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It sounds like you're an experienced negotiator, know home prices in the area like the back of your hand, and are pretty sure the listing agent is a bozo. So go for it if you want. My suggestion, though, is to just leave the whole commission issue out of it, since you're not party to the contract between the seller and his agent. Just negotiate the net price you want. Period. Why mess with two negotiation processes when one will work?
In other words - say the house is priced at $300k. You don't want to spend more than $270k for the house. You could either negotiate the price to $270k and be done with it, or negotiate the price to $275,500 and then negotiate the extra 2% commission rebate. Doesn't it make more sense to just negotiate what you want to pay for the house, and let the seller decide if he wants to try to get his agent to reduce the commission he pays?
I don't know - just seems like you're taking the more difficult route, here.
great post gretchen. another thought if the seller rejected the $270 offer you could always then go back with your $275, 2% back offer.
A real estate transaction is nothing like a phone purchase! It is a legal transaction involving multiple parties (lender, escrow, title etc.) and usually hundreds of thousands of dollars. For most people real estate represents the biggest financial asset they have. Why someone would choose not be properly represented is beyond me. I suppose there are buyers who'll forgo a home inspection in order to save the $500.
Great point, Sandy! I've seen this sort of penny wise, pound foolish thinking a few times over the years and it still sort of puzzles me...
I agree, Sandy & Chaz. It sounds like the OP has been burned a couple of times by poor representation, though. It really irks me when some of our colleagues don't do their job - gives the rest of us a black eye.
It sounds like you're an experienced negotiator, know home prices in the area like the back of your hand, and are pretty sure the listing agent is a bozo. So go for it if you want. My suggestion, though, is to just leave the whole commission issue out of it, since you're not party to the contract between the seller and his agent. Just negotiate the net price you want. Period. Why mess with two negotiation processes when one will work?
In other words - say the house is priced at $300k. You don't want to spend more than $270k for the house. You could either negotiate the price to $270k and be done with it, or negotiate the price to $275,500 and then negotiate the extra 2% commission rebate. Doesn't it make more sense to just negotiate what you want to pay for the house, and let the seller decide if he wants to try to get his agent to reduce the commission he pays?
I don't know - just seems like you're taking the more difficult route, here.
Great point, Gretchen.
Seems like spending so much energy on 2% at the margin, runs the risk of putting the other 98% of the picture at risk.
I agree, Sandy & Chaz. It sounds like the OP has been burned a couple of times by poor representation, though. It really irks me when some of our colleagues don't do their job - gives the rest of us a black eye.
I haven't read every post, so I apologize in advance if this is a repeat. In my area, builders are offering higher commissions than I've ever seen (some up to 20%) making it difficult for re-sellers to compete. Why do you think the seller's agent would be willing to give you a 2% discount? Maybe this would work in a different market, but I don't know about today.
Additionally, with ala-carte and unbundled services, do you know for sure that the listing agreement is based on a 6% co-broke? That said, anything is possible and everything is negotiable.
It sounds like you're an experienced negotiator, know home prices in the area like the back of your hand, and are pretty sure the listing agent is a bozo. So go for it if you want. My suggestion, though, is to just leave the whole commission issue out of it, since you're not party to the contract between the seller and his agent. Just negotiate the net price you want. Period. Why mess with two negotiation processes when one will work?
In other words - say the house is priced at $300k. You don't want to spend more than $270k for the house. You could either negotiate the price to $270k and be done with it, or negotiate the price to $275,500 and then negotiate the extra 2% commission rebate. Doesn't it make more sense to just negotiate what you want to pay for the house, and let the seller decide if he wants to try to get his agent to reduce the commission he pays?
I don't know - just seems like you're taking the more difficult route, here.
I understand your point, but in this case, I think negotiating with the sellers and the agents separately is a better plan.
The problem is that the sellers have no leverage with their agent. They've already signed the papers, and unless the agent believes that cutting his commission to help them sell their house is a good thing for him, it's unlikely he'll agree - and he doesn't seem like the kind of guy who'd believe a thing like that.
On the other hand, if I can make a full value (full appraised-value) offer to the seller, and get a discount buyer's agent, everybody wins. The sellers get the full value of their house, the buyer's agent gets a fee he'd otherwise not have got, and I get a discount back at closing.
Well, the seller's agent doesn't win.
But he still gets his 3%, which is probably as much as he was expecting to get in the first place.
I know the whole thing is illogical, but I didn't design the commission system - I just got stuck with it.
PS - I've decided to settle for a 1% deal. It's maybe not as good as I could have got, but at least I'll be working with someone I know, and not stranger from out of town.
The fact that it is a major purchase is the reason it's so important to be educated about the process, to do your homework, and to shop around. Especially considering that you're conducting a transaction in which the people agents encourage you to rely on - agents - have a financial interest that is contrary to your own.
For example: agents who recommend a particular home inspector, because they know he's is unlikely to find problems that might slow the transaction down.
Or agents who encourage buyers to think that representation is "free," because it's hidden in the price of the home.
Linus,
It sounds to me that perhaps you've had some negative experiences with real estate agents in the past. In actuality Realtors are bound by a code of ethics. The way I see it, a Realtor's financial interests are never contrary to those of his clients. Real estate is a relationship business, similar to doctors, tax accountants, attorneys etc... Once you have have established a relationship with a good Realtor, why use a different one for a new transaction? If I recommend a service provider (home inspector, mortgage broker, contractor...) and my clients are not satisfied, it reflects on me. You better believe I want my clients to have a home inspector who is thorough. If the house fails the test, they'll still buy a different home through me - nothing lost. If they feel I work hard on their behalf they'll, have me list their house when it's time to sell, and recommend me to their friends. This kind of service and dedication doesnt come with commission cuts or discount deals, but those clients get the certainty that their interests are protected in every aspect of the transaction, from start to finish and beyond.
I understand your point, but in this case, I think negotiating with the sellers and the agents separately is a better plan.
The problem is that the sellers have no leverage with their agent. They've already signed the papers, and unless the agent believes that cutting his commission to help them sell their house is a good thing for him, it's unlikely he'll agree - and he doesn't seem like the kind of guy who'd believe a thing like that.
On the other hand, if I can make a full value (full appraised-value) offer to the seller, and get a discount buyer's agent, everybody wins. The sellers get the full value of their house, the buyer's agent gets a fee he'd otherwise not have got, and I get a discount back at closing.
Well, the seller's agent doesn't win.
But he still gets his 3%, which is probably as much as he was expecting to get in the first place.
I know the whole thing is illogical, but I didn't design the commission system - I just got stuck with it.
PS - I've decided to settle for a 1% deal. It's maybe not as good as I could have got, but at least I'll be working with someone I know, and not stranger from out of town.
There's value in that.
Forgive me if I seem a little confused. You have to do a full-appraised value offer in order to get the rebate from the discount buyer's agent??? If so, that's just crazy unless your market is a very, very, very HOT market with tons of full-price offers. First of all, in a downward trending market, appraisals tend to come in high. Secondly, I think most markets show that sellers are only getting about 90% - 95% of their asking price (probably about 95% of appraised value - or less. I've been hearing of appraisals coming in $30k higher on a $400k house.) Anyway, my point is, 2 or 3% is not much of a discount in this market. A really good buyers agent should be able to negotiate you a much better deal than that.
It sounds to me that perhaps you've had some negative experiences with real estate agents in the past. In actuality Realtors are bound by a code of ethics. The way I see it, a Realtor's financial interests are never contrary to those of his clients. Real estate is a relationship business, similar to doctors, tax accountants, attorneys etc... Once you have have established a relationship with a good Realtor, why use a different one for a new transaction? If I recommend a service provider (home inspector, mortgage broker, contractor...) and my clients are not satisfied, it reflects on me. You better believe I want my clients to have a home inspector who is thorough. If the house fails the test, they'll still buy a different home through me - nothing lost. If they feel I work hard on their behalf they'll, have me list their house when it's time to sell, and recommend me to their friends. This kind of service and dedication doesnt come with commission cuts or discount deals, but those clients get the certainty that their interests are protected in every aspect of the transaction, from start to finish and beyond.
Sandy
Right on, Sandy!
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So go for it if you want. My suggestion, though, is to just leave the whole commission issue out of it, since you're not party to the contract between the seller and his agent. Just negotiate the net price you want. Period. Why mess with two negotiation processes when one will work?
You have to do a full-appraised value offer in order to get the rebate from the discount buyer's agent???
If so, that's just crazy unless your market is a very, very, very HOT market with tons of full-price offers. First of all, in a downward trending market, appraisals tend to come in high. Secondly, I think most markets show that sellers are only getting about 90% - 95% of their asking price (probably about 95% of appraised value - or less. I've been hearing of appraisals coming in $30k higher on a $400k house.) Anyway, my point is, 2 or 3% is not much of a discount in this market. A really good buyers agent should be able to negotiate you a much better deal than that.
