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Old 09-06-2008, 12:21 PM
 
15 posts, read 52,332 times
Reputation: 27

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I have located a house I am interesting in purchasing and done the appropriate research (tax assessor/comps/schools/etc....). I am not familiar with Colorado's real estate laws as far as agent fees go. It seems like the 4 agents who I've spoken to all say that I should have a buyer's agent because it won't cost me (the buyer) anything, and that the seller has to pay the agent fees. Since the agents I have tried to use essentially unlock the doors of the houses I want to see and agree with me if I think the house is a piece of crap (what the hell is up with carpet in bathrooms in denver?), I think that their function is completely useless. I have heard myths of helpful agents, but I am skeptical of their existence. I'd prefer for the percentage to reduce the price of the house, not a real estate agent's pocket. So, here's my question: If I go through the process of purchasing the house without a buyer's agent, does the seller's agent get the percentage that would have gone to the buyer's agent? Thanks in advance, and sorry if my rant offended any agents who peruse this. I'd guess that almost everyone who has ever bought or sold a house at least once agrees with me.
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Old 09-06-2008, 03:00 PM
 
14 posts, read 91,811 times
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I would highly recommend not using a buyer's agent if you're comfortable with the process. I've found (several times) that buyer's agents don't provide much help once you've located a property (I don't mean that they are unhelpful, I just mean that it seems silly for me to call my agent just to relay information to the seller's agent, then have the seller's agent call my agent, who then calls me, etc....). Especially with a straightforward residential transaction, and if you're well-informed about the process (as you appear to be), you shouldn't use an agent.

Besides - using an agent doesn't necessarily provide you any "protection". If you have an incompetent agent (and let's be honest, the real estate profession rarely attracts the rocket scientist demographic, so it's not unlikely...), and they overlook something, you aren't afforded any particular protection just because it was your agent's mistake. Ultimately, you are always the one responsible.

As far as money goes, in Denver, sellers usually take ~7%, then give ~2.8% to the buyer's agent. If you don't use an agent, the seller's agent is under no obligation to give YOU that 2.8%. They'll usually just try to keep the full 7% for themselves. In this case, you should just call the seller directly and tell them that their agent is trying to sneak away with an extra 2.8% of the commission, and that they should instruct their agent to take that 2.8% off the purchase price. The sellers pay the same thing no matter what, and the seller's agent will still get his cut. You just have to "encourage" the seller's agent to not try to take your cut as well.
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Old 09-06-2008, 05:18 PM
 
Location: N.E. I-95 corridor
792 posts, read 2,804,947 times
Reputation: 200
Quote:
Originally Posted by frankurias View Post
I am not familiar with Colorado's real estate laws as far as agent fees go.
In Boulder Co. I believe the selling agent gets 3.2% and the buyers agent gets 2.8% for 6% total.

Quote:
Originally Posted by frankurias View Post
So, here's my question: If I go through the process of purchasing the house without a buyer's agent, does the seller's agent get the percentage that would have gone to the buyer's agent?
I believe a dual agent would be entitled to the full 6% in this case. This is what I have been told in the past.
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Old 09-06-2008, 06:29 PM
 
Location: Just south of Denver since 1989
10,909 posts, read 29,397,473 times
Reputation: 7131
There is no dual agency in Colorado. Seller's broker (aka listing broker,) Buyer's Broker (aka Selling Broker) and Transaction Broker (either or maybe both.)

Read the Definitions of Agency on the state's website http://www.dora.state.co.us/real-est...DD25-05-04.pdf

You cannot tell the listing broker to take less than what is in the contract between the brokerage and the seller. That is called contract interference.

You can make whatever offer you'd like to the seller through the listing broker and it will be presented. Would the seller negotiate 3% off the purchase price? The only way to find out is to write up an offer.

Finding the property for the buyer is the least important part of my job (IMO) my skills are put use during contract negotiation, and inspections, ans transaction management. I don't care what house you buy, as long as you are fully informed.
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Old 09-06-2008, 06:39 PM
 
14 posts, read 91,811 times
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Contract interference requires damages of some sort. If the seller's agent is receiving the exact same compensation (as if he would receive if a buyer's agent was involved), he has suffered no loss, and no one has committed contract interference.

In any case, I repeat my suggestion that the best way to deal with this is to contact the sellers directly and explain that you are not using a buyer's agent, and that they should renegotiate their contract with their agent to reduce the total commission paid to just the portion properly due the seller's agent. I have done this a few times with easy success.

A smart seller would include a provision in the listing agreement with his agent covering this situation in advance...
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Old 09-06-2008, 07:12 PM
 
Location: Just south of Denver since 1989
10,909 posts, read 29,397,473 times
Reputation: 7131
Quote:
Originally Posted by DanFromSoDak View Post
Contract interference requires damages of some sort. If the seller's agent is receiving the exact same compensation (as if he would receive if a buyer's agent was involved), he has suffered no loss, and no one has committed contract interference.
Damages is this case is money - the broker receives less because the buyer interfered with the contract current in place between the seller and the brokerage. Perfect example.
Quote:
Originally Posted by DanFromSoDak View Post
In any case, I repeat my suggestion that the best way to deal with this is to contact the sellers directly and explain that you are not using a buyer's agent, and that they should renegotiate their contract with their agent to reduce the total commission paid to just the portion properly due the seller's agent. I have done this a few times with easy success.
I always tell my sellers do not talk to buyers, nothing good will come from this - tell them to call me. It's in our contract to refer negotiations through the broker.

Quote:
Originally Posted by DanFromSoDak View Post
A smart seller would include a provision in the listing agreement with his agent covering this situation in advance...
Some do, most don't. They want the property sold.

I do not like doing all the work for half the pay and all the liability. It still takes time, skill, and experience - none of that gets halved because the buyer doesn't use a broker.
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Old 09-06-2008, 07:41 PM
 
14 posts, read 91,811 times
Reputation: 19
But the point is that the broker does NOT receive less. If I buy a house using an agent, the seller's agent gets 4.2% and my agent gets 2.8% (or numbers close to those). If I buy a house without using a buyer's agent, why should the broker now get the full 7%? He didn't do any extra work! Clearly, since I am acting as my own agent, I should be entitled to that 2.8% (which I "receive" if I ask the seller to reduce the price by that amount), since I am the one working in place of a buyer's agent.

So how do you believe that the broker is receiving less?

You say "half the pay", but you are getting paid EXACTLY THE SAME as if a buyer's agent were involved! It's not half! And there is virtually no additional work to be done on your part.
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Old 09-06-2008, 07:55 PM
 
Location: Just south of Denver since 1989
10,909 posts, read 29,397,473 times
Reputation: 7131
who writes this offer of yours?
who orders/reviews the O&E report
who reviews your GFE?
who sits at the property during the inspection?
who discusses your options after the inspection?
who discusses appraisal issues with you?
who helps you when your financing gets hung up?
who does your walkthrough with you?
who helps you at the closing table if issues come?
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Old 09-06-2008, 08:19 PM
 
Location: N.E. I-95 corridor
792 posts, read 2,804,947 times
Reputation: 200
I never heard of 7%. Isn't 6% customary in Boulder and metro Denver?
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Old 09-06-2008, 08:30 PM
 
Location: Salem, OR
14,002 posts, read 32,908,117 times
Reputation: 12760
Quote:
Originally Posted by 2bindenver View Post
who writes this offer of yours?
who orders/reviews the O&E report
who reviews your GFE?
who sits at the property during the inspection?
who discusses your options after the inspection?
who discusses appraisal issues with you?
who helps you when your financing gets hung up?
who does your walkthrough with you?
who helps you at the closing table if issues come?
As the listing agent you would do none of these. These are agency level. In my opinion if you do these on behalf of the unagented buyer, you are creating an implied agency relationship. What I tell my sellers when the buyer is unrepresented, is that the deal may fall apart. Be prepared for it.

The only thing I do for unagented buyers is give them the paperwork they need, and a referral for a home inspector if needed. Otherwise, they are doing all of the above on their own.

My job is to continue to solicit a new buyer in case that deal falls apart.

I do think it is interference in a contract, but in my contracts, if there is no buyer agent then that portion of the commission is waived. I have my fee and a buyer agent fee, if involved. I already have it addressed in my contract, so for me, it would not be interference, but having the buyer contact the seller would be irritating.

I can also say that I have had several contracts where the buyer's chose to represent themselves and take the commission offering off the sales price. All have ended up contacting a real estate agent that is a friend to help them out during the transaction. They worked out some deal for their time.

The question isn't that you are going to do the job of two agents. The issue is that many agents won't set the boundaries in order to keep the deal together. That is the problem. If a buyer can't represent themselves well the deal will fail. I'm willing to let it fail in order to prevent violating agency laws. My seller's know this, and are prepped for a bumpy ride.
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