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Buyers pay transaction costs, including agent fees. In a normal transaction, all the cash at the table is the buyer's -- some goes to the seller, some goes to agents, some goes to the tax man, etc. But the buyer pays for everything. It's not a zero-sum game; reduce the amount that you pay to agents, and you reduce the amount you pay overall. Meanwhile, one below-market transaction in the neighborhood isn't going to impact value, so paying less means you have more equity.
To accomplish this as a buyer, like I posted before, the only way we were able to reduce agent spend was to get a rebate from our agent and then drop that rebate into our down payment. Of course, like I posted before, you could choose to do whatever you want with the money that you're not spending on real estate agents; no reason you have to build equity with it. But that option's on the table.
Whether a buyer can get all the way to 6%, as I've written a couple times now, depends in large part on the seller. You'd have to pay nothing to any agent,which is impossible in most transactions. To do that means the seller (i) did not guarantee anything to an agent, and (ii) is not trying or able to negotiate for some of that 6% baked into comp prices herself.
But any buyer can reasonably expect to save 2-3%, depending on ability to negotiate with a buyer's agent over the rebate amount. Still significant equity boost (or cash or whatever you want to do with the money other than pay agents), depending on the value of your home.
If it is impossible in most transaction, then why you keep saying that one could get 6% of sales by avoiding agents on both sides? Your argument is flawed. First, you have no control over seller choice of using or not using a sellers agent. Second, why do you think some sellers go "by owner" ? Yeah, to pass that 6% to you . Not to mention that most by owner listings are over priced where listing prices are pulled out of thin air. I guess you would be OK and feel that you won, if a seller get you an overpriced house and told you he will give you all the 6% .
I think if somebody can have a license like Chi said or share a flat fee like you did, one may save some. I will give you that. Even though the amount is debatable. But I think you overstate you achievement and savings . IMO.
I am not going to get into the fray about having a Realtor or not. It is your choice. Recommend reading the Real Estate section of this forum to see some of the issues that have come for people that went on thier own.
Some of the comments in here are incorrect.
- Good luck with getting that license in a weekend. It actually is a lot of information, then you test. If you have a photographic memory, you can do it. Still need to take the test.
- Hang your license in a brokerage that doesn't take your commission. It is that simple. You may be charged a transaction fee of a couple hundred dollars, but it won't be a significant amount of money. The Big Name Real Estate Companies charge you percentages and fees. The advantage they have is they generate business. Leads for people wanting to buy or sell now are where people make thier money.
- Good Realtors work hard! I actually would have thought the percentages for commissions would have changed by now. For informed people, you are correct, you can do much if not all of the work on you own.
- Most Listing Agents will not deal directly with you. The Listing Agent is legally required to get the best deal for the seller. How can they represent your best price as a buyer? A seperate form must be signed by both parties to represent both sides in the State of Florida.
- While it is a significant amount of money to pay that 3%, you are legally covered for so many things. Realtors have to pay an error and ommission charge on each transaction as insurance just incase they did not cover everything (which they absolutely should have)
- The hardest prospects from my point of view is the unrealistic ones. Say a client wants to buy a home in New Port Richey for 30,000. Why? Because their friend bought one two years ago at that price and only needed a little work. You tell them there are not any, and you get treated like dirt. Happens all the time.
- Prospects come into town for the weekend, you show them homes all over the Bay Area and they leave and you never hear from them again. All on your own dime and own time. Happens all the time.
- BROKERS OWN THE MLS. They own it. Zillow, Realtor.com, etc... buy the data feed. Brokers are legally required to keep in updated within 48 hours, all these other commerical sites are not.
- The Seller signs a contract with a Brokerage to sell thier home for a price, less 6% (normally). On a 200K sale, that seller is getting 188K. The Buyer pays 200K, 3% to Listing Agent, 3% to Buyers Agent.
A buyer that gets (100% commission) earns 3,000. If applicable, they pay an MLS fee (From 0 to 400 [yes, I have seen it that high]), then pays the Broker something. So 3,000 (commission) - 300 (MLS fee) - 250 (Brokerage transaction fee) - 35 (error and ommission fee). So 3% is now ~2400.00. Still a good sale. Sell one of these a month and you make ~30,000 per year. Some of the Big Real Estate Companies require a commission split. Can be 70/30 and I have seen 60/40. So give 40% of your 3,000 to the Broker and now you make less than 20K per year.
One of the biggest scams around is the Title Companies. Watch out for them. Some charge upwards of 3,000 for your transaction where another one charges about 1,000. SAME SERVICE, SAME WORK. A lot of that work can be done by you as well if you know where to look.
Bottom Line to me - You are making a purchase that most people are going to pay 30 years on. You want someone looking out for you, to ask the hard questions, to show you everything that you want to see and more, to drive you to these places, to point out what they legally can, and for you to be happy in your new home.
On a 300,000 purchase a Realtor gets that 3% (9K minus what they have to pay). If you can get it without a Realtor, you don't recoup that 3%, you hope the Seller takes less than 300K. Say you get it for 290K. You saved 10K, and with todays interest rates on a 30 year loan that is about ~40 dollars a month. You feel you got a Great Deal. I don't lose sleep over 40 a month, but I lose sleep wondering if there is a sinkhole 3 lots down, am I in the correct flood zone where I require or do not require insurance, etc... You HOPE THAT THIS IS ALL DISCLOSED BY THE SELLER. Say you bought the home, 6 months later you have a problem. You go back to the Listing Agent and explain the problem, they say they were never told, you now hire an attorney to go after them.
Another word of caution - BE VERY CAREFUL WITH COMPARABLE HOMES. Square footage really is a main factor on price of homes that nobody has seen. But we have all been in homes that are similar on the outside, only to see major differences on the inside. That isn't included by Appraisers. They do not go in other homes to determine your price. Also Short Sales and Foreclosures have distorted prices.
Just my two cents - But love the thread and even thought about not even posting. But when I see inaccurate information being put out by the normal City Data Negatives, I had to chime in. Contrary to what you want to believe, a steady, stable housing market is what every Realtor wants to see. Bidding wars are no fun, short sales are unpredictable, Foreclosures usually require $$$, and a lot of Real Estate people NEVER CALL YOU BACK!!
A buyer that gets (100% commission) earns 3,000. If applicable, they pay an MLS fee (From 0 to 400 [yes, I have seen it that high]), then pays the Broker something. So 3,000 (commission) - 300 (MLS fee) - 250 (Brokerage transaction fee) - 35 (error and ommission fee). So 3% is now ~2400.00. Still a good sale. Sell one of these a month and you make ~30,000 per year. Some of the Big Real Estate Companies require a commission split. Can be 70/30 and I have seen 60/40. So give 40% of your 3,000 to the Broker and now you make less than 20K per year.
IF that was how it worked in the real world of realtors, none would be driving the latest BMW, Mercedes, Audi, and other very expensive cars. Not to mention have their homes bought up front.
This is true 50% because certain things are now EXPECTED by buyers, so if you're trying to sell me a home with crappy Formica, linoleum floors, and ****ty appliances you cannot expect to get your inflated sales price. When you spend over $200k, some quality is indeed expected because that is $200,000 dollars, and not $1. The other thing to actually watch out for when doing comps is the type of property you're comping with...and not comp a house with a yard/pool with a town house just because they are part of the same sub division. You have to be very careful with that.
Quote:
Another word of caution - BE VERY CAREFUL WITH COMPARABLE HOMES. Square footage really is a main factor on price of homes that nobody has seen. But we have all been in homes that are similar on the outside, only to see major differences on the inside. That isn't included by Appraisers. They do not go in other homes to determine your price. Also Short Sales and Foreclosures have distorted prices.
If it is impossible in most transaction, then why you keep saying that one could get 6% of sales by avoiding agents on both sides? Your argument is flawed. First, you have no control over seller choice of using or not using a sellers agent. Second, why do you think some sellers go "by owner" ? Yeah, to pass that 6% to you . Not to mention that most by owner listings are over priced where listing prices are pulled out of thin air. I guess you would be OK and feel that you won, if a seller get you an overpriced house and told you he will give you all the 6% .
I think if somebody can have a license like Chi said or share a flat fee like you did, one may save some. I will give you that. Even though the amount is debatable. But I think you overstate you achievement and savings . IMO.
I'm not making an argument. I've explained my experience in real estate transactions, the (lack of) value I have received from realtors, the circumstances under which I do think someone should engage a realtor, and the cost-savings strategies that I've successfully employed. I'm just trying to help out the original poster, who'd asked for experiences and opinions. I recommended that the original poster hire a realtor, given her circumstances/preferences, and suggested how I would go about hiring a realtor were I in her shoes. You asked me some questions about my experiences, and I answered them to the best of my ability. There's nothing for me to "win" here.
I've already addressed your points above. But, for clarity's sake, one more time: (1) It's not controversial statement that, if you don't have to pay someone 6%, you'll pay 6% less than if you do have to pay him 6%. (2) In my experience as a buyer, the way the system is set up, a buyer not only has to pay the seller's agent's customary 3%, but also has to pay something (in our case 1%) to a buyer's agent. And (3) that's going to keep being the case until and unless sellers decide they can handle transactions on their own.
I'm not making an argument. I've explained my experience in real estate transactions, the (lack of) value I have received from realtors, the circumstances under which I do think someone should engage a realtor, and the cost-savings strategies that I've successfully employed. I'm just trying to help out the original poster, who'd asked for experiences and opinions. I recommended that the original poster hire a realtor, given her circumstances/preferences, and suggested how I would go about hiring a realtor were I in her shoes. You asked me some questions about my experiences, and I answered them to the best of my ability. There's nothing for me to "win" here.
I've already addressed your points above. But, for clarity's sake, one more time: (1) It's not controversial statement that, if you don't have to pay someone 6%, you'll pay 6% less than if you do have to pay him 6%. (2) In my experience as a buyer, the way the system is set up, a buyer not only has to pay the seller's agent's customary 3%, but also has to pay something (in our case 1%) to a buyer's agent. And (3) that's going to keep being the case until and unless sellers decide they can handle transactions on their own.
Well, we are in different planet then...
I have never heard that a buyer paying 3% to a seller's agent which you said customary in your experience. I can see if a buyer pays a buyer's agent 3%, which actually doesn't happen often. But not the seller's agent. This is news to me. Where is this happening? I guess not here...
Is there anybody here who paid a seller's agent 3% when buying a house? Any one?
I am not going to get into the fray about having a Realtor or not. It is your choice. Recommend reading the Real Estate section of this forum to see some of the issues that have come for people that went on thier own.
Some of the comments in here are incorrect.
- Good luck with getting that license in a weekend. It actually is a lot of information, then you test. If you have a photographic memory, you can do it. Still need to take the test.
- Hang your license in a brokerage that doesn't take your commission. It is that simple. You may be charged a transaction fee of a couple hundred dollars, but it won't be a significant amount of money. The Big Name Real Estate Companies charge you percentages and fees. The advantage they have is they generate business. Leads for people wanting to buy or sell now are where people make thier money.
- Good Realtors work hard! I actually would have thought the percentages for commissions would have changed by now. For informed people, you are correct, you can do much if not all of the work on you own.
- Most Listing Agents will not deal directly with you. The Listing Agent is legally required to get the best deal for the seller. How can they represent your best price as a buyer? A seperate form must be signed by both parties to represent both sides in the State of Florida.
- While it is a significant amount of money to pay that 3%, you are legally covered for so many things. Realtors have to pay an error and ommission charge on each transaction as insurance just incase they did not cover everything (which they absolutely should have)
- The hardest prospects from my point of view is the unrealistic ones. Say a client wants to buy a home in New Port Richey for 30,000. Why? Because their friend bought one two years ago at that price and only needed a little work. You tell them there are not any, and you get treated like dirt. Happens all the time.
- Prospects come into town for the weekend, you show them homes all over the Bay Area and they leave and you never hear from them again. All on your own dime and own time. Happens all the time.
- BROKERS OWN THE MLS. They own it. Zillow, Realtor.com, etc... buy the data feed. Brokers are legally required to keep in updated within 48 hours, all these other commerical sites are not.
- The Seller signs a contract with a Brokerage to sell thier home for a price, less 6% (normally). On a 200K sale, that seller is getting 188K. The Buyer pays 200K, 3% to Listing Agent, 3% to Buyers Agent.
A buyer that gets (100% commission) earns 3,000. If applicable, they pay an MLS fee (From 0 to 400 [yes, I have seen it that high]), then pays the Broker something. So 3,000 (commission) - 300 (MLS fee) - 250 (Brokerage transaction fee) - 35 (error and ommission fee). So 3% is now ~2400.00. Still a good sale. Sell one of these a month and you make ~30,000 per year. Some of the Big Real Estate Companies require a commission split. Can be 70/30 and I have seen 60/40. So give 40% of your 3,000 to the Broker and now you make less than 20K per year.
One of the biggest scams around is the Title Companies. Watch out for them. Some charge upwards of 3,000 for your transaction where another one charges about 1,000. SAME SERVICE, SAME WORK. A lot of that work can be done by you as well if you know where to look.
Bottom Line to me - You are making a purchase that most people are going to pay 30 years on. You want someone looking out for you, to ask the hard questions, to show you everything that you want to see and more, to drive you to these places, to point out what they legally can, and for you to be happy in your new home.
On a 300,000 purchase a Realtor gets that 3% (9K minus what they have to pay). If you can get it without a Realtor, you don't recoup that 3%, you hope the Seller takes less than 300K. Say you get it for 290K. You saved 10K, and with todays interest rates on a 30 year loan that is about ~40 dollars a month. You feel you got a Great Deal. I don't lose sleep over 40 a month, but I lose sleep wondering if there is a sinkhole 3 lots down, am I in the correct flood zone where I require or do not require insurance, etc... You HOPE THAT THIS IS ALL DISCLOSED BY THE SELLER. Say you bought the home, 6 months later you have a problem. You go back to the Listing Agent and explain the problem, they say they were never told, you now hire an attorney to go after them.
Another word of caution - BE VERY CAREFUL WITH COMPARABLE HOMES. Square footage really is a main factor on price of homes that nobody has seen. But we have all been in homes that are similar on the outside, only to see major differences on the inside. That isn't included by Appraisers. They do not go in other homes to determine your price. Also Short Sales and Foreclosures have distorted prices.
Just my two cents - But love the thread and even thought about not even posting. But when I see inaccurate information being put out by the normal City Data Negatives, I had to chime in. Contrary to what you want to believe, a steady, stable housing market is what every Realtor wants to see. Bidding wars are no fun, short sales are unpredictable, Foreclosures usually require $$$, and a lot of Real Estate people NEVER CALL YOU BACK!!
I agree with every word written by you on this post but want to add that you forgot to mention that after an agent gets their commission they need to calculate what the net will be after paying taxes and deducting all their costs. Often agents give a small gift to their clients after closing, the gas they spend on trips to show the home, time spend on being present at a home inspection and perhaps during an appraisal...
If you divide that by the hours spend than I wonder how many people out there will work in this business...
To be honest when i complaint about the bad realtors I never thought about the above BUT my bad realtors didn't show up most of the time and I was present for all home inspection on my properties that were for sale but never my agent....
For all ood agents out there I applaud you since it is not always easy and knowing what I know now there are more risks to do it on your own as many will expect and we see on a regular base why it is good to have a good realtor, title company, etc...
On your own you will have to blame yourself for things going wrong, but usually that doesn't happen.
Btw many sales are short sales and for the agent who list and work them all the way to closing they do a wonderful job.
Nowadays you can hire some lawyer who claims you can't do it and will do it for $ 3000.- which means they make money on that...and we rather do it ourselves without charging any additional fees to sellers or buyers...to me that is a waste, not a scam since this is a free Country and you don't have to hire a realtor or lawyer or title company in Florida...free to do it and take the risk and that is why we pay a lot for E & O insurance and it is not for nothing!
Algia, while I normally won't acknowledge your posts or comments, It is 100% correct. Why would you try to poke holes in something that I write when I always try to be completely honest and open in here? What benefit does it provide for someone to flat out lie?
Why some people are driving a 60K auto, I have no idea. There are Realtors out there than make well into 6 figures. The average Realtor has 10 transactions a year. But mind you, there are plenty that do much more and many much less. Many do none, but keep thier license active.
Thank You Bentlebee for filling in a lot of blanks. What I forgot was the largest expense of all, MARKETING. How does someone find you with all these Realtors out there. I know many that spend over 500 per month on adverstising, lead generation systems, etc... I even know a couple that spend over 1,000 per month.
To the OP: I am sorry that you ended up with poor service. I don't know all of the requirements you are asking. What I do know is good, hard working Real Estate Professionals want to have all of your questions answered immediately. If they don't know the answer, they don't go to bed without sending you that information. If you call at 10 PM to see three houses that you have been researching online and want to see them at 8 AM tomorrow morning, the Agent probably won't deliver on Market Analysis, Comparable Sales, School District, etc... Also, the Agent can not steer you into certain areas because of Nationality, Gender, Sexual Orientation or other things like that. A good agent will have 'Farmed' thier area of expertees. They will have a lot of information that you can't find online. If you live locally, most you will probably already know. 1 in 4 Sales in Florida are to people that do not live here. They rely on a Realtor to help them in a lot of ways.
If you do go it alone, PLEASE GET LEGAL ADVICE FROM A REAL ESTATE ATTORNEY. Pay the money and Protect Yourself. This is probably the largest purchase of your life. Don't let a couple thousand dollars ruin it.
The post about the expensive cars that realtors are driving...? OMG most realtors are glad they can afford to pay for gas to drive around showing homes. Many agents write multiple offers for one client since many want to low ball and see what will stick and most won't at this time.
I never heard of any buyer paying the sellers agent commission either...but some people just say something and hope someone else will take it as a true statement.
There are agents who make a lot of money because they work hard and have a lot of experience and just like with any other profession there are people driving cars they actually can't afford but have a lease on it and have it to impress.
There are people on welfare driving cars or walking around with IPhones and we have no clue how they get them and frankly it is not our business.
I'm not here to defend bad realtors but isn't it sad that there are bad realtors, bad lawyers, bad mail delivery people, bad car sales people, bad car repair people, bad contractors, bad doctors, bad cashiers, bad clerks, bad teachers, etc...
There are agents who make a lot of money because they work hard and have a lot of experience and just like with any other profession there are people driving cars they actually can't afford but have a lease on it and have it to impress.
You must know that "buyers" are looking to be impressed by homes, and not what you're driving. I hope you're joking, because if they drive cars they can't even afford, that is a much bigger problem.
Gulfer: That is MY Opinion, and you have to realize at some point that not everyone is going to have your opinion. You don't have to agree with my opinion, however, that is what I think, and you need to learn to accept that different people have different opinions. Your excuse/explanation regarding the cars they drive is pathetic. Plus, if it is the way you're saying, and poor realtors cannot afford the gas then they should stop driving potential buyers to homes that don't fit the buyers criteria; which brings us back to the "necessity" of having a "buyers agent"...there is none. Save your gas.
There are some info which I disagree with. Realtor as well as Inspector doesn't guarantee anything. Everything is based on their knowledge... And I noticed some realtors prefer not to know any potentially unattractive info about house, so they don't have to disclose it.
It's great that realtor could help with the info about area, schools, and so on. I would prefer to get more info on the house. As an example (I think I already told you all about it, but I will repeat just in case):
(me) - Do you know any background info on that house?
(Realtor) - Let me check with Listing Agent.... No, LA doesn't have any background info... It's bank owned property... Bank recently purchased it...
(me) - Is there any way to find out if that house were vacant for a long time or is it was used for drug lab?
(Realtor) - No, it's sold as is.
(me) - What about possible problems like sink holes and so on...?
(Realtor) - No, it's sold as is. Do all inspections. I can recommend you one (!!!)
I called few inspectors and check if they can tell anything. They said the report will be based on their visual observations, so if there is no visible damage (read - if bank quickly painted house in and out) - it's impossible to find anything.
(me) - I just run a quick search on county appraisal site and county permit site and found a notice dated 3 years ago about that house been found vacant... And permit - for sink hole evaluation.
(Realtor) - I don't want to hear about all that. House sold as is....
So, it is normal for a real estate agent to act like that? Besides, my realtor lives pretty far away from the area I am interested in... All info she could provide me I already know, or I can find it online within few minutes (like school and their rating).
Another thing I cannot stand is something like: "You saved 10K, and with todays interest rates on a 30 year loan that is about ~40 dollars a month". Every single time I heard this from my realtors, they were actually trying to make me offer MORE than asking price... Next time I will hear anything like that, I will ask if realtor would like to pay this $40/month since in't nothing over 30 years... No, really, don't you think buyers already figured out the price they are willing to pay???
FYI, I used mortgage calculator and for 10K for 30 years and 3.375%, and the total I would pay for that 10K is over something 19K... Do I want to spend extra 10K now and pay interest over 9K ???
I am sure there are some benefits for having a real estate agent. I wish I had a better experience... or less expectations...
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. Not to mention that most by owner listings are over priced where listing prices are pulled out of thin air. I guess you would be OK and feel that you won, if a seller get you an overpriced house and told you he will give you all the 6% 
. 
. IMO.
