An agent is very helpful in finding suitable homes, getting you inside those homes, and insulating you from listing agents wanting to turn you into their client. They're extremely useful in helping you determine what a good comparable price is, and figuring out negotiation tactics. They're very good with keeping the deal ontrack, with the lenders, appraisals, and deadlines.
It seems that you're probably already pretty well equipped for all of that, and If so, I agree that $12,500 is a lot to pay for services you don't need.
You can still hire a local RE attorney ($400-$750-ish), and maybe get a professional courtesy discount... it'll be worth that fee... otherwise, I think you're under control.
What sort of mistakes do you see unrepresented buyers making, and what sorts of costs would you attribute to them? If I have my eye on a particular property already, and believe that I have a fair price in mind, are there agents who might engage me on a discounted basis, especially if I am willing to be the point person on the financing issues?
I appreciate your response, and would be happy to come to the conclusion that the $12,500 on a buyer's agent was well-spent. I am just wanting to get my head around all of the reasons why it would be. Any further thoughts out there?
1) Think of an agent as insurance. If anything goes wrong, if you used an agent, you likely have legal recourse.
2) Agents will make the process a lot easier and smoother for you. As a first-time buyer, there are lots of procedural issues which if you mess up are potentially costly and will be a pain in your butt.
3) These days, you can easily find agents who will refund for you a part of the commissions they receive from the selling agent. This negates a lot of the reason not to use one. You can find agents like this in lots of places, try http://www.seekingagents.com/
Best of luck,
Sharp negotiators earn their keep in many ways. Assuming you can get the sellers to discount your purchase by the full amount they would likely pay a cooperating broker (2.5%?) may be a mistake. Have you "negotiated" that with them already? A good buyers agent may be able to get you tangible concessions like having closing costs paid by seller (3%) throwing in, washers & dryers, swingsets, furnature etc. The real issue is whether the buyers agent you choose is an order taker or negotiator. Speaking to their references, reading their blogs & website should give you an idea of their personality type and whether they are prepared to earn your referral business.
Let me attempt to answer your question as candidly and unbiased as possible. Getting my real estate license meant nothing more than spending less than a month in classroom training and passing a test. That was the easy part. I since have spent the last 22 years becoming and expert in real estate. If you think buying real estate just involves a little paperwork, you're sadly mistaken. And if you think all agents are equal, you'd be wrong again. That would be the same as saying all attorneys share the same experience and expertise. Do you think O.J. Simpson was innocent or that he had an experienced attorney get him off for murder? Would an attorney in his first year of practice have gotten O.J. acquitted? I doubt it.
I save my clients thousands of dollars per transaction because I have spent years learning how to negotiate, the psychology of sales and having the knowledge to get it done. The paperwork has nothing to do with it. I don't even bother with it and have my assistant complete it for me.
Also, what makes you think you'll be able to negotiate a discount by going straight to the listing agent? The seller has already signed a listing agreement to pay a commission. Being unrepresented only means the listing agent doesn't have to split the commission with a buyer's agent. Do you expect the listing agent to give split to you? It doesn't work that way. And if you were to buy direct from a "FSBO", they're not going to give you the discount. They're trying to sell it themselves so they don't have to pay a commission. If they "discount" the price, don't be fooled into thinking you saved some money. That seller just sold you a home for market value.
Go here for more information on benefits of having a Realtor represent you in the purchase:
Hope this helps. Good luck to you.