I'm in the early stages of shopping for my first home. I found one home I liked on realtor.com, sent an email, and made plans to go see it. The realtor I met there was not the listing agent, and it's not even the area he works in. It's my guess realtor.com sells the leads the agents?
So now this guy is sending me emails every week about new places and I guess he is my "Agent" now. What I don't really understand is if I even need him. I can find places just fine myself, and couldn't I just contact the listing agents directly to see them?
Also where do buyers agents get paid from? He told me there is no fee to me, but I just don't understand where his commission is coming from then. I'm in PA if it makes any difference.
It is useful for buyers to have a real estate agent?
Started by
endthefed
, Feb 20 2012 04:00 PM
16 replies to this topic
#1
Posted 20 February 2012 - 04:00 PM
#2
Posted 20 February 2012 - 04:12 PM
This is the way I understand it...
For simplicity sake:
Typically there is a commission on the sell of a house.
For example:
House sells
There was a 6% commission
Buyers agent gets 3%
Sellers agent gets 3%
If there is no buyers agent the sellers agent would get the full 6%.
For simplicity sake:
Typically there is a commission on the sell of a house.
For example:
House sells
There was a 6% commission
Buyers agent gets 3%
Sellers agent gets 3%
If there is no buyers agent the sellers agent would get the full 6%.
#3
Posted 20 February 2012 - 04:16 PM
Thanks that makes sense. I'm still not sure what service he is providing me that I couldn't do myself, but I guess if it truly is no cost to me it can't hurt.
#4
Posted 20 February 2012 - 04:37 PM
Do you even like him? You can choose any agent you want. Feel free to contact a few and interview them to find a good fit.
A good buyer's agent is worth their weight in gold. You might think it's easy to find houses you like online and just schedule your own appts, and, sure, it's simple. That's not the part that's tough. It's negotiating the contract and getting it to closing. Some things your agent will do for you is to pull comparable sales (you don't have access to this) to help find the best offer price, negotiate that offer price along with any concessions, add any necessary contingencies to protect you, help you choose inspectors if you need and negotiate needed repairs, and many many more things. That contract itself is a mine field and you don't want to do it by yourself. I'm in the business and I would NEVER do it without a buyer's agent.
A good buyer's agent is worth their weight in gold. You might think it's easy to find houses you like online and just schedule your own appts, and, sure, it's simple. That's not the part that's tough. It's negotiating the contract and getting it to closing. Some things your agent will do for you is to pull comparable sales (you don't have access to this) to help find the best offer price, negotiate that offer price along with any concessions, add any necessary contingencies to protect you, help you choose inspectors if you need and negotiate needed repairs, and many many more things. That contract itself is a mine field and you don't want to do it by yourself. I'm in the business and I would NEVER do it without a buyer's agent.
#5
Posted 20 February 2012 - 05:16 PM
Yes he is a pretty good guy. He was a half hour late to our only appointment so far and it's not even his area, which I'm not comfortable with. But he's very friendly and has been sending me lots of custom searches and stuff.
I think my problem is I don't yet know what area I want to buy in. I'm looking in like a 40 mile radius of where I work. Once I narrow it down to a certain area it might make more sense to find an agent knowledgeable about that area.
I think my problem is I don't yet know what area I want to buy in. I'm looking in like a 40 mile radius of where I work. Once I narrow it down to a certain area it might make more sense to find an agent knowledgeable about that area.
#6
Posted 20 February 2012 - 05:37 PM
As long as you didn't sign anything with him find a buyers agent in your area that shows up on time and that you like.
Good luck!
Tammy
Good luck!
Tammy
#7
Posted 20 February 2012 - 07:20 PM
I learned (almost the hard way, but got some advice in the nick of time) the value of a GOOD buyer's agent. The previous post was right on the money - finding a house is easy, but working your way through the negotiation, purchase contract, contingencies, and close (though I haven't actually closed yet!) can be brutal with a dozen potential gotchas along the way. Unless you really know you're way around the industry and the process, showing up to buy a home without a good realtor is like showing up to court without a lawyer.
Some things my agent has helped with:
1. Really diving into the negotiations. Not just the "hard" items like how to value upgraded kitchens/baths vs. hardwood floors vs. termite damage, but also the "soft" side of understanding seller motivations, history of the listing, etc. So for the house I wanted, she was able to figure out - by a combination of intuition, knowledge of the local market (and other realtors), and scouring sources I either didn't have access to or didn't know to look - a lot more about the buyer's circumstances than I could have on my own, and as a result ended up getting me a purchase contract at about $15K under what I'd decided in my head the place was worth.
2. Checked the little box on the second page and filled out the right line stating that my loan contingency was in effect until the loan was actually funded. The default (at least for CA) is 17 days. Besides checking the box, she convinced the seller to accept it. Now that I'm hitting some snags in the loan process, that checkbox is what stands between my $10K earnest money deposit and the seller.
3. Because I trust her, she can act as my agent (no pun intended) for things like secondary inspections, appraisals, minor repairs, etc. While I was there for the general inspection, she's handled everything since, rather than me having to duck out of work every time.
4. Rides my loan officer, escrow officer, and everyone else involved to keep things on track. Lots of little details to keep track of, and any of them can derail the process.
5. Reviewed HOA details - CC&Rs, minutes, rules and regs, etc. - to help me get a good idea of both the day-to-day and financial aspects of the HOA, and any rules to watch out for.
And so on. Yes to some degree it would be easier to do it yourself, but unless you go the "for sale by owner" route, either way realtors are going to get that 6%. One thing to try if you're really more interested in just the "post-finding-the-house" support, would be to check out Redfin. Their model is basically you find and select houses to view on your own, and they basically step in once your ready to make an offer. It's sort of the in-between approach, and in return they give you back 50% of their commission at the end (with some Ts & Cs in there).
Some things my agent has helped with:
1. Really diving into the negotiations. Not just the "hard" items like how to value upgraded kitchens/baths vs. hardwood floors vs. termite damage, but also the "soft" side of understanding seller motivations, history of the listing, etc. So for the house I wanted, she was able to figure out - by a combination of intuition, knowledge of the local market (and other realtors), and scouring sources I either didn't have access to or didn't know to look - a lot more about the buyer's circumstances than I could have on my own, and as a result ended up getting me a purchase contract at about $15K under what I'd decided in my head the place was worth.
2. Checked the little box on the second page and filled out the right line stating that my loan contingency was in effect until the loan was actually funded. The default (at least for CA) is 17 days. Besides checking the box, she convinced the seller to accept it. Now that I'm hitting some snags in the loan process, that checkbox is what stands between my $10K earnest money deposit and the seller.
3. Because I trust her, she can act as my agent (no pun intended) for things like secondary inspections, appraisals, minor repairs, etc. While I was there for the general inspection, she's handled everything since, rather than me having to duck out of work every time.
4. Rides my loan officer, escrow officer, and everyone else involved to keep things on track. Lots of little details to keep track of, and any of them can derail the process.
5. Reviewed HOA details - CC&Rs, minutes, rules and regs, etc. - to help me get a good idea of both the day-to-day and financial aspects of the HOA, and any rules to watch out for.
And so on. Yes to some degree it would be easier to do it yourself, but unless you go the "for sale by owner" route, either way realtors are going to get that 6%. One thing to try if you're really more interested in just the "post-finding-the-house" support, would be to check out Redfin. Their model is basically you find and select houses to view on your own, and they basically step in once your ready to make an offer. It's sort of the in-between approach, and in return they give you back 50% of their commission at the end (with some Ts & Cs in there).
#8
Posted 20 February 2012 - 08:16 PM
Sellers agent: Works to get the HIGHEST price for the seller. Represents the sellers best interest. Works to find the best offer for the seller.
Buyers agent: Works with the buyer to get the BEST price. Represents the buyers best interest. Works to find the buyer the best property using the qualifications (loan, money down, minimal contingencies, quick closing) that the buyer has available.
As ugghh said above, the commission is paid from the seller's funds. Some would say the buyer is paying the commission but the buyer is buying the house and the seller is taking some of the sales price money to satisfy the agreed commission. The listing agent agreed to a split when a buyers agent is involved.
Some states allow a 'dual agent/agency' where a buyer would contact the listing agent directly, giving the listing agent/broker full commission.
With that said, it seems logical to have someone represent 'you', and your BEST interest, instead of having the listing agent (under a dual agency) represent 'both' parties.
Edit: If approached without a buyers agent, the listing agent is under NO OBLIGATION to surrender any/part of the commission to the buyer. NONE.
Buyers agent: Works with the buyer to get the BEST price. Represents the buyers best interest. Works to find the buyer the best property using the qualifications (loan, money down, minimal contingencies, quick closing) that the buyer has available.
As ugghh said above, the commission is paid from the seller's funds. Some would say the buyer is paying the commission but the buyer is buying the house and the seller is taking some of the sales price money to satisfy the agreed commission. The listing agent agreed to a split when a buyers agent is involved.
Some states allow a 'dual agent/agency' where a buyer would contact the listing agent directly, giving the listing agent/broker full commission.
With that said, it seems logical to have someone represent 'you', and your BEST interest, instead of having the listing agent (under a dual agency) represent 'both' parties.
Edit: If approached without a buyers agent, the listing agent is under NO OBLIGATION to surrender any/part of the commission to the buyer. NONE.
Edited by jst300z, 20 February 2012 - 08:18 PM.
#9
Brian B The Loan Professor
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- 8,700 posts
Posted 20 February 2012 - 08:21 PM
Do you even like him? You can choose any agent you want. Feel free to contact a few and interview them to find a good fit.
A good buyer's agent is worth their weight in gold. You might think it's easy to find houses you like online and just schedule your own appts, and, sure, it's simple. That's not the part that's tough. It's negotiating the contract and getting it to closing. Some things your agent will do for you is to pull comparable sales (you don't have access to this) to help find the best offer price, negotiate that offer price along with any concessions, add any necessary contingencies to protect you, help you choose inspectors if you need and negotiate needed repairs, and many many more things. That contract itself is a mine field and you don't want to do it by yourself. I'm in the business and I would NEVER do it without a buyer's agent.
I agree with both of these posts - You should have a buyers agent and in my professional opinion it should NOT be the listing agent - when an agent signs an agreement to sell a house their primary legal responsibility is to the seller and you are secondary as a buyer. Let this person know in a kind way that you appreciate the help and will consider them when you are ready to buy but at this time you are still trying to decide on an area to buy in.As long as you didn't sign anything with him find a buyers agent in your area that shows up on time and that you like.
Good luck!
Tammy
Good Luck
B
#10
Posted 21 February 2012 - 11:32 AM
what I dont get is, isnt it in the Buyer's agent's best interest to get a high price because he gets a % of the commission? How can you trust your agent is really trying to get you the best deal possible and not just the best deal you will agree to?
#11
Brian B The Loan Professor
- Forum Leads
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- 8,700 posts
Posted 21 February 2012 - 11:49 AM
On the surface that sounds reasonable but when you use real numbers you see why it is in their best interest to make you happy and get the deal donewhat I dont get is, isnt it in the Buyer's agent's best interest to get a high price because he gets a % of the commission? How can you trust your agent is really trying to get you the best deal possible and not just the best deal you will agree to?
Say you buy at 200k Agent gets 3%
Lets say you want to buy at 185k That would lower their commission by $450 to $5550
Now if you walk they get zero - so working with you to get your price is more important that pushing for a few extra dollars. What can happen (to be fair to agents) is buyers come in with unrealistic expectations and hopes for sales price and then get mad at agent when it doesnt happen. They have to be reasonable when it comes to offers otherwise they get a bad rep in the profession for being a low baller etc..... Now the example I used isn't a low ball offer but say you wanted to come in at 150k - well you may think they are being unreasonable when it comes to writing your offer and pushing you to go higher but the reality is you may be the one being unrealistic in that case.
B
#12
Posted 21 February 2012 - 12:47 PM
I was usually contacted first by applicants wanting to get a pre-approval letter before shopping for a home. Once qualified i always sent them to one of my realtors that i trusted. 99% of the time it worked out better than just sending the applicants out on their own. I approve this message.
#13
Posted 21 February 2012 - 12:51 PM
what I dont get is, isnt it in the Buyer's agent's best interest to get a high price because he gets a % of the commission? How can you trust your agent is really trying to get you the best deal possible and not just the best deal you will agree to?
There is not much to get.
For every $1,000 MORE the buyer pays, the buyers agent will net (after broker split, taxes, expenses) would be a WHOPPING $11.25 (on average).
Math to help you figure it out: .06 x 1000 = 60/2 (list/sell broker split) = 30/2 (broker/agent split) = 15 x .75 (taxes, state, fed, medicare, food stamps, free cell phones....) = $11.25
If I save my client $5,000 knowing that in the future when they sell/buy again that they WILL call me, I wouldn't sweat 50 bucks.
#14
Posted 21 February 2012 - 02:50 PM
Also, from what I was told by our buyers agent, potential referrals from a positive buyers experience is priceless to an agent. I loved our agent and would have had a tough time with the process without him. There was no doubt he represented our best interest.
#15
Posted 21 February 2012 - 03:16 PM
This is the way I understand it...
For simplicity sake:
Typically there is a commission on the sell of a house.
For example:
House sells
There was a 6% commission
Buyers agent gets 3%
Sellers agent gets 3%
If there is no buyers agent the sellers agent would get the full 6%.
So even if you don't use an agent there is no benefit to you? The commission is going to go out no matter what just how it's split is different? Other than possibly missing out on owner listed properties is there any benefit to not using an agent. Previously I thought you could possibly talk down the price by the amount that was going out in commission to the agent. From reading here it sounds like no matter what that money is going out.
#16
Posted 21 February 2012 - 04:07 PM
It's a common misconception that you can talk down the price by not using an agent. The negotiation for what the agent is paid is done at the time the listing agreement is signed. The seller has already agreed on the commission long before you came along. Not using your own agent just means it all goes to the listing agent. While further negotiation can happen, it's not very common.
And, you won't even miss out on owner listed properties with an agent. You'll just have to negotiate their commission with the seller. It can be done.
And, you won't even miss out on owner listed properties with an agent. You'll just have to negotiate their commission with the seller. It can be done.
#17
Posted 21 February 2012 - 04:49 PM
So even if you don't use an agent there is no benefit to you? The commission is going to go out no matter what just how it's split is different?
Unless you are a licensed real estate sales agent, you cannot have any commission. If you want a 'rebate' or a portion of the commission given to you, that would be a call solely on the listing broker.
The commission is paid by the SELLER. The seller said "If you can get this price for my house, I will give you $X or X%". The Selling Broker/Agent then utilizes that POTENTIAL commission by offering other licensed real estate sales people to bring qualified buyers by offering a portion of the commission.
The 'gravy' deal is having the listing and having a non-represented buyer, who is QUALIFIED to buy, walk into the office.
As jop said, you can negotiate the price without representation but the commission remains for the licensed agent/broker.
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