I am not a buyer but a Realtor however thought I'd give you my opinion. Buyer's agency was established to be sure you are properly represented. Prior to Buyer Agency the buyer simply went to the listing agent and purchased the property. The listing agent only represented the seller and their best interest. You are correct, the buyer's agent does get a percentage of the sales price once the home settles and that percentage is paid by the Listing Agent's Real Estate Agency. I can understand why you might feel that the buyer's best interest is weaker however that is not the case. If I have a buyer purchasing a property and the deal falls through due to inspection issues I am simply going to sell them another home. It's the seller's agent who has to start all over again. As far as commission and getting the buyer to pay more due to the higher commission involved I have some thoughts. First I always provide comparables to my buyers so that they see what the homes in the area are selling for so an educated offer can be constructed. Secondly the bank that is financing the buyer's mortgage is sending an appraiser to the property to be sure that the buyer is not paying more than the appraised value of the home and the appraisers are very strict with their guidelines. Thirdly, let's say a home is listed for $300,000 however the buyer wants to offer $290,000 and let's just for the sake of this conversation state that the buyer agent's commission is 3% of the sales price, although the listing agent always negotiates this rate. At $300,000 the buyer's agent in the above scenerio will receiving $9,000 however at the $290,000 they receive 8750.00. Is there really that much of a difference? No in the entire scheme of the situation there is not that large of difference in commission received.
However the larger issue here is that you are assuming the only thing the Buyer's Agent does is write the offer and hand it to the Seller's Agent. I can tell you with 99.9% certainty that is all the Real Estate Attorney is going to do. They are not going to drive around showing you homes. They are not going to provide you with comparables. They are not going to schedule the home inspections and accompany you to them. They are not going to check in with the mortgage company to be sure everything is in order (and I can tell you this takes many many hours of work due to the problems in the mortgage industry today), they are not going to negotiate with the Seller's agent when it comes to inspections and they are not going to be there to answer every single question you have regarding the process and to handle any problems that come along.
And the strange part of this entire equation is you are going to pay an attorney a couple of thousand dollars to represent you and the seller's agent is getting the full commission. For in PA there is something known as Procluring clause and that means that the agent who shows you the property receives the full commission as the commission is negotiated between the Seller and the Listing agent, not the Seller and the Buyer's agent. So before you even think of looking at a home that is on the market the commission has already been set. Therefore you will call the listing agent to show you the house, decide to purchase the house and pay an attorney to write the paperwork and show up at settlement only to find that you saved nothing in the end and put out thousands of dollars for representation that would have cost you absolutely nothing had you utilized a buyer's agent.
Jennifer Daywalt, Realtor
Re/Max Results Realty - Collegeville
Top Agent 2004 2005, 2006, 2007, 2008
Author of "Ask The Realtor" Column in The Saturday Edition of The Phoenix Newspaper
Licensed since 2001 in PA
610-489-7355 Main Office
610-999-7693 Direct Line
I just wrote a blog post about this very subject: http://www.trulia.com/blog/ellen_doc_stephens_realtors/2010/
As in every profession, there are those who don't take seriously their Fiduciary duty to their clients, but that is not the norm. Most REALTORS® understand that a small benefit from today's transaction is far outweighed by the enormous benefit of having a well-satisfied client. Real Estate, like every other profession, is primarily a relationship and referral business. We grow our business by consistently exceeding our client's expectations. They, in turn, tell their friends that we did a great job, and our business grows.
Anyone who thinks that getting 3% or so on an increased sale price is worth trading one's integrity for isn't thinking right. They don't last very long in our profession.
Doc Stephens, REALTOR®
Keller Williams Realty
San Antonio, TX 78230
My question to you is would you represent yourself in a court case and expect to win? So, why would you want to be unrepresented in real estate transaction?
A real estate professional looks out for their clients' best interests. Each agent is different and have different reasons why they are in this profession. Yes, we do get paid by commission, but that is not our only purpose.
Why would you want to have an attorney work with you in a real estate transaction? How many homes has the attorney sold? Real estate agents sell hundreds of homes in their profession and therefore, are best able to assist you in your search. They are knowledgeable and will work in your best interests.
I suggest interviewing several agents before signing up with one. Look at it as though you are the employer and the agent is your employee. A good buyer's agent will work on their behalf and a seller's agent will work for the seller. It doesn't matter where the commission comes from. If you feel your agent is not committed to working in your best interests, you can cancel the contract in writing and explain why.
I love to help people and this is why I am in the real estate profession. I have helped others throughout my life by helping friends and relatives and also by volunteering my time to help in various organizations. Helping others makes me feel good. Getting paid for it is just an added bonus.
My suggestion is for you to interview several agents and hire the one that you feel most comfortable with and one you feel you can trust.
Wishing you the best in your home search.
Brigita McKelvie, REALTRO, e-PRO, GRI
Pennsylvania license #RS297130
Residential, Rural and Horse Properties and Farms
Keller Williams Real Estate, Bethlehem, PA
Office: 610-867-8888 Direct: 610-393-9424
Blogs site: http://activerain.com/blogs/brigitam
No one is working on your side.
The agency designation requires that the Realtor work on behalf of the person whom they are contracted with. In the absence of the "Buyers Agency" the Realtor is required by law to work on the behalf of the seller because the seller is the only party that is contracted with the Realtor. Knowledge of your finances and ability and willingness to purchase may be passed on to the Seller in the absence of the Buyers Agency contract.
The Realtor that picks you up at a Open House is not necessarily your best friend.
That being said choosing a Realtor to represent your interests should not be taken lightly as you are commiting to EXCLUSIVE representation for a certain area, price range and time period. If you are not happy with your choice it becomes problematical.
The commission agreement, in this area, is usually negotiated at the time of sale so that the seller ends up paying the full commission.
I always recommend that my clients make the conscious decision to choose a Buyers Agent.
I think if you find an agent that looks long term you will see a HUGE difference. Are they going to fight for your best price now and ensure your business and the future referrals you may send them in the future, or are they looking for a quick paycheck now?- which clearly does not fall within the code of ethics we are bound by!
Also bear in mind there is much more than just price in a transaction!
Agents are not miracle workers, but you are still better off with one, especially since it doesn't cost anything in most cases. Ask someone who had a bad experience and they will you don't need one. Ask someone who had a good result and they will say yes get one.
I think you have already made up your mind, now you are just trying to justify it.
i have the same skeptical view of agents, for exactly the reasons you cite. i know they're not all evil, but the appearance of conflict is virtually impossible to ignore.
agents are in business to make money, despite what has been written here, and they make money when houses sell.
there are numerous resources available, so it can be done. and based on your previous experience, i agree with john prell's advice.
I've worked with many great (and a few not so great) Lawyers. Just as there are agents with "skills that vary", Lawyers are similar. Around here, a real estate attorney will usually charge you anywhere from $500 - $1200. That is money well spent vs. going at it alone.
As far as a Buyer's agent "wanting to get you to pay a higher price" because of commission, be cautious of course, but remember: That a Buyers Agent is working in your best financial interests. Unless you grossly overpay for a home, the difference in commission to the actual agent is so minimal in most cases that any "above board" agent wouldn't even consider doing that. I certainly am not going to risk my license doing something like that and I'd like to think that most others would not as well... Why??
I've worked with multiple family members as well as people that previous clients referred to me. In fact, it's the majority of my budsiness. Other agents have done this as well. , Doing a good job, getting your client a home at a fair price, negotiating in their best interestes, providing accurate comps and explaining those comps as well as educating their buyer/client is the top priority for any professional agent. It gets me/us future business from satisfied customers. Are there "not so great agents"?
Sadly as in any profession.... Yes. Ask friends , co-workers and relatives for a good agent reference. You'll find someone you feel comfortable with.
Also keep in mind that when choosing a buyers agent, consider choosing an ABR. As an ABR myself, we are trained, we adhere to guidelines to protect our clients. (Not to say a "non ABR" agent is bad or that ABR's are better). (PS, I don't work in your area - I'm not trying to get your business.,).
For others: If you feel that your agent is not providing accurate comps, doing something "not above board", speak to the broker, end your business relationship and find another agent. (if you want). There are plenty of good agents out there with your best interests in mind.
If you choose a Real Estate Attorney, that is an excellent option as well. Please also post back as well because your post can provide a lot of good info to others who are going through the same thing.
Good luck with your home search.
Brian Luce ABR
Weidel Realtors - Doylestown
215-348-5600 x 122
Here's the thing. There are quite a few sites out there that will walk you through a real estate transaction. So you can learn the ins and outs of all the documents and the overall process. While I'm slightly biased because this is what I do, we've helped literally hundreds of folks save money with their real estate transactions. Find a discount realty company with a good track record, great BBB rating and a long list of customer testimonials who will give you a rebate on your transaction.
I also remind my clients about things they need to do like (here in LA) file a Homeowners Exemption (this saves them money), I follow up with them for years afterwards when I have information about interest rates being low and it being a good time to refinance (also saving clients thousands of dollars). My clients have turned to me when they have problems such as termites, water leaks, etc - I immediately get a reliable, well priced professional out there right away.
So, keep in mind to look at the entire picture.
Keller Williams Realty
I can understand your skepticism about using a realtor. Before I became one last year, I bought and sold several properties without one, but have come to realize that a GOOD agent is worth their weight in gold. Even though the higher the sales price, the more we make, when representing a buyer, my goal is to assist them in getting the best deal for their goals. In return, I may make less, but maybe they will share their satisfaction with friends and I grow my business by referrals, while creating a network of happy customers.
I have to agree with Brigita. Buying a home is not the place to cut corners and go into a purchase blind. Having a Realtor on your side will help you save money and headaches. As Realtors we are trained for just this purpose. We can find the most recent sales to help you come up with a reasonable offer. We have the information at hand and we do this everyday not 3 or 4 times in our lives. You wouldn't go to court unrepresented or perform heart surgry on yourself to save money. It is worth it to hire a pro to walk you through any purchase or sale. Good luck!
Keller Williams- Central Texas Green Homes
I am an agent but I will give you a few answers, one as a buyer before I was an agent. The moral of the story is there are two sides to every coin.
When I bought my home, the market was average but it was a 1 in a million home so multiple offers. I found the home online and went with the listing agent because I felt at worst it could do no harm and at best if she was ethically challenged it may benefit me the buyer. She stood to get double commission if I bought over the other offers from other agents. Even at a lower price she still made out way better. She wanted ME to get the home. If she was a straight arrow, at least I had speed on my side as speaking to her was almost speaking to the seller with no wisper down the lane and time delays. To this day I do not believe I could have bought my home if I had not gone with her. Times have changed but I still think ethically challenged listing agents may work against the seller more than against the buyer as listings are plentiful and buyers are less so with the thinking, get it sold, get paid, who cares about the price.
Don't think for a minute there are less ethically challenged agents than there are bad politicians. There are plenty. I would never buy or sell a home without an agent but finding the right one is the challenge. A good friend of mine in Virginia just bought a home. He found an agent he liked but still called me every day to ask every kind of question. At first every time he asked me a question he would say, "my agent said the same thing", which made him feel good. As time wore on he started feeling the agent just wanted the sale. The answers stopped matching mine so he just told the agent to do what I recommended. The agent had no idea I was an influence and when he got the home for what he wanted, his agent said "you sure are a good negotiator." I think the bad economy may bring out the worst in some agents that "need" the sale to keep food on the table. It can also bring out the best. I am working with a listing agent now that needs the sale and is discounting his comission to the seller to make it work just to get it sold. This is from a brokerage that never discounts.
I used a lawyer once, enough said. He fumbled through the paperwork like a new agent. If you do, make sure it is a lawyer that really knows real estate but I cannot imagine why you would want to unless it is commerical real estate. They seem to try to prove their worth by changing or adding things in that are not part of the standard agreement and it throws a monkey wrench in the works when the other side sees it.
I know you are only wanting to hear from Buyers, but I think some of the answers missed an important point for a Buyer's Agent. My parter & I are only licensed in OH, but the concept of Buyer's Agents in PA is basicly the same. The fiduciary duty & the incentive for a Buyer's Agent to negotiate the lowest purchase price possible & the best terms possible is to let your client know you really care about them and the success of their transaction. And, if a Buyer's Agent accomplishs that objective, the Buyer will tell friends, family, & co-workers how great the Buyer's Agent is & make referrals. As an example, my partner & I slice & dice all of the numbers available to help our Buyers pinpoint the offer they want to make. We pride ourselves in the difference between the list price & ultimate purchase price for every property for which we act as Buyer's Agents. The Buyer's Agent you choose in PA should take that same approach -- interview several. [Note: My partner & I are also Seller's Agents. We like to think that having current experience on both sides of separate transactions helps us keep our negotiation skills keen. So, when you look for your Buyer's Agent in PA, you may want to consider a Realtor who has experience on both sides of transactions.]
I've had investors that offer me X amount of dollars instead of % simply to help them find the house or property. That's the only part of the transaction I am involved on with this particular investor, he then uses his lawyer for the remainder of the transaction. It works for him, he likes it. I think it's a matter of personal preference.
In California a listing agent can represent both the buyer and the seller as long as there is disclosure and it's agreeable to both buyer and seller... however, if the listing agent represents both parties at the table, he really can't effectively advocate for EITHER the seller or the buyer.
You could use a lawyer, but unless he's also a realtor, he wont have access to the MLS to demonstrate the most up-to-date comps so you are comfortable that you are not overpaying for the home. And he might not be up to speed on all the up-to-date building code and municipal requirements.
Finally, buyer's agent commission is generally paid to the LISTING BROKER who then splits the fee with a cooperation (buyers) agent. This agreement is between the seller and his agent... it will likely be paid to the to the listing broker whether you have an agent protecting your interests or not.
As for your fear that your buyers agent will put his interests before yours, I strongly recommend interviewing several buyers agents... check their references and satisfy yourself as their character. I would only add that all agents have a fiduciary duty to their clients to negotiate in good faith. Any agent that does not uphold this very basic principle can and should be reported to their state real estate association.
Another realtor says you do because they will fight harder for you.
I am only 100% sure that you do NOT want the same realtor or office the seller has. The sellers realtor is obligated to take you for as much as they can. You also using them does not change that.
I think to find out what would really work best for you, you should speak to buyers in both scenarios; those that purchased on their own, and those that purchased with the use of a buyer agent. . If you would like to speak with buyers who have purchased their home through myself and my business associate as their buyer agents, I'd be happy to give you their names and numbers. Why just yesterday, we had a mortgage loan officer tell our clients what a great job we did in negotiating a good price for them. So, if you would like to speak with them, just let me know. Our testimonial section, although a little out of date, is also available on our website.
I would like to suggest, however, that the real incentive is for the agent to work with the client toward the client's goal, because if an agent and a client grow too far apart, it is the agent who will get thrown away from the deal.
Whitney Smith, Realtor
Accredited Buyers Agent
Coldwell Banker Preferred, Exton