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Let me preface my statement by saying that I am an on-site agent for a new home construction homebuider...so I don't really have a dog in the fight.
You say that you have already picked out some homes you want to see. How did you do that? Zillow? Trulia? Realtor.com? Also you said you've looked at comparables...what factors did you use? Did you adjust your comparable pricing based on the features that the home had to get a true comparison?
Also, you do know that the SELLER pays all commissions right? Not the buyer. You don't pay your agent anything. It all comes from the sellers side.
Just some food for thought.
Your latter point is something I've never understood when people bring it up so I will address it first. In the sale of a house, it occurs to me there are 3 groups that bring and take away different things from the transaction. The buyer brings money, receives buyer agent services and a house. The seller brings a house, receives seller agent services and money. The agents (both buyer's and seller's) bring expertise and time, receive money. Obviously there are transaction losses from this system in the form of taxes, fees, inspections, blah blah. The only group that brings money is the buyer. Yes, commissions have been set previously by the seller and his/her agent, but they do so knowing and accepting the buyer's agent will receive some percentage of the sale price. The seller has some floor for the least amount they're willing to receive after all commissions (say, X). If the buyer can get money from the buyer's agent, in effect lowering the cost of acquiring the house to him or her - while still satisfying X - why is this not preferred?
As for your former point I have indeed looked at the sites you are referring to. In addition I've looked at similar houses around the area that have recently sold, gone to the municipal records to look at tax and assessed property values, and asked knowledgeable friends. Of course all this may not quite match the experience of a agent, but that's one of the things I want to hire an agent for, right? I want the agent to, in addition to handling paperwork and closing, assist in sending the offer based on what homework I've done in addition to adjustments they may think. If I didn't need help with this, I'd just hire an attorney to do the paperwork (which some people I've done, I've read).
Quote:
Originally Posted by NewUser
Sorry. That was my fault.
Haha no problem. If i have to be called a girl to get some good advice, so be it!
Preface: . . .Any assistance would be greatly appreciated. . .
Good luck, BluePanda. It sounds like you know what you are doing.
One additional idea: A selling agent can, in many situations, if properly disclosed, act as a dual agent. A dual agent will represent both the seller and buyer. In this case, said agent typically receives 6% commission. This type of agent might be willing to give you a nice slice of the pie.
Typically the seller has already signed a contract stating that he/she is paying a 3% commission to the selling agent and a 3% commission to the buyer's agent. Since the fees come out of the seller's profits, why wouldn't a seller be willing to pay 4% to a dual agent, 1% to the buyer, and save the other 1%? EVERYONE wins: the selling agent gets an additional 1%, the buyer gets 1%, and the seller saves 1%.
I have used a dual agent before. She showed me five houses over a period of two days and then we made a cash offer and purchased a house. It was probably the easiest deal of her career. I should have asked for part of her 6% commissions.
Sorry, I don't give referrals. Trust your judgement or that of people that you know regarding agents.
Best wishes in your new home!
Last edited by Justin Time; 05-20-2011 at 09:24 AM..
Your latter point is something I've never understood when people bring it up so I will address it first. In the sale of a house, it occurs to me there are 3 groups that bring and take away different things from the transaction. The buyer brings money, receives buyer agent services and a house. The seller brings a house, receives seller agent services and money. The agents (both buyer's and seller's) bring expertise and time, receive money. Obviously there are transaction losses from this system in the form of taxes, fees, inspections, blah blah. The only group that brings money is the buyer. Yes, commissions have been set previously by the seller and his/her agent, but they do so knowing and accepting the buyer's agent will receive some percentage of the sale price. The seller has some floor for the least amount they're willing to receive after all commissions (say, X). If the buyer can get money from the buyer's agent, in effect lowering the cost of acquiring the house to him or her - while still satisfying X - why is this not preferred?
As for your former point I have indeed looked at the sites you are referring to. In addition I've looked at similar houses around the area that have recently sold, gone to the municipal records to look at tax and assessed property values, and asked knowledgeable friends. Of course all this may not quite match the experience of a agent, but that's one of the things I want to hire an agent for, right? I want the agent to, in addition to handling paperwork and closing, assist in sending the offer based on what homework I've done in addition to adjustments they may think. If I didn't need help with this, I'd just hire an attorney to do the paperwork (which some people I've done, I've read).
Haha no problem. If i have to be called a girl to get some good advice, so be it!
Thanks again BiggJoe and NewUser.
Blue you are right on with your assessment about who bring what to a transaction. The reason everyone says that the Seller pays for the commissions is because when you look at a HUD statement the full commissions are paid for out of the sellers pocket. No money from the buyer go towards commissions on either side. Paid in full by the seller. Thats why people always mention it.
Bravo on doing your research. it sounds like you are a very resourceful cat. I will warn you that sites like zillow and trulia and even realtor.com are not very accurate. I mean that they receive feeds from the local MLS's across the country. Agents MUST update the status of a home within 3 days I do believe but that information may not feed into those sites for a week(s). So the house you see that you like MAY not be there available when you want to make an offer.
IMHO the searching for a home is the easy part. Unless you deal with contracts and negotiating on a daily basis, I would say THAT aspect of a realtor's job is the hardest.
Good luck, BluePanda. It sounds like you know what you are doing.
One additional idea: A selling agent can, in many situations, if properly disclosed, act as a dual agent. A dual agent will represent both the seller and buyer. In this case, said agent typically receives 6% commission. This type of agent might be willing to give you a nice slice of the pie.
Typically the seller has already signed a contract stating that he/she is paying a 3% commission to the selling agent and a 3% commission to the buyer's agent. Since the fees come out of the seller's profits, why wouldn't a seller be willing to pay 4% to a dual agent, 1% to the buyer, and save the other 1%? EVERYONE wins: the selling agent gets an additional 1%, the buyer gets 1%, and the seller saves 1%.
I have used a dual agent before. She showed me five houses over a period of two days and then we made a cash offer and purchased a house. It was probably the easiest deal of her career. I should have asked for part of her 6% commissions.
Sorry, I don't give referrals. Trust your judgement or that of people that you know regarding agents.
Best wishes in your new home!
Thanks for the advice Justin. I have read a bit about this type of agreement and initially thought it was an interesting concept due to its simplicity.
The main issues I have with a dual agency are:
1) For the seller's agent to become a dual agent and represent you, the seller has to agree to such an arrangement. For the seller to give up the sole agency, I have to appease him/her somehow. This will most likely come the form of saving 1%. While I recognize this may be reflected in a slight lowering of the home sale price, I don't believe such a difference can be fully recognized.
2) I am somewhat uncomfortable with the whole idea of dual agency. The whole idea is somewhat paradoxical to me. The seller's agent has the duty to sell the house at the highest possible acceptable price for seller and the buyer's agent has the duty to buy the house for the lowest offered price. It is my belief that unless the lowest acceptable price for the seller matches the highest willing offer price by the buyer (with a certain amount of human complacency and error built in) naturally, the dual agent has failed in agency to one party.
Don't get me wrong. I am immensely happy that it worked for you and that you were happy with the arrangement. I just think there may be a few issues associated with it.
Thanks for the advice Justin. I have read a bit about this type of agreement and initially thought it was an interesting concept due to its simplicity.
The main issues I have with a dual agency are:
1) For the seller's agent to become a dual agent and represent you, the seller has to agree to such an arrangement. For the seller to give up the sole agency, I have to appease him/her somehow. This will most likely come the form of saving 1%. While I recognize this may be reflected in a slight lowering of the home sale price, I don't believe such a difference can be fully recognized.
2) I am somewhat uncomfortable with the whole idea of dual agency. The whole idea is somewhat paradoxical to me. The seller's agent has the duty to sell the house at the highest possible acceptable price for seller and the buyer's agent has the duty to buy the house for the lowest offered price. It is my belief that unless the lowest acceptable price for the seller matches the highest willing offer price by the buyer (with a certain amount of human complacency and error built in) naturally, the dual agent has failed in agency to one party.
Don't get me wrong. I am immensely happy that it worked for you and that you were happy with the arrangement. I just think there may be a few issues associated with it.
Thanks again!
You are welcome. I totally understand your point and it is VERY important to feel comfortable with a real estate transaction.
I only mentioned it because it could benefit you financially. This ONLY works if you and the seller mutually agree to a fair sales price. Since this form of transaction might slightly lower the commission that a seller pays, it would give the seller an incentive: to save money on commissions while retaining the exact same price offered. You are saving the seller money and this should appease him/her. In this market, most sellers are more than ready to negotiate with buyers.
Dual agents have to tread a fine line and are legally, ethically, and morally bound to represent each side fully, without bias. Because they are already familiar with the property & sales contract AND legally have to disclose everything to you (if they are your agent), this actually can provide you with a slight advantage over a typical buyer's agent who may not be not privy to the same details.
Again, do ONLY what you are comfortable with. I Just felt an obligation to share.
1) For the seller's agent to become a dual agent and represent you, the seller has to agree to such an arrangement. For the seller to give up the sole agency, I have to appease him/her somehow. This will most likely come the form of saving 1%. While I recognize this may be reflected in a slight lowering of the home sale price, I don't believe such a difference can be fully recognized.
2) I am somewhat uncomfortable with the whole idea of dual agency. The whole idea is somewhat paradoxical to me. The seller's agent has the duty to sell the house at the highest possible acceptable price for seller and the buyer's agent has the duty to buy the house for the lowest offered price. It is my belief that unless the lowest acceptable price for the seller matches the highest willing offer price by the buyer (with a certain amount of human complacency and error built in) naturally, the dual agent has failed in agency to one party.
Trust me, these concerns are well-founded. The buyers that are purchasing our home had no agent when they looked at it, and decided to put an offer in using our agent as a dual agent. At first it seemed like a good idea, as we were going to get a 1% savings. But after just a few days, it became clear to me that the money we were saving was not going to be worth the stress of it. I trust our agent and feel that he's ethical, but it still felt very, very incestuous and uncomfortable.
Luckily, we ended up in a competitive bid situation, at which point our agent gave up his dual agency and handed off the buyers to someone else in his agency. I would not have been pleased going forward if he had continued to represent both us and the buyers.
IMHO the searching for a home is the easy part. Unless you deal with contracts and negotiating on a daily basis, I would say THAT aspect of a realtor's job is the hardest.
I definitely agree with you that searching for homes is easy for both the buyer and agent in terms of just being able to walk around and view homes (I like the kitchen; I'm not wild about the drapes... etc). However I believe it is also very high in risk:reward. The agent may lead the buyer from house to house, week to week for an extended period of time without a defined destination in mind. I would say this isn't necessarily hard in terms of magnitude of effort but in terms of duration of uncertainty.
On the other hand the negotiating and closing may be a stressful time for both parties and their agents and more effort may need to be exerted to guarantee everything is taken care of, but they do so with an end-game in mind. This is why I perceive this portion of the home-buying process to be simpler.
Justin and Jill, thank you for the advice on dual agency. While I will look into all options including this, I doubt that I will get to the level of comfort necessary to accept such an agreement. There are simply too many concerns with conflicting responsibilities and questionable ethicalities (note: boo red, squiggly line. "ethicality" is a word) and I doubt any agent can convince me otherwise.
Last edited by BluePanda; 05-20-2011 at 11:35 AM..
Reason: Removed questionably bad word, replaced with "boo"
Thanks for the great advice everyone. I believe I will start contacting agencies and working something out to where I can get a large portion of the commission back.
Quote:
Originally Posted by BluePanda
Your latter point is something I've never understood when people bring it up so I will address it first. In the sale of a house, it occurs to me there are 3 groups that bring and take away different things from the transaction. The buyer brings money, receives buyer agent services and a house. The seller brings a house, receives seller agent services and money. The agents (both buyer's and seller's) bring expertise and time, receive money. Obviously there are transaction losses from this system in the form of taxes, fees, inspections, blah blah. The only group that brings money is the buyer. Yes, commissions have been set previously by the seller and his/her agent, but they do so knowing and accepting the buyer's agent will receive some percentage of the sale price. The seller has some floor for the least amount they're willing to receive after all commissions (say, X). If the buyer can get money from the buyer's agent, in effect lowering the cost of acquiring the house to him or her - while still satisfying X - why is this not preferred?
I'm a little confused: why would you be getting any of the commission back? If I'm not mistaken, whoever set up the listing through MLS has already determined the commission splits, which will be paid for by the seller. The seller doesn't decide on the commission that will be paid. You, as the buyer, would not be paying any of the commission fees, so there would be nothing for you to get back.
You will also need to pay for any inspections (such as radon), surveys/appraisals, closing costs, and title insurance. Set aside all the other legalese, there is also the need to make sure the buyer knows what will be coming with the house, such as fixtures and/or appliances. Having an agent that is properly representing you would make sure that all of this was done within the time restraints that may be noted in the Offer to Purchase contract.
Many firms abhor the idea of dual agency. Even the slightest hint of collusion can send a seller and/or buyer to the Real Estate Commission. Any site such as Zillow or Trulia should say who the selling agent is and what firm they represent. Just make sure you don't go to the same firm to find a buying agent.
Seeing that North Carolina is still a caveat emptor state, I would always seek out a non-discount agent just to give me piece of mind. In regards to one's home and all that really goes into purchasing one, I think this would be one of the times that "you get what you pay for" would be something I would be thinking about.
Here in PA, all sellers pay the commission. Frankly, as the person who helps (once they want to put an offer in) explain and coordinate the various docs between both parties (try doing that w/o help), helping and negotiating the buyers get through inspections, title and financing and finally on to settlement, I'd be hard pressed to give up any of my commission. They did the easy part finding the home. It's what goes on behind the scenes that the average buyer knows nothing about and how much work it is these days to get to the settlement table.
I'm not saying it isn't done without a happy ending, it's just not for me. I work too hard giving ultimate service that keep my clients for life.
I wish you the best of luck!
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Trust your judgement or that of people that you know regarding agents.
Dual agents have to tread a fine line and are legally, ethically, and morally bound to represent each side fully, without bias. Because they are already familiar with the property & sales contract AND legally have to disclose everything to you (if they are your agent), this actually can provide you with a slight advantage over a typical buyer's agent who may not be not privy to the same details. 
