patrick.net

I just bought a condo without using a buying agent. I did all my research. I used Redfin as a base for information, went to police station by, asked future neighbors and friends that live in the area. Then I ran the number using various online excel tables and of course Patrick's Real Estate Tools. Compare similar rents in the area and bingo I am saving $825 per month. Although it took me more than a year to find the right property that served my needs.

1sfrenter says

When a house I want comes up, offer dual agency and hire my own RE lawyer and inspector.

I think you should specifically spit it out so everyone understand, you mean ..... then listing (dual) agent give me kick back of 50% of the commission (usually 3%).

I was looking to buy and one buyer Realtor offer me a % kick back of the commission she would receive after the close, whether the listing was hers or not.

Why would you ask for a part of the commission? Its stupid it will scuttle the deal and if you get the house it will be top dollar price. Of course if its allready way over market price the agent might give you some of his commssion just to unload it. SO it means any agent offering to cut you part of the commision means that house is overpriced. The 'good deals' and good properties sell fast and they can wait for a agreeable buyer (by this I mean they double dip and you are easy to work with).

Remember they are vampires and the listing agent has the loan owner hypnotized. If its a bank/short sale the relationship is even more slanted toward listing agent have all the power control.

In fact according to the law the loan owner doesnt own the listing of his own home - the Listing agent does. Loan owner cant even change agents for 6 months normally in CA (standard CAR listing form has 6 month expiration of lstings. Of course I crossed this off when I listed a home with an agent before I got a clue and got my own license).

My (buyer's) agent is not really adding anything to my search right now. I might need his help when it comes to making an offer and escrow, though.

With everything online now, seems like what I want to buy might be better found if I can find it before it ever gets listed.

If a listing agent knows they will get the entire 6%, might they pick up the phone and call me first and try to get the house sold to me before a slew of buyers and their agents jump on it?

If the seller and the listing agent are hoping for multiple offers and a bidding war, then this wouldn't work.

PockyClipsNow says

Why would you ask for a part of the commission?

Exactly. Just let em take that damn 6%,who cares how they want to split. Just reduce your offer by 6%.

PockyClipsNow says

Why would you ask for a part of the commission?

I am thinking about the same question as OP (thanks for posting thread). I understand that if the seller has an agent they will have to get their 3%. Seller's choice. But if I don't want an agent, I would like to ensure that the 3% normally going to buyer's agent instead goes directly to the seller. I don't need any complicated kick-back scheme. I just want it to go directly to the seller, anticipating that he or she will consider my bid ~3% more valuable than same bid by someone else with a buyer's agent.

Possible?

drtor says

But if I don't want an agent, I would like to ensure that the 3% normally going to buyer's agent instead goes directly to the seller. I don't need any complicated kick-back scheme.

I see an advantage to NOT getting a kick back (although in a slow market you could ask):

you get first dibs on all good listings if the listing agent knows they will personally make commission by selling to you.

In a tight market with low inventory, as it is where we are, this is major. Anything decent gets pounced on within a week.

drtor says

I would like to ensure that the 3% normally going to buyer's agent instead goes directly to the seller. I don't need any complicated kick-back scheme.

NO!
This NEVER happens. Contractually in the listing contract which is legally binding in a court of law the listing agents gets the whole 6% if there is no selling agent. The loan owner CANNOT get this money. Its possible in rare cases the owner is smart and crossed out or changed the contract so that in this case the 'loan owner' gets the selling side commission but its rare (i did this, but I have a clue).

I know clueless buyers who have wanted to do this before. I used to think this would work. It wont and cant. You wont even be allowed to communicate with the seller. You tell the listing agent you want the seller to have half his commission and see how fast he stops calling you. (this is legal since he can say you 'are not a serious buyer' and he is actually correct! lol)

ALSO according to CA law (IIRC) just because you 'dont want an agent' the listing agent is legally representing you anyway. Its like you as a buyer are considered a minor with no rights. There have been many many abuses over the centuries and CA law hold agents liable for fair dealing. Lots of laws are like this the most annoying is that binding financial advisors which is why you see posts 'this is not legal/financial/investing advice'.

Your actions such as merely walking into a home for sale start a series of legal events which you are unaware of. Learn them. Such as 'procuring agent gets commision' means u cant change agents. And a seller cannot cancel a listing contract before it expires (breach of contract) without paying the 6% to the listing agent (its in the CAR listing form, read them).

All this is not trivial. People get legally sucked in like this:
1. walk into open house to check it out with no agent next to you (you have just chosen the listing agent to represent you! unless your hand picked buyers agent found the home and is physically there with you - listing agent gets commission).
2. call on a listing you are driving by - agent shows u the home -your wife loves it. Guess what? you just chose the listing agent to represent you. the first agent to stand next to you while u view the house (whether you sign anything or not or are serious about buying or not doesnt matter) has procured that sale for the seller and the seller owes that party commssion if you close(buy) on that home.

*this is not legal or financial advice (hahaha! so annoying isnt it!)

PockyClipsNow says

NO!
This NEVER happens.

Thanks a lot for this information, very valuable. And annoying.

Another process that comes to mind is this. I have a friend who is realtor part time. Suppose re 1. and 2. that I declare upon entering house that I do have an agent who could not make it today . Then when I have looked around at houses at my own pace and am ready to make a move I call on friend to assist in final steps of transaction only. We split her fees some way on account of the fact that her realtor workload was very light. Possible?

Yes you can use your own buyers agent. Just tell the listing agent at open house - "I have an agent and they sent me here but cannot make it themselves- my agent is the procuring agent for this property and will write up the offer if I decide to buy".
Thats pretty clear and they will know 'you know how it works'.

This should establish procuring cause and the listing agent will also leave you alone and not try to adopt you as a buyer.

Of course I like the idea of dual agency to get super lowball price but I have not actually done this yet- havent bought a home since 2004.

http://homebuying.about.com/od/realestateagents/qt/Procuringcause.htm

PockyClipsNow says

Of course I like the idea of dual agency to get super lowball price but I have not actually done this yet- havent bought a home since 2004.
http://homebuying.about.com/od/realestateagents/qt/Procuringcause.htm

Thanks a lot PockyClipsNow. Obviously lowball price is part of it but honestly I just don't want an agent to follow me around. I like to just spontaneously stop by open houses at random places and take my time. And it wouldn't be fair to the agent either - I may do this for several years and then not decide to buy!

If you don't use a buyer's agent, the listing agent will just take all the commission. It won't save you a dime. That's how it works. I'm a former realtor.

Not having a Buyer's Agent in the rough and tumble business of real estate is like not needing a manager for the New York Yankees. When you have 9 great players getting a Billion dollars a year, why do you need a manager.
35 Years investing experience guarantees I know more than you, and many hours of negotiating training guarantees you will be at a disadvantage.

LASVEGASWINNER says

negotiating training

You mean,negotiating with the sellers agent to screw your client,so that you both can enjoy the big fat commission check. LOL.

In my experience, what you are missing is that when I tried this, I still couldn't get access to half the houses I saw listed online but wanted to see - the ones that didn't have open houses. Many of the listing agents would not return phonecalls, or when they did, they didn't take me seriously as a buyer without me having a buyer's agent. So, in short, the lock box access was a major part that I was missing without an agent.

1sfrenter says

Would like advice on how to buy a house without using a buyer's agent. Sheesh, all they do is open some lock boxes for you (can't the listing agent do that?) and drive you around in their big fancy cars (no thanks I can drive myself to open houses). In 2 months he hasn't told me about anything that I didn't already find listed online myself.

If you know what you want and you know the neighborhood and the comps, do you really need a buyer's agent?

This is a common misunderstanding of what it is that we as agents actually do. You are completely correct: opening lockboxes is of little value.

Selling (buyers') agents really earn their money by helping educate their clients about neighborhoods and the local market. But most of their value comes during escrow, helping the buyer navigate through the process of inspections, appraisals, negotiating repairs, etc. On clean deals, things can go smoothly, but most deals have a number of issues where good real estate advice can make or save clients a lot of money.

Again, bad real estate advice is worthless. But good advice can benefit a buyer by far more than the 2-3% that the agent earns.

1sfrenter says

Can't I just go to several of the top-selling listing agents in the neighborhoods I want to live and tell them what I am looking for. When a house I want comes up, offer dual agency and hire my own RE lawyer and inspector.

What are the pros and cons of this? What am I missing?

You probably aren't saving the Sellers any money and therefore aren't going to end up getting any kind of better deal. You will likely end up with no financial benefit by working directly with the listing agent and are actually risking not getting sound advice as a buyer in the deal.

Instead of focusing on the unlikely possibility that you might be able to get the house a little cheaper, find a good agent who you trust will give you sound advice through the process.

I would estimate, in my experience, that about 1 out of 3 offers 'get flushed' when submitted by a buyers agent. Agents know this is illegal so they do things like not return calls, keep property locked via chain and padlock, steal key from lockbox, put glue in door lock, put in mls for sale but 'no showings allowed for fake reason'. In rural or cheaper areas maybe everyone is more honest but with commission of 30k on the line the shenanigans start.

I will add my experience is limited.

gregpfielding says

You probably aren't saving the Sellers any money and therefore aren't going to end up getting any kind of better deal.

It's not so much getting a better deal that I am after, but getting a heads up/first dibs on listings, as anything decent is still garnering multiple offers in the nabes we are interested in.

gregpfielding says

Selling (buyers') agents really earn their money by helping educate their clients about neighborhoods and the local market.

I've been a renter in the neighborhood where we hope to buy for the last 20 years. Following the bubble pretty closely since 2000.

Most everything you need to know is on line now (comps, sales history of a certain house, property taxes, etc.) Between MLS, Redfin, Trulia, zillow, the assessor's parcel info. online and property shark, anyone who is at all comfortable on the web can find out a lot.

1sfrenter says

gregpfielding says

Selling (buyers') agents really earn their money by helping educate their clients about neighborhoods and the local market.

I've been a renter in the neighborhood where we hope to buy for the last 20 years. Following the bubble pretty closely since 2000.

Most everything you need to know is on line now (comps, sales history of a certain house, property taxes, etc.) Between MLS, Redfin, Trulia, zillow, the assessor's parcel info. online and property shark, anyone who is at all comfortable on the web can find out a lot.

This is the point right here. Yes, some realtors in some situations do earn their money by educating customers who are new to an area and visit a lot of houses.

The problem is that the seller sets the commission schedule leaving no choice, no optionality, and certainly no price competition for a buyer who may want and need much less service.

I would make the modest proposal that sellers should not be allowed to specify the buyer agent's commission. It would then be up to the buyer to hire an agent to support them for a price they agree on. Or not.

I am not a lawyer but to me this looks like a solid antitrust case. Seller setting buyer agent's commission at a fixed rate, and in a way that benefits seller and agent, leaving no option for buyer - could it be any less competitive than this?

If you think I am a dreamer, note that NAR was forced to open up MLS to aforementioned online options in 2008 because of an antitrust case.

1sfrenter says

It's not so much getting a better deal that I am after, but getting a heads up/first dibs on listings, as anything decent is still garnering multiple offers in the nabes we are interested in.

This does have value. If you know exactly what neighborhood you want to be in and there is an agent who tends to know lots of the listings before they come up, absolutely consider working with them as your buyer's agent.

They've earned your business with their specialized expertise.

drtor says

I would make the modest proposal that sellers should not be allowed to specify the buyer agent's commission.

First off, the seller absolutely can pay less if they want to. While 2.5 and 3% are most common, we do occasionally see 1.5 or 2% being offered as compensation.

The issue is that it is in the seller's best interests to get local agents excited to show their house and keep it in mind when talking with potential buyers. If you are discounting your commission, you are going to turn some people off.

Depending on the scenario, they could even end up netting more cash by offering more commission or a bonus to the buyer's agent.

I agree with you all here that it seems like a racket. But this is the system we have and, because NAR seems to own the politicians, it's not going to change.

My advice to everyone here is to worry less about how to beat the system to potentially get a small discount, and focus on finding and working with a good agent. We are out there.

gregpfielding says

First off, the seller absolutely can pay less if they want to. While 2.5 and 3% are most common, we do occasionally see 1.5 or 2% being offered as compensation.

Agreed. Seller's commissions work better.

The issue is that it is in the seller's best interests to get local agents excited to show their house and keep it in mind when talking with potential buyers. If you are discounting your commission, you are going to turn some people off.

Depending on the scenario, they could even end up netting more cash by offering more commission or a bonus to the buyer's agent.

Are you suggesting that some buyers' agents would steer their principals towards properties with higher commissions rather rather than towards properties that are in the buyer's best interest? I am shocked. Shocked. Seriously though, this is another important argument why the seller should not be setting the buyer's agent commission rate.

I agree with you all here that it seems like a racket. But this is the system we have and, because NAR seems to own the politicians, it's not going to change.

Good point - although note that the MLS antitrust case was brought by the Department of Justice, without the need for, and indeed going against, the owned politicians. That is why I like to think there is some small hope for my idea.

My advice to everyone here is to worry less about how to beat the system to potentially get a small discount, and focus on finding and working with a good agent. We are out there.

What I learned in this thread (that seller's agent gets to claim buyer's agent commission if buyer shows up without agent) could well save me 1/2 a regular commission, or $15k on a $1MM house. That is significant to me.

I don't doubt that there are good agents out there. And actually that brings me to another point. The non-competitive commission rates invite all sorts of unserious people to the business, and the NAR does very little self-policing. That gives the good agents out there an undeserved bad rep.

gregpfielding says

Again, bad real estate advice is worthless. But good advice can benefit a buyer by far more than the 2-3% that the agent earns.

I don't disagree that good real estate advice can be worth more than 2-3%, but I do challenge to what extent the typical agent is able and motivated to provide such advice.

Also, bad real estate advice is much worse than worthless. Consider the 2006 NAR campaign that it was a great time to buy a home. Following that advice cost many people their life savings. And how many buyers' agents in 2006 advised their principals to stay clear of real estate?

drtor says

I don't disagree that good real estate advice can be worth more than 2-3%, but I do challenge to what extent the typical agent is able and motivated to provide such advice.

Also, bad real estate advice is much worse than worthless. Consider the 2006 NAR campaign that it was a great time to buy a home. Following that advice cost many people their life savings. And how many buyers' agents in 2006 advised their principals to stay clear of real estate?

Agree completely. NAR has no credibility and their shameless spin makes all of us look bad. While any individual agent can be working to achieve the best outcome for their clients, NAR is working to achieve the best outcome for NAR - which is not necessarily in the public's best interest.

If I could sell real estate without being a member, I would. But they control the MLS systems, so we are all stuck.

drtor says

What I learned in this thread (that seller's agent gets to claim buyer's agent commission if buyer shows up without agent) could well save me 1/2 a regular commission, or $15k on a $1MM house. That is significant to me.

What do you mean by this? That the listing agent will take less commission if they double-end the deal?

It is common that a listing agent my offer to take 1/2% to 1% total less commission from the sellers if they double-end it. So, the sellers could net the same amount by selling it to you for a little less, but that doesn't mean they will automatically be willing to do it. Usually they want to keep it (after all, it's their money).

gregpfielding says

What I learned in this thread (that seller's agent gets to claim buyer's agent commission if buyer shows up without agent) could well save me 1/2 a regular commission, or $15k on a $1MM house. That is significant to me.
What do you mean by this? That the listing agent will take less commission if they double-end the deal?

Specifically I was refering to an exchange I had with PockyClipsNow. He told me that the seller sets the buyer's commission rate so as a prospective buyer it would seem like I have no choice, and if I show up without an agent then that commission would go to the seller's agent.

We discussed a workaround whereby I find an buyer's agent who is willing to return half that commission to me. On the plus side (for the agent) I would do all the house visits myself, so the workload would be lighter as well. From my perspective this is actually not only about saving costs - I would just feel stressed by having an agent following me around, I prefer to take my time and in the end I may decide not to buy at all (which would not be fair to an agent who had showed me a lot of places). Does this sound like a reasonable arrangement to you? Maybe you would even be interested yourself ; ) ? If not I have some friends who are part time realtors who would be happy to do this...

Redfin buyers agents will kick back 25% of thier commission (i think - they used to do 33% but then trasaction volumes were cut in half by the crash).

You could use redfin/internet to find a home, drive by it, then call your redfin agent to 'let u in the door' and write up your offers.

BTW if you are going to use a buyers agent that is willing to kick back part of commission the best scenario is using a BROKER not a SALESPERSON licensee. A broker would be indepenent (not c21) but marketing in their own name or a RE MAX agent (i think most of them are independents, they pay like a flat fee to sign with RE max vs commish split). The reason is a salesperson only get probably 60% of the buyers side (40% or whatever is negotiated would be kicked up to the head broker or the head vampire of the coven). An inpedendent vampire can give you half his commish ez he has no one to share with.

I learned all this by being angry like many people at all these parasitic salesmen and leeches that come out of nowhere into your life when you buy a house. I got my own license, went 'undercover' at a real RE office and even took thier free training, sold my own home that way. Its so easy even a caveman could do it BUT making a living at it means mucho competitition from every bored soccer mom in your town - half of them are agents.

Start by asking 'how do you get paid, how much, by whom and when' when they 'let u in the door for free' ITS NOT FREE.

drtor says

Does this sound like a reasonable arrangement to you? Maybe you would even be interested yourself ; ) ? If not I have some friends who are part time realtors who would be happy to do this...

Half is a lot. But, depending on the scenario, some credit may certainly be fair.

A lot of times buyers who don't really think they need an agent because they found a house by themselves, don't really understand that most of their time, work, and expertise comes into play after a house is found. Many buyers who don't think they need much help soon realize that they need just as much as everyone else. That's not to say that you'll fall into this category, but it is true of most.

Also there are some mechanics to consider. The easiest way to "credit" you money is through escrow - meaning it has to go towards your closing costs (or else your lender won't allow it). This means that you have to have closing costs that are that high, and you can't ask the seller to pay any of them. Doing it outside of escrow creates some tax problems for all parties.

I would definitely be interested in hearing more about your situation. Email me with some more details and we can see if there is a fit.

PockyClipsNow says

BTW if you are going to use a buyers agent that is willing to kick back part of commission the best scenario is using a BROKER not a SALESPERSON licensee.

This isn't necessarily true. Most licensees can do whatever they want, within reason, but they use there broker as an excuse when they don't have any other excuse to use.

Most brokers are pretty reasonable and will let you as an agent make contributions necessary to close a deal. Worst-case scenario, they will ask you to give all or some of the credit AFTER the brokerage split. In reality, productive agents can get away with a lot.

E-man says

You're not missing anything. I think that's a fantastic idea. I recommend you find the property yourself. Knock on the door and ask if the homeowners want to sell their home to you. Save 6% commission. Remember, the 6% commission is built into the sale price. You're the one that's bringing money to the table to close the deal. Make sure knock the 6% off of the purchase price and put it in your pocket.

Come on. You can do it. Actually, anybody can do it. That's a lot of money/savings for very little work. I bet you would enjoy doing it too. Go for it, and report it back to us on what you've learned so we can learn it from you too.

Seriously, who needs a listing agent and a buyer's agent? Only a fool would use a realtor to list and sell their home. Go with FSBO. :)

Learn from your victory. Prosper from your failure.

Anybody can but most people don't.

We saw a lot of this in Ohio in the seventies. The industrial jobs went away (sort of the same way in which construction, real estate and finance jobs have gone away here) and that six percent suddenly became a lot of money.

E-man says

You're not missing anything. I think that's a fantastic idea. I recommend you find the property yourself. Knock on the door and ask if the homeowners want to sell their home to you. Save 6% commission. Remember, the 6% commission is built into the sale price. You're the one that's bringing money to the table to close the deal. Make sure knock the 6% off of the purchase price and put it in your pocket.

Nothing wrong with this at all. Find a neighborhood you like and go for it. And if you guys decide you need help with paperwork, you could hire and agent or lawyer for a small fee to help you out.

gregpfielding says

E-man says

You're not missing anything. I think that's a fantastic idea. I recommend you find the property yourself. Knock on the door and ask if the homeowners want to sell their home to you. Save 6% commission. Remember, the 6% commission is built into the sale price. You're the one that's bringing money to the table to close the deal. Make sure knock the 6% off of the purchase price and put it in your pocket.

Nothing wrong with this at all. Find a neighborhood you like and go for it. And if you guys decide you need help with paperwork, you could hire and agent or lawyer for a small fee to help you out.

East Bay Real Estate Agent and Blogger

If more people do this, the realtor jobs will begin to disappear. That also happened in Ohio during the seventies and eighties.

The realtor my landlord used as a representative to handle his paperwork just retired. I suspect part of that was about her age and the other part was about her technological illiteracy and scarcity of listings. She's seventy and figured it was time to let someone else do it.

1sfrenter says

gregpfielding says

Selling (buyers') agents really earn their money by helping educate their clients about neighborhoods and the local market.

I've been a renter in the neighborhood where we hope to buy for the last 20 years. Following the bubble pretty closely since 2000.

Most everything you need to know is on line now (comps, sales history of a certain house, property taxes, etc.) Between MLS, Redfin, Trulia, zillow, the assessor's parcel info. online and property shark, anyone who is at all comfortable on the web can find out a lot.

BusinessWeek did a story on this several years ago. They said technology is doing to residential real estate salesmen what it did to car salesmen about ten years ago. Information is now widely available and the technology to access that information is highly pervasive. There's really no such thing as getting screwed at a car dealership anymore. I know plenty of people who don't even buy new cars these days. I haven't bought a new car in over ten years and don't know if I ever will again thanks to Craigslist.

rootvg says

They said technology is doing to residential real estate salesmen what it did to car salesmen about ten years ago. Information is now widely available and the technology to access that information is highly pervasive. There's really no such thing as getting screwed at a car dealership anymore.

There is a big difference between real estate salespeople and car salespeople. Cars are commodities. You can shop between dealers for the exact same cars to get the best deal. The cars don't "sell themselves" in terms of where you buy them. Car salespeople have to "sell" you right then and there. In effect, they aren't selling the car, they are selling the deal. People find the car they want, then shop for the best deal.

Houses, by contrast are much more unique and individual. People find the house they want, and then try and get that specific home for an acceptable price. It's not like they can go buy that exact same house at a different dealership. Real estate salespeople do much more facilitating a deal then hard-selling a deal.

Realtors will be replaced by machines. Just like the rest of us will be.

wthrfrk80 says

Realtors will be replaced by machines. Just like the rest of us will be.

I think that's a little extreme.

Not everyone thinks as we do. Not everyone lives in a place that's as wealthy and progressive as this. The area where my father's family lives has changed very little in the last twenty years. It's the one place I head to when I need to get away but also have access to internet and phone if the excrement hits the oscillator at work and the on call needs to find me. I called my boss and checked in from our rented SUV on an old forest road on top of a 3000 ft mountain in central Pennsylvania. I was away but yet I was there...and it felt really damn good.

I guess I'm guilty of getting off topic.

rootvg says

BusinessWeek did a story on this several years ago. They said technology is doing to residential real estate salesmen what it did to car salesmen about ten years ago. Information is now widely available and the technology to access that information is highly pervasive. There's really no such thing as getting screwed at a car dealership anymore. I know plenty of people who don't even buy new cars these days. I haven't bought a new car in over ten years and don't know if I ever will again thanks to Craigslist.

Last time I bought a car was October 1995!

gregpfielding says

Houses, by contrast are much more unique and individual. People find the house they want, and then try and get that specific home for an acceptable price. It's not like they can go buy that exact same house at a different dealership. Real estate salespeople do much more facilitating a deal then hard-selling a deal.

You can usually get a home that's close enough. The whole thinking that housing is unique is mostly in your head.