotiator and an agent knowledgeable in contracts; I am both.

I'm an independent Broker-Owner, and I answer only to the law, my clients, and myself. Please include me in your consideration.
0 votes Thank Flag Link Sun Apr 17, 2011
We have been doing business in the Barrington area since 1990 as realtors. We would certainly be more than happy to work with you to obtain this home under your terms. We would be willing to give you a current market analysis of your home of choice (Barrington is not immune to this housing value decline and has been taking a hit in value monthly, not bi-annually). We are not pushy but are excellent negotiators with statistics to back us up.
One question to you: If this is listed in the MLS, and the sellers have agreed to pay the buyer's agent a fee, why are you going about the negotiating in this method? Are they, perhaps, listed at an unrealistic price? Many sellers in Barrington are still thinking that their home is worth what it was worth in 2007. Sorry to be the bearer of bad news, but that just isn't so. Hope you call us,, but whatever you decide, good luck to you!
Web Reference: http://hollyandwayne.com
0 votes Thank Flag Link Sun Apr 17, 2011
Thanks to all who supplied answers/opinions/advice.

First, to answer a few questions that have been posed:
@John: I am not planning on selling my current home in the near future (this will not create a financing issue). I also appreciate your many thoughtful points made in your posts.
@Lela: I don't think "scrimp" would be an accurate definition of what I am trying to do. I think it would be likely that the agent/broker representing me would likely be compensated at a rate of a few hundred dollars per hour. Sure, there are no guarantees in life, but I am willing to pay for good/great service.
@HollyandWayne: yes, this home is currently in MLS

From this discussion and talking to a realtor friend of mine (who does not know this area), it seems that I am leaning in the direction of talking to a few agents to see if they would be open to a creative structure. I fully value the knowledge and expertise of a professional real estate agent - that's why I am heading down this route rather than going it on my own. I know there can be unforeseen things, but I do believe I am in a fairly unique set of circumstances where I would like the help of an expert and am willing to pay for it. I am a free market believer and believe that people deserve to be paid for services. My main starting point in this is that I likely need much less services than the usual circumstances and have a very high chance of getting this deal done if I get the right help. And given the price range ($1M+) it seems like there is plenty of value to be had for an agent outside the traditional model. I've already got a reasonable set of recently closed and still open comps.

So I will call around to a few places to see if anyone has the interest. I definitely do NOT just want the lowest cost service. I realize the agent can save me on the final price, lead through the mechanics of closing the transaction, etc. If you have expertise in the Barrington area and would be open to this type of transaction please let me know and I will reach out to you.

Thanks again to all posters - this has been extremely educational for me.
0 votes Thank Flag Link Sun Apr 17, 2011
I am a broker owner and can work on any commission I want. I have a similar program with FSBO sellers where I charge flat fees for certain services on a consultant basis. I agree, this is not a typical situation and you can save money while still protecting yourself. Contact me and I would be happy to discuss with you.

Suzanne Hamilton
Independent Broker Owner
RE Marketing Consultants
888-788-9544
suzanne@remarketingconsultants.com
0 votes Thank Flag Link Sat Apr 16, 2011
Well, Erica, personally, I'd stay away from the "consultant" angle.

Our license is as a salesperson and/or a broker, not as a consultant. Certainly, we consult, but is an adjunct to our primary service, which is to broker real estate. I think that holding ourselves out as a consultant would require a very specialized agreement, and our managing broker would of course be responsible for our actions as such.

But I think a buyer brokerage agreement, where the up-front fee is (x), the fee on closing is (y), and the remainder from the co-brokerage is rebated to the buyer, fits pretty neatly into what we're already doing.
0 votes Thank Flag Link Sat Apr 16, 2011
All commissions/fees are negotiable. What you are looking for is a CONSULTANT more than anything. Find a broker in your area willing to be paid on those terms. I can tell you I have done things like this, and it is not unusual to find a broker willing to do this. However, I would request a retainer up front for my time invested even if the deal does not close.
0 votes Thank Flag Link Sat Apr 16, 2011
John, you're absolutely right (again).

I don't want this to be a secret, but whenever I have a seller that's confronted with a lowball offer, and they're feeling discouraged, I remind them that we can lower the asking price to EVERYBODY, to see if somebody is willing to pay more.

And I don't know if $2000 is the "number" or not, but I think we are going to see more and more buyer brokerage agreements that have a front load to them - I'll show you houses and write your deals for, say, two thousand up front, and then you can keep a piece at the back end or so. I'm not saying it will sweep the nation, but it might stop being remarkable.
0 votes Thank Flag Link Sat Apr 16, 2011
John,
In theory, a dual agent represents both, but it is human nature to look out for the one you have the relationship with. The law states that you have to be truthful with both parties and not violate their confidentiality--not necessarily be impartial. I'm sure many agents can and do represent both parties well, but this is not always the case. I would not want my agent to represent both parties, but that's just me.
0 votes Thank Flag Link Sat Apr 16, 2011
You know, this deal isn't half bad. $2000 to sit down with the client and craft an offer, $3000 more if it closes, and a potential bonus at the end.

I think this is a pretty good format for a buyer who, for whatever reason, didn't go out homesearching with an agent from the beginning, found a house they want to buy, and wants their own representation. The numbers can vary, but it's basically a good idea.

I've always felt that bringing in a "hired gun" to negotiate a one-off deal was awkward - the agent's not fully invested in you as a client, they don't want to take chances on your losing your dream house, and they're pretty sure that if this deal falls apart, they won't ever get paid, because you're not likely to use them to pursue the next property!
0 votes Thank Flag Link Sat Apr 16, 2011
I understand where you are coming from in wanting to save money. Everyone wants a bargain in this economy. But are you sure that you want to scrimp on the agent who represents you in such an important investment? We Realtors make it look so easy, but in reality, we work very hard--especially in this market. I often spent several hours pouring over comps trying to find the best price for a property. We spend hours on hold with attorneys, mortgage people, appraisers, inspectors, to say nothing of our gas for multiple trips to the house. Just the "normal" deals are complicated. I would be happy to represent you, as I have lived in the Barrington area since 1983, and sold Real Estate here almost that long. I can't discount my fee, but I can assure you that you will be getting a bargain with me. I am thorough and also have a network of service people for anything from flooring to painting to housecleaning.
Also: Dual agency is not a good idea. The listing agent's first loyalty is toward the seller.
0 votes Thank Flag Link Sat Apr 16, 2011
I'm willing to do this. I do need clarification on a few points, but I am willing to do this in principle. And I understand what you are saying: most of the work involved for a buyer broker is driving around trying to find something, so you want a discount since that part has been taken care of. You only need the agent help you negotiate, explain the process, make sure things in his control go smoothly, and to visit the house maybe 3-4 times between now and closing. I am as strong a negotiator as you want me to be... to the point of where I want my buyers to be willing to walk away from a deal cold, so I will need to understand how much you want the house so I know how hard we should negotiate. Give me a call and we'll talk about it. 773-368-5614
0 votes Thank Flag Link Sat Apr 16, 2011
I was correct about newer construction in Barrington being high end price wise. I looked up all active homes in Barrington built in 2008 and most in toll bros, Woods of South Barrington that go for 450-900k. Several in Barrington village and tall grass in the over million category. And even some in the $3-6.5M category. Call the listing agent directly and see if he is authorized to do dual agency and you sign the dual agency approval. If not ask listing agent for "no agency" ministerial acts waiver to be signed and have an attorney write up the offer.

Most managing brokers would not go along with your proposal and it is not up to the agent to accept reduced commission on behalf of the brokerage.
0 votes Thank Flag Link Sat Apr 16, 2011
Debated for a while on even if I should respond to this. Many answers below I do agree with. However, it seems to me that if you are so concerned with saving a commission, that maybe you should not work with a Broker/Agent at all. Go directly to the Seller's Agent or Seller is if the house isn't listed. Tell them you know everything about the house & would love to buy it. You are asking for expertise, that comes with a certain fee. A GREAT AGENT will save you a TON of money, time etc while negotiating a property, so that extra commission, you don't want to pay, will be worth it. Good luck.
The Marie Souza Team - Top Selling in Cape Cod
Phone: 508-790-2000 Fax: 508-790-4005
info@mariesouzateam.com
0 votes Thank Flag Link Sat Apr 16, 2011
I'm familiar with the Barrington area if you are buying in 60010 where the website indicates you now reside. I've been selling Real Estate in Western Lake County for 22 years and presently manage 4 RE/MAX offices including Long Grove near you. I'd be willing to get together and discuss the type of arrangement you propose. Do be careful not to simply choose the agent who will work for the least amount of money. They may be the least qualified.
0 votes Thank Flag Link Sat Apr 16, 2011
I would gladly take $5,000 on a $150k house in Barrington, however most homes in Barrington are 500-750k and have a 15k plus gross commission shared with the office from 50/50 to 80/20 split. Plus any reductions in commission need to be approved by the sponsoring broker and it is illegal to pay an agent directly outside of the brokerage agreement. I am not going to jail and losing my license for a few thousand dollars cutting my brokerage out of the deal. More than you need to know. In short, it is not your place to decide if an agent is overpaid.

Scenario...
The last two months you work on a project that was really easy, and your boss comes in and says since it was so easy, he wants to pay you half your normal pay. Another analogy. Go to the doctor and say skip the consultation, go right to the surgery I want to save the expense of you Asking me a bunch of questions, I will tell you what I want cut out. Sounds pretty obnoxious doesn't it?

I bet you have a friend or family member in real estate within your ethnic community. Ask them what they think, get your cousin in Lemont or brother in law in Bolingbrook to do this as a favor through their brokerage. Out of area agents, inappropriate to coddle this type of request. I am with Phil how much will you pay each of us for advise? thumbs up to Phil.
0 votes Thank Flag Link Sat Apr 16, 2011
I believe you are going about this in the right way. Being honest and up front with your buyers agent is of the utmost importance. There are a few factors involved your buyers agent will want to discuss with you: price of the home, sellers commission and expected time involved by the agent. As a buyers agent myself, I spend many hours and days with my clients. I know you have located your proposed home, which is only half the battle. What experienced agents and First Team Real Estate have to offe, is more than just writing a contract and negotiating the deal. You are also obtaining legal representation with your transaction. ( In CA ) This can be priceless. Each buyer I work with is different as well as there circumstance, but I do give back to my clients in way of a home inspection, new heater, handy man to fix all the issues, city transfer fees etc... each transaction is different as are the needs of my clients. I think you will have a great relationship with your agent as long as you are doing what it seems you have set out to do, be honest and fair in working out your deal. Much Luck!
Amy Sims
http://www.amypsims.com
0 votes Thank Flag Link Sat Apr 16, 2011
Sounds like you've given this alot of thought as far as what you are willing to pay. I see you do not mention anything about inspection issues, helping with the inspection, atty's etc. This is all part of a successful negotiation you know. Which often isn't as easy as it seems.
I guess you could shop around. Of course I'm curious as well as to what house it is, location, etc.
Feel free to contact or call me if you would like to discuss things further.
Good luck.
Coleen
0 votes Thank Flag Link Sat Apr 16, 2011
The first thing would be getting your own agent. Being neighbors I can understand you wanting representation. You know what you are looking for so I would suggest you start interviewing the agents and asking the questions. I do not know of agents giving rebates. I know agents will renegotiate the commission based on circumstances involved. All parties involved need to be in agreement.
Web Reference: http://www.dlrealestate.com
0 votes Thank Flag Link Sat Apr 16, 2011
You can cwrtainly call around and try and negotiate with buyer brokers in your area, you may get some who are willing to work for a set fee as you are offering. You may also alienate others who will not want to work for limited pay. The best thing is you know what you want and hwat you want to pay, so you can tell them up front and let the agent make their decision if they can accomodate you. In life though you get what you pay for, so by offering discounted pay you can also receive discounted services. The value of a buer broker is saving you money through negotiating the best offer which more than pays for their fee without trying to reduce their commission.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sat Apr 16, 2011
It sounds like you are looking for a buyer broker and are willing to pay that broker for his/her expertise in getting the home at a reasonable price. Nothing is uncommon about your request, except that in the state of Illinois it is assumed that the broker who shows a home is representing that buyer. Is this home currently listed in the MLS? If not, if it is "for sale by owner", this payment arrangement would be welcome by any seasoned agent.
0 votes Thank Flag Link Sat Apr 16, 2011
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer