Best banks in area to use for mortgage loan? Realtor's commission. (Houston: for sale by owner, real estate)

[Sampaguita]

I'm asking a bunch of questions because my parents are gearing up to buy a house in the area and my father is absolutely refusing to use a buyer's realtor.

In his experience a real estate transaction involves the seller's realtor & buyer's attorney. You cannot believe the absurdity of the arguments my father & I are having over this (he wants ME to do all the leg work; he's 80, a former realtor "I have more experience...blah-blah-blah" and well, he's 80. Did I say that already?). Granted, dad does have experience but it's OLD experience in 3 other states!

Any recommendations for local banks would be greatly appreciated (please feel free to PM me if necessary).

Also, can anyone please confirm that 6% is the standard realtor's commission in the Houston area? My father doesn't believe me - thinks it's too high in light of the economy. We've been telling him whether he has a realtor or not representing him, someone is going to get paid that 6% and no matter what, it is paid by the seller AND it's reflected in the asking price. He keeps arguing that HE is the one paying because it's in the asking/selling price so why have a buyer's realtor which will drive up the price.

And no...dad is not senile...he's impossible to deal with in these types of matters and has been as long as I can remember. He is always suspicious of other's intentions. Drives us all batty.

Thanks!

[City Love]

I can only imagine the discussions you guys have regarding this topic. You seem to be right on target, but he's not buying into it.

6% is the standard commission, but it's all negotiable. Given that your dad will be on the buying side, the seller's commission will have very little effect on his purchase. If he does not use a buyer's agent, the listing agent will get the full 6%. Or whatever they agreed to during the initial listing. When you sale a home, you sign a listing agreement. That agreement spells out all the commission splits WAY before there is even a buyer. Your dad might put you to work extra hard, as will he, when he could have a buyer's agent represent him at no cost to him.

The listing price does reflect the commissions that will be paid, but regardless of who he uses, the full commission will have to be paid out. Unless you use an agent that can rebate some of their commission, then that makes it work out.

[houstonfan]

Sounds like you're both saying the same thing, just different perspectives. You both agree that the commision is included in the asking price. You see it as the seller paying the commision whereas your dad sees it as the buyer paying, because the buyer's the one forking over the money to pay for the house, which covers the commisions. Sometimes if you don't have your own buyer's agent, the seller will agree to sell the house for 2-3% less, because his take home will be the same since he doesn't have to pay the buyer's agent. This, as Citylove pointed out, DEPENDS on the listing agreement which is already in place. In this economy, I'd have to agree with your dad on some points (altghouh I"m not advocating not usng an agent): I think you can find buyers agents that are willing to charge only 1.5-2% commision, or listing agents for similar rates. I've also known many scenarios where listing agent charges 3% but if they're the one showing the property and find the buyer, they take 4% rather than the full 6%.
I've done one such transaction before where I knew exactly what subdivisiono i wanted and one day, before I even hired an agent, I saw a listing for a great price. I had to act immediately so I called listing agent and asked her to show me the place. She charged 4% commision for dual representation, so got a net of about 10% off asking price, eventhough I was willing to pay full price. There were 2 other offers but after a little bit of negotiation, I got the deal with just a few hundreds more. I have no proof but i'm pretty sure she wanted me to win the contract b/c that means she gets paid a little more. That deal closed faster than anything.
Remember though, that unless your dad has all the comps and info, he may be overpaying for a property without access to all the data that a good realtor can provide him. ie, 'may' save a few % on commisions, but overpay by a lot more.

[Texascrude]

One area your father could possibly benefit is by searching for homes for sale by owner. Most people listing this way are more than willing to pay a buyer's agent their commission if they find a buyer, but you could probably negotiate quite a bit if you're not using one.

[cheryjohns]

Originally Posted by Texascrude

One area your father could possibly benefit is by searching for homes for sale by owner. Most people listing this way are more than willing to pay a buyer's agent their commission if they find a buyer, but you could probably negotiate quite a bit if you're not using one.

Except a lot of for sale by owners are over-priced. One of the reasons that a large number do not use a listing agent is they can't find one that will list an an inflated price that will not sell. They believe their house to be worth $X, even if market conditions dictate otherwise.

[houstonfan]

Originally Posted by cheryjohns

Except a lot of for sale by owners are over-priced. One of the reasons that a large number do not use a listing agent is they can't find one that will list an an inflated price that will not sell. They believe their house to be worth $X, even if market conditions dictate otherwise.

Agreed, most are avg or inflated prices. Even if the do-it-yourself sellers have a realistic asking price, they are going through all the trouble of listing it themselves b/c THEY want to bank the savings of the commission, not pass it on to the buyer.

[City Love]

Originally Posted by houstonfan

Agreed, most are avg or inflated prices. Even if the do-it-yourself sellers have a realistic asking price, they are going through all the trouble of listing it themselves b/c THEY want to bank the savings of the commission, not pass it on to the buyer.

There is one particular home around the heights area that has changed agents about 3-4 times in the past year and also been FSBO twice during this time. Well, I had a client visit his open house out of curiosity and she really liked the house but was so put off by the owner. He kept hounding her and telling her if she wanted the house not to use an agent and he would knock off $500 from the asking price. She said she would never want to deal with him directly. He scared her.

I don't know what type of listing agreement he has with these agents but he's switched so many times I get the feeling that the agents don't mind letting the listing go.

[cheryjohns]

Originally Posted by City Love

There is one particular home around the heights area that has changed agents about 3-4 times in the past year and also been FSBO twice during this time. Well, I had a client visit his open house out of curiosity and she really liked the house but was so put off by the owner. He kept hounding her and telling her if she wanted the house not to use an agent and he would knock off $500 from the asking price. She said she would never want to deal with him directly. He scared her.

I don't know what type of listing agreement he has with these agents but he's switched so many times I get the feeling that the agents don't mind letting the listing go.

Please PM me with the address. I want to see who the next agent (fool) is that takes the listing. LOL.

[cheryjohns]

Originally Posted by cheryjohns

Please PM me with the address. I want to see who the next agent (fool) is that takes the listing. LOL.

Thanks - I see where he just listed with his 5th agent since 7/1/09.

[HtownHomes4U]

Sam, sounds like you're going to have some fun with your father. Good luck.