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How to Avoid Having a Buyer's Agent in California
invite response
2011 Jul 20, 8:59am 26,185 views 60 comments
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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?
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.
Grimydazzle
2011 Jul 25, 2:28pm
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.
klarek
2011 Jul 26, 12:07am
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.
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.
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.
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.
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 :)
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(I posted this in another thread and am reposting as a separate topic)
[I'm adding this "assumptions" section because people who don't read this whole post are making misguided comments and not using common sense.]
Assumptions: 1) you are (or you have a friend who is) a CA-barred lawyer who has taken the DRE exam because you are planning to buy your (or he or she has bought his/her) own house and can save up to 3% by not paying a used house salesman
2) you can be your own (or this friend is willing to hook you up too by being your) buying agent (or selling agent) when you've already found a house you want to buy (or sell) -- the idea is not that your friend will drive you around like a used house salesman
3) I'm not suggesting you pay your friend to take the DRE exam. It would be far better to study for the DRE exam and take it yourself if that were the case.
4) if you (or your lawyer friend) is not a real estate attorney, they can specifically say they are not providing legal advice with respect to the transaction, and you can hire a real estate attorney for cheaper than a used house salesman (at least in the expensive markets in CA) who actually knows the law and can give you legal advice on disclosures, instead of non-legal advice from a realtor
One thing you can do in California is find a friend who is a member of the State Bar who is willing to help you out. A lawyer in California can take the brokerage exam (automatically qualified to be a broker by education and qualification) and become a member of the local real estate association for probably less than $1000 all in.
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.
That way, there's no double-end issue and no dual agent issue, and you can save up to 3% on the deal. I highly recommend that most members of the Bar who are comfortable going without a buyer's agent take the DRE exam and become a member of the local real estate association when they want to buy property. Instead of paying 2.5-3% to a buyer's agent, you can pay $1000 or less. You'd still have to pay the listing agent, of course.
Other benefits are that, by being a member of the local real estate association, you get access to full MLS, not the cheap consumer-facing version that lacks realtors' internal comments and that lacks a lot of pertinent information.
Update: Since people keep asking, I'm not saying that you should get a friend who is not already licensed by the DRE to do this. I'm saying that if your friend already did this for himself/herself, they could also do it for you. There might be insurance issues and other business risks, but that's true of any business. I'm also suggesting that you simultaneously get a real estate lawyer to review the transaction, instead of paying an absurd fee to a used house salesman that has no relation to the value they provide. Let's not pretend that I'm the first person to suggest that a lawyer could easily get DRE-licensed or that plenty of lawyers aren't also DRE-licensed.
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