if i represent myself while buying a home, is there any way to recoup 1/2 of the real estate commision

Asked by Frank Lahould, Sunset Beach, NC Tue Sep 11, 2007

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44
Michael Ford, Agent,
Thu Sep 13, 2007
BEST ANSWER
sure, you just make your offer 2.5 or 3 points below what you would have otherwise offered...your offer will be either accepted or countered. no hard feelings.

if i get the question as to whether i will share commissions i always say "no need to ask...go get any mls subscribing agent in town to write up your offer. the home went into the MLS upon listing in hopes that one of my pals in the trade would help me work the file".

if you can lean on him or her to cut you in in their side of the deal that's between you guys. then i get the liability shared, you get a horse to carry your load and i don't have to explain a single thing or hold your hand in any way or form.

agents have a well established business model that works for us...many WILL alter it for a client but you cannot expect all to accommodate your desire to squeeze the deal for two or three points. you can ask...but the answer may be no.
1 vote
Wow you sure had your back up there
Flag Thu Aug 17, 2017
Another agent who keeps scaring people. as a buyer I'll avoid you if you are the LA. As a seller, I'll never hire you. You guys should find a higher added value and adapt your job to the reality of the market today instead of trying to lockup the clients.
Flag Thu Oct 20, 2016
late reply, but your reply is kind of dishonest there. making an offer 2.5-3% below is not the same as having your commission cut down to 3%. The seller will be less likely to accept the offer if the seller's the one taking the hit on the sales price rather than the agent on his percentage commission.
Flag Sat Mar 12, 2016
Ruthmarie Hi…, , Westchester County, NY
Sat Sep 15, 2007
OK, I'm straying from the question a bit here because there seem to be quite a few angry buyers/sellers who keep wanting to squeeze commissions and I think its time to put some of this in its proper perspective.

Do you (the buyer or seller) take for granted that an agent will take you around to property after property FOR FREE? Most people do take this for granted and think nothing of trying to "window shop" at the expense of agents who are hoping to make a deal. I've put as much as 750 miles on my car trotting one customer around for three months before they decided that "this wasn't the right time for them." Four months later they closed on a FSBO and I got nothing. Do you complain when this happens to one of us?

How about when we list a house spend a ton of money advertising it. Give up four weekends to run open houses and then the offers come in lower than what you want....so you decide not to sell. Do you complain about the fact that we walk away from this uncompensated with out-of-pocket expenses in four figures? Do you expect to be able to pull your property if things don't work out?

What about when you are buying your first property - generally a condo or co-op. These aren't very expensive so the commission on them can be nothing short of pitiful. Yet I can spend 200 hours earning less than $2000 on such a transaction. Do you complain that we are earning about minimum wage after expenses. What happens when you turn around to sell the property? Do you complain when the listing agent barely breaks even after advertising the unit?

Well......maybe you should START complaining. Because that is in part why higher end commissions are so high. This is a service intensive business. If you want all that service, eventually someone has to pay the piper. If we didn't from time to time land a big commission all that free service would disappear in a hurry.

The trouble with discounting commissions is that it negates the fact that agents work many hours with NO compensation AND there is no getting around the fact that purchasing and selling a home are very time-intensive and EXPENSIVE activities. You can't get around that.
7 votes
Paul Slaybau…, Agent, Scottsdale, AZ
Tue Sep 11, 2007
If you do not have an agent, then the listing agent has procured you as a buyer, and would be entitled to his/her full fee. Buyers do not procure themselves. No matter what medium led you to the property (internet, periodical, open house, sign, flyer, etc), the listing agent is due the full commission if you are unrepresented. Why would any self respecting agent pass out 1/2 of what he/she is due? The goal of any listing agent is to procure the buyer. We only co-broke as a means of tapping into all of the buyers out there working with agents. Further, instead of approaching multiple listing agents trying to find one who will play ball, why not use the services of an agent who will help you analyze each property objectively and secure the best value? If you are only dealing with listing agents, they will give you the hard sell on one particular property, rather than assisting you in combing through all of the inventory. So while you very well might find an agent who will reduce his fee slightly, do you really think that is how you will come out ahead in the end? Is this the guy to trust to tell you whether the home is really a solid value? Consider the whole investment you plan to make, not just a couple of percentage points.
7 votes
Let's be real here. A realtor's job is not hard AT ALL. It is common sense and plain english. You don't even need a high school degree to do it! The only reason it is a "career" is because you have to pass a government test to officially say you are a Realtor. I represented myself in my home purchase and the Realtors always try to scam and mislead you by saying you can't negotiate your 3% out of the costing price. It is very UNETHICAL to mislead people that way. Moochers, lazy people and misleading Realtor are the most annoying types of people I have ever encountered.
Flag Wed Jul 23, 2014
I agree with the comment below.
Flag Sun Nov 17, 2013
Absurd; you are exactly the type of agent that drives people to want to represent themselves.
Flag Fri Oct 26, 2012
John, Both Buyer And Seller, California
Sat Sep 15, 2007
RuthMarie... Wow... Bad day at the office? Pulling out a few examples where things didn't work out (and that happens everywhere, with everyone) doesn't really make the case for not negotiating compensation. We all also know many stories where houses sold for more than the listing price, multiple offers, in a week or less. But that wouldn't help with the argument would it? Was the last six years, where property values (and therefore commision based comp) more or less doubled in many areas all that tough? And just because valuation went through the roof were those services/fees based on percentages only all that more valuable? The question wasn't about how some realtors have a tough day and therefore someone else should pay full freight to make up for it. It was about what room a buyer, or seller, has to negotiate compensation. A rant about the few that got away doesn't really address that fee can, should and increasingly will be negotiated.
4 votes
J Lo, Home Buyer, California Glory, Brentwood, CA
Tue Sep 11, 2007
This type of question has been posed in the past - excuse my plagiarism - and or inability to name the source - but I must reiterate: Frank, why would you allow for the seller to be represented & not yourself?

You have everything to lose. You are the buyer, where did the phrase "caveat emptor" come from? It is imperative that you do your due diligence - beyond the inspections, beyond the appraisals...

The buyer's agent can catch subtle nuances, see the road ahead through experience & education - any bumps that you can avoid.

What do you really save if you purchase a home that is wrought with problems? It has happened where the buyer was not protected - hence the needless lawsuits, etc. Avoid those pitfalls by getting reputable representation.
4 votes
Rachael Lawr…, Agent, Yorba Linda, CA
Sat Nov 15, 2008
One of the biggest mistakes new and veteran real estate investors make is to purchase a listed property without the use of a buyers agent who is experienced in working with real estate investors. Now any agent can be a buyers agent but unless they understand how we buy and sell property they will not be able to guide you through the many pitfalls and will cause unnecessary paperwork and hassle.

Many investors incorrectly believe that if they don’t use a buyers’ agent they can get the seller to give “them” a 3% discount in-lieu of paying the full 6% to the listing agent. This is almost always wrong. A seller enters into a listing agreement with the listing broker for an agreed upon amount or percentage. Once the property is listed in MLS that fee is shared with the agent, if any, that sells the property. If the listing agent sells the property…they keep 100%. That means not only do you not get a discount equal to the shared fee, but you also are letting the seller have an advantage in the negotiations.

*Reliable advice and information is perhaps the key factor in making a "good decision". As your buyer agent, they will provide you info such as, but not necessarily limited to the following:

* The original purchase price of the house.

* Evaluating improvements that the sellers may have made to the house.

* Comparative market analysis for similar houses in the neighborhood.

* The average closing help paid by sellers of other similar houses in the neighborhood.

* The average drop from list price to sold price.

* How many days the property has been on the market for sale.

* The co-relation between tax assessed value and market value.

* Computerized what if scenarios on spreadsheets to allow you to make sound financial decisions.

* Introduction to reliable mortgage lenders, home inspectors, settlement attorneys etc.

* You worry about finding the perfect house – they will help you take care of all the small details.
3 votes
I'm curious, are you living in a cave? You do realize all of this information is provided by many online sites for free...the original purchase price, days on market, price drops, etc. All of this information is available for free. As an IT professional with a Masters Degree, I think realtors have an over inflated sense of how useful they actually are. I know more about real estate and REI as well as 1031's etc. than any realtor I've worked with. I just sold one of my rentals on my own in a single day, for 15% over asking. Filled out all the required paperwork, made it through inspection and appraisal hurdles, all of it on my own. Seriously, you are a relic from another era.
Flag Mon Mar 6, 2017
Chris you are right and you just need to find that smart agent who understands you and works this with you. Not someone who takes you for an idiot and tries to explain why you need to pay them full price.
I would add: Why this whole commission thing is a percentage? When have the agents worked twice more for $1M SFR compared to a $500k house?
Flag Thu Oct 20, 2016
What if the buyer has done all of the above without an agent's help? All of the above can be attained on line or through recommendations.
What if the only reason you need a real estate agent is to collect the contractual commission fee??
Could you not just offer an agent a set amount of the commission to come in and represent only the offer, then under contract recoup the remaining amount of the commission??
Example: a buyer has done all leg work listed above, a home lists for 300K....3% of that amount is 9K....why wouldn't an agent take 2K to make an offer and have 7K come back to the buyer??? As an agent they would make 2K for a few hours work max.....
Flag Wed Sep 14, 2016
J Lo, Home Buyer, California Glory, Brentwood, CA
Sat Sep 15, 2007
Brava Ruthmarie - you managed to put into perspective as only a seasoned, field tested, neglected, overlooked, overworked, underpaid agent could!
3 votes
Patti Philli…, , Carlsbad, CA
Wed Sep 12, 2007
John, In response to the second part of your response-- not necessarily the same service. When I list a high end home, the marketing cost is much greater. I often advertise in Deam Homes, which costs me about $1,700.00 per month, and I might run the ad for a few months. I also put on evening cocktail open houses which can cost me many hundreds of dollars in sending out invitations, food and drink. I could go on, but no, the costs and services aren't the same, necessarily. Also, many higher end homes need to have me present for buyers and their agents to view them. I might have to run over to that home 2 or 3 times in a day. That doesn't happen on lower priced homes. Just a bit of input. Thanks so much for your input on this!

Patti Phillips
800-680-9133
3 votes
Carrie Crowe…, Agent, Southaven, MS
Tue Sep 11, 2007
The seller may have no choice! If you represent yourself, then the listing agent will get both sides! The commission is determined when the listing is taken. It does not factor into the purchase unless provisions were made in advance. There may be some states where there is a small variance, but I am not aware of any differences when it comes to listing the property! If it is going to be paid anyway, and you can't do anything about it, you would be better off getting an agent to represent you. Good luck, if you have more questions or need more details don't be afraid to ask.
Web Reference:  http://carriecrowell.com
3 votes
Andrew Wetzel, Agent, Havertown, PA
Fri Sep 14, 2007
Probably not in a direct manner as a Broker is not allowed to compensate a non-licensee. However, once you determine what the property is "worth" based on comparable sales, you can either reduce your offer by what you think you saved the seller (if you are using a mortgage you will NOT see a "dollar-for-dollar" savings as you would if you were paying cash) OR, assuming that your lender agrees, request a seller assist towards your closing costs. If the seller expects "fair market value" and a commission savings, you may want to continue to shop as the comparable sales probably have a "full commission" (whatever that is in your location) factored in.

That being said, are you sure that you feel competent to proceed without a Realtor or an Attorney? Buying Real Estate is a project and you do not want to be short-sighted and suffer in the long run.
2 votes
John, Both Buyer And Seller, California
Thu Sep 13, 2007
Paul, I agree with you - and hope that it applies to "Real Estate Pros" who seem to do the same blanket thumbs down/useless click if there's any question as to the ability to negotiate fees. I did not say that most shouldn't use a realtor, but that if you do there's no reason to not discuss fees. I respect the effort and the value that a realtor can bring to the table but fixed percentages in a business/world where all is negotiable borders on price fixing. The market is changing - there are now online services, "a la carte" firms and full service firms that get that the magic 6% isn't set in stone. And yes, if you want more people to see your home if you are selling you can negotiate a higher than 6% fee, right? Seems fair to let a buyer/seller know that everything, including commisions, is negotiable. Now let the thumbs down clicks (from Pros only?) begin!
2 votes
Deborah Madey, Agent, Brick, NJ
Sun Sep 16, 2007
NOTE TO JOHN:
All businesses absorb loss, and those losses must be figured into the pricing component of the business. The restaurant that you eat at charges you, in their pricing, for the food that gets discarded. The insurance company bases it’s premiums on the losses and the scams. The mortgage industry bases interest rates on costs of money and losses from those who don’t or can’t pay. The retail store charges you for clothing based upon damaged goods, items that didn’t sell and shoplifting. Rental rates for residential and commercial buildings are set based on anticipated loss and vacancy rates. The list is nearly infinite.

The loss and unproductive time of the typical Reatlor is high, and yes, that does drive the pricing. The average income for full time agents is not high. The median income for agents is not high. And, the margins for brokers is very lean. There are a few who make some very nice incomes. The pubic often believes that agents make stellar income across the board, and that is simply not true. The loss factor from unproductive time is very high and includes assisting buyers for months who never buy, and servicing listings for months that never sell. It comes with the job, and yes, the fees for the transactions that close do offset that. If everyone, or even most of those I ever came in contact with went to closing and I got paid, yes, I could reduce fees by quite a bit. Since many properties don’t sell, but still cost time and money to promote, and many buyers opt not to buy, common sense explains that this will factor into the pricing. Why would you think that the profit and loss sheet in real estate follows a different format than the accounting sheets and P&L than the rest of all businesses?

FRANK AND JOHN:
The time to negotiate is before utilizing the services, time and expertise of the individual. When a seller considers listing his/her house, the seller can discuss options for representation and marketing and compare that to the fees associated with each. A buyer can negotiate for buyer representation, but the time to do that is before beginning dialog on properties. From the brief description here, it seems that Frank has been working with an agent to see and learn about both the property and the seller. Upon the agent failing to concede to Frank’s attempt to modify the listing agreement, Frank decides he will find another agent. The agent who assisted Frank may have a claim for procuring cause. There is not enough info here to make that assertion, but it is worth pondering as a possibility.
1 vote
Paul Slaybau…, Agent, Scottsdale, AZ
Sun Sep 16, 2007
I find John to be a reasonable person to discuss this with, Ruthmarie. He just has a differing view. I think the crux of his argument is that all commission is negotiable. This is true to a point. It is certainly negotiable between the seller and the listing agent (the only two parties who sign the agreement for compensation), but the buyer is not a party to this agreement. Someone not party to the agreement for compensation is not entitled to negotiate such a fee in any way, shape or form. As I said in a previous post, you can ask a buyer's agent for some type of rebate, but no respectable agent negotiates or passes along a fee to a party that is not responsible for paying it.
1 vote
Fontella Pap…, Agent, Parker, CO
Sat Sep 15, 2007
Frank, yes there may be a way for you to recoup half of the real estate commission. But the real questions is, are you willing to waive 100% of your rights to have proper representation. The seller will have a coach advocating on their behalf, but what about you? Is it really worth 1/2 the commission.
1 vote
Frank Lahould, Home Buyer, Sunset Beach, NC
Fri Sep 14, 2007
thank you all for your answers. I have learned a bunch from all of your answers. Just to clarify my question/situation. I have found the home I want. I know the true value of it already. Easy and many many comps around, and the land value alone is 90% of the cost. So pricing the home is a no brainer. Since I don't need a agent to help me "find" the house, or evaluate the property, I am leaving 3% on the table. In the end I have asked the agent to nogotiate the 3% and as Mike stated. Agent replied no in the end but got a bunch of information out from her about what the owner would really take. In the end, yes I will find a agent to "gift" the 3% to. And yes they will likely earn some of it. But it will be very little work on their part. Essentially show up at closing and get the money.
1 vote
John, Both Buyer And Seller, California
Thu Sep 13, 2007
Patti, I agree with you as well and I appreciate the well thought response. It makes complete sense that it could cost more, even much more, to successfully list, market, present and sell a higher end home than a starter home, and complete sense that those costs should be factored in and result in a higher fee. But I prefer the approach that those higher costs/fees (or lower costs/fees) are discussed and negotiated rather than just presented as fixed across the market, no ability to negotiate. I'm not against using realtors at all, and in most cases it is definitely the way to go. I don't think anyone should be their own attorney, or accountant either - but even though it costs more to have an accountant do your taxes if you have more complicated finances, all accountants across the country don't have a set fee based on your income or assets. But realtors in effect do. I think I've said enough on this so good luck and good fortune to all...
1 vote
Paul Slaybau…, Agent, Scottsdale, AZ
Wed Sep 12, 2007
Funny how all of the thumbs down come out when agents don't rally around the idea of passing out fees. There are some very good responses as to why an agent has earned and is entitled to his/her full fee if there is no other agent involved in the transaction (as well as some very good reasons for having an agent of the buyer's own to protect his interests), but they get rated as "useless" because they don't hop aboard the commission giveaway train? And we agents are accused of being greedy. What exactly is the rationale for a buyer being owed 3% for showing up to buy a house? It's okay to disagree (baseless as it may be), but rating the responses "useless?" Come on people. We're here to help. Even on topics where our livelihood is called into question. Please respect the time the agents take to respond to questions we would rather trade for root canal.
1 vote
Chris Tesch, Agent, College Station, TX
Tue Sep 11, 2007
Frank, I agree wholeheartedly with Jeanette. Representation doesn't cost you anything as a buyer, and it's unlikely to save you money to be unrepresented. It's extra work for the agent to let you into the house, arrange and show up for inspections, negotiate repairs and pull up comparables for you. Get yourself an agent that you trust and get the information about the area, the reputation of the builder, the resale prospects for the house and other expert advice.

Good luck with your search!
1 vote
Deborah Madey, Agent, Brick, NJ
Tue Sep 11, 2007
The seller contracts with the listing broker to represent him/her, find a buyer, and get through closing for an agreed upon fee. Sellers do not hire a listing broker and concurrently contract individually with each potential buyer agent. Sellers hire a listing broker, and listing brokers agree to share their fees with a buyers agent, for the purpose of widening the pool of potential buyers and sharing the workload.

If a buyer comes to contract on the property as a result of the listing brokers marketing and does not have an agent, the listing broker fulfilled his/her role of finding a buyer and managing the contract through closing, and is due his/her full compensation.

You have no monetary gain in the form of savings of commission fees, and you have much to lose by not being represented. I recommend that you find a strong buyer agent who will work on your behalf and evaluate potential properties based upon your criteria and interests. In the event that you found a seller’s agent who was willing to reduce their fee, their motive would be limited to your purchase of that property. On that note, how objective would the evaluation be? You deserve unbiased evaluation of properties and representation that is solely dedicated to achieving the best terms and price for you. As a buyer, you may certainly negotiate the terms of a buyer broker agreement with your buyer agent, but in so doing, you have no authority to modify a contract between 2 other parties (seller and listing agent.) Also, any buyer broker agreement you execute must abide by all governing laws.
1 vote
John, Both Buyer And Seller, California
Tue Sep 11, 2007
I'm not a Real Estate Pro but do own a number of properties. If you are not sure of what is involved in buying a home or don't feel confident in your ability to understand the market, then a buyer's broker/agent can help. But as much as brokers don't want to discuss it, how your buyer's broker's compensation should be, and is, negotiable, just like anything else.

And for the Real Estate Pros giving the usual answers here, not sure how to justify the same set percentage regardless of the type of home or the type of buyer? Is it truly justifiable to charge $60,000 if you happen to list a million dollar home and then charger someone else $9,000 to list a $150,000 home? More or less the same service, correct? Just not clear on the justification for a fixed percentage.
1 vote
Babcock_r, Home Buyer, Sunset Beach, CA
Thu Nov 26, 2015
If you find the house yourself, immediatly tell the listing agent that you intend to represent yourself and do the work you are supose to ie. order the appraisal, inspection report, handle the repairs and coordinate all business with title, mortgage officer, inspector, apraiser and bug guy in a timely manner. then yes you can as I have dozens of times and have never ran into in agent that said no. It is important that you talk directly with the sellers agent and let them know you are representing yourself and expect the 3% buyers commission be rebated to you at close. they show the house as the sellers agent and are usually excited to get the deal going. I own several homes in Texas and California and have never had a problem with this. I think any sellers agent that turns this away is unethical and I would write the owners a letter explaining why i did not buy there home. Although I have only ran into great agents eager to do business with me. I think the key is to establish your expectations over the phone before you see the proprty. Cheers! and Good Luck!!
0 votes
Tjvigi, Renter, Albuquerque, NM
Wed Jul 22, 2015
Though realtors have a place helping those who need the help, most people don't need them. The paperwork is boilerplate. Though the process can be stressful, it is one that I would rather handle myself. Realtors get in the way more than help facilitate the process. In my experience with buying the 3 houses I've purchased over the years, realtors made the process much more difficult than it needed to be. They misinterpreted the kind of home I was looking for, basically wasting my time looking at a bunch of junk. I eventually started looking myself on Trulia, Zillow, and Realtor.com. These sites facilitate the hardest part about buying a house.... finding one you're willing you make an offer on. Working with the realtors slowed down the process and they got in the way of constructive negotiations. I eventually found the last seller on FB and contacted him directly. We both agreed to negotiate everything without the realtors. The process was streamlined and we were able to come to agreements extremely fast. My lender and the Title Company were happy, as we were able to get them everything they needed in advance. Everything was ahead of schedule by weeks. Our realtors made commission on the sale of a home they didn't do anything on. It makes me wonder why realtors even need to be licensed. They didn't do a damn thing other than slow the process down and misinterpret what their clients wanted. My advice... cut the realtors out of the process. FSBO is the way to go. Who came up with the arbitrary 6% commission anyway? So stupid! This is a profession where people get paid simply by networking and knowing a lot of people. Realtors rarely earn their money because of their expertise. Could you imagine having to use an agent to sell your used car? It's simply nonsense and a waste of money! When I decide to sell my properties, I'll be selling them myself. The only thing Realtors are useful for is having access to the MLS and being able to do a market analysis, which most of the time they suck at as well. I'm honestly thinking of becoming a realtor on the side to save my friends and family the money they deserve to keep.
0 votes
Sol, Home Buyer, Indianapolis, IN
Wed Mar 21, 2012
Hi All,

I see that most of the people care about answering the 'representing oneself' question are real estate agents. Most of their answers are not to the point and do not make much sense. Basically they say that either you have to have an agent to protect you, or the listing agent deserves the full amount of the buyer agent's fee, the 3%. It is not the case at all. The bottom line should be money talks and rationale talks.

Say that it is a million dollar house, you know that you want to buy it and is able to fall into troubles with the help of title companies and real estate attorneys. Then you tell the listing agent that by showing the house to you, he or she spent about 5 hours more. For this service you are willing to pay $3000. The seller would accept a 920k into pocket price. There fore your offer to buy the house should be 3% + $3000 to the listing agent plus the 92k to the seller. That is rooughly $953600. With a buyer agent, you pay 980k. In this situation, the listing agent should be happy for having the house sold and make an extra 3k. The seller has got a into pocket price to his or her satisfaction. You have saved yourself about 2.8 percent of the purchase price.

The assumption is that the million dollar house would take a few months to sell. Both the seller and the listing agent should not let you pass if they act cool-headed.

You may fall into some trap by not having a buyer agent. But for the moment, you are confident and happy. To hell with the "You have to have a buyer agent" advice.
0 votes
Ruthmarie Hi…, , Westchester County, NY
Tue Jul 19, 2011
Whoops I hit send too fast - The buy /rent ratio is now favoring buying in my market. I can't speak for the rest of the country - the point is that all real estate is local. Areas such as the NY tri-state, Washington DC, and San Francisco - hub areas with jobs. Those areas are scraping at or near bottom - flat with some pockets moving up and others flat and outlying areas trending down. That signals the beginning of the end of the bear - but only for these areas. I saw the same thing in reverse at the top. Now - we have another 911 - that's another matter.

But location is driving the markets more than ever before. I wouldn't advise someone in PA or MI what to do - I can only advise in my area.

As for Ebay -that analogy really rings true to me - they not only waste your time but your resources. Time of course, is money and ebay I'm SURE is more time consuming than it looks. Everything is actually!!!
0 votes
Ruthmarie Hi…, , Westchester County, NY
Tue Jul 19, 2011
To those who say wait...waiting or not depends on where. The falling knife is pretty much done. Its now a question of cost. The buy vs. rent ratio is now in favor of buying.
0 votes
NonRealtor, , 23456
Tue Jul 19, 2011
Hi Frank,
Wait another year to buy, prices are declining. If you get a better price next year, it's like getting more than 1/2 of the real estate commission. Good Luck
0 votes
NonRealtor, , 23456
Tue Jul 19, 2011
Hi Frank,
Wait another year to buy, prices are declining. If you get a better price next year, it's like getting more than 1/2 of the real estate commission. Good Luck
0 votes
Keri Maxwell, Home Buyer, Stanwood, WA
Tue Jul 19, 2011
Unfortunately a lot of people are oblivious of their actions and how their behavior effects others. My husband and I are first time home buyers and are looking for a home currently. I do know what I want. What I want may or may not be available but it is up to me to find it and believe me with a husband who works, me going to school and three young children at home we do not have time to waste anyones time. I think your frustration comes from the fact that your livelyhood is at stake and if you are not a serious buyer than it's almost like a joke and messing with someones livelyhood is not funny to me. I sell on ebay and it is amazing how many people bid on things and never pay me. When you bid on ebay it is a legally binding contract and still people just don't pay. It ties the item up and I have to relist it which costs me more money. They are oblivious that their actions have an effect on another. It is selfish. So I do apologize for my first comment if it made it sound that you were a public servant. I guess my point was that it comes with the job and there really is no way around it. A large majority of our society lack class and etique and I don't know how that happend. The best of luck to you!
0 votes
Ruthmarie Hi…, , Westchester County, NY
Tue Jul 19, 2011
Hi Keri,
It's an interesting issue because I have been having a lot of what I would call "rudderless buyers." They have no clue as to what they want. So - for my neck of the woods - I have this web page which helps direct the buyer to online information.

For example - we can't really discuss schools - and that's by law. Now, I have a doctorate and teach very PT at local universities - so I know the schools - but I can't SAY much. Frustrating...So if I have a client who objects to SAT scores from a school system that I think is great and then they want to suddenly see homes in a school district I wouldn't send my dog to - we have a problem. So I always ask them to do their due diligence BEFORE asking for showings. That includes schools, crime and demographics. They also need to visit the area- walk around - have a meal out and see the sights. I can't take them on a tour of 20 towns. Physically not possible - so this is necessary research.

What can happen when buyers can't or won't do this is that the buyer gets all caught up with granite counter tops and thinks its great because its much less expensive. Then we get to discussing offers and contracts. By this time I'm into this transaction about 40-60 hours (not joking) and THEN they check the schools and walk. This wastes so many resources. It wastes the sellers time, the buyers time, the agent has just lost a weeks worth of income. All because the buyer was bent on seeing pretty houses without putting in any real effort.

In a market like this - I just can't do that. Only about 1 in 4 buyers actually BUY. If I'm putting in 100 hours for each buyer only to find one that buys - that's 400 hours before we get to contracts. I can't run a business this way. It's simply not viable. So buyers have to do their part. With guidance, most buyers can narrow 20 possible communities down to about 4 by "letting their fingers do the walking" on line. That cuts out swaths of inventory, time and hassle for buyers, agents and sellers. I will take people to four or five communities - But I had one buyer who was in 12 after 40 showings and she just wouldn't stop. It was like potato chips - she just couldn't stop. I had to let that buyer go.

Make no mistake - buying a house is WORK. It's not just hopping into an agents car and waiting until "WHAM!!" you are in love with a house. If you are a first time buyer - there will be compromises to make and most will feel like they are settling. They have to decide - great school district or a care-free house etc. But they have dig a little and do the groundwork.

Bottom line - we want to help - but this IS a business and buyers and sellers have been more than a bit spoiled by what we do for FREE. Some, sadly, take advantage of it. Everyone pays for that type of client. Even they do - eventually. The model is part of the problem of course. But changing it would be logistically impossible. A different topic all together but an interesting one.
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I'm an experienced home buyer. I have now worked with at least 6 agents and bought 3 properties, and each time I go into this, I see NO VALUE in a buyer's agent. Every time I go away with a very bad feeling that they just showed up, wrote up a contract and collected the check. The reason for that feeling: I'm much more informed about everything that you could potentially ask a buyer's agent. I go see at least 50 properties before I buy mine, I do marketing analyses myself (which agents usually have an egg face about when I ask them for it, or just send me a bunch of comps, without any analysis attached), they are uninformed about zoning regulations and they hide behind "we are not lawyers" or "we can't talk about that". They usually give me generic answers to specific questions. And they usually are completely unhelpful in a negotiation - in a market as hot as it is right now (2013, Southern California), negotiation is useless.... Sorry, had to respond to this whinie post.
Flag Thu Apr 25, 2013
Keri Maxwell, Home Buyer, Stanwood, WA
Tue Jul 19, 2011
I can understand that. My point was not that you would ever put up with someone who was wasting your time but understand that maybe some people don't know what they want. And most people don't. That is part of customer service and if you are in sales of any kind you are there by choice and just have to accept that sometimes. You can't control how people think and the mistakes they may be making and they may not even be aware of it. It seems like it's just a big complaining session between real estate agents and their bothersome customers, well they are the ones who ultimately have the money and give you your commision and sometimes it looks like you have to work harder than others for it.
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Ruthmarie Hi…, , Westchester County, NY
Mon Jul 18, 2011
Actually - that is incorrect. Keri. Most of us try to screen out buyers who take are destined to wander aimlessly around for months. Showings are a PRIVILEGE not a right. My job is not to show homes but to act as a fiduciary for the buyer while SELLING them a home - not showing. This is not a bus, not a tourist attraction and not recreation. If a buyer is busting my chops and wasting my time without doing any due diligence about neighborhoods and schools and just wants to run around the county endlessly - they are out of my car. They are not only costing me time and money - they are costing sellers time and energy to prep their homes and vacate the premises. We have an obligation to screen out the lookie lous and only bring in SERIOUS buyers who are ready to pull the trigger. A good buyer has a good feel for neighborhoods and limits his/her search to a sane geography. Sometimes that takes time to find that - but after 30- 40 showings you should have found something or you are not being realistic. Indeed, buyers have duties and obligations to do a certain amount of legwork on their own. If they can't or won't do it, I can't help them because there are things that we can not legally discuss. It is also very unfair to clients who do need us when one buyer who won't do any research and wants to literally galavant all over the county becomes a time vampire. This is high-touch business with a TON of hidden work done by many people including agents, secretaries, showing services and - yes sellers. Tours sometimes take more time to arrange than to execute. So there are definite limits to what a buyers agent can do in terms of showings.
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Keri Maxwell, Home Buyer, Stanwood, WA
Mon Jul 18, 2011
I do not know the answer but do have a comment on the answers given. Those agents who complain about the customer who runs them around and puts undue miles on their car, well your choice was to be a real estate agent. You need to put it into perspective. It's really not our fault that you made that choice and you knew you were not going to be paid hourly and also you agreed to those terms commision. You complain when things are not going great but also flourish in the rewards when they are doing great. Make up your mind are you in customer service or not and if you are you give your all regardless of the outcome. Good things come to those who are patient and give good customer service.
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Keri Maxwell, Home Buyer, Stanwood, WA
Mon Jul 18, 2011
I do not know the answer but do have a comment on the answers given. Those agents who complain about the customer who runs them around and puts undue miles on their car, well your choice was to be a real estate agent. You need to put it into perspective. It's really not our fault that you made that choice and you knew you were not going to be paid hourly and also you agreed to those terms commision. You complain when things are not going great but also flourish in the rewards when they are doing great. Make up your mind are you in customer service or not and if you are you give your all regardless of the outcome. Good things come to those who are patient and give good customer service.
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J R, , New York, NY
Fri Nov 28, 2008
One way to recoup the 3% is to go get a license and be a subscriber to the local MLS.
~~~~~~~~~~~~

Or become a real estate agent LOL!
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Harrison K.…, Agent, Irvine, CA
Fri Nov 28, 2008
Frank ... We recommend that you hire a qualified and experienced Realtor agent for your home purchase. These people will advocate for you and make sure your offer to buy a home is presented in the best way. Realtors will negotiate for you and get the very best deal on home price and possible benefits and credits from the buyer. A qualified Realtor will look out for your interest at every step of your home search, will make sure you are buying the best home at a good price, then coordinate inspection so that you will have all information to make the final purchase decision, then coordinate escrow matters toward the end of your successful purchase. These people will make your transaction work for you ... and not the other side ... and not for the bank. Realtors subscribe to and will abide by the NAR code of ethics. They will have the necessary education and experience to advise you along the way. Your real estate broker will earn and be paid commission by the seller ...not by you.

Best wishes to you in your home search and purchase.

Harrison K. Long, Explore group properties, Coldwell Banker Previews.
949-854-7747
For the best home and property search check out
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Javier Varon, Agent, Carlsbad, CA
Wed Sep 26, 2007
Sure... just ask for it. However, it's not a right so don't whine if you don't get it. I personally wouldn't. Big deal you found a house! That's only a small part of the transaction. Next time I'm going to ask my dentist if he can lower his fee since I found the tooth that hurts. Frankly, it's the Realtors' fault for playing these games. Can you imagine attorneys falling for this?
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Michael Ford, Agent,
Sun Sep 16, 2007
The discussion here has veered off into several directions and you’ve gotten a good basic primer in just how we are compensated (and not compensated). Slaybaugh does a good job of treating the issue of who owns commissions and when they are earned. It is simply inappropriate, I think, to ask a sellers agent to share commissions.

One way to recoup the 3% is to go get a license and be a subscriber to the local MLS. It isn't that hard and it isn't that expensive. Another is to develop a relationship with an independent agent who you make a deal with for a rebate of commissions.

To redirect the discussion it might help to ask if, as a buyer, you really care how much a sellers’ agent is making? Really. When I buy a property I look at the price i am willing to pay...what the seller paid for it, how much they will make (or lose), whether their agent makes a buck or nine thousand means nothing to me. Those facts may be interesting but they do not drive my purchase decision. If some guy overpaid for a property and wants me to do the same, that's his problem. If he signed a listing agreement that overpays his agent (he thinks, in retrospect) that isn't my problem either. I just want to know if I can get it for a price I want. Anything less than that is the gravy. The pricing decision from a buyers standpoint is easy...what's it worth to me.

I would caution you, and any other buyer, that if the purchase you are contemplating is genuinely impacted by a margin of 2-3% then it needs to be looked at real hard to be sure it is a wise one. Boil it down to its core elements...2-3% is very little in the big picture. Keep your eye on the big picture.
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I would argue that 3% is huge, the last transaction i did was $700k. so that three percent rebated back $21k. the buyers agent was happy to deal with me and even sends me houses she is bringing to market soon periodically. she made $21k on a transaction that i closed in 3 weeks, found the house and cordinated all with title, apraisal, inspector and handled all repairs and I did everything a buyers agent should. Can you honestly tell me that she deserved a $42k rip, she would disagree. Cheers!
Flag Thu Nov 26, 2015
Ruthmarie Hi…, , Westchester County, NY
Sun Sep 16, 2007
Thanks Deborah - for stating that clearly. To be honest, I was not in sales until I became an agent and truly didn't understand this concept until I found my time being endlessly drained. Compensation for these issues IS factored into the price. If the squeeze continues, I will have to cut waaay back on services. I have been very, very service oriented up till now - I am having to rethink some of this because too much time is being taken up on those who just won't make a decision.
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Ruthmarie Hi…, , Westchester County, NY
Sun Sep 16, 2007
John,

There is no talking reasonably to someone like you. The fact is that I am not reciting a "few" incidents. This stuff happens ALL THE TIME. Hard as you try to screen out the free loaders, they are literally everywhere. Unfortunately, most of us are a good 20 hours in before we realize that our "buyer" or "seller" isn't truly serious.

Another fact is that the boom was not good for agents at all. Commissions were squeezed very hard by a glut of totally incompetent and idiotic agents who were looking to get rich quick. This did two things: it undermined commissions becuase the fight for listings became intense and it reduced credibility because truly, the public was often dealing with a bunch of imbeciles who would "buy" listings by overpricing them and by accepting reduced commissions where they couldn't even break even.

Buying and selling a home are both labor intensive and EXPENSIVE propositions. Most people end up shooting themselves in the foot trying to go it alone. Since I've been in this business I have witnessed soooo many cheapskates making mistake after mistake - each of which costs thousands. I will say this for them..they worked very, very hard at losing all that money. The trouble was, their intent was to SAVE not SPEND. But they don't understand the process nor do they respect it and with that lack of understanding, they make expensive mistakes.

For example: The question above makes no sense. The agent that Frank has to ask this of is the LISTING agent. The listing agent has a fiduciary obligation to the SELLER not the buyer. Now, as a listing agent, it would never be in the best interest of MY CLIENT - THE SELLER to offer the buyer a kick-back using the SELLER'S money! Sorry, but that just isn't happening because I have to represent my seller and putting the seller's money into the buyer's pocket isn't serving that interest. If the buyer is that cash strapped, getting a mortgage would be a problem these days, so that is a compelling reason to scrap the entire deal. Since the buyer lacks representation, he is more likely not to be objective. It is a fact that deals of this nature tend to fall a part. Heck, I've had serious problems with AGENTS selling their own properties. Even good agents have trouble negotiating their own contracts. Since its their money, they can not be objective. Third party transactions are smoother because the people negotiating are not so emotional. So why would I want to risk taking the seller's property off the market for an iffy transaction? Not likely. I would judge this to be a bad deal for my client in 99% of the cases and probably wouldn't want to go near it with a 10 ft pole.

As far as high commissions are concerned. This is a business of high risk, high reward. We take on a HUGE risk when we list a property. Is anyone going to spend thousands of $$$ marketing a property if the reward is not a very signficant sum? No way. People only engage in contingency deals if the pay off for success is very handsome. If you LIKE the fact that you owe us nothing to list the property - that it is relatively risk-free for you, then you must accept that when we actually SELL it, the pay day is a large one. For every deal that goes well, there are often others that didn't. And YES, it is fair that you pay for that because there is every chance that your deal would go South too. This is a business of risk vs. reward. High risk = high reward - IF things work out.
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Paul Slaybau…, Agent, Scottsdale, AZ
Sat Sep 15, 2007
Frank,

If you are not going to purchase the property through the listing agent, then the buyer's agent that you select has value to the listing agent and the seller even if you see it as "gifted" funds. The agent you choose is the one that is ultimately bringing you to the table. If the agent that you select does not provide any additional value, why wouldn't you go straight through the lister? I understand your frustration, but that 3% was not left on the table as it was never offered to the general public. A fee is negotiated between the seller and the lister, and how the listing agent decides to parcel it out to a cooperating broker is not a matter for the buyer's consumption. I am not going to lie and tell you that you haven't done a good deal of the work already by locating the property, but the question becomes why were you doing all of the scouting when there was never any offer of compensation for your efforts? I suspect you were hoping all along that the agent you approached would play ball? It's good to be an educated buyer, but it does not entitle you to the listing agent's fee. If you choose to bring a buyer's agent on board to protect your interests, that's up to you. The full commission would otherwise go to the lister as his/her job has been performed in full by securing a buyer without assistance from another agent. The incentive for the listing agent to spend all of the advertising dollars and promote the home, rather than sitting at home and waiting for another agent to produce a buyer, is to earn the full fee . As Mike pointed out, you might be able to negotiate some sort of rebate or closing cost assistance with the agent who represents you as a buyer's agent, but does that strike you as something that a top shelf agent would do? If you opt for the services of a buyer's agent, I would let go of the fascination with commission and find the best agent you can who will truly look after your interests. Not only throughout the negotiation and subsequent escrow work, but who will take the time upfront to make sure that this is really the property you want to buy. This is an oft overlooked duty of a Realtor. Sometimes we must protect our clients from making poor purchasing decisions. Will the guy who has a deal fall in his lap, and readily agrees to funnel a portion of it to you, do that? Caveat emptor.
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Carrie Crowe…, Agent, Southaven, MS
Wed Sep 12, 2007
Great response Patti. I wanted to make a statement very similiar last night, but was way to tired to put in that much effort so I postponed. You market the homes in both price ranges much differently. You may put more time in the higher priced out of necessity. It may also take longer to sell as your buyer pool in higher price ranges are smaller. There is no comparison! None!
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The Hagley G…, Agent, Pleasanton, CA
Tue Sep 11, 2007
In the state of California, even if you represent yourself, the licensed agent is still responsible for both sides of the transaction....which means double the work.

Plus, commissions are broker to broker....not agent to agent. In our state, it is illegal to pay a commission to anyone that is not licensed.
Web Reference:  http://www.cindihagley.com
0 votes
Patti Philli…, , Carlsbad, CA
Tue Sep 11, 2007
Frank, I would agree with Jeanette. In addition, keep in mind that the Broker, not the agent "owns" the commission, and the Realtor's company would need to know. In addition, by law in California, you are not allowed to be "paid" a commission unless you are a licensed real estate agent.

Another spin to the answer is that if I were the listing agent, why in the world would I want to share my commission, when I am now going to do twice the work? As you wouldn't know what was needed, the listing agent would have to take the time to get all of the paperwork to you and back from you, let you know what you were signing, etc. Why would they give the buyer's agents commission back to you, when in essense they are doing their work?

Be smart and get representation!

Patti Phillips
800-680-9133
0 votes
I love how you call it work. Ratifying a contract and then ordering a home inspoection?? Thats a joke, and so is asking to keep the other half of the commission, and all of you know it'!
Flag Thu Feb 28, 2013
Tisza Major-…, Agent, Upland, CA
Tue Sep 11, 2007
Hi Frank,

That would be up to the selller of the property. I would suggest that if you are considering the purchase of a home you get yourself a good Realtor to represent your interests. Remember, a Realtor who is representing the buyer in the transaction is not paid by the buyer, but by the seller's agent out of the commission the seller pays to them so an agent will not cost you anthing. And a good Realtor may be able to save you much more including all the headaches that could arise if something goes awry.

I hope this helps and good luck in your home purchase. If you need a referral for a great agent in your agent, be sure to give me a call, I know some great people!

Take care,

Tisza Major-Posner, Realtor, Keller Williams Claremont/La Verne
http://Route66Living,com (909) 837-8922
Web Reference:  http://Route66Living.com
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