You have a ton of info here to weed through.
most listing agents/brokers in MA also work as buyer agents/brokers, but the converse is not true.
First- your plan to ask the listing broker to modify their existing agreement with the seller is poor.
If you can't afford the house, don't ask the broker to help you buy it.
Do you ask the gas station to help you fill your tank?
Do you ask your electric company to help you keep the lights on?
What the broker/agent is making on the sale is not your concern.
I am not a lawyer, and it looks like the way you are headed, you definatelyneed one.
(By the way - in MA most lawyers are automatically brokers.)
If you can't afford the house, don't interfere with the contract that the broker and the seller have in place.
Why make this so complicated?
Look at houses you can afford, and quit worrying what the broker/agent is getting paid.
That having been said, when you are buying a property in MA, and you are in a disclosed dual agency situation, you may have more leverage than if you are working with two separate agents/brokers.
No Buyer agent wants to admit that, because they want you to believe that no listing agent is honest enough to allow a buyer to use them , too.
In fact, the same section of laws that protect a customer from a buyer agent, cover a listing agent who is also working with the buyer.
Buyer agents only get paid when you hire them on the buy side.
They are in the business of "Listing Buyers" instead of listing property.
You can beware of them, too.
(Please note: when you choose an answer as a Best Answer, or at least give a thumbs up, it helps those who answer questions here.)
1st off: If you do not have your own Realtor who by law has fiduciary for you only, you will then have to depend on the sellers Realtor. The sellers Realtor has fiduciary for the seller only, which means, that no matter how nice the sellers Realtor is, you have absolutely no representation and may not get the correct information about the home you are buying.
2nd: The sellers pay the same commission weather or not you have your own Realtor. If you have a buyers Realtor, the commission gets split in half between the two Realtors. If not, then the sellers Realtor gets it all. Normally the buyers does not pay commission. This may depend on the state. So why not have protection.
3rd: Think about this: Do you have a job? Do you get paid for your job? A Realtors job is real estate. And they should get paid for it. You have no idea the legal coarses that a Real Estate agent has to know so they do not end up in jail. And what they do behind the scenes every day for your transaction.
I am not going any farther, the people who answered your question have no idea what they are talking about. Yes, just like in any occupation, you have good and bad Realtors. That is why you interview them. If you get a bad one, it was because you made a bad choice.
I don't think your intended analogy about the guitar, etc. is actually analogous and it wont work in favor of the point that you mention either. So I will skip talking about that.
The real interesting part from your note is QUOTE if we find you a buyer, we get paid "x," and if another agent finds you a buyer, we'll split "x". UNQUOTE. Now that is where the masquerading, politically correct sounding, legally vetted wordings but subtle dubiousness lie.
It will be a challenge to present that but let me try.
FEES are paid for SERVICES.
In the HOME SELL-BUY PROCESS, the following activities and services are relevant:
1. SELLER: Bringing the house for sale in the market and doing the tasks or activities towards making a sale happen. Seller may need the SERVICES of a Broker/Realtor towards help in such activities.
2. BUYER: Buyers needs to know about properties and then approach and engage with Seller/Seller's representative. Buyer may need the SERVICES of a Broker Realtor to help him in his activities.
When a Seller uses a Realtor, he is using that realtor ONLY FOR ACTIVITIES MENTIONED IN POINT 1 and fees should be appropriately defined only for POINT 1. What entitles the realtor to have a term that encompasses fees for activities in 2?
But it is the "smart" and "unhealthy" and unethical business savviness of the great real estate broker companies that they have devised this innocuous sounding "term" that has been quoted above, to sustain their disproportionate stranglehold in this information age. It really is unethical given the times that we live in and how other brokerage businesses happen. Fees should be paid for value being created but here we land up paying fees because of restrictive practices and controls that a party may unethically continue to hold because it is not getting challenged.
What entitles the realtor to have a term that encompasses activties in 2.?
Ethical? No, in my mind.
Required by the Realty Brokers to sustain disproportionate fees in this age of low cost information distribution? Absolutely.
Good for the economy? No.
I "misspoke" yesterday when I wrote this:
1. If you work directly with the sellerâ€™s agent, youâ€™ll probably pay the same amount as if you have your own buyerâ€™s agent. The sellerâ€™s agent will just happily accept the amount theyâ€™ve contracted with the seller.
What I meant to say is that you'll most likely pay the same or very similar costs in compensation to the agent(s) involved in your home purchase, whether you buy directly with the listing agent or have your own buyer agent.
The final price you pay for the property at the closing may indeed be substantially less than if you work with the listing agent, because your buyer's agent should a) help you get the lowest price possible at the initial negotiation, and b) should be looking for any additional price reductions and adjustments to other terms that are in your favor at every step throughout the process. The listing agent would be prohibited from helping you save money if it costs the seller anything or harms their interests in any way.
For instance, if your home inspection reveals the house needs a new roof, you might not know how to proceed. Your buyer's agent may recommend you ask the seller for a significant price reduction. A listing agent should never do this.
If you were working with the seller's agent and asked what you should do with such information, the agent should respond with something like, "Since I represent the seller, I can't answer that for you," or "Check with an attorney." You might get lucky and have a listing agent who says, "Tell us what you want and I'll take it to the seller." Though by saying that, it's murky at best that they're doing everything possible to help their client, at least it may prompt you, the buyer, to consider asking for what you need in order to stay in the deal.
But you might also get answers from a listing agent such as, "You knew this wasn't a new house when you agreed to the price," or "Surely you saw the condition of the roof before," or "We disclosed in the listing information the property was to be sold 'as is.'" Any of these may indeed be true, but that doesn't mean you are obligated to proceed with the deal with no adjustments for information gathered since your offer was accepted. Your inspector may have explained conditions are worse than you previously knew, or you may have independently found out that to replace this roof could cost $10,000, $15,000, or more.
You should never feel intimidated to stay in a deal you are unhappy with just because you were previously told something. New information can come to light at any time, and as long as you are protected by terms contained "within the four corners of the document," as a judge might say, you should be able to renegotiate or withdraw, if that's what you need to do.
BTW, I'm not recommending anyone back out of a contract willy-nilly. What I am saying is, if you have a legitimate reason to withdraw, you should feel free to explore your options.
Your strength in negotiating after a home inspection depends upon several things, including the wording of your inspection contingency, which spells out under which circumstances you will be able to walk away from the deal if you find something troubling at the inspection. So a) if the seller's agent has worded this contingency with an eye toward protecting the seller as much as possible, you may find yourself at greater risk of losing your deposit, and b) the listing agent may---possibly in very friendly terms---try to persuade you stay in the transaction or to ask for less in concessions than your buyer's agent would recommend.
If you should ever find yourself in a situation where you submit an offer on a property directly with a listing agent, hire your own attorney to draft or at least review the offer before you sign and submit it. This will likely cost you a couple hundred dollars, but could save you thousands and/or make it easier for you to withdraw from an accepted offer.
You may also wish to have an attorney review offers written by your buyer's agent, as well, to make sure s/he is doing everything they can for you. Hopefully you will have hired a competent and experienced agent who will adequately protect your financial interests with the very simple one-page offer forms used in Eastern Massachusetts. But if you have any doubt your interests are being fully protected in your offer, consult an attorney. Don't worry about offending your agent; if s/he is uncomfortable with a lawyer's scrutiny, that should raise a huge red flag for you.
As I said in my previous post, there are many potential points of negotiation throughout a transaction that can affect your interests. I think it's clear you want a zealous advocate on your side at each one.
So I return to my "executive report" answer: Whenever practical, hire a buyer's agent who you are confident will diligently protect your interests at all times.
- "the current model serves the general population of sellers the best.".
I disagree. The current model does NOT serve the general population of sellers better. It helps serve the realty companies maintain their hold and maintain disproportionate fees while preserving a model that precludes the possibility of more efficient brokering process. As the world and economy evolve over years, the general principle that is commonly followed and accepted is that business processes and in-general ways of doing things need to evolve and be simpler and be more efficient while leveraging newer technology and innovations. Realty business is able to hold on to an archaic model for their own good AGAINST the above principle and AGAINST the common good. Someday, that bastion will fall. Again, nothing against the people in the realty business, but just a general perception as an observer.
Well, you disagree. That should change things.
What you would do well to know is the current, co-brokerage model, is not "archaic," but rather new and hardly universal. In your experience, which is . . . well, let me guess: reading a few residential real estate blogs and perhaps being enrolled in an economics class? - co-brokerage may seem universal, but it is not. It has gained precedence in residential real estate, and it is not the dominant means of brokering commercial / industrial property or leasing.
Those fields tend to cling to the older model, which is that the listing broker goes out and finds a buyer / tenant, and when they do so, they keep the commission. And, they tend to be a much more sophisticated clientele.
Great questions! I totally understand wanting to save money, don't we all ! I'd like to try to simplfy your senario.
I will cut to the possible answers and then provide the supporting details.
All of this is conjecture without a written offer and good faith deposit.
a. you may put in the offer with the jr. agent who showed you the house. If the brokerage company is a "designated" office then the agent represents the seller not you. The jr.agent needs to disclose to you BEFORE showing you the property who he or she represents. If they are "dual agent" they represent neither party and must act fairly to both parties. You may ask them if you can hire them to be your buyers agent with a contract.
b. The seller can accept, reject or counter. What goes on between the seeler and their agent is private. Agents rarely adjust their commission just to get the house sold.
c. in order for YOU to be best represented I recommend you hire a buyers agent, with a signed contract. They will advise you on offerings. If you do not get this home, remember, there are many more homes for sale. Stay with your buyers agent and you increase the chances you will get a home you will like.
A gentle reminder... there is no correlation between what you can afford to pay for a house and what a real estate agent has negotiated with their client.
Regarding commissions. They are negotiable. Usualy the commission is negotiated at the time when 2 parties sign a contract. Then the real estate agent is the fidicuary agent of the client, seller or buyer.
An example for a sellers agent: the agent negotiates a 5% commission for professional services, payable at the time of closing and recording of the deed. That agent then determines how they will compensate a buyers agent. That % is disclosed on the MLS property description.
It is also important to understand why a commission is paid. This is a way for professional real estate agents to get paid for services rendered. Just like a physician, who has a fee for services; a landscaper, a teacher, who has a salary, and so on.
a. If the jr. agent shows you the house it is good faith that you will work with them. They could attemp to claim a commission however that probably would not hold up. They would have to prove procurring cause - that they are the reason you put in an offer which was accepted.
WHY even go down that path, it's messy and not a good idea to use a professional whom you will not pay.
The time to claim having a buyers agent is when you have a contact with a buyers agent and when you first visit the house. Yes, you may do that now and learn how they respond.
Best Wishes to you
7. From a financial standpoint, dual agency is great for real estate firms. It comes with some additional risks of liability, but most companies---and virtually all large companies---happily practice dual agency. But dual agency is terrible for consumers. If I had to guess, more than 90 percent of agents in Massachusetts work for firms that welcome and/or encourage dual agency. The reason is simple: the company gets to keep the compensation from both sides of the transaction. But since the agent in the middle cannot recommend anything to help one client at the expense of the other, your buyer agent who becomes a dual agent transforms from your head coach into a referee. If you want a recommendation of what to do at a critical point during the transaction, a dual agent cannot give that to you, unless they are certain it wonâ€™t harm either client.
8. Though the law that created â€œdesignated agencyâ€ in Massachusetts did have the positive impact of making buyer agency more universally acceptable to agents and brokers throughout the Commonwealth, Iâ€™m not a big fan of it, either. Probably more than 97 percent of agents in Mass. work for a company that practices designated agency. Designated agency assumes two agents in the same firm can maintain a 100 percent foolproof firewall at all times, where absolutely no information that could hurt the interests of either party leaks to the agent on the opposite side. Plus, the agents in a designated agency firm canâ€™t participate in open, collaborative discussions about how to help their clients without risking information sharing that could bite their client in the backside at a later date. A couple seeking a divorce with contested interests wouldnâ€™t hire two lawyers from the same firm. Why should buyers and sellers accept an analogous situation?
I apologize for taking up so much word space, but a simple question often has a very complicated answer.
The Seller's Agent, could never give you *true* Buyer Agency representation.
They could provide disclosed Dual Agency, however, that means they have to remain neutral and can give neither side an advantage.
There are Buyer Agents who understand when a Buyer is on a tight budget and would be willing to take the commission offered in PINERGY (MLS Database), which is paid by the Seller. More often than not, this is a reasonable commission.
Some Agents focus on the people buying the home and helping them reach their dream, rather than how much of a commission they will make.
It all works out in the end, if they do a good job, you'll refer friends and family members to them and so will they.
I hope you are able to buy the home of your dreams!
You are entitled to and should want buyer representation. The jr. realtor will be entitled to a commission and may even be considered the procuring agent should you first view the property with them and then try to bring in another agent to represent you as your buyersâ€™ agent. You should retain an agent that you feel comfortable with to represent you right from the start. A knowledgeable agent will be able to assist you with assessing the value of a particular property as well as negotiating on your behalf regarding price and other terms of your purchase contract. Donâ€™t be pennywise and pound foolish. This is an important transaction â€“ often the largest purchase most people will make. You want someone with your best interest in mind to represent you and guide you through this process.
they will still charge you the fees- which is what you are asking.
Else then that: you darling agent will not bother with disclosures, will manipulate the comps to exclude cheap sale and REO, will have no idea or interest what is permitted on th e house nor any idea what the town requires if there is a lien on it.
They will have an idea how they want for presenting you with paperwork- and pushing you to their favorite lender and loan.
Find the house , pay few hundreds to an real estate lawyer and get the house yourself- doing all of the above plus getting the title from the town 's assessor.
Just an example: a real estate hack is currently offering hugely overpriced piece of land, he bought it himself for 10% of the price he wants but that is not in the listing, and while the land is under county jurisdiction he advertises it as under Brea influence (Brea has 0 influence on county land) and Brea approved for family house.
The county has it as open spaces, no development.
That is the kind of professionalism real estate agents really do use.
Now if an inspection revealed a lot of issues and it was a very expensive property, I might rethink obtaining my own representation. But go with your gut and see what the inspection reveals.
1. What do you do with all this paperwork?
Each state has different regulations regarding the contracts required for a successful sale, and these regulations are constantly changing. A true Real Estate Professional is an expert in their market and can guide you through the stacks of paperwork necessary to make your dream a reality.
2. Ok, so you found your dream house, now what?
According to the Orlando Regional REALTOR Association, there are over 230 possible actions that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, who knows what these actions are to make sure that you acquire your dream?
3. Are you a good negotiator?
So maybe you’re not convinced that you need an agent to sell your home. However, after looking at the list of parties that you need to be prepared to negotiate with, you’ll realize the value in selecting a Real Estate Professional. From the buyer (who wants the best deal possible), to the home inspection companies, to the appraiser, there are at least 11 different people that you will have to be knowledgeable with and answer to, during the process.
4. What is the home you’re buying/selling really worth?
It is important for your home to be priced correctly from the start to attract the right buyers and shorten the time that it’s on the market. You need someone who is not emotionally connected to your home to give you the truth as to your home’s value. According to the National Association of REALTORS, “the typical FSBO home sold for $208,000 compared to $235,000 among agent-assisted home sales.”
Get the most out of your transaction by hiring a professional.
5. Do you know what’s really going on in the market?
There is so much information out there on the news and the internet about home sales, prices, mortgage rates; how do you know what’s going on specifically in your area? Who do you turn to in order to competitively price your home correctly at the beginning of the selling process? How do you know what to offer on your dream home without paying too much, or offending the seller with a low-ball offer?
Dave Ramsey, the financial guru advises:
“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”
Hiring an agent who has their finger on the pulse of the market will make your buying/selling experience an educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.
You wouldn’t replace the engine in your car without a trusted mechanic. Why would you make one of your most important financial decisions of your life without hiring a Real Estate Professional?
Buyer get yoru own agent, CONFLICT OF INTEREST otherwise, plain and simple.
I don't know what you do for a living, but I have found that if I go to Guitar Center and pick out a guitar, then decide to bypass the floor salesperson and buy it on line, I do not get a discount.
All the best,
It appears that the Realty business survives by an unstated, arguably unethical protocol being followed by all the realty businesses to make their listing agreements in a manner that binds the seller to pay the full commission (Seller + buyer) even if there is no buyer realtor. If a buyer is willing to put in his hard work to find the listing agent and approach him and is confident of doing the transaction himself, why should not the buyer get the advantage. If the Realty business needs such practices to survive and maintain their hold and get paid disproportionately without adequate value getting created by the "unethical" nexus that they maintain, then probably the government or advisory bodies needs to step in to make it fair and equitable.
Like an owner can list his home directly and save, similarly the buyer should be able to deal directly with the listing agent and should be entitled to save. Realty business should look to redefine this arguably unethical and definitely not-good-for-the-economy practice, which hurts everybody including the realtors.
I don't think anybody grudges the commissions for realtor agents, they put in the hard work. Its the basis on which the big realty chains/businesses keep their stranglehold which should be looked into.
Let put it this way.....if you were going to trial for legal matters would you feel comfortable being defended by the prosecuting attorney?????
Buyers are always well advised to obtain their own personal representation...It's basic "buying 101."
Buyer Beware: DO NOT SEE THE HOUSE UNTIL YOU FIND YOUR OWN AGENT!
Find your own exclusive buyer's asap. Don't use someone that works on that listing agents team or in their office.
Using the agent who represents the seller will cost you money. They are legally obligated to protect the seller throughout the entire process which means you will get very limited advice on property value. In addition their pocket gets bigger the more money you pay so why take a chance trusting someone who doesn't put your pocket and interests first.
Here are 2 very good reads on the topic. Get yourself educated and interview some buyer's agents:
Good luck! Feel free to call us anytime with questions.
Then there's the problems with chain of title, sometimes there are past due taxes that must be paid by the new owner because the lien is on the home, not the person. Or the title company that mistakenly wrote down the wrong unit number on the deed ... after major renovations the owner returned from vacation to ask what they were doing to his 2nd home.
Then there are the developments that flop, and your deposit disappears. Bottom line is the agent does much more than unlock the door. They know the law and are accountable to it or can be fined for an ethics violation. They pay for insurance that covers these things called Errors and Omissions. Why do you suppose there are real estate attorneys?
Good for you if you can do it, but it's intensive work that doesn't always work out the way you expected, unless you have a smart, seasoned agent.
They offer a portion of the commission they negotiated with the seller to find and represent a buyer. What most people dismiss is the "represent" part. That's where the buyer agent guides buyer through sale process. They know, receive & provide all the necessary forms and disclosures to the buyer, counsel and answer questions, assist with the home inspection selection and process, explain the various forms and disclosures and take on the responsibility of making sure it is all correctly completed and submitted to the selling agent within all the legal timelines. They will often also explain things about the lender and escrow requirements to the buyer who may feel confused by unusual sounding demands.
Often, a buyer's agent does more work during escrow than when showing properties.
It appears that the listing agent for the property you're interested in is busy as a listing agent and doesn't have additional time to take on buyers. In your case, it would seem best for you to work with a buyers agent of your choosing to view and offer on the home. They may be able to structure the offer to your advantage and find other ways to save you money, depending on your local market.
into play is the sellers commission with their listing agent. When the house is sold, if by another
agent the commission will be split by the selling agent and the listing agent. If the listing agent
sells the house, he will get 100% of the commission.
The listing agent referred you to a "jr buyer's agent" because he was smart not to represent both sides. His fiduciary responsibility is 100% to his seller, not you.
You can't afford the house....you should not expect the seller & listing agent to reduce their cost to finance your purchase. Excellent realtors work extremely hard, attend continued education weekly, hustle for their clients, protect your interest.....they are worth their weight in Gold!
I say, go for it! just analyze the worst that can happen in this transaction and if you will be fine with that. Good luck!
It sounds like maybe the seller did not agree to dual agency (represent you and seller) so they are referring you to another agent in that office. If you do work with the agent the selling agent recommended, that agent will also be paid a commission. I recommend that you do get an agent that represents you so your best interests are covered. If you end up using just the selling agent, that agent will get the entire commission. I beg to differ that all realtors are overpaid. We do a lot of work that buyers/sellers do not see behind the scenes.
To answer your question regarding any buyer agent. You have a choice as to whoever you want. As long as they are licensed realtor.
Who pays agents and whatever percent is negotiable as well.
Personally, I'd cut expenses, work with the seller (I require contact with the other party, and it works PHENOMENALLY), and just be adults buying/selling an asset. Neither buyer nor seller really determines value of the asset either if you have to secure a loan - the appraiser (NOT tax assessor) does that based on comparable sales, features of the home, neighborhood, etc. Their job is to make sure the bank loans you the appropriate amount based on asset value, not buyer/seller hopes and opinions.
Nobody has "claim" on representing you if you haven't signed a contract.
You should use your own Buyer's Agent.The Seller is already going to pay a %, such as 6% for the sale of their home. If you don't use your own Agent that will protect your interests, then the Seller's agent will just get the commission that was meant to go to the Buyer's Agent. You might as well use a Buyer's Agent that will do the best job protecting you and your interests. Contact me as I know a good one in your area.
**Buyers and Sellers please contact me as I do a Free Realtor Referral Biz Worldwide.**
There were many court actions relating to this questions, especially in CA. Best advice hire your own agent to represent you, and your interest, and agree to conpensate them seperatly. One other point the agent you hire make sure they are NIT connected to the listing agency, (conflict of interest).