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EXACTLY, as a buyer YOU didn't pay her anything! Yet she took her TIME to search listings, call for showings and drive to those houses to show you them (gas, wear and tear on their car), did the paperwork, etc. Most of what you are paying her for is her time to let you into these houses, negotiating and knowledge of the housing market in that area. Unless you are buying from someone selling by owner you need a realtor to let you into these homes. 30 homes is A LOT! Not to mention, had you changed your mind and didn't buy anything then she would have received ZERO. This happens frequently where realtors spend hours and receive nothing for their time. As another poster stated, the realtor doesn't even keep the full commission as they are most likely working for a broker who gets a cut.
I disagree with not paying her anything. True, I personally did not hand her a check, and thank her for her services. The price I paid for the house, I'm sure did have at least some of the commission built into the final number. I offered the sellers X and they would not accept less than X+More. if I wanted the house, it was time to open my wallet for more. The sellers thought to some degree - "more" to cover expenses. Expenses did include realtor fees on some level.
Consider if realtors did not exist. Take the scenario that everyone sold their own home on the internet. Prices would likely be generally lower by 2, 3 or maybe 4 percent. Consider that realtors ask for about 5% for the bulk of the home sales - the higher end sales, they might lower commissions 1 or 2 percent. The lower end sales, they might ask a higher commission. If the bulk home sales averaged out to $225K, without realtors, the average might be $218K. That is just over a 3% difference, but it is a 7K savings. For many people, I'm sure they would want to save 7K on a 225K home.
I do agree, 30 homes is a lot. I kept an excel spreadsheet of homes when I moved 2 years prior to coming to CT. I managed the spreadsheet into 'Looked' - which meant I did not dismiss the property off Zillow or trulia or <the internet> without at least doing a Google search / Street View of the property, perhaps more web searching. 'Drive by' - which is somewhat self explainitory - I did due diligence on the internet that it was worth seeing in person. Finally, there was 'Viewed' - where I actually contacted the RE agent and I looked at the inside of the home. Total of that spreadsheet was over 300 homes. I don't recall the breakdown of each individual category, but I looked the entire summer before I found something. What can I say, I'm unusually selective, and I know what I want. I did keep another spreadsheet for the homes in CT when I moved here, and it was significantly lower total count. I learned some things the first time.
When I was entering the post, I did consider the agent gets only part of the commission check. I did not want to try to explain that - RE/Max for example - they USED to - don't know if they still do - let the actual agent keep a larger portion of the commission, but the agent was responsible for a lot more of the expenses for selling the home. Then there is the buyers agent and selling agent splitting the amount in some 50/50 or 55/45 or 60/40 or ...?? fashion. When the house is sold, the sellers pay (Via the closing agency) the RE agency. I think the agency then pays the other agency, if one is involved, and their agent.
Some one (sorry I don't recall who), suggested that the prices would be similar if realtors were not involved in the sale. I can speak for myself here and say that, I sold my home in NH without a realtor, and I gave the buyers a price break worth about 90% of what I would have paid in commissions. I think the buyers got a heck of a deal in that case. If you knew the details however, you might think it was only an average, everyday deal. Totally subjective. For what it's worth, Zillow today, says that house is valued about 40K more than I sold it for.
Instead of discussing what should be, what might be, what could be, IMO the only thing that matters is what is! I know only states where title companies handle the escrow, not real estate attorneys: I know California and Arizona. My comments may or may not apply to other states.
The transaction is generally the same. The seller has a real estate agent, the buyer has a real estate agent. (If the buyer has no agent they can get one or use the sellers agent--something I don't like.)
From the point of view of the seller and their agent the seller hires the agent and the fee is the commission, perhaps in the area of 4% TO 6%. The selling agent handles the MLS listing, advertising, handles and coordinates all paperwork required from the seller, advises how to market the house, usually puts on a lock box (Supra) so other agents can show the house. The important thing is that the seller has signed an exclusive representation contract that says for X months the agent has exclusive rights to part of the commission IF the house sells. The situation is that it's almost a sure thing the seller's agent will get paid for the work.
From the point of view of the buyer and buyer's agent, it's a whole different story. The only chance the agent has to be paid is if they can find the buyer a house that the buyer likes enough to make a serious offer and negotiate the purchase. If buyer and seller come to an agreement and enter into a sales contract, and IF escrow actually closes, only then does the buyer's agent get paid a commission. My guess is that more often than not selling agents don't get paid, their buyers change their minds or decide to go with a different agent. There is no guarantee the seller's agent will get paid unless the house gets through escrow.
For the seller's agent it's almost a sure thing they will get paid. For the buyer's agent maybe yes, maybe no. Now my personal opinion is that any buyer will not agree to pay their agent anything just for showing them houses, not unless they actually buy one. However most sellers realize it's not a simple process and are willing to pay to hire a competent professional who will ensure a good deal and a smooth closing of escrow.
Incidentally as most probably know, the usual terms are the buyer's agent and seller's agent split the commission 50/50 unless the MLS listing and sales contract says otherwise. Note also that the commission goes to the BROKERS not the agents. The broker takes a cut and from what I hear most of the commission goes to the agent (buyer or seller) but not without a bite from the broker. After all, he has to pay for the offices etc.
Looking at if from my point of view as a seller I know that buyers won't go for paying their agent a fee, but I want to sell my house. I can negotiate the commission and maybe get a good rate, but I'm not some FSBO type of person, and I want to have a professional sell my house. To get that service I'm willing to pay the buyer's agent too, because what I really want is a good escrow and a nice check.
Now where did that money really come from? Well you can look at it two ways, I can't say that either is more valid, but this is how life is, this is the way the system works, and I see no way to change it. The seller does pay both buying and selling agent commissions. The money came from the seller. But... Of course that increased the price of the house, so another valid way of looking at it is that the buyer paid half the commission too, in the form of paying a higher price. But why is this unfair to the buyer? What about that agent (or those agents) who drove you to all those houses? You want that for free? You're not going to get it.
Somebody has to pay agents to show houses. Whether the buyer's agent's commission is factored into the price of the house makes no difference. A good selling agent will be highly motivated to get the buyer to the right house and get the deal done and hand the buyer their keys.
This is just reality. It doesn't matter who you think paid which real estate agent what. Both have to be paid. You wanna call it added on top of the "real" price, fine. You wanna call it paid for the seller, then that is equally valid. They both work out to the exact same thing and the exact same amount of money changes hands.
That is just how things are. That's how people sell houses, that's how buyers find houses, that's how all agents get paid. No commission no deal. Anybody who wants a different deal: a seller can go FSBO and good luck with that. I believe but I'm not sure, probably the seller's agent will refuse to work directly with a buyer unless (1) both buyer and seller agree to use the same agent, or (2) seller's agent will have to tell buyer to go find an agent (often refer the job to another agent in house) or seller must get their own agent however.
In the end it doesn't matter who pays who. The price is what it is. The house gets sold. Both agents get paid. You can play with the math all you like but it doesn't affect how much money changes hands. In the end the seller walks away with a check and the buyer gets handed the keys to their new home.
You are just arguing philosophy by trying to pin down who pays the commissions. One way or another both buyer and seller pay the commissions. It's just a math trick to argue anything else.
I just put a FSBO under contract. The buyers negotiated $1,000 off the offer price and are ecstatic in finding a house they really like plus they are paying my fee at closing. It's more than hot here in Denver.
The house comps out $35,000-$45,000 more than the contract price.
They should just create a sticky thread on here called: "I don't want to pay for a realtor BECAUSE: ____________"
The problem is that there are two kinds of people. People who earn their living buying and selling real estate (and people who understand them like I do), and people who see real estate agent fees and think it's unfair, too much, somehow they think agents shouldn't get paid.
Never mind all the work good Realtors make to get the deal done right, and I truly appreciate MY Realtor because she gets the job done right for me! Well worth her commission! Even though I'm paying both Realtors. Totally worth it for me.
Quote:
Originally Posted by 2bindenver
I just put a FSBO under contract. The buyers negotiated $1,000 off the offer price and are ecstatic in finding a house they really like plus they are paying my fee at closing. It's more than hot here in Denver.
The house comps out $35,000-$45,000 more than the contract price.
We will let them think whatever they want.
I got a good laugh from your post!
There's a saying in the world of lawyers that a lawyer who represents themself in court has a fool for a client.
I'll add to that that a person who goes FSBO has a fool as their agent! And the most amusing part is they probably walked away from that ~$40K thinking they got a good deal!
Think of all the money they saved!!! (Shhh... let's not tell them they saved the money for the buyer, not the seller!)
You are welcome.
I have had this conversation in my head - goes like this at closing, after my buyers have left.
Me: Thank you for a great deal and a smooth transaction
Them: Thank you for all your hard work.
Me: You are welcome, are you at all curious about the appraisal?
Them: Oh yes!
Me: $519,000 (and walks out)
You and I share our opinion of FSBO sellers. They brought a knife to a gun fight. Can there be any wonder you left in a good mood and they didn't leave because they were left bleeding on the floor?
I've been around the block enough times and done enough real estate deals that I understand what good agents bring to MY table, the hard work they put in to get the deal done right, the negotiating they did on my behalf to get me a good deal.
Your FSBO seller didn't understand the game. The FSBO didn't even realize they were playing in the game. They were oblivious. The only thing they looked at was the 4-6 percent, they didn't understand what professional representation would bring to their deal.
All we need to complete the deal is an appraised by Zestimate price!
The way to have lower commissions is to pay for an agent's time as you use it like you do with other professionals. It isn't about your money's worth, but about the business risk to the agent. When you run an all or nothing business it means high risk for going out of business so the reward has to be high to compensate for the high risk. So when you are paying higher fees, you are paying for the privilege of not paying. It's that simple.
So the better way is to hire an agent at an hourly rate and pay for services as you go along regardless of whether or not you buy a home.
So for the 30 homes that you looked at, your agent got to those properties, let you in, and got you out in only 5 hours of time? I'm a bit confused by the thought that your agent only spent 5 hours of time on you in your math scenario, yet you looked at 30 homes. So as a consumer are you willing to pay an agent out of your own pocket to show you those 30 homes?
The more I buy and sell homes (my own) the more I like this business model idea. If all agents went to this way of doing business it'd weed out the lazy and incompetent MLS lister/pound sign in the ground then wait/do nothing agents AND would get rid of those lookie-loos that just want to use agents as a form of weekend entertainment.
Agents would have to justify their time billed and only serious buyers would bother spending hourly rates to search.
The more I buy and sell homes (my own) the more I like this business model idea. If all agents went to this way of doing business it'd weed out the lazy and incompetent MLS lister/pound sign in the ground then wait/do nothing agents AND would get rid of those lookie-loos that just want to use agents as a form of weekend entertainment.
Agents would have to justify their time billed and only serious buyers would bother spending hourly rates to search.
I don't see lazy or incompetent people weeded out of very many pursuits.
Why would real estate brokerage be an exception?
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There is an echo in here..... 
