Home Buying in San Diego>Question Details

BA buyer, Home Buyer in Milpitas, CA

Buyer's agent - general question

Asked by BA buyer, Milpitas, CA Tue Jan 1, 2008

Hi all:
I am planning to buy condo/townhouse and debating whether to have my own RE agent or not.
I have heard and I know that you can get 25% to 40% back from the commision that your agent gets from seller's agent(i.e 25 to 40% portion of that 3% buyer's agent gets!!).
My question is that do I need to sacrifice in quality of service from agent just bacause they know they are giving back some of their commision and hence may not work that hard fo my interest.....(I usually know what RE I am looking for and easily search in MLS by myself and have the groundwork)
Othere question is that if I have my agent, do I need to sign any binding contract with him/her ? if yes, what is the usual time length of contract and can it be voided/released in between, if either party is not satisfied ?
Thanks in advance.

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13
PP...my thoughts are if your are knowledgeable in the SD market, and have a good idea what housing values are or should be, than by all means negotiate directly with the sellers agent, but ask for the 3% buying half back in the price, on top of what you think the house is worth. Also, the more expensive the property, the more valuable this concession becomes. Ask to present the contract to seller in person so you can explain your figuring. Obviously you'll want to have included in the contract all necessary inspection contingencies. Ask the seller's agent for a copy of the purchase contract beforehand to study verbage. It is true that on paper the seller pays for the commission, but the buyer brings the $$$ to the table and in many instances, seller's have allowed in their bottom line, some allowance for this. Obviously the local market and seller motivations will help drive this thought process. Know where the SD market is and have an idea where it's going near term. Stay up to date if possible on local housing blogs to get some indication on where the market is heading. Be wary of NAR musings as they tend to be more cheerleaderish in their opinions. Again, if you feel comfortable with what you are doing, and negotiate on your own behalf, at least have a RE Lawyer review all docs before signing. You could probably find an Agent willing to just do the paperwork for you for minimal charge. It is a GOOD time to buy RE depending on your local market conditions, and if you are knowledgeable in what it takes in the longterm, as well as the short, to owning and maintaining such. Also, with your contract, request a copy of the HOA and their financial statement along with minutes from their last meeting. Just my 2 cents worth. Good Luck and remember in this market, the operative word is NEXT.
2 votes Thank Flag Link Wed Jan 2, 2008
OK, 2 questions for you

1) Are you an experienced buyer (e.g. actually purchased homes before) or an experienced shopper (lots of research but haven't committed to a property/agent yet)?
2) Would you choose a doctor or a lawyer on the same basis? (How low a price)

If you've never gone thru the process, I'd recommend a Buyer agent definitely. The seller pays buyer commission in most cases. So as someone else is paying for professionalism and experience - you don't want to learn expensive lessons because you did it without a professional or based solely on how much you could get back. If price is paramount, a good buyer's agent can show you how their experience saves you money and expensive mistakes (e.g. getting 2% lower price for buyer is better than 25-40% back).

Check REBAC for Buyer agents who have the ABR (Accredited Buyer Representative) designation.
2 votes Thank Flag Link Tue Jan 1, 2008
"I guess I just don't understand the concept behind the buyer's agent and their purported "fiduciary obligation" to the buyer when they are ultimately being paid by the seller and the amount they earn is directly correlated with the sale price."
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The sale price difference is not going to make a huge difference in the commission. You might as well ask how the buyer/customer's agent, who has a relationship with the buyer but not the seller, can be looking out for the SELLER'S best interest. Most agents take their fiduciary reponsibilities seriously.

"I mean, if I come to you saying: "I found this property that I want to buy, will you do the paperwork and due diligence?" How much is that worth to an agent in time savings not having to drive me around for months looking at dozens of properties before I make up my mind?"
I tell my seller clients "We may find a buyer for your home in a week. Or it may take 5 months." The commission is the same either way. The seller hires us to do a job: sell the home. Same way with customers, we may show them 3 houses and we may show them 50. The work we do afterwards is the same. And believe me, very few buyers find a home on line, call us, and that's that, house sold. But it does happen. I'm working on selling one of my listings right now. This is one of the most difficult sales I've done, and I also have to split my commission with a referring agent. I'll probably make about 2,500 on this sale before taxes and expenses. It's balanced out by the last house I sold, where I had both the buyer and the seller, and it was an easy painless relatively quick sale.
1 vote Thank Flag Link Wed Jan 23, 2008
Have you looked at Redfin.com? I just found this site recently myself and it seems like a good fit for a buyer like yourself (and me) who pretty much finds their own place, and just needs an agent to do the paperwork. They supposedly rebate 2/3 of the commission. That sounds pretty good to me... just curious if anybody has used them here in SD.
1 vote Thank Flag Link Wed Jan 23, 2008
PP: More important than any commission rebate is the agent's ability to negotiate on your behalf and in your best interests. An excellent negotiator will more than make up for any commission rebate you could hope to receive.

If you can get a top negotiator to rebate commission, all the better. You might try setting up a formula in advance: Full commission for x amount under market value, and slide the scale accordingly.

Good luck!
1 vote Thank Flag Link Sat Jan 12, 2008
Roberta Murp…, Real Estate Pro in San Diego, CA
MVP'08
Contact
Hi, PP. I'm not a real estate agent, but I'm in the process of selling my home. First of all, I'd not assume that you'll get any discount for not using a buyer's agent. The selling agent will be happy to take the full commission, and the seller may not be willing to lower the price any more than he or she would've anyway.

Secondly, I can tell you that one of the people interested in my home is not using a seller's agent, and I will not go under contract with her for anything less than full price/cash/quick close. The fact that she's not using an agent, coupled with other weird behavior (such as showing up at my house unannounced/uninvited to take pictures, and suggesting we make a deal after my listing expires) make me very reluctant to enter into any contract with her. I find the behavior off-putting, I don't trust her, and I'm not interested in pinning such an important transaction on someone who's not going through proper channels.

My two cents...
1 vote Thank Flag Link Wed Jan 2, 2008
The first thing I would do is to caution you to be wary of any agent that that would give you a part of their paycheck. My guess is that they are either new or not accomplished. Plus....if they are giving away their own money to you, how much of YOUR money are they giving away to the seller?

Showing you homes and writing a contract is only a small portion of what a Realtor does to earn his paycheck. We protect you in the investment, make sure you get the needed inspections, and negotiate any needed repairs and other nuances after throughout the escrow. PLUS, the seller pays for your agents commission.

What happens if you use the seller's agent? You don't get a discount on the price - the sellers agent simply makes both sides of the commission.

Why not allow the seller to pay your agent for good representation that has your sole interest in mind? If you both use the same agent, who do you think wins in a negotiaion?

Good luck - it's a great time to buy!
Web Reference: http://www.cindihagley.com
1 vote Thank Flag Link Tue Jan 1, 2008
Cindi Hagley, Real Estate Pro in Pleasanton, CA
MVP'08
Contact
Re: time & terms, almost all contracts are negotiable. Depending on type of property & price range, determine a reasonable time to achieve your goal. If there's lots of properties available, a short term - 90 days, is fine. If you want something difficult to find, 6 months is more reasonable.

Also, always work with someone who offers an Easy Exit Guarantee. Even if they don't, as a client you have the right to fire your agent if they're not performing as agreed, although you should voice your concerns and give a reasonable amount of time to correct the situation.

The other thing to remember is an excellent Buyer agent will also know of, know how to locate and get, properties NOT on the MLS. That knowledge (and ability to buy without other competing offers in some cases) is often invaluable.
1 vote Thank Flag Link Tue Jan 1, 2008
The short answer to all your questions is "everything is negotiable". You can probably get excellent service AND get a commission rebate -- if you really do most of the ground work. You'll have to work out the details in advance with your chosen Realtor/partner. But, contrary to popular belief, your Realtor's primary value is not usually searching for or finding the home for you. We really earn our commission from negotiations, contract skills, construction and/or closing processes and key knowledge of local markets.
1 vote Thank Flag Link Tue Jan 1, 2008
I guess I just don't understand the concept behind the buyer's agent and their purported "fiduciary obligation" to the buyer when they are ultimately being paid by the seller and the amount they earn is directly correlated with the sale price. How is that NOT a confict of interest? I can't think of any other commision based sales job where your goal is to get the lowest price.
Now Agents, don't flip out and jump down my throat: I do understand the services you provide, but perhaps they are more geared to buyers unfamiliar with your area or the homebuying process in general. And in that case, why should you not be paid by the buyers?
I've been on both sides: When I sold my home, I was happy to pay the commissions because there is much more work involved. But even then: I felt the buyer's agent was "working for me" as in: go find me a well-qualified buyer and receive your 3% bounty. I felt somewhat slighted when the guy was negotiating for a lower price. I felt like saying: you want a lower price? Take it out of your commission!
Now that I'm on the buyer-side again, I feel there SHOULD be some sort of rebate or sharing of the commission if I find my own property. I mean, if I come to you saying: "I found this property that I want to buy, will you do the paperwork and due diligence?" How much is that worth to an agent in time savings not having to drive me around for months looking at dozens of properties before I make up my mind?
0 votes Thank Flag Link Wed Jan 23, 2008
I work hard for my commission and there is no way I would split it with someone else. I am also not so wealthy that I can afford to. I would have to question the quality of whatever agent would do that. There are a lot of problems that can come up when you're buying a house, and I wouldn't want to be represented by an agent who is so desperate for a commission that they'd pay someone to buy a house from them. I wonder if THAT agent would show a house listed by a discount agency offering a 1% cooperative fee.
0 votes Thank Flag Link Wed Jan 23, 2008
PP, Although ideally you'd like to save by cutting out the additional commission. Truth is most listing agents are just as happy to collect the full amount and not have to split with others. An agent is a valuable resource, especially when buying. If you have the right agent they will save you enormous amounts of time previewing properties and looking at listings to eliminate those that are not what they appear to be. Additionally, they will negotiate on your behalf regarding sales price, home condition, repairs to be made, and so much more. Typically you'll be asked to sign a contract with an agent. However, if you don't wish to do so I suspect most agents today would still be willing to assist you. As you indicate at the end, your satisfaction if what is most important. Find an agent that wants to earn your business and puts your needs and desires ahead of their pocket book or tight schedule. I focus primarily on buyers and the key is sensitivity to the level of service you as a client want from an agent. Please feel free to call with questions or visit my website to access any San Diego properties for sale with no obligation. Babs 619-249-2221
Web Reference: http://www.BuyFromBabs.com
0 votes Thank Flag Link Wed Jan 23, 2008
Thanks Michelle and all for answers.
I am first time buyer but have been doing research in the area and know which area I am looking for and what kind of REs. Plus have ca$h ready to put abt 25% down and will have loan pre-approved from my local credit union.
I asked this question to evaluate my option and get some good/neitral feednack.
Thanks for help. Will check into REBAC as well.
0 votes Thank Flag Link Tue Jan 1, 2008
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