Home Buying in 90703>Question Details

Gupta, Home Seller in Fremont, CA

cont. how much is buyer and seller agent commissions.../ cont. on this discussion, I as a buyer in Los

Asked by Gupta, Fremont, CA Mon Sep 22, 2008

Angeles too have similar thoughts like Deepesh. Buyers are really informed these days.
The buyers these days know the area they are looking into . THe kind of house they want. They can get the inspections done and comprehend the language of inspector. Even write up an offer themselves.

Buyers also shop around to get best loans.

When most of the home-work is done by buyers then why the agents are hesitant in splitting comission.

Rates should be based on how informed the buyer is. There should be clear understanding between buyer and agent. For well educated buyers who have time on their hands and want to do most of house hunting themselves , the agents should be willing to work for less.

Whereas for clue-less buyers or buyers with no time to look at market with due diligence , the comission should be high.

Just my thoughts. Would love to know others.

One question though: Can a buyer represent himself just as sellers sometimes sell FSBO.?


Help the community by answering this question:


Hi Gupta;
Excellent question.
Yes buyers can represent themselves, but since the listing agent has negotiated a commission to be split with a selling agent's broker, this does not necessarily mean that you would get the agent's commission as a rebate.
I do think that we are nearing the time when, just like listing agents, buyer's agents will be negotiating commissions with their clients.
But be aware that looking for a home is only part of your agent's job. The key qualities of a good agent are the ability to negotiate and to be the client's advocate, plus keeping to deadlines, and the paperwork while in escrow. Real Estate can be a giant time drain.
But, you are right, for some savvy buyers, all they need to do is consult with a real estate attorney.

Good Luck
1 vote Thank Flag Link Mon Sep 22, 2008
I have reviewed some of your prior questions in preparation for responding to this one.
So most of this post are statements. Community Guidelines say this is a question forum, so my first piece of advice is you might try posing some of these statements as questions.

My dad always said that "Experience is the best teacher, but most prefer to be self taught".
He also said that "Confidence is the feeling we have right before we truly comprehend the situation"

So let me pose a question to you. Would you hire me to act as your agent to sell your home based on YOUR track record? Probably not. You haven't sold more than one or two homes, right?

Let's look at some of your statements regarding buying a home:

"Buyers are really informed these days". True, buyers know more about available inventory, if they watch HGTV maybe how to fix up a home.
"Buyers Know the area" - sure, buyers know where they want to live
They can get inspections done and comprehend the language of the inspector"
Which inspections? Sewer? Natural Hazards? Pest Inspection? Physical Inspection? Understand the title report?

There was a fellow that bought a small house on a large lot, he wanted to build a larger home. He did not read the title report. There was an easement for a power line across the front lawn...he couldn't build anything. Would you know enough to ask?

What if something comes up on one of the reports that needs a solution? Are they going to negotiate? How will they know what is reasonable? What if the seller has a Realtor and the buyers do not? Who represents their interests? Remember that an attorney who represents himself as a fool for a client (attorneys say that).

"Even write up their own offer". Really? What if there is a mistake on the offer? What if there is a counter?
What if the seller wants to lease back? Do no repairs? Sell it as is? Wants a long escrow? Which is better, a lease back or a long escrow?

"Shop around for the best loans" Sure they can. In a regular market escrows fail to close on time over 45% of the time. When they fail to close on time it is due to the Lender over 70% of the time. That was from a CAR survey in 2007. That is greater now. Even buyers with great credit have a hard to closing. What would you do if you had a penalty of $100 per day that your escrow closed late and you were rejected by the lender at the last minute? Would you have thought to have a back up lender, just in case?

"When most of the homework is done...why the agents are hesitant about splitting the commission"?
Really? Why would they be hesitant. The commission is negotiated by the Listing Agent and is published in the MLS for all to see. There is no hesitancy because it is a contract.

"Rates should be based on how informed the buyer is" Then I would charge first time buyers MORE. Buyers that have "more time on their hands" does not equate to more experience. As a seller I would be very concerned about a buyer wanting to represent themselves. They have no errors and omissions insurance, have no training, and will probably sue the owner. When a lawsuit is filed, 70% of the time is filed by a buyer.

The fact is that buyers and their agents do not negotiate for commission. Why are you so concerned about buyers "paying for commission" From the buyer's perspective they get a great negotiator, who knows the local market, knows property values, and can help them find their home FOR FREE.

Your profile says that you are a home seller. I read your other questions, you ask some good ones. Remember...you are asking US because you don't know the answer. There are MANY questions posted by readers on Trulia that truthfully can only be answered by one person:
A professional that knows:
1. Their property
2. Their personal situation
3. Their local market.

Do not substitute "free advice" on Trulia for the local market expert. I have saved MORE than the cost of my commission for sellers most of the time.

Best of luck to you.
1 vote Thank Flag Link Mon Sep 22, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
Good thought process. There are so many different aspects you could address here. Just a few to think further about....
1. Most buyers agents work for a broker who gets part of the commission so they aren't making as much as you might imagine.
2. For every buyer deal that goes through no matter how fast agent has spent time with no pay working for other buyers that may never close.
3. #2 is actually a big one. I would encourage everyone who thinks real estate is easy to get their license take a 6 month sabbatical from their real job and see how easy it is.
4. a deal can get to the end and fall apart ...lack of financing, soething wrong turns up in inspections etc. Most buyers agents are not getting paid for this loss time no matter how quick and easy deal worked.
5. there is e&o insurance to be paid by agent as well as mls dues, realtor courses, realtor dues. These all eat into the "profits" and shrink that commission down. These are all important things you want on your side to.
6. buyer can't receive commission if not licensed and doesn't pay anything for buyers agent service so why not get good broker on your side.
7. a good broker can more than save you the commission on negotiating and saving you time too. Everybodies time is valuable, but most people don't factor that into the equation.

So those are some starter ideas to consider. I'm sure more agents will add to the list.
Web Reference: http://www.maui4rent.com
1 vote Thank Flag Link Mon Sep 22, 2008
Any buyer who wants to earn the comission should do so by getting a license. Otherwise, lets to professionals do what they are paid to do. Finding a home, learning about the neighborhood, and knowing what the comps are is not leg work. Thats being an informed buyer.
0 votes Thank Flag Link Wed Sep 24, 2008
Yes, Gupta, buyers can represent themselves. There is even a box to check for unrepresented buyers on page 2 of the Agency Disclosure Addendum. The base Real Estate Contract, also known as an Offer To Purchase, is now 10 pages longe. There are many Addenda & Ammendments that may be needed or wanted to include in the contract. Do you know which ones you need and want for each particular property?

Realtors know because they took the time and spent the money to go to school to learn the required information to start in the business. Then they are further educated through experience and continuing education classes. There are changes to the contract every year and keeping up with the changes is part of our job.There are also sudden and unexpected changes such as some that have happened recently with FHA, Freddie Mac and Fannie Mae. Do you have time to keep up with all of the changes made every year, month, and day?

You're right, today's buyers are better educated than any previous generation has been. Buyers today also have access to a multitude of information via the internet. The problem here is knowing how to filter that information; not everything on the internet is 100% accurate. How do you determine which information is correct?

Mortgages: not long ago, one of the agents in my office asked "has anyone ever heard of a buyer with over $5000, in closing costs on a $135,000. home?" No, we had not. Come to find out, this buyer had gone shopping on the internet and found a "real deal." This buyer needed representation but didn't know it.

FSBO's: 90% of real estate transactions without realtor involvement do not make it through closing.
That means 10% are successful. Of the 10%, I hear stories from the buyers about how they did not get what they want or found something out later that should have been disclosed. Or even that the initial documents were not filled out correctly so now the owners of the property have to pay hundreds or thousands to have the corrections done so that they can sell or insure the property.

I also hear stories from people who were disatisfied with their realtor only to find out that that wasn't their realtor; that was the seller's realtor and they were an unrepresented buyer. Yes, you can represent yourself. Do you really think you can do better than a professional real estate agent who is out there 24/7 year in and year out?

Clear understanding between buyer and agent: have you read the Exclusive Buyer's Agency Agreement?
Have you read the Exclusive Listing Agreement, or Right To Sell Agreement? Did you happen to notice that the commission on a particular property is decided between the seller and their agent before the house is listed for sale? And that, usually, the listing broker offers a portion to cooperating agents? That is what most buyer's brokers receive for commission although that does depend upon the contract signed betweeen the buyer and their agent.

Different prices/charges/commissions for different buyers: There are actually some agents who have started charging buyers fees. Some are up front before they will even begin to work with a buyer. Some are fee based service charges. These fees are in addition to commission offered through co-op.
And then you have your discount brokerages....I have heard of some who will charge less to do less. I have also heard that the "less" they do does not always result in a viable transaction.

If you think that most of the work is the "house-hunt", you are deluded. As for negotiations, negotiations are best handled with the emotional buffer provided by a Realtor. Buying and selling real estate is an emotional experience. Some say it is right up there with getting married, losing a job, or the death of a loved one. Personally, I think it is a little less important than the other major life changes because a house is an inanimate object. However, it is still a huge financial investment for most people and does seem to elicit erratic behavior from both sellers and buyers during the process.

Besides being an emotional buffer, the Realtor knows what and how to get you the best possible deal on the house you want. And a Realtor can certainly help you to find better financing locally than any dot-com on the internet. Ask the dot-coms if they can guarantee, in writing, that you will close on time. Ask them if they will drop whatever they're doing and come to your closing if there's a problem.

Please, see Keith's answer below as it is excellent. His statement about the difference between free advice here on Trulia and the advice and opinion of your local professional is very good. And I would like to add another little saying here: " A fool and his money are soon parted." Oh, one more: "You get what you pay for."
0 votes Thank Flag Link Mon Sep 22, 2008
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