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So, my husband and I have started looking for homes in the Chicago area. It quickly became apparent that there are two different resale markets, one with higher prices and one with distressed sales.
We are renters and in no hurry to buy. We'd like to, if possible, purchase a foreclosure or short sale.
I have a few questions:
1) Do buyer's agents get the usual 2.5 - 3% commission with short sales and foreclosures?
2) With a relatively inexpensive property for Chicago in a decent neighborhood (we'd try to find a place for $200k-$300k), what motivates a buyer's agent to do a great job for the buyer? As far as I can tell, there can be a ton of work over a long period of time to close a short sale or foreclosure. With a commission low compared to a sale that isn't distressed, why would an agent work hard for me? Does anyone offer extra payment to their agents upon closing? I'm more than willing to pay several extra thousand dollars to an agent who gets me a great deal.
3) Am I wrong to think that we could buy a distressed sale and get a good deal? My husband are fine with continuing to rent while we do a major rehab on a home.
What motivates any real estate agent? Commission paid at closing. After that, referrals. I am a firm believer that if I do a good job for someone, they will tell 10 people. However, if I do a bad job for someone, they will tell 30 people.
Commissions on short sales and foreclosures vary. Right now I am closing a deal on a foreclosure and Freddie Mac is offering 3.5% to the Buyer's Broker.
Take your time and find a good real estate agent. He/she should work hard for you no matter what the percentage of the sale is and at any price point.
Foreclosures really aren't a problem. A bit more work than regular sales, but they offer a reasonable buyer agent compensation. Many short sales offer a decent compensation as well. I think most agents will work whatever transaction their buyer wants, but buyers need to be okay with the wait on short sales. When I explain the process, most choose to not look at short sales.
Since you aren't in a hurry you might be the perfect short sale buyer. MAM on this forum is in the Chicago area and if she doesn't cover where you are looking then she might be able to refer you to a good agent if you need one. I know a good agent in Evanston, and MAM is in Barrington I think.
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