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Old 04-26-2009, 12:10 PM
 
20 posts, read 64,292 times
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Default How much are realtor fees in Knoxville?

Hi there,

What is the typical commission for real estate agents in Knoxville (seller & buyer agents)? Who typically pays the buyer's agent fees? We are looking to buy a home soon & wanted to make sure we figured out all of our costs.

Thanks for your help!
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Old 04-26-2009, 12:27 PM
 
12,503 posts, read 17,905,037 times
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Quote:
Originally Posted by chicagofamily View Post
Hi there,

What is the typical commission for real estate agents in Knoxville (seller & buyer agents)? Who typically pays the buyer's agent fees? We are looking to buy a home soon & wanted to make sure we figured out all of our costs.

Thanks for your help!
Usually the fee is 6% on a listing and it is split down the middle between buyer and seller agents. As a buyer, you should not have a fee. The 6% comes off the sellers proceeds.

Hope this helps.
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Old 04-26-2009, 12:54 PM
 
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Thank you, SMG! I just wanted to make sure I wouldn't have to figure a big fee into our costs as a buyer. I appreciate your help.
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Old 04-26-2009, 01:15 PM
 
12,503 posts, read 17,905,037 times
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Originally Posted by chicagofamily View Post
Thank you, SMG! I just wanted to make sure I wouldn't have to figure a big fee into our costs as a buyer. I appreciate your help.
You're very welcome. And, you are very smart to be planning in such detail! Keep us posted on your move
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Old 04-26-2009, 05:00 PM
 
Location: Knoxville, TN
391 posts, read 834,122 times
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Chicago Fam,

As Smoky said, all agent fees are taken off the seller's proceeds. An exception to this can be if a buyer is purchasing a for sale by owner home, and the seller is not offering any compensation to the agent. In this case, if a representation agreement is signed between the buyer and agent, a set fee is often paid to the agent for their services. Sellers understand the cost of having agents market their home, and figure this number into their bottom dollar. 6% can be fairly standard, though 5-5 1/2% is being seen quite often. Even lower for some builder relationships, and especially short sales and foreclosures, as banks will sometimes only pay out a certain percentage. Most selling agents split their commissions 60-40, but a rare few split 50-50.

But as a buyer, you do get the benefits, knowledge, negotiating power, and especially legal representation of an agent at no charge to you. If for any reason any agent tells you otherwise, be wary. Some agents now are trying to induce a down payment for their services.

A few other things you can plan ahead for as far as up front costs will be a home inspection (around $350), an appraisal through the lender (around $300), closing costs if you don't wrap that up into the offer, and depending on your loan type, your down payment percentage can vary. And lastly, depending on the price of the home, up front earnest money may be required, but of course that applies to your purchase price. Best of luck with your move and keep us posted on your progress or let us know of any questions!
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Old 04-26-2009, 05:23 PM
 
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Default The buyer pays a higher price in a deal with an agent

The buyer, who pays for the house, is providing the funds to the seller for the selling agent's commission so the buyer ultimately pays. Ask the seller how much he/she is paying (out of your money) and ask for documentation on the commission then negotiate with the seller for a commensurate reduction. It's all coming out of your, the buyer's, pocket. You are only concerned with your ultimate cost, not who's getting what.

In today's ultra-tough market everything is up for grabs but sellers and agents need sales, the former to move and the latter to pay bills.

There's always another house down the road.
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Old 04-27-2009, 08:06 AM
 
Location: Knoxville, TN
391 posts, read 834,122 times
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There is always advantages and disadvantages of using/not using a buyers agent. An obvious advantage to most would be to assume a lower commission pay when not using a buyers agent. This can be the case, but sometimes not. Some realtors, more common than known, use an agreement basically stating that if they represent both sides, disclosed dual agency, they still get full commission. They are working for both sides, taking on much more legal liability, and require full commission. Many sellers are willing to do this, since they have already budgeted this overall in their price, and would be happy if their agent brings them a client. Also, there are certain laws in place that restrict realtors from discussing commission pay via contract forms with potential buyers, though admittingly it does happen alot.

A few general concerns with this though. First and foremost, a selling agent will always be exactly that. Her protected interests, and usually long term relationship will always be with the seller. The buyer will not have the assurance that the agent is always acting on their behalf. Are you certain you are buying the house for as least as possible? How? They said so? 100% of the time they are trying to move the house for the seller at the highest price possible. Negotations can be tricky and one sided with dual agency, as dual agency is never really what it sounds like. It is more one sided, with the true "agency" definition leaning to the seller, and a representation of the buyer. Many agents prefer not to represent both sides, even for a higher cost, as countless legal implications can arise. Now, not to say that a well educated buyer can't do this, as it certainly can and is done.

But there's of course adantages of using a buyer's agent. If you don't have a certain house picked out, let them do all the work. Research the market, find available homes that fit your criteria. If an agent truly cares for your needs and understands and works with your budget and criteria as the forefront, purchasing can be an easy and surprisingly lucrative task.
1. Buyers agents work as a third party, with strong negotiating skills, with no personal involement. They can communicate back and forth between other agents, in a professional manner, ensuring the transaction takes the proper steps in the proper order.
2. Buyers agents know the area, run numerous comps on the house , property, surrounding area, and know exactly what the house is worth in this market. If you are willing to pay too much, contrary to popular belief, a good agent will tell you that. They are not money hungry and looking for the highest deal, rather they are working with the buyer to get them the maximum benefit with the minimum investment. Good referral bases coming from sound business practices far exceeds one large sale for most realtors. Meaning, they work for you to get you the best deal possible, regardless of their final paycheck.
3. Buyers agents take all of the liability and place it on themselves, releiving the buyer from contractural errors. They have errors and ommissions insurance to back up legal nightmares, where as a buyer only has the paper they sign. Good, experienced realtors are trained and well versed in contract negotiation, be it price reductions with statstical data to prove, proper home inspection remedies and repair notices, personal property negotiations, contract extensions, property disclosures, etc.
4. Realtors scour the market, set up appointments for multiple houses, and most importantly, find out every bit of useful information on properties. When was it bought? How much? What was their loan amount? What was their rate? On their ammoritization, how much should they still owe on the house? Have they taken any seconds or improvement loans on the property, for how much? How will this effect the appraised value of the property? All of this leads to what the property is worth, what they paid for it, and ultimately, how much is too much for their asking price. A lot of in depth research can often protect a buyer from entering into a bad negotiation. A selling agent will never perform these tasks for a buyer, but try to protect this info from the buyer in most cases, as it gives a clearer picture as to what her client, the seller, has invested in the home. Knowing what they have truly invested will give the buyer much more stonger negotiating power.
5. Realtors have a wealth of contact information, be it good mortage contacts too ensure you're getting the best loan at the best rate, home inspectors to make sure you are getting a proper, thorough, and "buyer friendly" inspection, home repair services for any complications or work that may arise through the inspection process, flooring, roofing, plumbing, electricians, etc.
6. Realtors are often in the know of area troubles. A selling agent will never diclose what they are not asked, buying agents will inform the buyer of everything about the area. If there are 20 homes in that distinct neighborhood or area that haven't sold in the last year, why is that? Is there something about the area that should be known? Are you making an investment into an area that may be hard to get out of in the future. If you get transferred in one year and must sell, is your investment marketable? Simply because you like or love the house does not make it so....what assures you that you will have good resale potential. A good realtor will offer their opinions on resale through statistical data, which is very important when purchasing a short term home (5-6 years or under).
7. Buying agents work for the buyer, not the seller. A disclosed dual agent works for the seller and the sellers interests, and represents the buyer on a sales contract. Items 1-6, and countless others, will not be performed from a selling agent, though they may still get a full commission in many cases.

So yes, there is the chance you may have a lower loan amount without using a buying agent. But at the same time, maybe not. If you tour an open house, with an asking price of $200,000, want to make an offer, and the agent insinuates around $190,000 is the lowest they'll take. Back out the 2.5 %, you'll pay around $186,000. Maybe it's a great deal. Or, maybe a buying agent can look into it, find out they bought the house for $160,000 5 years ago, owe around $153,000, have updated only the kitchen with a $10,000 home equity line, there are 7 houses nearby that are priced lower on a price per square foot with comparable amenities, and determine that with statistical appreciation $186,000 is too much in this market, and though strong arm negotiating can get the house for around $183,000. Who knows? The selling agent will never tell you you're overpaying on your most important investment, but a good buying agent always should. My two cents...
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Old 04-27-2009, 09:21 AM
 
Location: Lee's Summit, MO
592 posts, read 1,319,108 times
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I have to agree that it's the buyer and not the seller that is "paying the realtor"..and I'm honestly wondering what "legal liability" the realtor takes on.


Seriously, they appear to be virtually untouchable.

10-14K to sell a 200K house is ridiculous in my opinion.

William, I know there are good folks in your field, but the the guys at Southland give realtors a bad, bad name. In addition, I admittedly didn't have the greatest buyer's agent when moving here, but what's one to do when moving to an entirely new area. I did most all of the research, etc.
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Old 04-27-2009, 10:03 AM
 
Location: Deane Hill, Knoxville, Tennessee
21,637 posts, read 31,006,169 times
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Quote:
Originally Posted by mjb62676 View Post
I have to agree that it's the buyer and not the seller that is "paying the realtor"..and I'm honestly wondering what "legal liability" the realtor takes on.


Seriously, they appear to be virtually untouchable.

10-14K to sell a 200K house is ridiculous in my opinion.

William, I know there are good folks in your field, but the the guys at Southland give realtors a bad, bad name. In addition, I admittedly didn't have the greatest buyer's agent when moving here, but what's one to do when moving to an entirely new area. I did most all of the research, etc.
But wasn't your agent really working for the developer?

Will, I bet you wrote that yourself, unlike that plagiarizing, "award-winning" agent. Nice job, as usual.
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Old 04-27-2009, 10:29 AM
 
Location: Knoxville, TN
391 posts, read 834,122 times
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That's a good question MJB, as most people are not aware. Legal liability for realtors is a huge concern, and for those not trained in the field or familiar with real estate law, can appear to be a misleading concept. In short, legal liability protects the buyer on every item under contract. If I listed every notion of legal liability for realtors, it would literally take pages, upon pages, just for the short abridged version. The National Association of Realtors website (realtor.org) can answer specific questions anyone may have, as a buyer or seller. Ten of millions $/year are paid out, and protected under contract by errors and omissions insurance, meaning buyers protection are heavily covered by realtor's legal liability. It is a practice put into place so that our profession is held responsible and liable when represaenting your protection, not you. Anyone that has ever been through this is very financially thankful.

Some interesting stats. In 2008, 79% percent of home purchases were made using a licensed realtor. Of the 21% or purchases not using a realtor, 11% ended up with court case mitigation to resolve dispute. Of the 79% using a realtor, 3% resluted in court mitigation. Of that 3%, 67% were in cases involving dual agency (selling agent representing both buyer and seller.) Average cost to buyer and seller = $8900. Of the 79% using a realtor, 94% stated they would use a realtor again, 68% the same realtor. Of the 21% not using a realtor, 53% stated they would use a realtor in their next purchase. Disclosed dual agency transactions, with 67% of court mitigations, 74% stated they would not use dual agency again, as their buyer interests were not met/fulfilled.

Definitely poses something to think about. Anyone considering purchasing from a selling agent, needs to understand they are entering into a land of ambiguity, as it is a direct conflict of interest. There is no way an agent or agency can both list homes under contract to represent the best legal and financial interests of a seller and a buyer simultaneously. And this is especially true when a realty agent and their realty company is both listing and selling the same home. It is theoretically impossible for a real estate company or their agents to represent the "best interests" of both buyers and sellers due to the nature of contract law. When a home seller enters into a listing contract with a realty company, the real estate agent and company has a legal or "fiduciary" duty to represent the seller. If the same company also enters into contracts with buyers to represent their "best interest" this automatically creates an inherit conflict of interest. Why? Because it is virtually impossible to represent the "best interests" of both parties under "contract" when considering issues like disclosure of financial and other proprietary and confidential information. The very act of negotiations involved in the transaction requires the disclosure of certain strategic information from the buyer to the buyer-rep. And this information can be easily divulged between agents without the buyer’s knowledge. This is a conflict of interest.

A good thing to always remember, real estate agents are LICENSED in real estate and trained in real estate principals, practices, law, contract negotiating, and some financing… how much real estate training has the everyday buyer had to protect their purchase? 2-3% commission may seem to high to some when they see some paychecks. But in relation to most other commission based sales positions, this is low, especially for the time spent. Touring 30+ homes, spending hours upon hours weeding through homes, pictures, property data, tax records, and contracts, walking buyers through a 30-45 day closing process, and combatting every possible snare can often test many agents, as some feel making $1000-5000 per home, when all work is considered is actually not beneficial enough. Always two sides of the coin. As for the amount of work a proper agent puts into a single home purchase, most buyers or sellers never see the detail work involved, and can easily assume the price doesn't justify work performed. For many that have bought/sold numerous homes and been involved with their realtor, their work is invaluable. Unfortunatey, there are those that don't perform their tasks with priority, such as the Southland crew, and believe me, that they have had their fair share of lawsuits and have lost many an agent due to their practices. There are great agents, and terrible agents, as with any work field. EVERY buyer should read of a sample of the buyers agent duties, and make sure they are obtaining the right agent.

p.s. thanks napster......hopefully he won't use this post on the other boards I see him on sometimes....
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