patrick.net

One question about the "we have multiple offers" thing? Has anyone actually demanded a list of the people who submitted these multiple offers along with the offer amounts(which of course would not be disclosed), proclaimed that you won't participate in a rigged blind bidding process that clearly places you, the buyer, at a disadvantage, flashed the listing agent the twin middle fingers, then wrote a note directly to the seller listing exactly how much you would have offered and why you didn't ?

I am confused. Why would anyone pay full commission to a realtor? It does not take serious negotiating skills or arm twisting to reduce a realtor's commissions.

As a buyer, if I ask 6 realtors to represent me and to reduce their commission to 1% (instead of 3%, one half of the transaction commission) and let them know I am asking the same of 5 other realtors, at least 5 of the 6 will immediately come down to 2% or less. If I press a little, at least 4 of them will go below 2% and probably 3 will go straight to 1%.

Are people having difficulties getting realtor's to drop their commission percentages? Getting a realtor to drop their commission is easier than getting Mary Jane Rottencrotch to drop her pretty pink panties.

What does it matter if your buyers agent drops their commission? Is it truly coming out of your pocket? Maybe the house value is inflated, but can you go to the seller and say "hey, my agent is only taking 1%, so knock the house price down 2%"

Biff Baxter says

I am confused. Why would anyone pay full commission to a realtor? It does not take serious negotiating skills or arm twisting to reduce a realtor's commissions.

As a buyer, if I ask 6 realtors to represent me and to reduce their commission to 1% (instead of 3%, one half of the transaction commission) and let them know I am asking the same of 5 other realtors, at least 5 of the 6 will immediately come down to 2% or less. If I press a little, at least 4 of them will go below 2% and probably 3 will go straight to 1%.

Are people having difficulties getting realtor's to drop their commission percentages? Getting a realtor to drop their commission is easier than getting Mary Jane Rottencrotch to drop her pretty pink panties.

One potential issue with that approach is yes, you can get some yeses, along with some nos. The yes group is more likely to be inexperienced, not busy, not as good - on average. The busy best in the area guy is going to tell you to take a hike when you ask for a reduction, in most cases.

See, e.g., http://blog.franklyrealty.com/2007/02/realtor-rebates-free-money-or-expensive.html

http://blog.franklyrealty.com/2011/02/6-realtor-commissions.html

PS - I'm not this guy, never used him, no affiliation, etc.

When I started out in my line of work, I used to drop my price if someone asked and it looked like that would get me the business. Now that I have more experience, referrals, repeat business, they ask, I say no, I offer the best value not the lowest price.

dodgerfanjohn says

One question about the "we have multiple offers" thing? Has anyone actually demanded a list of the people who submitted these multiple offers along with the offer amounts(which of course would not be disclosed), proclaimed that you won't participate in a rigged blind bidding process that clearly places you, the buyer, at a disadvantage, flashed the listing agent the twin middle fingers, then wrote a note directly to the seller listing exactly how much you would have offered and why you didn't ?

How does it place anyone at a disadvantage? The buyer is still free to offer whatever he wants to, whether there are multiple offers out there or not.

I have been successful in getting an idea about the other offers, e.g., one is a little low but it's all cash, one is high but FHA we're ignoring that one, etc.

UAVMX says: "What does it matter if your buyers agent drops their commission?"

Apparently not clear on the whole money thing.

JG1 says I may be getting a lesser realtor (oxymoron) if I pay less.

On the sell side there can be a difference between realtors skills but I have never had difficulty getting any realtor to drop their commission significantly.

On the buy side realtors are virtually a commodity assuming you know the basics about getting inspections and market prices. Inspection knowledge takes all of 5 minutes to learn and every buyer or seller should learn about market prices no matter which realtor they choose or how much they pay. If you can figure out a good price for a gallon of milk, you can figure out prices in your local real etstate market. Granted, learning about real estate prices takes longer.

UAVMX says

What does it matter if your buyers agent drops their commission? Is it truly coming out of your pocket? Maybe the house value is inflated, but can you go to the seller and say "hey, my agent is only taking 1%, so knock the house price down 2%"

This is not true. The buyer comes up with the cash that pays everybody. Effectively, each party pays half. It's naive to think you pay nothing as a buyer.

If you didn't have to pay a realtor fee, that $500K house is now $470K with a 6% fee. You are CERTAINLY paying the fee. When it gets rolled into your mortgage, you pay that fee for 30 years.

You didn't read the links, where a realtor explains some of the things he has done on the buy side that your commodity type realtors don't.

I chose to pay full price as a buyer because I was moving to an area where I was not that familiar with its neighborhoods, streets, etc., and I wanted someone who was active in the area on a long-term basis to provide guidance on these issues, as well as just the stuff you are talking about. I did talk to some other real estate agents and, yes, I got some to drop their commission as much as one-third. Personally, for my circumstances, I chose to go full price and am fine with it - the guy ended up throwing me a $1,000 gift at the end anyway - but I obviously considered the discount route since I approached some realtors about it. I was also turned down by a couple who said, no, I'll negotiate the hell out of the deal for you, but I won't drop my commission.

Let's see. You paid full commission but got a $1,000 gift.

I can't top that.

People are looking at me like I'm an idiot for laughing so loud.

JG1 says

dodgerfanjohn says

One question about the "we have multiple offers" thing? Has anyone actually demanded a list of the people who submitted these multiple offers along with the offer amounts(which of course would not be disclosed), proclaimed that you won't participate in a rigged blind bidding process that clearly places you, the buyer, at a disadvantage, flashed the listing agent the twin middle fingers, then wrote a note directly to the seller listing exactly how much you would have offered and why you didn't ?

How does it place anyone at a disadvantage? The buyer is still free to offer whatever he wants to, whether there are multiple offers out there or not.

I have been successful in getting an idea about the other offers, e.g., one is a little low but it's all cash, one is high but FHA we're ignoring that one, etc.

Dodge - I suggest you try this some time. Most likely the seller will gladly throw your lowball offer in the trash.

Biff - Again, you didn't read.

JG1, just so you can get comfy, I wanted to let you know that I did read the links you provided before my subsequent comments.

One restatement in general, I have never had to use any heavy handed or arm twisting practices with realtors. The idea that realtors are in a position of strength is a facade that is easily broken through. This is always true and possibly even more so in the current market. I have the money or the property. The realtor wants to facilitate the sale or purchase of a house. There are lots of realtors available (big supply). I tell them the price at which I will sell or the price that I am willing to pay, for both the realtor and the house.

And your statement that you only got some realtors to drop their commissions by as much as one third means one of two things. Either you are a realtor (hence the propoganda) or you shouldn't be allowed to negotiate your way to the bathroom.

And your statement that "the seller will gladly throw your lowball offer in the trash" is ridiculously unrepresentative of the current market. Sellers aren't doing much "gladly" lately.

First, I am not a realtor. Second, considering most buyers just pay full commission, any negotiation and concessions on price are way above average. The results you may have obtained would not be directly comparable to mine, regardless, as factors such as timing, market, price range, whether you're also selling a property and offering both a listing and a purchase to a realtor, etc., etc. come into play. And my negotiated commission was for regular full service, not for 'put an offer in on this one property, you won't have to do much work or drive me around, I promise.' So a third of list price for full service doesn't seem too bad to me - you (guys) try it at your local store or service provider and see how you fare. Third, I would be willing to bet that in most situations where "best and final" and "multiple offers" are bandied about by the listing agent, this is indeed the case, and the offer of someone who 'doesn't buy into this kind of thing' is unlikely to be compeititve in that situation. Which doesn't stop them from submitting a best and final that's the same as their original offer, or less, or only at their predetermined best price for the property, or whatever the hell they want to offer. In other words, write it up, submit it, there you go, your offer is in and the sellers can consider it. If the prospective buyer doesn't want to believe the information that there are multiple offers, then fine, but to the buyer who wants the property and does believe it's true, it's useful information, because it means the opportunity to lowball or go back and forth with the seller in small upward increments is likely not there.

Finally, someone mentioned the Property Virgins being an ad for paying full (list) price. In multiple offer situations on that show where the buyers have ignored the multiple offer situation and stuck to their original offer, guess what, just like in the non televised world, they usually lose out to a higher offer.

In my own personal experience, when I have been told there were multiple offers, I was outbid multiple times.

If there really are not multiple offers and the listing agent says they are, he is doing both his client and himself a disservice or at the very least, taking a risk. Risks include someone could find out and report the ethical violation or post about it online for future buyers to see. Another risk is the one and only offer walks away, leaving the seller without a sale and the realtor without a commission. A little bit higher sales price is not worth the risk of not selling the property at all to most realtors, as explained in the book Freakanomics, so the incentive for most realtors is to get any deal closed, rather than do anything possible to get the last dollar out of the sale, at the risk of going back to the seller and saying bluffed and lost the only offer we had, no sale for you, no commission to me, back to the drawing board...

MinnItMan says

you do not have a true "buyer's agent." You will have a "selling agent" representing you to the listing agent, and the listing agent's broker will pay that agent.

This is exactly what is happening in RE industry now.
Every Agency has two major groups of agents: one or few, usually brokers- owners, who focus only on listing properties. Those are RE Kings, use they connections to list as many properties as possible. Most agents, who work for agency, are the guys who run around town and shows properties to prospective buyers. Whenever they work for listing agency or shows properties from MLS, they STILL represent the SELLER- The owner who agreed to pay commission.
Every agent can say, regardless if it’s true or not “we have multiple offer” simply because buyer has no power to check it out.
When listing agent approach the owner who wants to sell property, he usually shows him for how much the similar property were sold recently. To make owner happy he is adding 6% commission on a top of that. This fact alone artificially drive prices higher with every listing.
Now is the hint: If your offer is 6% below listing price, you are the closest to the real market value.

This is exactly what is happening in RE industry now.
Every Agency has two major groups of agents: one or few, usually brokers- owners, who focus only on listing properties. Those are RE Kings, use they connections to list as many properties as possible. Most agents, who work for agency, are the guys who run around town and shows properties to prospective buyers. Whenever they work for listing agency or shows properties from MLS, they STILL represent the SELLER- The owner who agreed to pay commission.
Every agent can say, regardless if it’s true or not “we have multiple offer” simply because buyer has no power to check it out.
When listing agent approach the owner who wants to sell property, he usually shows him for how much the similar property were sold recently. To make owner happy he is adding 6% commission on a top of that. This fact alone artificially drive prices higher with every listing.
Now is the hint: If your offer is 6% below listing price, you are the closest to the real market value.

Another problem home buyers face is not being shown the best deals. I've seen several nice homes sold without my knowledge. I've learned that buyers are often only advised of more desireable homes after the realtors, the builders, the appraisers, bankers, and all their relatives and friends don't want it.

JoesAttic4us says

I've learned that buyers are often only advised of more desireable homes after the realtors, the builders, the appraisers, bankers, and all their relatives and friends don't want it.

Yes, this is very true. Of course, what happened during the boom is that realtors bought shitty houses and then lost money on them (read some of the San Diego housing blogs, especially, but this happened everywhere). After the boom, the smart realtors who still had money left were buying deals and flipping them. I detailed one such flipping realtor on Patrick.net in a prior thread.

Yes.... agents well connected often get the preferred listings.
Yes.... Now Banks often have agents that won't talk to anyone outside a small circle jerk that allows buying of mass properties for pennies on the dollar.

So instead of helping Joe and suzie lose their real estate cherry, instead of that look of joy and bliss, the first timers are more or less told to beat it, put off, told of multiple offers and then we hear of collusion and other conspiracies that are the tip of the iceberg and the slap on the wrist is delivered and on we go.

And Yes Agents are a hinderance to property sales in this market where owner financing, the house as collaterial would pull us out of this crunch so fast we would be AAmmmmericcca again!

Yes yes yes but be careful of the conclusions you draw cause everyday in our fair state properties came on line that somehow avoid the all seeing eye of the pundits. I say this from experience. Aome posters have alluded to the fact that the buyer holds the mojo, and that can be so very true. Maybe not in a fixed up cottage in Redwood City but certainly in a flooded out foreclosure in Oakland that the bank does not wish to maintain.... and four uinits later this property could net you a small fortune!

The bottom line is that much like Wall Street if you put 100 of these brokers/agents in a room, 10% would have real smarts, maybe 10% real experience and of those some would be ethical. Like so many things it does not take but a few to give all a bad name.

My point in this post is to entertain the notion that yes having a buyer agent forced upon oneself is bad BUT, getting to know some smart agents/Brokers hanging out and befriending them and asking them to help you find a decent property at a particular price could work wonders.

If you work this way the commission should not matter, state your price, which should always be at a discount in any market, and let the broker/agent price it so he/she gets his/hers.

People have these problems mentioned because the system sucks, there is collusion all over the place, and the interests of the sales team & the banks comes first.... but there are loopholes and there are a lot of opportunities

JoesAttic4us says

Another problem home buyers face is not being shown the best deals. I've seen several nice homes sold without my knowledge. I've learned that buyers are often only advised of more desireable homes after the realtors, the builders, the appraisers, bankers, and all their relatives and friends don't want it.

Why would the seller(s) allow this?

JG1 says

Why would the seller(s) allow this?

They don't know any better, and corrupt agents convince them that it's not worth any more and that it's not selling. There was a great story about one of these houses in SocketSite that sold for a too low price in a great neighborhood in SF. The agent would probably argue, "they just wanted a quick sale with no hassle," but in reality, the agent screwed them.

corntrollio says

If you didn't have to pay a realtor fee, that $500K house is now $470K with a 6% fee. You are CERTAINLY paying the fee. When it gets rolled into your mortgage, you pay that fee for 30 years.

Some people cannot or will not understand this. Claiming that a buyer's agent is "free" when they are paid out of the sale proceeds provided by the buyer, is like Wal-Mart claiming an item you paid $1.04 for was "tax free" because they were the one's who handed the government the $0.05, not you.

"It comes from the seller"

No more than Wal-Mart is "paying my taxes" on that candybar I just bought. Them handing the government my money is not them paying for the tax. They just priced the item based on the assumption they'd already owe that to the government, ie: The cost is built in.

The "free" buyer's agent's fee is built into the cost of your new home.

rocketjoe79 says

I say get your own General contractor license (it's quite simple), buy a property, hire your own workers and build your own place.

In California, it's not exactly simple. You do need four full years of experience at a journey level, or as a foreman, supervisor, or contractor in the classification for which you are applying, $2,500 operating capital, and must be able to pass the tests and pay the application fees.

Also, you do not need to be licensed in order to act as a general contractor for your own property.

chirpy says

rocketjoe79 says

I say get your own General contractor license (it's quite simple), buy a property, hire your own workers and build your own place.

In California, it's not exactly simple. You do need four full years of experience at a journey level, or as a foreman, supervisor, or contractor in the classification for which you are applying, $2,500 operating capital, and must be able to pass the tests and pay the application fees.

Also, you do not need to be licensed in order to act as a general contractor for your own property.

there are a ton of permits that must be obtained as well. it's a lot of fees and legwork.