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Interesting. So, using your hypothetical $1M house the math would go like this:
Agreed selling price on contract $1,000,000
"Full" buyer agent compensation @2% = $20,000
Less 2/3 rebate given by buyer agent to buyer - $13,333 Net buyer agent compensation $6666
Net purchase price of house at closing $986,667
.
Buyer Agent doesn't get the check - the company/broker does, and then splits that amount as per their specific agreement.
In addition to the split, most companies charge the agent either a franchise fee or administrative fee, etc.
Personally, I could think of many reasons. Why would anyone want to put in all the work a full service broker would and accept 2/3 less? Reply, no "Good" broker would do that, therefore, you will be most probably be dealing with a rookie or someone who does this only part time. Most especially as a first time buyer you are penny wise and pound foolish.
You do know that the seller actually pays the buyers realtor right? So why shortchange yourself?
FWIW I am not a realtor nor a lawyer. Please don not go with a jack of all trades attorney, especially in NYS. Find only a Real Estate attorney to work with.
Probably mis-worded my original post. Purchased 2 homes prior, looking to move out of NYC now and first time on Long Island. I've gone w/ a full service agent (century 21) and also without a buyer's agent previously, but first time with a discount broker.
They assigned me someone with 15 yr xp and so far he's been responsive and seem to understand the issues I've raised. With Zillow and other tools nowadays, I think there isn't as much for a buyer's agent to do. I hope this type of commish structure (w/ rebates) disrupts the industry in the years to come.
I'm selling another property to purchase a house on LI and using the same brokers and they've been working hard getting it done. The agreed commission is even lower than the 4% on LI. When it's all done, I should only have paid 2.5% for a full service broker.
Probably mis-worded my original post. Purchased 2 homes prior, looking to move out of NYC now and first time on Long Island. I've gone w/ a full service agent (century 21) and also without a buyer's agent previously, but first time with a discount broker.
They assigned me someone with 15 yr xp and so far he's been responsive and seem to understand the issues I've raised. With Zillow and other tools nowadays, I think there isn't as much for a buyer's agent to do. I hope this type of commish structure (w/ rebates) disrupts the industry in the years to come.
I'm selling another property to purchase a house on LI and using the same brokers and they've been working hard getting it done. The agreed commission is even lower than the 4% on LI. When it's all done, I should only have paid 2.5% for a full service broker.
As I indicated I am neither a realtor nor an attorney, but there are so many nuances on LI and problems that can and do occur that I am a believer in them. That said, buyer's agent are a relatively new phenomenon on LI as compared to other areas of the country. I had friends in Mn. use a buyers agent back in 2002, but they have still not caught on as well on LI.
When we sold, we had every COC, every paper, permit etc. down to the last detail all ready to go. Our contract was signed on NY Eve and at that time we told the buyers, their agent and ours, as well as our attorney that we would be unable to close until the week after St. Patrick's day, due to several reasons, not the least of which was final Doctors appointments before relocating, our home here was not ready and a family wedding.
On March 1st our realtor got a call from their realtor saying that they had to close within 3 days. They offered to "allow" us to rent back from them for up to 3 weeks, after a walk through and then another walk through on the date of closing. After consulting, with both our agent and attorney we said no. There was no reason offered as to why, and our agent showed us paperwork that she had written the words closing after 3/17 on and it was a triplicate paper, that their agent had. Long story short, they needed to extend their rate lock because they applied too early and then they apparently purchased a car or a boat after they got the mortgage. They were unable to fit the parameters of the credit report due to that purchase and our attorney advised us against a lengthy stay. A couple of days is not all that uncommon, but anything can happen in that length of time. If not for our agent, who worked her tail off to get this accomplished and our attorney, we may have been putting pictures back up on the walls after they had been packed for the move.
We spent almost 3 weeks in agony wondering if we had a deal or not. I thought ok, worst case scenario, they default, we keep their downpayment. Not so fast, it would go to arbitration, during which time we could show the house but not sign another contract. And we were advised that you want to avoid arbitration because at that time it was at least a year before it would be on the calendar. We found out on the 19th they were able to close, the movers came and packed on the 20th and the 21st we closed.
"The devil is in the details" - a familiar saying that is oh so true in real estate transactions.
Most people think that our work is done once we have an accepted offer (yes, I'm a Realtor), and then we just wait to collect a check at the closing. I wish that were so. There are so many "minor" issues that can come up, possibly leading to an abrupt end of the transaction - especially with first time homebuyers; undesirable for both, sellers and buyers, because both have to start all over again.
The number of hours I usually put in when working as a Buyer Agent often lead to my barely making minimum wage.
Good thing I enjoy what I do
"The devil is in the details" - a familiar saying that is oh so true in real estate transactions.
Most people think that our work is done once we have an accepted offer (yes, I'm a Realtor), and then we just wait to collect a check at the closing. I wish that were so. There are so many "minor" issues that can come up, possibly leading to an abrupt end of the transaction - especially with first time homebuyers; undesirable for both, sellers and buyers, because both have to start all over again.
The number of hours I usually put in when working as a Buyer Agent often lead to my barely making minimum wage.
Good thing I enjoy what I do
Elke, you are one of the "good" ones as is Tom. Even though I no longer live in NY, I so appreciate your advice because I think maybe it will save someone from making a mistake. How many times have you attempted to do something and then found out that "you really didn't know, what you didn't know.? Real estate is not something that you want to find out what you don't know.
Once again, as always, Good Realtor & Real Estate Attorney are must have's in my book, but that is JMO.
Elke, you are one of the "good" ones as is Tom. Even though I no longer live in NY, I so appreciate your advice because I think maybe it will save someone from making a mistake. How many times have you attempted to do something and then found out that "you really didn't know, what you didn't know.? Real estate is not something that you want to find out what you don't know.
Once again, as always, Good Realtor & Real Estate Attorney are must have's in my book, but that is JMO.
I share that opinion. And thank you Elke and Tom.
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