patrick.net

DM says

My wife is a California bar-licensed attorney, and I've taught law (although not real estate law), so we're not entirely clueless here.

What kind of law did you teach as a non-attorney?

DM says

I'll reiterate my question: if it's so simple, why don't you post a list of attorneys in the bay area who would be willing to do this, along with their contact info? Still waiting...

It's not my job to find you an attorney to do it, and you clearly didn't read my "update" and are making bad assumptions. I am saying rather that this is possible and it's quite simple to do.

Your wife could do it, if she's a member of the bar. Why do you think it's so difficult? Most realtors have very little skill and expertise in anything except pricing, which is quite easy to learn if you study the market, and realtors still get pricing wrong. You could hire a real estate attorney for the transaction to reduce risk on legal issues -- realtors profess to have knowledge of legal issues, but they don't have it. The forms are standard realtor association forms -- again, no special magic here.

Why do you think an agent who is not even required to have a college education is somehow more qualified to do this than a member of the state bar? It would be quite cheap for your wife to do this, it would take very little effort, and you could save thousands of dollars.

corntrollio says

it would take very little effort

I disagree with this. Real Estate licensing tests are filled with questions that you really can't guess at, like the difference between accretion and avulsion, where the origins of the cadastral system are in California, how many acres in a section, etc.

Troy says

I disagree with this. Real Estate licensing tests are filled with questions that you really can't guess at, like the difference between accretion and avulsion, where the origins of the cadastral system are in California, how many acres in a section, etc.

As if lawyers aren't used to knowing shit they will never use again when studying for the bar.

For the record, here's a description from DRE about the test:
http://www.dre.ca.gov/exm_content_broker.html

Sample questions are in this PDF -- you be the judge:
http://www.dre.ca.gov/pdf_docs/ref_book/ref02.pdf

Lawyers could easily get many of these questions right off the top of their head, and some of them are math questions involving simple math. You can also look for the Barron's book for more sample questions.

I am an attorney and a real estate broker with membership in my local MLS (and an avid patrick.net reader) and have closed escrow on over 80 single family residences in the past few years.

Regarding, "Your lawyer friend can then take the fee that would have gone to the buyer agent, 2.5-3% or whatever, and refund a portion to you" I would take this deal all day long, with the amount of fee refunded depending on how far along the transaction is before I am contacted. If you are pre-approved for the loan amount, I do not have to drive all over the place showing property or preparing multiple CMAs and offers (in other words you have already decided what property you want to make an offer on and what price you are willing to pay and can qualify for the loan) and I can get right to preparing and submitting an offer then my fee will be very reasonable. (I do note that after closing offices in 12 markets and shedding 700 agents during the first quarter, ZipRealty says it will no longer offer commission rebates to buyers in the 23 markets where it continues to operate brokerage offices so offering commission rebates to buyers is an endangered business model.)

Regarding FSBO property, if you have the buyer lined up and I can meet with both parties at the same time to fill out the disclosures and prepare the offer and have it accepted (the purchase agreement) I will do any house up to $1m for a flat fee of $4,995.00. This includes, among numerous other things, opening and supervising escrow, ordering and supervising the inspections and providing names of vendors for any subsequent repairs, handling changes to the purchase agreement because of inspection findings (decrease in purchase price/seller credit, etc.) and babysitting the loan officer for the two-month escrow period to make sure he or she gets the job done. In other words, I am involved in all aspects of the transaction until title changes hands.

What I have found after operating as a discount broker for the past few years is people are apparently happy paying 6% of the equity in their home to someone from their church or someone with the right logo on his or her business card. Very few people are willing to think out of the box and try a different approach, either because they are lazy or scared. Either way, unless the consumer demands, through effort and action, a different compensation model, the 6% regiment is here to stay. There are alternatives, but consumers need to put a little effort into finding them, which can easily be done using the Internet. I for one do not have tens of thousands of dollars to spend to try and convince consumers that they do not have to pay 6% of their equity to sell their home. It should be obvious right?!

EsquireREALTOR says

I am an attorney and a real estate broker with membership in my local MLS (and an avid patrick.net reader) and have closed escrow on over 80 single family residences in the past few years.

Awesome. :) It sounds like your prices are very reasonable as well. Keep fighting the good fight.

Regarding the MLS, it is just one giant database that contains information and pictures regarding houses. When a broker/agent looks something up/does a search, certain data fields are queried and the resulting data appears in the broker/agent report. When the same search is done for a non-MLS subscriber, a seller or a buyer, certain data fields are not queried so that information does not end up in the consumer report. Most notably, confidential remarks and the amount of commission offered to the selling (buyer's) agent is absent. Confidential remarks usually consist of showing instructions, i.e., "Call 30 minutes before, then go and show", "Don't let the cat out." Occasionally the remarks will be more telling such as a "Contractor's Special" or "A real tear down."

Regarding the commission, I am contractually bound to pay the commission listed in the MLS. While it is true that the money actually comes from the Seller, the law treats it as the responsibility of the listing broker to pay the selling broker. So if I list a property and the seller agrees to offer the selling broker 3% and I list the home on the MLS and offer the selling broker 3% and then the seller changes his mind and only wants to offer the selling broker 2.5% but the selling broker saw the 3% listing and his buyer submits an offer then legally I am out .5%, which would really suck, so it is important that the commission offered to the selling broker be in the MLS listing data and be correct so there is no misunderstanding when it comes time to close escrow.

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.

robertoaribas says

so yeah, great theory, but waste of time...Another thing is I have now spent 15 years driving around Phoenix showing homes... You don't think that gives me a little bit of market knowledge about this area that your office bound attorney might not have?

If you mean knowledge of pointing out features like granite counter tops and stainless steel appliances, then sure.

robertoaribas says

Is your new lawyer/Realtor going to drive around with you opening all the homes too? They can't give you the mls lockbox key after all, and good luck getting foreclosure listing agents to open the door for you, they won't even return your calls.

Agreed! The system must be changed as almost all the realtor "benefits" are getting them to do things that people could easily do themselves. The database should be open, owners can have open houses, I should be able to bid openly with the owner, etc.

One day we'll all be dealing with the owners once people get tired of this shit. You're just a greedy middleman road block.

The best way to buy a house is from FSBO directly. (For Sale By Owner).

You get the deal you want, and at the same time shutot the middle man.

MoneySheep says

The best way to buy a house is from FSBO directly. (For Sale By Owner).

You get the deal you want, and at the same time shutot the middle man.

Yeah, and the amount of houses doing that are slim to none. People play the Realtor game because they have no choice, but it shouldn't have to be this way. They've stepped in as middlemen and locked away everything to keep it that way. You'd almost need government intervention to get all the shadyness out of real estate.

EMan says

corntrollio says

If you've ever seen the printout the agent gives you instead of the printout you make yourself, you'd know this.

All that data is available on public MLS. And public MLS is dime a dozen.
If you are that much interested in private shared notes you can sign up as a company instead of individual and pay more. It isn't going to be any different.

You're able to find the listing agent's contact information as well as offer instructions and where to obtain disclosures? Try calling the listing agent for info that is on the private remarks and see what he will do.

The private remarks are where the agents go to stab buyers/sellers in the back. They give away minimum sale prices, disclosures about the property that your buyer agent may want to withhold from you, etc.

The most recent important private remark I've seen mentions something about an aggressive dog in the backyard, and not to go there. I'd like to see someone surfing the web find that address and go in the backyard :)

robertoaribas says

another stupid thread...written purely as conjecture by the uninformed.

Yes an attorney can act as an agent. No, most won't do it, and most several years out of law school have forgotten everything that isn't in their area of practice. I'm sure a 20 years divorce attorney will be quite up on zoning issues for real estate...

You did not read the original post. Assumptions: 1) the attorney is a friend who already has a license and used it for buying/selling their own house already and can quickly close a transaction on the side; 2) the attorney is not advising on real estate law, but only just closing the transaction as a realtor would do; 3) the attorney could optionally advice on the transaction if they have subject matter expertise, but you could also hire a real estate attorney.

Read before you criticize. The assumption is based on the fact that an attorney in California does not have to take additional coursework to take the real estate exam, like a non-attorney would. The exam is a cinch for attorneys -- these questions are far easier than the Bar.

Also, this assumes you have already found a home.

Yeah, duh. I said that -- the purpose is just to close the transaction. I'm saying that most of the other services realtors provide are mostly useless. Driving around, I can do myself. Useless middleman salesman does not need to do that. You're not even in California, so I'm not sure why you're talking.

This is just silly. I assume your lawyer friend is going to study, pass the exam, pay all the fees, complete the background check, THEN work for free as your buyer's agent so you can save the 3%. Really?

Dude, just man up an pay the fee or invest your OWN time to learn enough to buy the property. You don't need a license to purchase for yourself, but you do need some smarts.

Zoas says

This is just silly. I assume your lawyer friend is going to study, pass the exam, pay all the fees, complete the background check, THEN work for free as your buyer's agent so you can save the 3%. Really?

You people can't f'in read. The assumption is that the lawyer friend already is DRE licensed because they bought a house themselves. I'm going to need to move the assumptions to the top because you people who don't read are getting on my nerves.

The lawyer has already passed a much harder exam, paid much higher fees, and completed a much more intensive background check. DRE is a joke compared to the California Bar.

You people can't f'in read. .

The lawyer has already passed a much harder exam, paid much higher fees, and completed a much more intensive background check. DRE is a joke compared to the California Bar.

What do you mean "you people" Har, har, har.

Seriously though, your whole fantasy premise makes you come off like a cheapskate buyer looking for a free ride. Only a desperate realtor or attorney would get involved with a client like you.

If the DRE exam is such a joke you'll have no problem passing it so you can start brokering your own deals and those for people that don't want to pay the 3%. You'll do it for $1000 bucks, right?

The idea that attorneys who typically bill out at anywhere from $275 to $400 per hour would touch this is ludicrous. On these low end deals realtors are lucky if they net out one tenth that amount after spits and costs.

There are other ways to save money on the deal, but this ain’t one of them.

Zoas says

If the DRE exam is such a joke you'll have no problem passing it so you can start brokering your own deals and those for people that don't want to pay the 3%. You'll do it for $1000 bucks, right?

I posted the sample questions above. The attorneys in the crowd will agree with me that several questions are simple for attorneys and others just involve basic math. Some of them are ridiculously basic for lawyers (i.e. you wouldn't even need the in-depth knowledge that you got studying for the bar to answer a basic multiple choice question about consideration).

Zoas says

The idea that attorneys who typically bill out at anywhere from $275 to $400 per hour would touch this is ludicrous.

You must be dealing with non-big firm attorneys. Big firm attorneys can top out at 4 digits if you're a partner in a specialty, and even $700 or more if not. Other attorneys work for corporations or for government or even (gasp) public interest, and don't make that kind of coin. In fact, there are a large number of attorneys who make quite a bit less than 6 figures if you look at national numbers. Not that many people work at big firms, and the number who do has been dwindling since 2008.

3% of $500K-$1M is a lot of money, especially if you buy more than one house. It'd be a bargain if you're an attorney to broker your own sales in these cases.

If you're not interested in putting in the effort, fine, but it's not hard. I know people who've done it, sometimes because they brokered two sales of their own and two family members'. Again, no driving around -- their relative found the house ahead of time and asked them to do the paperwork. My other buddy has their house plus two rentals, and his wife is an attorney and took the exam while on maternity leave, so they've probably saved at least $55K in brokerage fees, probably more. Instead they paid about $2500 to their real estate lawyer per transaction to review the standard realtor forms and got real legal advice on disclosures.

Honestly, this sort of goes to the "how do people get their money?" thread and the general idea that many millionaires are unassuming folks who aren't flashy but just work hard. If you're an enterprising person, there are tons of ways to put real money in your pocket. Why should you roll $55K in realtor fees into your mortgage and pay interest on it for 30 years?

With realtors making $30K-60K on single transation, may well explain "how do people get their money?" and some local income statistics over the past 10 years.

Used a lawyer as our "buyers agent" in the 1980's, because the house we wanted was FBSO and that deal made me nervous. It went smoothly with using the lawyer. I don't know why more buyers don't do it that way.

I am looking to buy at around 2M in santa monica, los angeles, north of montana ave. Now, I can either go with redfin or try to find an attorney who has broker licesnse and negotiate with him/ her some flat fee or per hour deal. I don't have an attorney friend. Advice will be appreciated.

La Dude says

I am looking to (transact) at around 2M ..... Now, I can either go with ... or try to find an attorney

2 M is a lot of money for something to go wrong in a transaction. Realtor® or no Realtor®, it sounds like maybe you oughta also have a lawyer reviewing your stuff before signing off on things.

La Dude says

I am looking to buy at around 2M in santa monica, los angeles, north of montana ave. Now, I can either go with redfin or try to find an attorney who has broker licesnse and negotiate with him/ her some flat fee or per hour deal. I don't have an attorney friend. Advice will be appreciated.

Find a fsbo and have an attorney help you. If you find something that's listed, offer them a reduction to an amount that you feel is reasonable, because you'll be paying the full real estate commissions. With an attorney, you might be able to get them to reduce the commission - re agents & brokers are desperate these days and might be willing to do anything for a sale.

So an identical home to mine sold next door for 2M using an agent. Now you want to buy mine FSBO. Do you think my asking price will be 2M less 6%? If you do, you don't understand people very well.

No, Zoas. I don't think you understand people who can afford a 2M home. Even tho there's some confusion above over whether it's the buyer or the seller paying 6%, when you're selling a house it sure feels like you're the one paying it. Mainly that's because of the settlement statement, where the money/purchase price comes in at the top, then you go through all your deductions and arrive at how much you put in your pocket and take away from the table.

If you can show me how to put more money into my pocket, I'm going to listen to you, and on a 2M property not having to pay out the 6% commission will do exactly that.

Most people who are wealthy have some smarts, and can discern that it's not just about the asking price.

And here's the other way to find FSBO's, in answer to those who have responded that there aren't many in inventory. You drive around the area you want to live. You see a house you want to buy. You walk up and ring the doorbell. It works.

Nomograph says

A buyers agent costs you nothing. Interview, find a good one, and use them. Don't let emotions (i.e. RE agent hate) get in the way of business or it will cost you.

Who said anything about hate? Once again, a lecture from Nomo about how one should feel and react. Even in the absence of emotion, he'll just use projection to justify his holier-than-thou, sanctimonious bullshit.

The RE industry is a cartel. It makes billions of dollars by forcing itself as a middle-man onto the market. People spend years trying to pay down their mortgages just to squeeze a profit. God forbid they want to discuss a way to circumvent this criminal enterprise and save ten thousand dollars.

klarek says

hate?

..and jealousy and what not. I am learning new words from uncle Nomo everyday. LOL.

I still think it's easier to find a Realtor(R) friend than a lawyer friend.

vain says

I still think it's easier to find a Realtor(R) friend than a lawyer friend.

Are you saying lawyers lie more than Realtor(R)s?

Zoas says

So an identical home to mine sold next door for 2M using an agent. Now you want to buy mine FSBO. Do you think my asking price will be 2M less 6%? If you do, you don't understand people very well.

Probably not. But I can easily produce a prelim HUD-1 showing a breakdown of all closing costs coming out of the sale proceeds prior to the seller being compensated, and then I can show you what one would look like without 6% coming off the top for commission. I think I know which one you'd rather sign.

Sale price means jack shit. Form HUD-1, Line 603, is all the seller is concerned with. I show you a HUD with a higher amount on line 603 than your neighbor, we're good.

Zoas says

So an identical home to mine sold next door for 2M using an agent. Now you want to buy mine FSBO. Do you think my asking price will be 2M less 6%? If you do, you don't understand people very well.

It's because of people like you that I'm using an agent (he's kicking back 2/3 of his commission) rather than look for that lone intelligent needle in the haystack of delusional sellers, the person that realizes it's mutually beneficial for us to remove agents and their cartels from the process.

So while you might not acquiesce to taking 6% less sans-agent, just know that since your proceeds are coming directly from me, the buyer, I'm going to buy your house for 6% less with an agent than I would have if you were more sane. That's a $120k lesson that costs me nothing either way. I hope your agent at the very least can show you some quality loving for that kind of money.

Zoas says

Do you think my asking price will be 2M less 6%? If you do, you don't understand people very well.

But your asking price could be $2M less 3%, and you'd still be better off FSBO. The buyer would think they got a deal, and you'd get more money in your pocket. I get that buyers have an ego and want the same $2M their neighbor got, but in reality the neighbor got $1.88M-1.9M (5-6% commission robbed) in their own pocket. It always pays to look at financial substance, and make a mutually beneficial deal.

There are sometimes expectations set on $2M properties -- e.g. that they are staged (especially in the Bay Area). However, it's easy to solve these things -- if you're concerned, you can find your own stager instead of choosing your realtor's favorite stager who throws them a backhander (good advice generally).

robertoaribas says

That attorney will not be advising you on real estate, and will work for only a small payment...

They could advice you on real estate if they have the expertise, and just babysitting the transaction doesn't require much effort. You're just glorifying the work of a realtor -- there isn't much when you eliminate driving around because used house salesmen use standard forms and don't have expertise on those forms. Add that to the fact that the buyer's agent doesn't actually represent you, and your friend will.

In any case, what I'm saying is generally good advice for attorneys at a minimum. It's easy to babysit your own transaction -- minimal effort, high gain. Any lawyer is more than adequately prepared to babysit their own transaction.

The fact that people might be given comfort by having a person, who has no ethical obligations, who has no standards for conflicts of interest (and may even be working in the same office as the listing agent), who cannot help them with serious legal disclosures, who are paid on a commission basis, and who may not even have a college education, represent them on the largest transaction of their life is terrifying to me.

bubblesitter says

vain says

I still think it's easier to find a Realtor(R) friend than a lawyer friend.

Are you saying lawyers lie more than Realtor(R)s?

No I was just suggesting that more people would find a licensed RE agent in their family/circle of friends more often than a lawyer. And even when you find the lawyer, the probability of them wanting to go thru more school/examinations to help you out is close to zero.

Just use the RE agent and follow the same instructions as suggested for the lawyer as shown below. Just change the term 'lawyer' to agent.

"Your lawyer friend can then take the fee that would have gone to the buyer agent, 2.5-3% or whatever, and refund a portion to you. In addition, your lawyer friend would get all of the standard used house salesmen forms that realtors use for transactions from the local real estate association, so you won't be missing anything you would have gotten from a realtor.
One thing your lawyer friend may want to do is make it clear they are not providing legal advice, but are only providing services as a real estate broker in this case, unless they specifically want to provide legal advice (and are covered by their malpractice carrier for this). Instead, you could hire a real estate lawyer with the money you save to review all the disclosure issues and other material aspects of the transaction."

corntrollio says

But your asking price could be $2M less 3%, and you'd still be better off FSBO.

In a rational world - yes. But the FSBOs I've come across have been mostly delusional when asked if they will cooperate with a buyer's agent.

Try it sometime. Knock on the door of a FSBO and say you want to represent yourself so you'd like the 3%. When they look at you crazy, then ask if they'll pay it to an agent.

Nope, FSBOs believe it's the same thing as selling a car. You see that mentality here when you read comments like "downloading the used house forms" and "escrow doing all the work".

But for the big picture, go back to what started this thead on the previous posting. The guy didn't want to use a buyer's agent, but couldn't get the deal done on his own.

Instead of recognizing that there might actually be some value in a buyer's agent, he goes to great lengths to create a fantasy scenario where Mr. Right is going to appear and work for charity.

klarek says

It's because of people like you that I'm using an agent (he's kicking back 2/3 of his commission)

Well first off, you misunderstand my hypothical. I'm saying a FSBO is not going to discount 6%, or even 3%. He's going to want it all because he doesn't really have a clue about the sales process. You'll be lucky if he read the first chapter from "The Idiot's Guide..."

Your agent is going to kick back 2/3 of his commission? Yeah, that can happen when it's your relative and the broker will allow (or they are the brokers). Other than that, don't count on it.

Zoas says

In a rational world - yes. But the FSBOs I've come across have been mostly delusional when asked if they will cooperate with a buyer's agent.

Try it sometime. Knock on the door of a FSBO and say you want to represent yourself so you'd like the 3%. When they look at you crazy, then ask if they'll pay it to an agent.

Let's be more specific about this. Can you find us FSBO houses that sold for significantly less than realtor-sold houses that are apples to apples? (i.e. similar in condition too -- a comparison between renovated and unrenovated isn't useful, for example)

You're saying people are irrational and will want the whole $2M or nothing, but do you have the data on this? Do FSBO buyers eventually capitulate and get less than $1.88M-1.9M on average?

corntrollio says

Can you find us FSBO houses that sold for significantly less than realtor-sold houses that are apples to apples?

Kind of not worth the effort really. How do you find a property that sold, determine it was a FSBO, find the previous owner, then interview them to find out what they wanted vs. what they accepted? And it's got to be a resonable model match for a realtor sold property.

I believe the NAR statistics are that fewer than 1% of homes are sold FSBO. And I don't think it's because of a realtors "cartel". As some have mentioned, the used home forms are downloadable, escrow does most of the work, etc...

Nope. Selling a home takes a lot of work and a bit of knowledge, especially if it's a short sale. Most people are not up for that. Kind of like doing a valve job on an engine. Most of us could do it, but don't.

What generally happens is that the seller pockets the 3% commission when you don't have an agent. It doesn't make the price go down by 3% so you might as well have your own representation.

Funny how people get so upset about a measly 3% commission, when the going rate in the food service industry is 15%. Perhaps you guys should only eat at fast food restaurants to avoid paying anything and save toward a down payment.

Zoas says

Your agent is going to kick back 2/3 of his commission? Yeah, that can happen when it's your relative and the broker will allow (or they are the brokers). Other than that, don't count on it.

He's not a relative. He doesn't have to put much time into the transaction, just open the door and fax the papers. On a $400k transaction, a $4000 commission is still pretty good.

Grimydazzle says

What generally happens is that the seller pockets the 3% commission when you don't have an agent.

More likely their agent will pocket it.

Grimydazzle says

Funny how people get so upset about a measly 3% commission, when the going rate in the food service industry is 15%.

Yeah cuz a $10 burger is comparable to a six-figure house.

Grimydazzle says

Funny how people get so upset about a measly 3% commission, when the going rate in the food service industry is 15%. Perhaps you guys should only eat at fast food restaurants to avoid paying anything and save toward a down payment.

Thanks for the out of context comment. I'm sure the smallest purchase of most people's life compared to the largest purchase of most people's life is entirely a valid comparison.

Zoas says

How do you find a property that sold, determine it was a FSBO, find the previous owner, then interview them to find out what they wanted vs. what they accepted? And it's got to be a resonable model match for a realtor sold property.

In my area there are tons of substantially similar 1950s tract homes for which you could do this. It wouldn't be that hard to compare level of renovation, especially if you look at permits. No need to interview anyone.

ESq.realtor-

Can you identify your contact information to me/those of interested in having you represent us on a transaction? Would love to have your contacts as refrence for future purchase I make here in San Joaquin county. Thanks,

Gabe

Controlled you can use Greg Glaser and he will do FSBO for you for $1000 . You can also use Brian Collons . Both of these guys are attorneys and have a real estate license too. Both if them closed a FSBO transaction for me in the last and I recommend them. You can't get anything cheaper than that :)