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Considering that even real estate agents cannot agree on who pays buyer's agent fees (a very fundamental question that requires clarity), how do you explain the funding of your services as a buyer's agent to a potential client without using the lie that you reference?
Are you saying that you say something like this to your potential buyer's agent clients:
"You're looking for homes in the 400k range which means that my services as a buyer's agent will cost approximately 12,000. This is not free for you and in the end you pay for it. I am confident that you will find that my services showing you houses and writing offers provides you great value for money for that 12,000. I pay for the gas to drive you around and I expect to do hours of work for you...and stuff.
Here...please sign this form..."
Is that kind of how you explain it?
it is easy. Buyers pay the agents fee. but if there was no fee those monies would go to the seller.
so you can say seller pays the fee because it is deducted from the proceeds of the sale.
why seller? well a house that sells for 500k would sell for 500k with or without the fee.
how do we know a 500k house would sell for 500k either way? Well buyers compete for homes based on their ability to pay and typical market variations.
we know this from a factual standpoint. we can measure by looking at large changes in tax policies in a number of countries. in one example a 6% tax was dropped and prices very quickly returned to the norm. infact prices actually went higher because buyers now no longer needed to save both a deposit and the tax payment...
ability to pay is the primary factor driving pricing... (of course demand supply etc)
btw i believe NAR and the 800 odd MLSs are running a racket. the 2 million members of this "club" are controlling the fees using their divide and control method. buyers have no control of over seller fees and sellers have no control of the buyer fees. thus each party is reduced to bargaining over a fraction of the fees.
that and requiring agents to split fees with agencies means fees are split 4 times. Thus allowing agents and agencies to argue that they are "NOT" getting massive money... but remember most RE sales pay out to 4 parties ...so the "Cartel" is getting MASSIVE fees... each MLS is a monopoly on that area and they all collude together to match pricing , otherwise we would see a much wider range of fees based on how intense local competition is , but we don't....
But when the majority of buyers are idiots and dolts and the banks are enabling their irresponsible proclivities it screws everyone else. IF this were true market principles at work (ie only people with CASH up front) could bid on a house the prices would be MUCH lower. Or even if the loans were based on free market, as the previos poster stated, there is no way Joe with his little billy and sally could ever qualify for a loan with his tire shop job nor would he every have the collateral or heafty down payment the bank would require to cover their loan.
This would lead to, I would wager 80% of the people in the market being forced out, with much fewer people bidding the price would drop a staggering amount, not just 10-20k, we are talking 50-60% price corrections downwards.
Joe will do what ever it takes (except actually gain skills and save money) to get little billy and sally into the BEST school district (even though billy and sally are simply average and play call of duty with the rest of the kids in the other districts or what ever time wasting activities girls do) and the nicest house they qualify for. They will run the bid up to what ever the bank puts up. Then they will toil like the peasants they are to keep that place.
Pretty soon you now have meh homes in Arcadia California that cost 700k because its surrounded by less desirable school districts. Wash rinse repeat.
Very true... no or little money down and payments moves inventory... thing is it comes at a price and many are willing to pay it...
Just like the car business... a cash deal doesn't leave many profit centers that come with trade in and lending...
I have never financed a car... always cash... bought some homes cash, bought some with seller financing, bought one with a private note and the rest conventional load with 20 to 30% down payment.
Your logic would work in many situations... such as College degrees to buying home furnishings and of course cars... even vacations when you think about it.
The old mortgage and the one that was on my home when the buyers bought it in 1922 was 25% down with the balance paid off over 10 years....
It's because 50K (How much I paid) is absurd for the amount of work the agents in my example did and quite frankly borders on extortion. Agents block the free market by using their strong board of realtors lobby to prevent a buyer or seller from doing the deal themselves. A seller can do FSBO but most agents will refuse to show their clients the house. A buyer can't just approach a seller and ask to do the deal without an agent unless they have a close relationship and set this deal up before an agent gets involved. Agents then have you sign forms that basically absolve them from any legal liability despite the fact they shoehorned themselves into the transaction in the first place.
I see nothing wrong with commission based sales when they are reasonable. But making a buyer pay 6% on a sale in today's world is crazy. Houses are advertised online and any information I need about an area can be found by searching google on my cell phone from anywhere in the world. That's why people call it a ripoff.
May I suggest/request you read the entire topic, whereby you'll see some input on most of the issues you raise -especially about "cartels" or "cabals" or "monopolies"?
By the way, how do you know what the total commission that you paid but which was taken from the seller's proceeds was?
I asked to see a fsbo house and my agent straight up refused. Sure I could drop the agent but the house wasn't in the area I wanted anyway. But most buyers will simply accept their agents refusal since it's not worth the hassle. That's how the real estate lobby protects their self interest.
you have an agent selection problem.
I've not yet heard of a single state that requires the Buyer to use an agent. Whether you're able to successfully negotiate the Buyer's agent fee off your unrepresented purchase is up to you.
This article is very closely related to the topic you raise about the Billies and Sallies of the world. I suggest that anyone interested in this topic read it. The US government has been subsidizing mortgages for decades and over the last several years, that's increased hugely to the point that it's effectively nationalized. For example, in the UK, the 30 year fixed mortgage doesn't really exist to any extent but it's the staple of the heavily subsidized US system. A 'fixed rate' means fixed for a few years. The nationalized system does not use the capital requirements of the private market and if they priced mortgages according to the appropriate capital requirements, rates should be much higher than they are.
A possible way.
Review many assessments in an area to see if they are accurate.
Keep in mind you may have to divide by a number if the assessment ratio for the town is not recent and above or below market value.
Identify all sales which are family member to family member,estate sales and REO sales and remove them.
Now using a large sample compare all FSBO sales to assessment and come up with a factor as to what % of the assessment they sold for,and do the same with properties sold thru a broker.It could even be broken down by homes in different price ranges.
one could certainly follow all of that data over a number of years and reach a somewhat-educated conclusion.
it all comes down to how accurate the assessed value is, as produced by the government.
Very true... no or little money down and payments moves inventory... thing is it comes at a price and many are willing to pay it...
Just like the car business... a cash deal doesn't leave many profit centers that come with trade in and lending...
I have never financed a car... always cash... bought some homes cash, bought some with seller financing, bought one with a private note and the rest conventional load with 20 to 30% down payment.
Your logic would work in many situations... such as College degrees to buying home furnishings and of course cars... even vacations when you think about it.
The old mortgage and the one that was on my home when the buyers bought it in 1922 was 25% down with the balance paid off over 10 years....
I do as well, but we both pay more for said car because 95% of people are financing. So the dealers are moving product, they dont need to sell at lower prices because people are willing to leverage themselves out to get the car (even though they have no buisness owning a new or nearly new car). I would wager that I paid 15k extra (or about 50%) more than I should have paid for my car had all the mouth breathers been forced out of the market.
If only 20% of the people were buying cars because no one could finance I could drive a WAY harder bargain. Sales would be slow and no one with cash is going to pay 30-40k for a car if they dont have to. But when there is a metaphorical line of people out the door willing to leverage their future to get that car, suddely you the cash buyer are chopped liver, why deal with you when there is 100 other people willing to pay the full inflated price PLUS interest.
I've not yet heard of a single state that requires the Buyer to use an agent. Whether you're able to successfully negotiate the Buyer's agent fee off your unrepresented purchase is up to you.
You and I both know the average person is not going to be able to buy a house listed by an agent without a buyer's agent in the picture. Why do agents insist on throwing out outrageous hypotheticals knowing full well they aren't possible because of the way the agency operates?
Quote:
Originally Posted by BoBromhal
By the way, how do you know what the total commission that you paid but which was taken from the seller's proceeds was?
I know how much the commission is because my agent works for the same firm as the seller's agent. My agent told me how much the commission was. Besides, it's no secret how much the standard commission is here.
You and I both know the average person is not going to be able to buy a house listed by an agent without a buyer's agent in the picture. Why do agents insist on throwing out outrageous hypotheticals knowing full well they aren't possible because of the way the agency operates?
I have no idea how you consider this an "outrageous hypothetical". I do know what hyperbole is, though. Many many times an unrepresented Buyer has brought an offer, and the listing agent has agreed to reduce the agreed-to % since the Buyer isn't represented/no other agent is getting paid. Many many times.
The "average person" has no desire to dedicate the time and assume the solo risk for their largest financial asset, in a transaction that they won't remember when it's time to do it again, and then would also have to dedicate time to learn about 30% of the process all over again. Maybe that's all just in my market though.
Quote:
I know how much the commission is because my agent works for the same firm as the seller's agent. My agent told me how much the commission was. Besides, it's no secret how much the standard commission is here.
I ask because, for the last several years, we haven't known what the seller "paid" the listing agent. I can also tell you that I do not have access to the files to see what other agents charge their listings. Because when we're operating under designated dual agency, I don't have a right to know.
Lastly, there is no market-wide standard.
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