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Old 08-13-2012, 12:22 PM
 
285 posts, read 443,914 times
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I see some folks are emphasizing Realtor listing agreements a lot. From buying 1 home and 2 rental properties over the last 10 yrs in central NJ, I can tell you that Realtors often make changes to listing agreements at the last minute/during price negotiation phase. The goal of the listing agent/seller's Realtor is to sell the house ASAP (and pocket their $$). Given this current buyer's market, this is more true these days. I have had Realtors kick in $$ during price negotiation phase, just to get the buyer and seller to close the deal on two occasions (I used a buyer's agent one of those times). The third time, I bought a house directly from FSBO, so no Realtors were involved at all. Of course, I had lawyers review all paperwork in each case to cover the legal aspect of the transaction. I am about to start the process of buying a new home (for myself) and have no intention of using a buyer's agent. Just like the OP (original poster), I am pretty knowledgeable about the area and think that if I go in directly, I will be able to knock off 2.5% to 3% of selling price right of the bat.
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Old 08-13-2012, 12:49 PM
 
2,619 posts, read 4,113,678 times
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The data the OP is referring to (I think) comes from Freakonomics (link to a revisited study).

Freakonomics Real Estate Agents, Revisited

OP, I believe that if you have no agent, the seller gets a higher price (e.g. if the commission were 3% buyer/ 3% seller), from which you can negotiate on/ offer a mathematically lower price of 2.9% than the next best offer.
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Old 08-13-2012, 02:05 PM
 
1,726 posts, read 2,277,768 times
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Quote:
Originally Posted by 4NJseasons View Post
I see some folks are emphasizing Realtor listing agreements a lot. From buying 1 home and 2 rental properties over the last 10 yrs in central NJ, I can tell you that Realtors often make changes to listing agreements at the last minute/during price negotiation phase. The goal of the listing agent/seller's Realtor is to sell the house ASAP (and pocket their $$). Given this current buyer's market, this is more true these days. I have had Realtors kick in $$ during price negotiation phase, just to get the buyer and seller to close the deal on two occasions (I used a buyer's agent one of those times). The third time, I bought a house directly from FSBO, so no Realtors were involved at all. Of course, I had lawyers review all paperwork in each case to cover the legal aspect of the transaction. I am about to start the process of buying a new home (for myself) and have no intention of using a buyer's agent. Just like the OP (original poster), I am pretty knowledgeable about the area and think that if I go in directly, I will be able to knock off 2.5% to 3% of selling price right of the bat.
This is where the realtors here will tell you that you are wrong. They will say that you should get your best price regardless of the realtors commission. You are just a greedy jerk. If you ask for that 3% b/c you are unrepresented you are illegally interfering with their listing agreement. yada yada yada....

Logic tells you that you are correct and that this is common sense...The seller should be willing to negotiate with that side of the commission. If the listing broker was willing to share with a represented buyer, why not with an unrepresented one? The answer is that its already spelled out in their contract, and that most realtors are looking out for other realtors. If you ask for that 3% and their contract says they get 6% if there is an unrepresented buyer, then you can pretty much kiss your hope of getting that 3%...the agent/broker have already decided how to spend their windfall gains from you.

It all depends on what type of Agent you get....I have successfully used that process several times, and other times when dealing with the greedier agents I have used a friend of mine...I made offers that dealt with commission that were rejected and I countered with the same offer this time using my own realtor.

In one of 3 transactions just adding another realtor was enough to close the property. Instead of me getting to lower the price by the buyer agents commission, another person got paid for nothing. The friend I use loves when I call b/c he gets paid to do literally nothing. He adds his broker/sales information to the contract I have already done for him. Its literally free money....Granted he only takes 1.5% and credits me the other 1.5%, but still...its free money.
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Old 08-13-2012, 03:17 PM
 
285 posts, read 443,914 times
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Quote:
Originally Posted by marksmu View Post
This is where the realtors here will tell you that you are wrong. They will say that you should get your best price regardless of the realtors commission. You are just a greedy jerk. If you ask for that 3% b/c you are unrepresented you are illegally interfering with their listing agreement. yada yada yada....
If I am the seller, **I** am the boss. Realtor don't tell me what to do, I tell them. (I am not saying I disregard their advice, but I make the final decision). Sure I am legally bound by the agreement with the (seller's) Realtor, but if he is forcing me to reject an offer just because the buyer is not being represented by a buyer's agent, he better get me a competitive offer ASAP or I will fire him at the earliest possible time as permissible by our contract. Then again, this is just my perspective, YMMV.

However, it does not really come to this. Of the two cases where I experienced that the Realtor discounted their commission, they offered it themselves. Look at it from the perspective of the Realtor- Its a buyer's market out there, here in central NJ it takes 6+ months to sell a home. So, (again, from the perspective of seller's agent) here I have an offer to buy a house (directly from a buyer), but I can make it happen only if I discount my commission ~2.5% (of the total ~5% commission) . Or I can wait another few weeks or months, even then I will still get my 2.5% as most likely, the other buyer will have his own buyer's agent anyway. So, its not like if I wait, I will pocket all the money....So, am I willing to delay taking home my commission/losing all my commission today just because I want to look out for my other Realtor friends? Besides, what if I don't get another offer in the next few weeks/months and my contract with the seller ends. The buyer might get restless and go with another Realtor. I know real estate is local and all, but here in central NJ in this market, I just don't see why a seller's agent will refuse an offer directly from the buyer.

Last edited by 4NJseasons; 08-13-2012 at 03:26 PM..
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Old 08-13-2012, 04:36 PM
 
397 posts, read 492,008 times
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Quote:
Originally Posted by marksmu View Post
Its literally free money....Granted he only takes 1.5% and credits me the other 1.5%, but still...its free money.
Is this subject to income tax?
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Old 08-13-2012, 04:40 PM
 
4,630 posts, read 7,216,053 times
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Quote:
Originally Posted by 4NJseasons View Post
If I am the seller, **I** am the boss. Realtor don't tell me what to do, I I know real estate is local and all, but here in central NJ in this market, I just don't see why a seller's agent will refuse an offer directly from the buyer.
Well, there are a multitude of issues. One is the buyer's ability to buy the house. There's another thread here on CD going where an unrepresented buyer took offense at the listing agent asking for financial information. Long story short, they lost the property.

Why should a Listing Agent and the seller pull a property off the market without knowing IF the buyer can actually close the deal?

Also, and I found this when I was a Realtor, the unrepresented buyer started taking more of MY TIME - financing issues, inspection issues and pricing issues. Since they were NOT MY CLIENT and I had no fidicuary responsibility towards them, they didn't like the non-commital answers they received.

Now it varies by State and the laws are getting more explicit regarding these dual agency situations, but having been on both sides.. as the Listing Agent... and as a seller.......just don't like it at all.

As a present seller, I'm not looking at any offer - even cash - unless I know I have a qualified buyer.
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Old 08-13-2012, 04:53 PM
 
397 posts, read 492,008 times
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Quote:
Originally Posted by ocngypz View Post
Well, there are a multitude of issues. One is the buyer's ability to buy the house. There's another thread here on CD going where an unrepresented buyer took offense at the listing agent asking for financial information. Long story short, they lost the property.

Why should a Listing Agent and the seller pull a property off the market without knowing IF the buyer can actually close the deal?

Also, and I found this when I was a Realtor, the unrepresented buyer started taking more of MY TIME - financing issues, inspection issues and pricing issues. Since they were NOT MY CLIENT and I had no fidicuary responsibility towards them, they didn't like the non-commital answers they received.

Now it varies by State and the laws are getting more explicit regarding these dual agency situations, but having been on both sides.. as the Listing Agent... and as a seller.......just don't like it at all.

As a present seller, I'm not looking at any offer - even cash - unless I know I have a qualified buyer.
I would want to verify the buyers financial ability regardless of whether the buyer is represented or not. As a seller, I would not take the BAs word for it.
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Old 08-13-2012, 05:08 PM
 
3,404 posts, read 4,143,793 times
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Ultimately it is up to the seller to accept the offer or not. What is in the listing agreement is something the buyer doesn't have access to to you won't know if you being unrepresented will make a difference in as far as what commission the seller pays to his agent. It could help in some cases, but it wouldn't be a reason for going unrepresented if you aren't comfortable with the idea or don't know what you're doing.
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Old 08-13-2012, 08:50 PM
 
1,726 posts, read 2,277,768 times
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Quote:
Originally Posted by RE Skeptic View Post
Is this subject to income tax?
I have not asked my CPA about that, but my assumptions is that it is taxable. I assume everything is taxable at the 35% rate and then at the end of the year if it is less I move that extra money I had set aside for taxes over to the savings account or IRA.
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Old 08-13-2012, 09:58 PM
 
Location: DFW - Coppell / Las Colinas
29,975 posts, read 34,587,203 times
Reputation: 35978
I would send you a 1099 for any money paid and would be reported to the IRS.
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