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Old 08-02-2012, 02:40 PM
 
Location: Lexington, SC
4,281 posts, read 10,286,407 times
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Quote:
Originally Posted by DMenscha View Post
I would like to remind several of the posters here that not all states (especially the western US) have attorneys handle real estate closings. If one needs legal advice about real estate by all means hire an attorney.
True, but candidly I want a legal expert in my corner even in a state where one is not needed. Who am I to trust to protect me especially if push comes to shove?

Are you going to suggest my local realtor?
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Old 08-03-2012, 06:57 AM
 
3,576 posts, read 5,903,599 times
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Quote:
Originally Posted by jghorton View Post
An assumption that you can save the 5% realtor fee by buying a 'for sale by owner' home begs the 'less than what?' question. Is the owner's motive really an altruistic effort to save you money ... or a realization that they probably can't get the higher price they have in mind? If the latter, is the new 'non-realtor' price really a bargain? More important, how are you specifically going to comfortably assure yourself that you are paying the right price.

Also, since the seller typically pays the entire realtor fee (which also covers your realtor's share of the fee, if you have your own realtor) ... Not involving a realtor deprives both the seller and buyer of transaction, comp, inspection, etc-advice. Yes, between a lawyer and the title company, you can protect your own interests, but, then, you are paying for that service (which still does not deal with the RE market issues).

I've sold homes on my own, but, when buying, would rather have someone involved on my side that understands the local market dynamics ... and can advise me about things I might otherwise miss. In this market, I would be more concerned that I was paying the best possible price, than with possibly saving 5% on a RE commission. Perhaps the question you should be asking, is "How can I best ensure that I've got the most competent realtor working for me?"
You seem to be making a contradictory statement here. It's ok that you've sold homes on your own? But you would rather have someone on your side if you are on the buyer side in case you miss something?

Wouldn't you be missing something if you were selling your own home yourself? You aren't concerned about that?

It's reasonable to assume you could act on your own behalf as a buyer also without an agent if you have been through the process. Bottom line is it doesn't cost you any money to have an agent on your side as a buyer. But it obviously will cost you money to have a seller's agent if you are the seller.

Just wanted to point that out. It always comes down to net proceeds from any real estate sales, especially a FSBO situation. Nothing wrong with that.

I'm on my 4th home transaction now. I am actually the buyer (without an agent) in a FSBO and feel comfortable what to look for and what to ask for. The seller is on the same page as me. I am actually saving him at least $14-15K in real estate commission. I am saving myself close to $40K off the market value of the home myself.

The owner is highly motivated. He even listed his home at least 20K below market value to began with. He wanted a quick close and I told him I could close in less than 30 days. Actually it's looking like we could close in 21 days since the loan app has already gone to underwriting for final review. We are using a real estate attorney to finalize the deal.

Last edited by aneftp; 08-03-2012 at 07:06 AM..
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Old 08-03-2012, 08:24 AM
 
1,722 posts, read 2,270,054 times
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Quote:
Originally Posted by jghorton View Post
An assumption that you can save the 5% realtor fee by buying a 'for sale by owner' home begs the 'less than what?' question. Is the owner's motive really an altruistic effort to save you money ... or a realization that they probably can't get the higher price they have in mind? If the latter, is the new 'non-realtor' price really a bargain? More important, how are you specifically going to comfortably assure yourself that you are paying the right price.

Also, since the seller typically pays the entire realtor fee (which also covers your realtor's share of the fee, if you have your own realtor) ... Not involving a realtor deprives both the seller and buyer of transaction, comp, inspection, etc-advice. Yes, between a lawyer and the title company, you can protect your own interests, but, then, you are paying for that service (which still does not deal with the RE market issues).

I've sold homes on my own, but, when buying, would rather have someone involved on my side that understands the local market dynamics ... and can advise me about things I might otherwise miss. In this market, I would be more concerned that I was paying the best possible price, than with possibly saving 5% on a RE commission. Perhaps the question you should be asking, is "How can I best ensure that I've got the most competent realtor working for me?"
A seller in the FSBO can save 5-6% by listing his property at market value and not paying a realtor to do it. Realtors want the every day person to believe that selling a house is somehow difficult. Its not...just like becoming a realtor is not difficult to do.

In this situation the Seller can offer his house for sale at Market Value, just like he normally would and then he can keep the commission that would normally goto a reatlor....FSBO listers will make the buyer pay his realtor if he wants to use a realtor....Its pretty unlikely to occur though b/c most realtors wont show a FSBO house even if its exactly what their client is looking for b/c they know they wont get paid so they ignore it completely and keep the near complete realtor monopoly going.

In terms of pricing Realtors do not have magic powers to determine what market value is in any area. There are a multitude of tools that anyone with half a brain can use to get to an accurate market value. Any person can obtain an independent appraiser...Costs about $350 and he gets an appraiser who does exactly what a realtor would do, but looks unbiased.

Anyone can use Sawbuck or Nuhabitat and get the sales prices of recently sold properties, and compare them to the current MLS properties.

The Seller can also look at his appraisal district and see what the appraisals are there and then make an adjustment based on that number...

By using those three methods its pretty easy to come up with a very good Market Value...then he can look on the MLS at property around him for sale, and then click back over to Sawbuck or Nuhabitat and get days on market, etc...compare to his current property and have an accurate value of what his property should sell for and price it where he wants it depending on how fast he wants to sell.

None of it is tricky. Once a buyer is found, the Seller gets an attorney and they hammer out the paperwork and its done. 5-6% saved, nothing lost....an attorney will cost about $1200, and appraiser $350-$500...max out of pocket $1700 vs. paying a realtor $40,000....its enough to make it worth while, even if you do end up $5-$10,000 below what a realtor "could" have gotten you.The internet is replacing realtors...The only person who really needs a realtor is a buyer who is purchasing in an area he is unfamiliar with....everyone else just uses realtors out of convenience....a very expensive bit of convenience if you ask me.
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Old 08-03-2012, 09:02 AM
 
3,576 posts, read 5,903,599 times
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Quote:
Originally Posted by marksmu View Post
A seller in the FSBO can save 5-6% by listing his property at market value and not paying a realtor to do it. Realtors want the every day person to believe that selling a house is somehow difficult. Its not...just like becoming a realtor is not difficult to do.

In this situation the Seller can offer his house for sale at Market Value, just like he normally would and then he can keep the commission that would normally goto a reatlor....FSBO listers will make the buyer pay his realtor if he wants to use a realtor....Its pretty unlikely to occur though b/c most realtors wont show a FSBO house even if its exactly what their client is looking for b/c they know they wont get paid so they ignore it completely and keep the near complete realtor monopoly going.

In terms of pricing Realtors do not have magic powers to determine what market value is in any area. There are a multitude of tools that anyone with half a brain can use to get to an accurate market value. Any person can obtain an independent appraiser...Costs about $350 and he gets an appraiser who does exactly what a realtor would do, but looks unbiased.

Anyone can use Sawbuck or Nuhabitat and get the sales prices of recently sold properties, and compare them to the current MLS properties.

The Seller can also look at his appraisal district and see what the appraisals are there and then make an adjustment based on that number...

By using those three methods its pretty easy to come up with a very good Market Value...then he can look on the MLS at property around him for sale, and then click back over to Sawbuck or Nuhabitat and get days on market, etc...compare to his current property and have an accurate value of what his property should sell for and price it where he wants it depending on how fast he wants to sell.

None of it is tricky. Once a buyer is found, the Seller gets an attorney and they hammer out the paperwork and its done. 5-6% saved, nothing lost....an attorney will cost about $1200, and appraiser $350-$500...max out of pocket $1700 vs. paying a realtor $40,000....its enough to make it worth while, even if you do end up $5-$10,000 below what a realtor "could" have gotten you.The internet is replacing realtors...The only person who really needs a realtor is a buyer who is purchasing in an area he is unfamiliar with....everyone else just uses realtors out of convenience....a very expensive bit of convenience if you ask me.
While I agree with most points, I disagree that a seller can expect to save himself/herself 5-6%.

Realistically the seller needs to have the mindset that they will probably save 3% (cause that's with a selling agent commission) and expect to pay 2-3% buyer's commission if they want to attract foot traffic. Buying a home is the biggest purchase 95% plus of people will make in their lifetime. Many buyers are simply not savvy enough to know what to ask for. And that's where a realtor (buyer's side) come into place. Unless you plan on giving a buyer (without an agent) a 3% discount off what the market rate is, you most likely aren't going to get that buyer.

No buyer (without an agent) will expect to do their own hard work to pay full market price without an agent or representation.

And that's the biggest fallibly (or simply greed) on most for sale by owner's mindset. If "market rate for a 3000 square foot home is $500K" Assume 95% plus sales are using realtors. If the average commission is 6% paid by the seller. That puts the commission at $30K to be split between buyer/seller agent.

Let's say FSBO lists at 515K to give themselves a little wiggle room for negotiations. If the FSBO "target price/market price" is $500K assuming they are using a full brokerage with 6% fees.

Their "net" with realtors is $470K (before the usual transfer/stamp taxes etc).

If the FSBO wants to negotiate directly with a buyer (without an agent). That buyer will want to pay somewhere between 480-490K for that home. It's unrealistic unless the buyer (without agent) absolutely must have the home to expect the buyer to pay the full $500K for the home. The buyer has to do work that their realtor must do. Find their own inspection company. Know what to ask for in concessions, figure out the correct mortgage broker/company to be steered towards etc. It's not hard work but some buyers simply do not have the knowledge or time to deal with this.

As a FSBO, you have to expect to knock off 2-3% of the market price if you want to give a buyer (without agent) any incentive to buy your home.
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Old 08-03-2012, 09:52 AM
 
1,722 posts, read 2,270,054 times
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Quote:
Originally Posted by aneftp View Post
While I agree with most points, I disagree that a seller can expect to save himself/herself 5-6%.

Realistically the seller needs to have the mindset that they will probably save 3% (cause that's with a selling agent commission) and expect to pay 2-3% buyer's commission if they want to attract foot traffic.
I agree you will get way less foot traffic FSBO than traditional route...I have found the majority of realtors will completely ignore FSBO outright, even if its perfect for their customer. They protect their livelihood.

Quote:
Originally Posted by aneftp View Post
Buying a home is the biggest purchase 95% plus of people will make in their lifetime. Many buyers are simply not savvy enough to know what to ask for. And that's where a realtor (buyer's side) come into place. Unless you plan on giving a buyer (without an agent) a 3% discount off what the market rate is, you most likely aren't going to get that buyer.
Agree again. A buyer who is not 100% comfortable closing a transaction on their own will need help. This is where a realtor is actually quite helpful...however I think most FSBO people do in fact budget a 3% discount from their list price....

Quote:
Originally Posted by aneftp View Post
No buyer (without an agent) will expect to do their own hard work to pay full market price without an agent or representation.
And this is where the FSBO problem hits its biggest snag. If the owner wants to sell for market price, he cant b/c the buyer knows the owner is getting to keep 3% more than if he had used a realtor....both seem to think the 3% should be saved on their side, when in reality, market price is market price....its just impossible for both sides to grasp that b/c each on thinks they should get to keep the savings. Both parties are trying to save money by buying direct, but that is not possible....reasonable buyer/seller could come to an agreement, but most homebuyers/sellers throw logic out the window and let emotions run the show....this is why Realtors maintain a stranglehold on the market and their commission...each Buyer is automatically assuming that the price is inflated to cover the commission. The true market price of a home is not really the true market price anymore..its the market price, plus commission.

Quote:
Originally Posted by aneftp View Post
And that's the biggest fallibly (or simply greed) on most for sale by owner's mindset. If "market rate for a 3000 square foot home is $500K" Assume 95% plus sales are using realtors. If the average commission is 6% paid by the seller. That puts the commission at $30K to be split between buyer/seller agent.
I don't think its seller's or buyer's being greedy...I think its realtors. It costs too much to buy or sell a house in this country. Realtors are over compensated in this regard. In europe its 3% total (Trust me I am NOT advocating the US be anything like Europe)....thats more palatable, but I still believe that selling a house should be a flat fee and realtors should be compensated on a cost plus basis...especially for listings over $500,000.

Quote:
Originally Posted by aneftp View Post
If the FSBO wants to negotiate directly with a buyer (without an agent). That buyer will want to pay somewhere between 480-490K for that home. It's unrealistic unless the buyer (without agent) absolutely must have the home to expect the buyer to pay the full $500K for the home.
It should not be unrealistic if the market value for the home is $500K....The value of the home is what it is...its not value plus cost to sell, its market value. This is where realtors have completely controlled the mindset of buying/selling property.

Quote:
Originally Posted by aneftp View Post
The buyer has to do work that their realtor must do. Find their own inspection company. Know what to ask for in concessions, figure out the correct mortgage broker/company to be steered towards etc. It's not hard work but some buyers simply do not have the knowledge or time to deal with this.

As a FSBO, you have to expect to knock off 2-3% of the market price if you want to give a buyer (without agent) any incentive to buy your home.
The buyers who need the help should get it...there should be two prices on real estate....the market price, and the price with a realtor...Sellers should not have to take less than market price to sell their home....if they do, then they have taken below market. A seller should be able to walk away from a closing with his market price in his pocket, minus his mandatory closing fees.
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Old 08-03-2012, 10:02 AM
 
Location: So Ca
13,879 posts, read 13,545,555 times
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Quote:
Originally Posted by marksmu View Post
Realtors want the every day person to believe that selling a house is somehow difficult. Its not...
Wow, couldn't disagree with you more. Few sellers have the time or expertise to market their home. Our realtor worked her rear end off. If we'd had to do it ourselves, our house would still be on the market. She sold it in ten days.
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Old 08-03-2012, 10:44 AM
 
1,722 posts, read 2,270,054 times
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Originally Posted by CA4Now View Post
Wow, couldn't disagree with you more. Few sellers have the time or expertise to market their home. Our realtor worked her rear end off. If we'd had to do it ourselves, our house would still be on the market. She sold it in ten days.
Every market has its differences but generally Sellers only think its hard to do because they are intimidated by the thought of it all and are scared they are going to screw it up. Its not hard.

In my particular neighborhood of Houston right now I could quite easily list and sell my property in ten days or less...the inventory in my age/quality/location/price is less than 2 houses and I live in a desirable area...My area is a very strong sellers market. There are several buyers agents that maintain market data on their websites that show my perception of this is not incorrect. But its not hard to see....if a house like mine lists on MLS I get an email about it...50% of the homes that list are already pending (I assume a pocket listing or offered to other agents in same office before being posted) the other 50% are pending by the next Wednesday. Only severely over priced property is not selling. Builders are putting sold signs out a day or two after clearing the old house off the lot and putting up their sign....its a strong market for my area at the moment.

If I were in a different situation, a realtor may make my life easier., but its still not hard. I have found that very few listing agents, at least in the Houston market, have to do anything other than place the property on HAR (the houston specific MLS) and the house sells itself....People looking for real estate in Houston usually dont even contact a realtor to show them a property until they have found what they are looking for.

EDIT - If I were looking outside of Houston in an area I am not familiar with I would feel very different about utilizing a realtor. My comments pertain to the exact situation of moving inside of a city that a person knows intimately.
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Old 08-03-2012, 10:57 AM
 
108 posts, read 324,221 times
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What if I was to hire a realtor to help me with the legalities of buying a home for sale by owner.

I would hire the realtor to basically help me complete the transaction of buying the house.

What would be a fair price that I might have to pay a realtor to help me complete the transaction of buying a home that is for sale by owner ?

I also realize that I could hire a real estate attorney to help me complete the transaction of buying a home that is for sale by owner. I am not sure that I would really want to go with a real estate attorney because things could get really expensive.
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Old 08-03-2012, 11:26 AM
 
Location: Columbia, SC
8,844 posts, read 17,440,566 times
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Quote:
Originally Posted by Demps View Post
What if I was to hire a realtor to help me with the legalities of buying a home for sale by owner.

I would hire the realtor to basically help me complete the transaction of buying the house.

What would be a fair price that I might have to pay a realtor to help me complete the transaction of buying a home that is for sale by owner ?

I also realize that I could hire a real estate attorney to help me complete the transaction of buying a home that is for sale by owner. I am not sure that I would really want to go with a real estate attorney because things could get really expensive.
That's a really hard question to answer because I think it would depend on what your expectations were. I'd just sit down and go through the parts of the transaction and see what you were comfortable doing and what you wanted me to do. I'd then either give you an itemized price or we'd work hourly. For hourly I'd probably bill in 30 minute blocks at maybe 200/250 per hour. But of course my area has pretty low cost of living so that my number may not be applicable in your area.
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Old 08-03-2012, 12:41 PM
 
Location: Barrington
41,854 posts, read 31,715,364 times
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Quote:
Originally Posted by marksmu View Post

In europe its 3% total (Trust me I am NOT advocating the US be anything like Europe)....thats more palatable, but I still believe that selling a house should be a flat fee and realtors should be compensated on a cost plus basis...especially for listings over $500,000.
There is no standard in Europe.

Here's the going rate for a handful of countries payable to the estate agent :

UK- 3-5%
Germany- 5%
Sweden- 5%
France 6%
Estonia 3-5%

Italy- 5-6% split between the buyer and seller.

Generally speaking, real estate is a different animal in Europe and there are no MLS.

What we call dual agency is the norm in most places.

When the buyer uses an agent other than the listing agent, the buyer's agent become a sub agent of the listing agent. No one is looking out for the best interests of the buyer.

Marketing a property is not included in estate agency fee.

Outside of major metropolitans and respot areas, the use of estate agents diminishes. Properties generally treansfer amongst family members or friends.

It is common for 50% of the fee to be due and payable upon a contract, regardless if the contract proceeds to closing. This means the consumer shares in the business risk.

VAT fees and property transfer taxes are imposed on all property transfers and range 5-7%.

If/when U.S. consumers get serious about reducing the cost of brokerage, they will share the business risk and pay a cost plus, regardless of outcomes. Thus far, when consumers are given the choice, most prefer the status quo. Go figure.
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