Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Standard practice is to use an agent as a buyer, and the common statement is that the seller pays for both agents in a transaction.
I have a natural distrust of Real Estate Agents, and my inclination is to not use one, or at the least, pay a flat fee. We've purchased once before, and did use an agent at that point, and came away feeling like we paid a 3% fee for someone to open doors and bundle paperwork given by the Title Company. We were told that the seller pays for both agents, but it seems to me that if I can reduce the cost of a home by 3% if I pay a flat fee, that it's the buyer who pays for the agent.
Too often it seems that the agent has no idea what they're selling, and will give clients incorrect information (unknowingly, I'm sure) or downplay potential problems in order to close the sale. Recently we dealt with a property that was entirely landlocked, with no ability for the property owner to gain access. The agent was attempting to ignore this issue right up until the TO brought it up as a concern, and then the agent was trying to ramrod a (ultimately impossible) solution through while citing the need to close escrow within two weeks.
I can't get over the built in conflict of interest in being paid for a sale going through, and in direct relation to the cost; it seems to me that the perfect buyer's agent would be paid a flat fee and would actively try to negotiate a lower cost for their client, and ensure that these issues are taken care of an do a bit of homework/consult with those more knowledgeable before forging ahead.
What I'd like though is to hear from the other side of the argument; I don't want my past experiences with RE Agents to unfairly influence future decisions. How does an agent deal with the conflict of interest? What mitigations are there for the potential buyer to avoid issues? Given a buyer who is ready to pull their own comps from the MLS, will be looking at PTRs for potential problems, and is willing to negotiate property price independently, is it reasonable to pay a flat fee or eschew the use of a buyer's agent?
I want to address what you are talking about here in the 4th paragraph about what you see as a conflict of interest. Let me explain why there isn't one. First of all it isn't like a used car salesman where he has to sell you a car from the lot he works at or you may go elsewhere, that does encourage a sales person to use pressure to sell. We have access to all the houses on all the lots with the rare exception of a some FSBO's so it isn't in an agents best interest to pressure someone into buying a certain house. A good agent puts the effort into helping you find the one you want because we get most of our business from word of mouth. As far as trying to sell the most expensive house to you the same principal applies. A good agent won't want to sell you something you don't appear to be happy with. Again, we depend on word of mouth. Also, every buyer has a price range they want to stay in and usually the difference from the bottom of the price range to the top isn't enough money to temp and agent to pressure a buyer into something they don't want. Any agent that is only showing properties at the very top of someones price range risks earning a percentage of nothing. Only the dumbest people would try it.
I have yet to meet a realtor with character and integrity, and I've bought and sold 7 houses. I've been looking for a house now for years, not months, and just when I think I've heard every lie and misrepresentation there is, I hear a new one.
^^^ I agree. I am currently on my 6th home purchase and I have many stories of incompetence and dishonesty as well, but I will share my most recent one.
I requested the lateral sewer line completely replaced and not repaired after a video cam inspection revealed part of a sewer lateral line (25’) needed to be replaced and/or repaired, buyers agent said to me that I could not dictate to sellers what to do with their home if sellers chose to repair it.
My agent said he'd talk to listing agent to see what sellers wanted to do replace or repair. I told him, in no uncertain terms, if the line was not replaced, I would walk. Well guess what, the sellers agreed to a complete line replacement. Then I asked about warranty on the line replacement early on when seller agreed to replace the sewer line, I didn’t get an answer about the warranty until after date of negotiations on contract should have been completed, go figure. They don't want the deal to fall through at any cost.
These are not isolated incidents, in my experience, what are the chances that all agents that I have come across were dishonest and/or incompetent, good luck finding one that is both honest and competent.
@WorldKlas, we are not all seasoned investors, sadly many homebuyers get taken, time and again.
Welcome to City Data, where we stand to learn a lot by participating.
The Big Lie in the REALTOR® COE is the artifice that allows us to pontificate that "Buyers Agency Is Free." It is not, and never when a buyers' agent takes a slice off the HUD1 in a transaction fueled by buyer funds and credit.
But, the shtick goes on with NAR blessing, because no one can really get comfortable with buyers' agency when they are lost in the 1970's and Subagency.
I've seen you say this a few times and I'm sure you've seen me say the opposite. The thing is, I follow the money (literally) on the closing statement and you are using something else to justify your position but you never explain what that is or why you think it. Analogy: I pay a builder to build me a home. He uses that money to buy a boat. Did I pay for the boat? After all, I paid the builder and the builder paid the boat seller. Obviously, the answer is no. In our biz, the buyer pays the seller. The seller pays his broker. The broker pays my broker who then pays me. The buyer paid me about as much as I paid for the builder's boat.
Another analogy: As you know, it is common for certain bills, association fees, and taxes to be paid out of the seller's funds after they are provided by the buyer. Is the buyer paying the seller's taxes? HOA fees? Repairs? I'm sure most buyers would be upset to be told that they are paying those things (instead of the seller) because the money is being "sliced" off on the HUD in the same way that the commission is being paid....out of the seller's funds, BTW. The fact that the closer is accommodating both brokers by creating two itemized checks means nothing more than exactly that...it's an accommodation and nothing else. Of course, I am not talking about a situation where the buyer's broker is literally hired to help them and has a contract stating this. Maybe this is what you are talking about.
I've seen you say this a few times and I'm sure you've seen me say the opposite. The thing is, I follow the money (literally) on the closing statement and you are using something else to justify your position but you never explain what that is or why you think it. Analogy: I pay a builder to build me a home. He uses that money to buy a boat. Did I pay for the boat? After all, I paid the builder and the builder paid the boat seller. Obviously, the answer is no. In our biz, the buyer pays the seller. The seller pays his broker. The broker pays my broker who then pays me. The buyer paid me about as much as I paid for the builder's boat.
Another analogy: As you know, it is common for certain bills, association fees, and taxes to be paid out of the seller's funds after they are provided by the buyer. Is the buyer paying the seller's taxes? HOA fees? Repairs? I'm sure most buyers would be upset to be told that they are paying those things (instead of the seller) because the money is being "sliced" off on the HUD in the same way that the commission is being paid....out of the seller's funds, BTW. The fact that the closer is accommodating both brokers by creating two itemized checks means nothing more than exactly that...it's an accommodation and nothing else. Of course, I am not talking about a situation where the buyer's broker is literally hired to help them and has a contract stating this. Maybe this is what you are talking about.
How often do your sellers pay you in the absence of a buyer?
How often do you receive payment after a buyer provides funding?
When I was a kid, my dad gave me a few bucks. I "paid for" a birthday gift or Christmas gift for my mother. Yep, I did. Sort of, in a shell game. But, not really. I like that analogy much better than either of yours.
The HUD is actually irrelevant. It is not even required unless there is a loan.
And, the loan is the real mess here. Lenders and Fannie and Freddie can wrap their minds around the shell game, and refuse to sever buyer and seller fees and fund them as they really are. So, complicit with the historic system where buyers were not represented and both agents represented and were paid by the seller, the simplistic financial deception continues.
I could never tell a buyer that I work for "free" and then take money from them, shell game or no shell game. And NAR needs to revise the COE and the industry leaders need to review the practice, IMO.
I've seen you say this a few times and I'm sure you've seen me say the opposite. The thing is, I follow the money (literally) on the closing statement and you are using something else to justify your position but you never explain what that is or why you think it. Analogy: I pay a builder to build me a home. He uses that money to buy a boat. Did I pay for the boat? After all, I paid the builder and the builder paid the boat seller. Obviously, the answer is no. In our biz, the buyer pays the seller. The seller pays his broker. The broker pays my broker who then pays me. The buyer paid me about as much as I paid for the builder's boat.
Another analogy: As you know, it is common for certain bills, association fees, and taxes to be paid out of the seller's funds after they are provided by the buyer. Is the buyer paying the seller's taxes? HOA fees? Repairs? I'm sure most buyers would be upset to be told that they are paying those things (instead of the seller) because the money is being "sliced" off on the HUD in the same way that the commission is being paid....out of the seller's funds, BTW. The fact that the closer is accommodating both brokers by creating two itemized checks means nothing more than exactly that...it's an accommodation and nothing else. Of course, I am not talking about a situation where the buyer's broker is literally hired to help them and has a contract stating this. Maybe this is what you are talking about.
It is the same concept as closing costs. A buyer has to pay $6,000 in closing costs for their loan. They can wrap that cost into their offer so they don't pay it out of pocket, but finance it over 30 years instead. If a buyer doesn't pay closing costs out of pocket it doesn't mean they didn't pay them. It just means they financed them with interest, in their loan, like a credit card.
Buyer agency fees are the same way. They are a closing cost that gets wrapped into the cost of the home and hence, loan for the buyer. So if you use the argument that you only pay what is in your HUD column, then buyers don't have loan fees and the loan is free (if the seller pays their closing costs). I don't think any agent would make that statement to a buyer.
How often do your sellers pay you in the absence of a buyer?
How often do you receive payment after a buyer provides funding?
When I was a kid, my dad gave me a few bucks. I "paid for" a birthday gift or Christmas gift for my mother. Yep, I did. Sort of, in a shell game. But, not really. I like that analogy much better than either of yours.
The HUD is actually irrelevant. It is not even required unless there is a loan.
And, the loan is the real mess here. Lenders and Fannie and Freddie can wrap their minds around the shell game, and refuse to sever buyer and seller fees and fund them as they really are. So, complicit with the historic system where buyers were not represented and both agents represented and were paid by the seller, the simplistic financial deception continues.
I could never tell a buyer that I work for "free" and then take money from them, shell game or no shell game. And NAR needs to revise the COE and the industry leaders need to review the practice, IMO.
As an investor myself I have a license so I'm not waiting on someone else to take care of these things for me. Investors need an agent involved because things have to happen quickly.
Having a license in TX can be an issue because agents must always buy title insurance as the seller. And I sometimes sell to my tenants and negotiate the title insurance but I do pay for the abstract search. I sell using a flat fee listing service but use a realtor for my buys. however if I wasn't winding down, I would get a license.
I would think its a violation to fib on anything in a real estate deal.
I wish.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
