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Asked by Merlina, Asheville, NC Fri Mar 6, 2009

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23
Matt Heisler, Agent, Westborough, MA
Fri Mar 6, 2009
BEST ANSWER
Merlina:

Listing agents have contracts with SELLERS to collect commission, right? OK. Let's say it's 6% of 100,000, or $6000. Now, if you use a buyers agent, the buyers agent (typically) will get half of that money. So what happens if you don't? Well, the seller's MAY have an agreement where the commission is cut - but VERY RARELY is it 50%. I'll tell you why: the listing agent has to do TWICE the work. Usually, they cut 1% or less from the fee: In my example, $1000.

SO: For about 1% of your purchase price, here's what you give up:
1) A person in your corner, to make sure you don't overpay.
2) A person who can advise you what test you could do, and what tests you SHOULD do.**
3) Someone who will help you with your end of the transaction.

If you don't think your buyers agent can do those things, GET ANOTHER ONE. Any decent buyer agent can save their clients more than 1% as opposed to going direct, but it's what you GAIN that makes it worth it. You should NEVER give up your representation unless YOU are prepared to be an expert.

** Here are some good examples.
Example 1: A house has a 30 year-old septic system that "passes" its certification.
What a Listing Agent would say: It has passed it's certification.
What a Buyer Agent would say: You need to know a 30 year old system could FAIL, and sooner rather than later. That risk should be reflected in the price, and you should save money for this expense. We need to talk to the inspector, and review the report VERY carefully, so that you understand what you are buying.

Example 2: A house has a well with well water.
What a Listing Agent would say: You should do a quality test, and a quantity test. (if they say THAT!)
What a Buyer Agent would say: You need to test for Radon in the water, and arsenic, in ADDITION to the standard quality test. And the quantity test is not optional.

Do you see the difference? Unless you KNOW everything you need to inspect, and when you need to inspect it, GET REPRESENTATION, and make sure they are qualified to help you. You wouldn't go to court without a lawyer, don't buy a house without an agent!!!!

Matt
0 votes
Kristin Noll, , Milwaukee, WI
Sun Mar 8, 2009
After some checking, I discovered that this guy probably isn't who he says he is - unless there are two Patrick Beringer's both selling real estate in Bellevue, WA.

This is the real Patrick's profile:
http://www.trulia.com/voices/profile/Real_Estate_Pro-Bellevu…

Can't even be honest about who he is. Makes him really credible. 'Nuff said.
1 vote
J R, , New York, NY
Sun Mar 8, 2009
HI Merlina, you are asking a lot of the right questions - In general its a conflict of interest for the same agent to actually try to represent both buyer and seller in the same transaction. States have different laws on the matter. Here in Tennessee its called "dual agency' and while its allowed, it is generally a bad idea all round. TN also allows the agent to act as a "facilitator" - no agency relationship with either party -(why bother?).
~~~~~~~~~~~~~~~

Correct: the same agent cannot "represent" both the buyer and the seller. However, as long as the listing agent discloses to the buyer that they represent the seller there is nothing unethical about the same agent handling both sides of the sale. There is no need to be a dual agent, transactional agent or facilitator, at least in NY.
1 vote
J R, , New York, NY
Sun Mar 8, 2009
After some checking, I discovered that this guy probably isn't who he says he is - unless there are two Patrick Beringer's both selling real estate in Bellevue, WA.
~~~~~~~~

This one is using the same name and has already had his account cancelled.
0 votes
Kristin Noll, , Milwaukee, WI
Sun Mar 8, 2009
"I guarantee I would have gotten that down to the same amount, if not more, without YOUR help, and without PAYING YOU $5,490 for it. So your buyer could have gotten the same house for at MOST $177,500 instead of the 183k you made him pay. Great work there Kristin!"

Yeah, good luck with that around here. If you had tried for $177,500 on your own it would have been rejected. Period. Pretty presumptuous of you to assume you know all of the details of our negotiations. MAYBE he could have gotten it down more on his own, but that's presuming that he would have even TRIED.

Had I not been helping my client, he would have NOT gotten the house AT ALL, because he didn't think that he could get a $195k house down into his price range. He said he never would have even looked at it because of the asking price. So, I got him a lot more house than he even thought he could get and kept it under his approval amount.

You presume that the purchase amount is the end all of a transaction and forget it's about getting a great place to live, too.

"You are now comparing yourself to contractors, farmers, and lawyers; when you are nothing more than a glorified used car salesman."

Patrick, are you for real? Or has someone stolen your identity and is posting under your name?

How can someone who says "My focus is on finding you the right property, negotiating your absolute best price and terms and making sure closing happens quickly and smoothly" on his web site, turn around and describe agents as glorified car salesman or even be in the business with good conscience?? How can you possibly negotiate the absolute best price and terms for your buyers if you're even involved?? Wouldn't they actually get the best price and terms if you WEREN'T getting your split??

You aren't even worth arguing with, because you obviously aren't a real professional or you'd know by years of experience - as I do - that MOST people don't have the skills, knowledge or time to take on buying or selling a house on their own. There ARE those who can, but there are also people who can make their own car repairs, bake their own bread, fix their own dishwasher, shingle their own roof, etc. But MOST can't or don't even want to, when there is a person who can do that for them.

And everyone knows that commission is built in to the asking price - when the comps come from the MLS, too. The buyer pays it on the front end and gets it back on the sale. People seem to forget that little tidbit.
0 votes
J R, , New York, NY
Sun Mar 8, 2009
You can get 3% off thier lowest price buy cutting out the Buyer's agent. Good luck.

~~~~~~~~~~~~~

How do you plan on doing that?
0 votes
Robert J. Va…, Agent, Clarks Summit, PA
Sun Mar 8, 2009
Pat,

3700 sf on 11.7 acres in Benton Twp., 1 yr old, 3 car garage, 8 rm. 4 bed 2.5 bath, long dirt drive, full basement, no landscaping, signed gas lease, tile baths and hardwood on first, granite counters, vinyl exterior, full conc. basement, well & septic. Give us a price using whatever public sites you choose and post your comps for all to see.
You're about to prove to everyone what I already know.
0 votes
Frank S, , 04543
Sun Mar 8, 2009
Patrick:

Your answer is interesting, you seem to have very strong feelings about this. Do you really feel that the buyers agent is no more than a car salesman? Your website states that you help buyers - but why do you bother if you feel there's no value in it?
0 votes
Ray Pepper, , Washington
Sun Mar 8, 2009
I will say it again. Find an Agent to represent you and get 75% or at least 50% of the commission back. Here in Washington State we have:

http://www.500realty.net
http://www.redfin.com
http://www.shopprop.com
http://www.handspringrealestate.com
http://www.findwell.com

Good Lord! Let another Agent do all the work and take 75% of their commission. There should be a ton of Agents that will give you 50%. Just look for one.
Web Reference:  http://www.500Realty.net
0 votes
Kristin Noll, , Milwaukee, WI
Sun Mar 8, 2009
Whether or not you can save the 3% if you do not have a buyer's agent depends on the state you live it (does it allow rebates?) and the listing broker's policies.

A flat statement that you'll be the one to save the 3% by using the listing agent is completely false, in most cases, in Wisconsin. I don't know about PA.

If you deal straight with the listing agent here, all you are doing is going without someone to look out for your best interests and putting more money in the LISTING BROKER'S pocket. If the commission gets renegotiated, because you don't have an agent, 99% of the time that 3% goes to the SELLER, not to you. And that is even rare. Mostly, it stays in the broker's pocket.

I just had a home close where I was the buyer's agent. Had the buyer gone straight to the listing agent and negotiated 3% off, he would have paid $189,000. The listing agent's job is to get the most money for the seller. They won't offer suggestions to the buyer to get the price lower. Because my client had me as his advocate - working in HIS best interest - I negotiated it down to $183,000. I got him an additional $6,000 in savings and still took the split from the listing agent. So he paid me nothing out-of-pocket. (And it appraised for $215,000!)

If you're trying to get a good deal, in MOST cases, working directly with the lister is the worst thing you can do. They have a legal obligation (and personal interest) to get the most money for their seller - as they should.

(And please don't argue that buyer agents will try to get more money out of buyers to get a higher commission, because that would just be stupid. First off, a few thousand dollars will only gain the typical agent a couple hundred bucks - not worth a bad reputation. By getting a lower price & better deal for our clients we make MORE money, because those happy clients refer us more business!!)
0 votes
Robert J. Va…, Agent, Clarks Summit, PA
Sun Mar 8, 2009
Pat,

One may also build their own home, grow their own food, and represent themselves in court to save money. In Scranton, one cannot look up sold comparable information so you are giving the poster an errant and uninformed opinion. The poster asked for advice, I gave it and for some reason you feel the need to throw a hissy fit about Realtors. Good luck with that.
0 votes
Robert J. Va…, Agent, Clarks Summit, PA
Sun Mar 8, 2009
Merlina,

The more informed you are, the better off you'll be. Discuss your options with your current agent who may actually refer you to a top producing ABR at the destination of choice or interview 3 Buyer agents on your own and decide from there. A good agent will save you thousands by directing you to the lending institution with the most attractive loan package, recommend a reputeable inspector and show you the best comparable/most recent sales indicating true value of the property.
Web Reference:  http://www.robertvanston.com
0 votes
Gita Bantwal, Agent, Jamison, PA
Sat Mar 7, 2009
If you use the listing agent, make sure you know the market value and make up your own mind on the price based on home sales in the area. Also get an attorney if you are not comfortable. . Ask the agent how you will benefit from using the agent. Some agents reduce the fees inorder to help the seller sell and the seller can accept a lower price but some agents keep the entire fees and you may not benefit.
Web Reference:  http://www.gitabantwal.com
0 votes
Eager Buyer, , 29401
Sat Mar 7, 2009
You can get 3% off thier lowest price buy cutting out the Buyer's agent. Good luck.
0 votes
Larry Watford, , 37601
Sat Mar 7, 2009
HI Merlina, you are asking a lot of the right questions - In general its a conflict of interest for the same agent to actually try to represent both buyer and seller in the same transaction. States have different laws on the matter. Here in Tennessee its called "dual agency' and while its allowed, it is generally a bad idea all round. TN also allows the agent to act as a "facilitator" - no agency relationship with either party -(why bother?).

As I noted in my answer to your earlier question, your best bet for saving on fees is to stick with one agent for several transactions over the long term. I often discount my fees for my better clients - we know each other - I know what to expect, what they like and dislike and how they will behave in negotiations. We work as a team to get the best deal and I earn my fees by saving them money on the total deal.

Think about this - if you get your agent to cut his or her fees by 50% you might save 1.5% on the whole deal. But when my clients and I work together, negotiate cleverly, we often see as much a 10% savings over all - after all fees. Much better savings for them and I can afford to work hard for them!!

As for the "dual agency" question - I would be careful. If you have already found the home you want to buy - no agent envolved, I wouldn't envolve a buyers agent - just negotiate for a lower price based on the fact there is no buyers agent fees to be paid -but get a good closing attorney - and make sure he doesn't try to claim the buyers side fees (many will). If you need help finding and evaluating the right property, engage a buyers agent (sign the buyers agency agreement) and put them to work for you - a good agent, working exclusively for you in a buying situation should earn every penny of the fee.

Anyone who tells you they can handle both sides of a transaction - with no conflicts of interest - is not human!!

Good hunting - and keep asking good questions. - LW
0 votes
Chris & Step…, Agent, Philadelphia, PA
Sat Mar 7, 2009
Merlina,

We are doing a dual agency sale right now. I'd like to share with you our personal experience so far with this particular situation. We are currently in the home inpsection negotiation stage of the offer. Here is how it has played out this far:

A few weeks ago the buyer called us saying he saw the proerty (the seller personally showed him the property one day when he was driving by the house). The buyer said he wanted to make a cash offer and wanted us to help him. We immediately discussed his options regarding dual agency vs buyer agency. He said that he had done his homework (viewed our blog and website) and felt we were not only qualified but seemed to have the moral integrity he was loking for (we were flattered of course).

I took the lead as the buyer agent and Chris took the lead as the listing agent. So, I made the offer for him, went back and forth with the seller and buyer and they agreed on a sales price. When we took the listing, we told the seller we would lower the commission if we were to do dual agency so this helped get the offer accepted at a better price for the seller and buyer. In reality we rarely do dual agency.

Then the home inspection was completed and there were a few thousand dollars of repairs that popped up. The buyer asked for a full credit for those repairs and the seller will not agree. I communicated the buyer's requests and Chris communicated the sellers response. We have come to a point in the negotiation process where we are going to adjust our commission once again to close this deal. It is an executive decision on Chris's and my part and our dual agency is allowing us to have full control over how we manage the process.

If the buyer had his own representation then we would very little flexibility adjusting the commission.

My example is our personal experience. We are a husband and wife team and most agents are not. Many agents doing dual agency will not dip into their commission and I do not believe they should. Negotiating both sides of a sale is very difficult. It is hard to stay neutral, but not impossible. It is hard not to give advice knowing both parties strengths and vulnerabilities, but it is not impossible. Dual agency should be entered into with caution but not always with total skepticism. It is a case by case decision.

I hope that our experience has brought some insight to someone reading.Our blog has lots f interesting stories and info. If you want to check it out it is ThePhiladelphiRealEsatevoice .com
0 votes
Heather Mori…, Agent, Allentown, PA
Sat Mar 7, 2009
Hello Merlina,

Well this is all about opinion. What you should think about is what the duties the listing agent has to the seller which is to represent the sellers best interest and get as much money as they can for the seller. How can the seller agent negotiate with them selves to get you the best deal on the house how can they prove current market value is lower than list price?

No you do not pay for any commission the commission is paid by the seller and taken from their profit from selling the home at current market value. The seller shares this commission with the buyers agent. So, if the seller is paying 5percent to the listing agent this is split in half between the 2 agents.

Yes although the listing agent may cut half of the commission to give you a discount who says you would not have received this discount of the price in having a buyer agent protect you.

These are only a few points I wanted to make to help you.

Working with the listing agent is like having the same attorney in a court room.

But in the end you need to do what is best for you.
0 votes
Andrew Salam…, Agent, Tierra Verde, FL
Fri Mar 6, 2009
Merlina,

You really want to have unbiased fiduciary representation when there is so much on the line. Get an agent that is working for you and for you alone.

The idea that you will save money equal to some portion of the commission by going to the listing agent is highly questionable. On the other hand, your buyer's agent might save you a tremendous amount of money (and headaches) by providing expert, un-compromised representation when you need it most. Market knowledge, negotiations, investigations– these are all areas where you really want someone with a very high level of skill and experience working only for the benefit of your best interests.

Particularly in this complicated market, there is just no good reason to not have your own agent.

I've never posted here before, and hopefully that link I typed in below will show up. Although its content is geared mostly toward California Real Estate, I'm sure you can find some helpful information there. You can always do a quick Google search for "exclusive buyer's agent" and get quite a bit more information and perspective.

Good luck,

Andy
0 votes
Ray Pepper, , Washington
Fri Mar 6, 2009
Find an Agent who will give you back 75% of the commission and let them do all the work!
Web Reference:  http://www.500Realty.net
0 votes
Tara Cornett, Agent, Orange Park, FL
Fri Mar 6, 2009
Hi Merlina,

The bottom line is if you go directly to the Listing Agent, they collect 6%..its called a Birthday because it hardly ever happens that a LA sells their own listing. If you use a Buyer's agent the commission is split in half (Listing Broker gets 3% & Selling Broker gets 3%). Either way you choose is fine, however you feel most comfortable. There are alot of good agents out there that will help get you get a good deal and look out for your best interest.

Good luck in your home search =)
0 votes
Rent4life, , Cleveland Heights, OH
Fri Mar 6, 2009
No need if you are a buyer to have an agent.

If it is free why would any one care?

Here is a a little secret: Make an offer withOUT an agent and just keep 3%!!!!!!!!!!!!!!!!!!!!!!!


http://mysite.verizon.net/vzeqrguz/housingbubble/
0 votes
Rent4life, , Cleveland Heights, OH
Fri Mar 6, 2009
Great way to save 3%.You do not need an agent.

But, prices will go down more.

So what 18 months and then see.

Check this out: http://money.cnn.com/2009/02/24/real_estate/Case_Shiller_December/
0 votes
Donna Steo, Agent, Sciota, PA
Fri Mar 6, 2009
Hi Merlina:

Yes the listing agent can represent both the buyer and seller without conflict if they are comfortable with that. They must disclose that they are a dual agent and as long as all parties are comfprtable with it then it is ok. The 6% is paid by the seller. It is not likely that you wll get a better price thru the listing agent because the seller will be paying the commission and any agent will want to do what is best for the customer. If you use another agent to purchase your home it won't cost you any money for commission either.

I hope I helped.

Donna Steo
Better Homes and Gardens Real Estate,
Wilkins & Associates
570-977-5623
dsteo@wilkins1.com
0 votes
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