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Old 08-14-2012, 01:46 AM
 
936 posts, read 1,755,222 times
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You're overthinking a process that should be much simpler for you. You are trying to figure out all sorts of ways to save maybe 1-3% off your purchase price yet you fail to choose the easiest way to do it. That is, find a competent buyer's agent who knows the market and has good negotiating skills and they'll save you money.

There's a big difference between having access to sales data and being able to figure out what a property is worth. You are fooling yourself if you think that you know the market better than a competent agent.

If you buy without an agent then you're likely to incur higher attorney fees because your attorney is taking on a larger part of the workload than what would be normal.
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Old 08-14-2012, 07:00 AM
 
3,216 posts, read 2,748,318 times
Reputation: 6581
Sellers who think that it would be clever to state in the listing contract that the buyer's side will be zero in the event that the listing agent handles both sides should consider the scenario of the listing agent having an interested buyer. She will collect twice the pay if that buyer buys a different listing. Eliminating the buyer's side commission altogether in the listing agreement in the event of unrepresented buyer is a perverse incentive. Reduced buyer's side usually makes sense. Eliminated altogether, never.
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Old 08-14-2012, 07:52 AM
 
1,727 posts, read 2,287,035 times
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Quote:
Originally Posted by 1insider View Post
Sellers who think that it would be clever to state in the listing contract that the buyer's side will be zero in the event that the listing agent handles both sides should consider the scenario of the listing agent having an interested buyer. She will collect twice the pay if that buyer buys a different listing. Eliminating the buyer's side commission altogether in the listing agreement in the event of unrepresented buyer is a perverse incentive. Reduced buyer's side usually makes sense. Eliminated altogether, never.
It is THE LISTING AGENTS JOB to find interested buyers and bring them to the property. That is EXACTLY what they are being paid 3% to do.

If you think the 3% is earned by just taking pictures and posting them on the MLS and then filling out a few pages of a contract then something is severely wrong with your interpretation of what the listing agents job actually is!

A listing agent is expected to advertise and find potential buyers...if the listing agent knows of someone who would want the property but does not actively go after that person b/c its in the agent best interest to show that person another property - that is a HUGE problem. That is a TERRIBLE listing agent....that is the exact type of person who should not be selling real estate.

When people hire a listing agent they are hiring someone to sell their property....not just post it on MLS.
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Old 08-14-2012, 08:03 AM
 
Location: DFW - Coppell / Las Colinas
30,017 posts, read 34,671,455 times
Reputation: 36050
Quote:
Originally Posted by marksmu View Post
It is THE LISTING AGENTS JOB to find interested buyers and bring them to the property. That is EXACTLY what they are being paid 3% to do.
Wrong again. I charge 6% to get the home sold. What my Broker does with that money is up to them.
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Old 08-14-2012, 08:09 AM
 
397 posts, read 492,909 times
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Quote:
Originally Posted by Rakin View Post
I would send you a 1099 for any money paid and would be reported to the IRS.
If you send out a 1099, I am assuming you would keep it off the HUD?
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Old 08-14-2012, 08:25 AM
 
Location: DFW - Coppell / Las Colinas
30,017 posts, read 34,671,455 times
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Originally Posted by RE Skeptic View Post
If you send out a 1099, I am assuming you would keep it off the HUD?
All monies paid out should be on the HUD. I believe the law says any amount over $600 paid to someone should be 1099'd. Personally never faced the situation and would not pay money to a Buyer who was not my client.

The Lender (if used) would probably have problem with money being paid directly to the Buyer and not approve the HUD.
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Old 08-14-2012, 10:01 AM
 
1,727 posts, read 2,287,035 times
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Quote:
Originally Posted by Rakin View Post
Wrong again. I charge 6% to get the home sold. What my Broker does with that money is up to them.
Seriously!? We are still operating on a fictional listing agreement here. I am using generic percentages...there is no right or wrong answer on a fictional listing. Its the agents job to sell the house whether or not the listing agreement states the commission is for 3% or 6%.

I actually think you understand this but just want to tell me I am wrong because you enjoy it.
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Old 08-14-2012, 09:47 PM
 
397 posts, read 492,909 times
Reputation: 210
Quote:
Originally Posted by Rakin View Post
All monies paid out should be on the HUD. I believe the law says any amount over $600 paid to someone should be 1099'd. Personally never faced the situation and would not pay money to a Buyer who was not my client.

The Lender (if used) would probably have problem with money being paid directly to the Buyer and not approve the HUD.
I dont think anything on the HUD is taxable. If a seller gives the buyer a 5K concession at closing, are you saying that this is taxable?

As I understand it, the only potential taxable income is money paid directly (off the HUD). This can occur if the rebate to the buyer exceeds the buyer's closing costs. Some of you may have heard of Redfin, a discount broker on the West Coast.

IRS Rules That Redfin Does Not Have to Report Commission Refunds as Taxable Income | Redfin

That being said, refunds from agents can complicate tax planing and thus the advantage of having the seller reduce their price (assuming the LA is willing to re-negotiate).
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Old 08-14-2012, 10:06 PM
 
397 posts, read 492,909 times
Reputation: 210
Quote:
Originally Posted by yousah View Post
You're overthinking a process that should be much simpler for you. You are trying to figure out all sorts of ways to save maybe 1-3% off your purchase price yet you fail to choose the easiest way to do it. That is, find a competent buyer's agent who knows the market and has good negotiating skills and they'll save you money.
Assume I want a buyers agent, how do I go about knowing if a BA "has good negotiating skills". Is the there a master negotiator score that each RA has? Do I ask them? Seriously, the RAs negoatiating prowess is often cited by agents as a benefit of a BA. But how do you really know who is really who is a good negotiator. Seems like a crap shoot.

Quote:
There's a big difference between having access to sales data and being able to figure out what a property is worth. You are fooling yourself if you think that you know the market better than a competent agent.
Out of town buyers may benefit from the knowledge of a BA, assuming they know the area well, which is not always the case.

Local buyers often know their target neighborhood far better than a random agent. They have probably been tracking sales for months or years, have social contacts and generally have a more keen pulse on the area.

Quote:
If you buy without an agent then you're likely to incur higher attorney fees because your attorney is taking on a larger part of the workload than what would be normal.
Perhaps, but it will still be considerably less than 3% or even 1.5%. With or without a BA, I am still going to have "real" legal representation.
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Old 08-15-2012, 06:50 AM
 
3,216 posts, read 2,748,318 times
Reputation: 6581
Quote:
Originally Posted by marksmu View Post
It is THE LISTING AGENTS JOB to find interested buyers and bring them to the property. That is EXACTLY what they are being paid 3% to do.

If you think the 3% is earned by just taking pictures and posting them on the MLS and then filling out a few pages of a contract then something is severely wrong with your interpretation of what the listing agents job actually is!

A listing agent is expected to advertise and find potential buyers...if the listing agent knows of someone who would want the property but does not actively go after that person b/c its in the agent best interest to show that person another property - that is a HUGE problem. That is a TERRIBLE listing agent....that is the exact type of person who should not be selling real estate.

When people hire a listing agent they are hiring someone to sell their property....not just post it on MLS.
I think you misunderstood my post. I said that by agreeing in the listing agreement to eliminate the buyer's side, a situation is created where the listing agent would be more greatly rewarded if their interested buyer bought a different listing using them as their buyer's agent. I'm all for agreeing (in the listing agreement) to reduce the commission in the event of an unrepresented buyer. However, I am against agreeing to eliminate it altogether so as not to create the perverse incentive.

About just taking pictures and posting on the MLS, that is exactly what the majority of listing agents do. There are good ones that go the extra mile but the majority are lazy. I see way too many listings with bad photos, poor descriptions and/or no lockbox. Don't get me started about the listing agents who don't even put their cell phone numbers in their listings OR the offices that are closed on the weekend. How about the ones who never answer their phones? I'm sure all of us here are the upper crust of our profession but the reality is that the majority of our peers do a crappy job and are responsible for the public's poor opinion of us. I wish it were different. It would make my job easier.
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