Lawyer instead of buyer's real estate agent? Experience anyone?

[Hulk]

Anyone have success using a lawyer instead of a real estate agent to close on a house? I feel like with the internet today, a buyer's agent is just not necessary. I can figure out what houses I like searching online and then go see them in either an open house or with the seller's agent. The information asymmetry necessitating a buyers agent is just no longer there. I feel comfortable finding a house, establishing a value for the house on my own (I can look up recently sold comps, county appraisal, redfin estimate, zillow estimate etc.) All that is left after that is lawyer's work; Drafting an offer, negotiating, reviewing title, reviewing closing docs. I would much rather pay a lawyer a flat rate fee than a realtor 3%.

I did a cursory internet search to try to find such a person/lawyer, and they seem to exist. But not sure what unforeseen obstacles there may be. Anyone have any experience with this. I am guessing I'll get some push back from the sellers agent as he tries to protect his industry. But if he still gets his 3% it shouldn't be a problem. But I don't want him getting 6% just because I came to the table with no buyer's agent. I want that 3% to reduce MY costs.

I was told to bid X minus 3% (assuming the seller negotiated a 6% fee for agents.) That way the selling agent still gets 3% of a higher X. Seems fair.

Any tips would be helpul

[HornedToad]

You can do it but it probably won't save you much if any money. Most sellers contracts dictate the 6% and if there's no buyer's agent the seller's agent gets more. You might get 1%, MAYBE 1.5%. Unless you find a FSBO home.

[stan1]

In most states the seller signs a listing contract that identifies the selling and buying agent's commission. The seller pays the commissions out of the proceeds of the sale (yes the buyer's agent actually works for the seller not for the buyer). If that's the practice in your state you'd have to convince the seller and possibly the seller's agent to give you the 3% for the buyer's agent back to you. Let us know what state you are in and you might get some more specific advice (especially if it is Florida or Louisiana).

Also 6% commission is pretty much history in many places. It's 5% and sometimes 4.5% if you ask. I'm sure there's some places where 6% is still common, perhaps you don't live there.

[123]

Are there any lawyers that specialize in being a buyer's real estate agent? I might be concerned about his lawyer abilities if his/her claim to fame is being a buyer's real estate agent. I don't think that a lawyer would be interested in the oddball hours and grunt work hassles involved in real estate. Of course if they can't get lawyer work I guess it would help pay the bills.

[il0kin]

We sold our first home FSBO with both the buyer and ourselves not officially represented by realtors but it was a unique situation. The purchaser of our home was an acquaintance who was looking in the area we were preparing to sell, and the sale price was determined by simply sitting down at our kitchen table after a tour of the home and a simple discussion. His mom is a realtor and guided him and supplied paperwork/contracts and did not charge us as she was doing her son a favor, and we employed a real estate lawyer who made some suggestions on verbiage to the standard contract to help protect us.

To be honest, I think 95% of the transactions in the real estate market are probably overseen by realtors and you will probably miss some opportunities. When we purchased our home, we contracted a very well known and respected realtor in our area and she was able to get us access to review and tour several homes before they hit MLS. None were quite what we were looking for, but it was great to have her knowledge and guidance.

[Jack FFR1846]

I've done it twice. First house was for sale by owner, second had us specifically excluded from the real estate agent agreement as we had seen and expressed interest before they put it on the market.

In both cases, we used the bank's lawyer to do closings and act in our interest, which really is in line with the banks. The lawyer has to go to the county seat to research titles for the bank anyways. It was quite cheap (a few hundred dollars). We did all our own negotiating and did have the lawyer review the purchase and sales agreements.

The lawyer commented to us that the real estate agent's main job is to come to the closing to collect their commission check.

[dknightd]

Anyone have success using a lawyer instead of a real estate agent to close on a house? I feel like with the internet today, a buyer's agent is just not necessary. I can figure out what houses I like searching online and then go see them in either an open house or with the seller's agent. The information asymmetry necessitating a buyers agent is just no longer there. I feel comfortable finding a house, establishing a value for the house on my own (I can look up recently sold comps, county appraisal, redfin estimate, zillow estimate etc.) All that is left after that is lawyer's work; Drafting an offer, negotiating, reviewing title, reviewing closing docs. I would much rather pay a lawyer a flat rate fee than a realtor 3%.

I did a cursory internet search to try to find such a person/lawyer, and they seem to exist. But not sure what unforeseen obstacles there may be. Anyone have any experience with this. I am guessing I'll get some push back from the sellers agent as he tries to protect his industry. But if he still gets his 3% it shouldn't be a problem. But I don't want him getting 6% just because I came to the table with no buyer's agent. I want that 3% to reduce MY costs.

I was told to bid X minus 3% (assuming the seller negotiated a 6% fee for agents.) That way the selling agent still gets 3% of a higher X. Seems fair.

Any tips would be helpul

Good luck with that. Usually lawyer fees are optional (I'd pay them just for peace of mind) Sounds like what you want is for sale by owner. That saves the seller, so maybe they will pass that savings on to you. 3% back to you - ha ha

[jfn111]

I found this thread timely because I spent the day with a Lawyer helping her find a house. She had no desire to do it herself.
Of course you can do it without an agent. Work with the listing agent, or a FSBO, and try to negotiate a discount. In my market most houses are going into multiple offers and most listing agents don't want to be involved in representing a buyer when there is multiple offers. It's a good way to have the Commerce dept. scrutinizing your business.

[kjvmartin]

I found this thread timely because I spent the day with a Lawyer helping her find a house. She had no desire to do it herself.
Of course you can do it without an agent. Work with the listing agent, or a FSBO, and try to negotiate a discount. In my market most houses are going into multiple offers and most listing agents don't want to be involved in representing a buyer when there is multiple offers. It's a good way to have the Commerce dept. scrutinizing your business.

You seem like a rare breed of buyers agent. In our neck of the woods, we basically get a daily e-mail blast based on our parameters. I can't imagine what it would take to get a realtor to actually spend a day with me helping me find a house. We've dealt with a couple Realtors over the last 8 years and they prefer us to find out the open house, drive by ourselves and check it out, and then if we're sure we like it they will try and schedule a showing. Sometimes it's too late, by that point

kjvm

[SrGrumpy]

Are there any lawyers that specialize in being a buyer's real estate agent? I might be concerned about his lawyer abilities if his/her claim to fame is being a buyer's real estate agent. I don't think that a lawyer would be interested in the oddball hours and grunt work hassles involved in real estate. Of course if they can't get lawyer work I guess it would help pay the bills.

FWIW, very common overseas. Where I come from you would never buy a house (or any property) without hiring a conveyancing lawyer. It seems (mercifully?) paradoxical that lawyers in the most litigious country on the planet have not spread their tentacles into this area.

[Pajamas]

FWIW, very common overseas. Where I come from you would never buy a house (or any property) without hiring a conveyancing lawyer. It seems (mercifully?) paradoxical that lawyers in the most litigious country on the planet have not spread their tentacles into this area.

It varies by state. In many states, it is required by law that lawyers are even physically present at real estate closings. It's mostly the western and southwestern states that generally do not require lawyers to be involved.

[jfn111]

I found this thread timely because I spent the day with a Lawyer helping her find a house. She had no desire to do it herself.
Of course you can do it without an agent. Work with the listing agent, or a FSBO, and try to negotiate a discount. In my market most houses are going into multiple offers and most listing agents don't want to be involved in representing a buyer when there is multiple offers. It's a good way to have the Commerce dept. scrutinizing your business.

You seem like a rare breed of buyers agent. In our neck of the woods, we basically get a daily e-mail blast based on our parameters. I can't imagine what it would take to get a realtor to actually spend a day with me helping me find a house. We've dealt with a couple Realtors over the last 8 years and they prefer us to find out the open house, drive by ourselves and check it out, and then if we're sure we like it they will try and schedule a showing. Sometimes it's too late, by that point

kjvm

I may be old fashioned but I believe in customer service. I've never told a client to go to an open house unaccompanied. I love working with people and enjoy the "hunt" to find them the perfect house.

[Hulk]

Not interested in "customer service" for tens of thousands of dollars!

[heartwood]

FWIW, very common overseas. Where I come from you would never buy a house (or any property) without hiring a conveyancing lawyer. It seems (mercifully?) paradoxical that lawyers in the most litigious country on the planet have not spread their tentacles into this area.

It varies by state. In many states, it is required by law that lawyers are even physically present at real estate closings. It's mostly the western and southwestern states that generally do not require lawyers to be involved.

+1

We've bought homes in two states. East Coast, we used a lawyer. East Coast, I've never heard of anyone buying/selling without an attorney both of whom attend the closing. Roughly $1k total fee, also prepares the contract and manages it all.

West Coast, no attorney, limited involvement with the realtor after our offer was accepted. Everything was handled by the title company. I recall about $500 fees to the title company.

The West Coast purchase was a lot easier than the East Coast.

[LarryAllen]

Lawyers and realtors do two separate jobs. You would use a lawyer to review contracts which Realtors are notoriously not great about. However, the form contracts are pretty straight forward that a layperson can get through them fine and an experienced Realtor at least knows the important clauses and what they mean. In fact, a good Realtor knows those important clauses better than an average lawyer since the Realtor deals with them every day whereas the the lawyer has to remind himself what it means. Beyond that a good Realtor is better than the internet and better than most lawyers at helping you compare houses, pointing out things you might not see, etc.... It's not all dollars and cents... there is also sense. Beyond that an experienced lawyer will have a high hourly rate. I think the odds of coming out ahead are nil unless it's a multi-million dollar house.

[lthenderson]

All that is left after that is lawyer's work; Drafting an offer, negotiating, reviewing title, reviewing closing docs.

I bought two houses without a lawyer or a realtor involved. (Bought directly from owner both times.) For drafting an offer, I downloaded one of thousands of samples online and modified it to suit my needs. I did the negotiating. My bank's lawyer reviewed the title before lending me the money and also the bank agent reviewed the closing documents. It was easy and went very smoothly. No regrets on my part.

[Watty]

I found my first house by myself at an open house. When the negotiating was going back and forth it got stalled when the price was a couple of percent apart so the real estate agent offered to lower her commission to make the deal work.

In that state a title company did all the work for the closing and while the title company had a lawer review the paperwork as a neutral party the buyer or seller typically did not use lawyers.

When I have sold a house with a real estate agent the listing agreement specified that if the buyer did not have a real estate agent then the selling real estate agent did not get to "double dip" and the commission was reduced.

[pshonore]

I found my first house by myself at an open house. When the negotiating was going back and forth it got stalled when the price was a couple of percent apart so the real estate agent offered to lower her commission to make the deal work.

In that state a title company did all the work for the closing and while the title company had a lawer review the paperwork as a neutral party the buyer or seller typically did not use lawyers.

When I have sold a house with a real estate agent the listing agreement specified that if the buyer did not have a real estate agent then the selling real estate agent did not get to "double dip" and the commission was reduced.

Its been a few years since I was active as an agent/broker, but I have never seen a listing agreement with that particular verbiage. That might work with an "educated" buyer who knows what they're doing and whats involved but not so much for a first time buyer.

[bsteiner]

...
The lawyer commented to us that the real estate agent's main job is to come to the closing to collect their commission check.

Brokers and lawyers do different things. In addition to collecting the commission, the broker's job is to find a buyer. The lawyer's job is to represent his/her client in connection with the transaction.

Lawyers are typically involved in residential real estate transactions in some states but not in other states.

[renue74]

Our state requires a closing attorney. I've bought homes before without a buyers agent. Really...all an agent does is push paper to the closing attorney. The attorney seems to do all the major leg work.

Our state has a standard offer to purchase document that I use and it covers all the bases...termite inspection, home inspection period, contingencies,etc.

If you are making offers to a seller with an agent, I would definitely communicate the whole 3% deal and call it an "easy" closing.

[ICMoney]

Anyone have success using a lawyer instead of a real estate agent to close on a house? I feel like with the internet today, a buyer's agent is just not necessary. I can figure out what houses I like searching online and then go see them in either an open house or with the seller's agent. The information asymmetry necessitating a buyers agent is just no longer there. I feel comfortable finding a house, establishing a value for the house on my own (I can look up recently sold comps, county appraisal, redfin estimate, zillow estimate etc.) All that is left after that is lawyer's work; Drafting an offer, negotiating, reviewing title, reviewing closing docs. I would much rather pay a lawyer a flat rate fee than a realtor 3%.

I did a cursory internet search to try to find such a person/lawyer, and they seem to exist. But not sure what unforeseen obstacles there may be. Anyone have any experience with this. I am guessing I'll get some push back from the sellers agent as he tries to protect his industry. But if he still gets his 3% it shouldn't be a problem. But I don't want him getting 6% just because I came to the table with no buyer's agent. I want that 3% to reduce MY costs.

I was told to bid X minus 3% (assuming the seller negotiated a 6% fee for agents.) That way the selling agent still gets 3% of a higher X. Seems fair.

Any tips would be helpul

Yes, I have experience with this. We successfully did this in a small market as a cash buyer, and the listing agent lowered their commission to make the deal work.

We attempted to do it later in a large market, but the listing agent refused to lower the 6% commission to 3% to get the numbers to work. We ended up coming up a bit to close the deal after abandoning it once, but the closing paperwork made it clear that us coming up solely funded a double commission to the listing agent. If we hadn't been under time pressure we would have abandoned this house and waited for another one we liked, but it was a situation where we needed to buy within a relatively short time period. We had several realtors in this larger market tell us what we were trying to do was not allowed, they had never heard of it, etc. My advice would be expect it not to work (i.e. listing agent to lower their commission), and to be pleasantly surprised if it does. Like you said, they have a vested interest to protect their industry, and our experience made it clear to me that the realtor we dealt with would rather lose a deal than sell to a buyer trying to buck the system.

Best,
ICM

[michaeljc70]

Not interested in "customer service" for tens of thousands of dollars!

You're not paying for it nor do you have a choice in the matter. The commission is paid by the seller.

[Hulk]

Not interested in "customer service" for tens of thousands of dollars!

You're not paying for it nor do you have a choice in the matter. The commission is paid by the seller.

Everybody keeps saying that but its not exactly true. Depends on how you look at it and everything is negotiable.

[michaeljc70]

Not interested in "customer service" for tens of thousands of dollars!

You're not paying for it nor do you have a choice in the matter. The commission is paid by the seller.

Everybody keeps saying that but its not exactly true. Depends on how you look at it and everything is negotiable.

The seller signs a contract with the selling agent. It is spelled out. An agent CAN give some of the commission to make the deal happen. The seller cannot just take it back and give it to you because you want to make your own rules that violate their contract. I am not going to say I believe all the "rules" (or the "system") are fair. I have long said that selling a $5M house and $500k house should have a 10x difference in commission. Not to mention how much less work it is for the agent given the internet and that (at least where I live) every agent get the same commission % whether they have a month's experience or 20 years experience. It is a system ripe for disruption.

[9to5er]

I've not purchased without an agent (hard to get into the homes to view them without), but have sold 4 houses without one. In that case, if we put the house on the market, we agreed to pay the 3% to the buyers agent in order to get agents to bring their clients for a showing. These were in states where a lawyer isn't required and the title company has all the standard contracts for the sale, so the title company drew up the papers - great savings. One of those times we sold to our renters so there were no RE agents, just the title company.

[Carefreeap]

Not interested in "customer service" for tens of thousands of dollars!

You're not paying for it nor do you have a choice in the matter. The commission is paid by the seller.

Everybody keeps saying that but its not exactly true. Depends on how you look at it and everything is negotiable.

The seller signs a contract with the selling agent. It is spelled out. An agent CAN give some of the commission to make the deal happen. The seller cannot just take it back and give it to you because you want to make your own rules that violate their contract. I am not going to say I believe all the "rules" (or the "system") are fair. I have long said that selling a $5M house and $500k house should have a 10x difference in commission. Not to mention how much less work it is for the agent given the internet and that (at least where I live) every agent get the same commission % whether they have a month's experience or 20 years experience. It is a system ripe for disruption.

The higher priced houses generally do have a lower commission but it's not 10x. Depending on the market (SF Bay Area excepted) the $5M may take years to sell and an agent will spend many $$$ with much higher end marketing with no guaranty that they will get any return on those $$$ or the time involved to market those top tier properties which have very, very few buyers. That's the way the system works. Most States do allow a buyer to hire a Buyer's agent and for that person to be paid hourly by the buyer. The buyer can then request a credit of the agent's commission as a condition of the purchase contract. But most people don't want to pay an agent an hourly amount. They like to think they get the agent's time for "free". If you can change the "get something for free" part of the human psyche then we can talk about "disruption".

[michaeljc70]

I've not purchased without an agent (hard to get into the homes to view them without), but have sold 4 houses without one. In that case, if we put the house on the market, we agreed to pay the 3% to the buyers agent in order to get agents to bring their clients for a showing. These were in states where a lawyer isn't required and the title company has all the standard contracts for the sale, so the title company drew up the papers - great savings. One of those times we sold to our renters so there were no RE agents, just the title company.

I've done the same 3 times. I paid someone a few hundred bucks to put the listing in the MLS and offered 2.5% (standard here as full commission is 5%). I did all the showings, created the listing, took the pictures, etc. The difference is everyone uses lawyers here for real estate deals. The buyers agent wrote up any offer.

[michaeljc70]

Not interested in "customer service" for tens of thousands of dollars!

You're not paying for it nor do you have a choice in the matter. The commission is paid by the seller.

Everybody keeps saying that but its not exactly true. Depends on how you look at it and everything is negotiable.

The seller signs a contract with the selling agent. It is spelled out. An agent CAN give some of the commission to make the deal happen. The seller cannot just take it back and give it to you because you want to make your own rules that violate their contract. I am not going to say I believe all the "rules" (or the "system") are fair. I have long said that selling a $5M house and $500k house should have a 10x difference in commission. Not to mention how much less work it is for the agent given the internet and that (at least where I live) every agent get the same commission % whether they have a month's experience or 20 years experience. It is a system ripe for disruption.

The higher priced houses generally do have a lower commission but it's not 10x. Depending on the market (SF Bay Area excepted) the $5M may take years to sell and an agent will spend many $$$ with much higher end marketing with no guaranty that they will get any return on those $$$ or the time involved to market those top tier properties which have very, very few buyers. That's the way the system works. Most States do allow a buyer to hire a Buyer's agent and for that person to be paid hourly by the buyer. The buyer can then request a credit of the agent's commission as a condition of the purchase contract. But most people don't want to pay an agent an hourly amount. They like to think they get the agent's time for "free". If you can change the "get something for free" part of the human psyche then we can talk about "disruption".

Here, almost no agent gives a reduced commission. The exception may be if they do a large buy and sell with the same agent or a builder gives you all their properties, but it would be a small break.

As to being harder to sell expensive properties, it depends on the market. Sometimes high priced homes are in demand more and sometimes not. When the economy isn't great and/or interest rates are high, rich people pay cash and have money. My friend just sold a $2.8M townhouse in 2 weeks. The house was empty and not staged. He made a brochure like he would do for a $200k condo. He will make over $50k off of it personally (broker takes 20%). The other agent (and their broker) will make $70k.

[Hulk]

Not interested in "customer service" for tens of thousands of dollars!

You're not paying for it nor do you have a choice in the matter. The commission is paid by the seller.

Well the deal is done and I am sitting in my new home. Thought I would update the thread in case anyone is interested or wants to search this in the future. It certainly worked out well for us and I would recommend trying to do the same.

I negotiated a flat rate with my realtor and she agreed to return the balance of her 3% buyers commission to me in the form of a "realtor commission credit.” It saved us tens of thousands of dollars. The credit was actually so much that it was more than the bank would use for closing cost and she had to cut us a check for the remainder. (The bank won’t allow a commission credit to exceed closing costs. The realtor cannot “help with the down payment.” They are only able to pay for lender fees, prepaid taxes, prepaid insurance, and any points purchased.) All said, we were able to reduce the 3% (0.03) commission to 0.298% (0.00298). We paid less than 1/10th the normal commission! Which even according to our realtor is “highway robbery.”

I think this worked for at least 3 reasons:
1) We found our realtor AFTER we found our house. We called her up and said we are ready to bid tonight, here is the house, here is our pre-approval letter, we are willing to pay you X for your expertise and assistance (yes yes, I know. The seller pays the 3% not the buyer. But the buyer is the gatekeeper to that 3%. The agent can either take X and refund the rest, or take 3% of nothing.) Also, come ready to strike. I doubt a realtor will be interested in long, drawn out house hunting misadventure with you for a lower flat rate. It could take forever and you may not even end up bidding on any house. But a quick flat rate? Yes. Come ready to offer, having already done your research, your comps (if you cant do that, you probably do need a realtor with a normal financial arrangement). Her time commitment was as minimal as possible and the money was well worth her time.
2) She is a Broker (owns her own business) not just a real estate sales agent working for a brokerage company so she can do whatever she wants
3) The purchase price of the home was high enough that a significantly reduced fee was still worth her time. All in I’m guessing she spent maybe ten hours total for us, which was much more than I would have guess going in.
4) As a bonus, she is a lawyer, able to think outside the box. I went looking for a real estate lawyer (to avoid the conventional 3% financial relationship) but found a real estate broker and lawyer.

Anyway, good luck to all those house hunting! As someone said in this thread, the real estate industry is ripe for disruption. go disrupt! 3% commission IS highway robbery!

[michaeljc70]

Not interested in "customer service" for tens of thousands of dollars!

You're not paying for it nor do you have a choice in the matter. The commission is paid by the seller.

Well the deal is done and I am sitting in my new home. Thought I would update the thread in case anyone is interested or wants to search this in the future. It certainly worked out well for us and I would recommend trying to do the same.

I negotiated a flat rate with my realtor and she agreed to return the balance of her 3% buyers commission to me in the form of a "realtor commission credit.” It saved us tens of thousands of dollars. The credit was actually so much that it was more than the bank would use for closing cost and she had to cut us a check for the remainder. (The bank won’t allow a commission credit to exceed closing costs. The realtor cannot “help with the down payment.” They are only able to pay for lender fees, prepaid taxes, prepaid insurance, and any points purchased.) All said, we were able to reduce the 3% (0.03) commission to 0.298% (0.00298). We paid less than 1/10th the normal commission! Which even according to our realtor is “highway robbery.”

I think this worked for at least 3 reasons:
1) We found our realtor AFTER we found our house. We called her up and said we are ready to bid tonight, here is the house, here is our pre-approval letter, we are willing to pay you X for your expertise and assistance (yes yes, I know. The seller pays the 3% not the buyer. But the buyer is the gatekeeper to that 3%. The agent can either take X and refund the rest, or take 3% of nothing.) Also, come ready to strike. I doubt a realtor will be interested in long, drawn out house hunting misadventure with you for a lower flat rate. It could take forever and you may not even end up bidding on any house. But a quick flat rate? Yes. Come ready to offer, having already done your research, your comps (if you cant do that, you probably do need a realtor with a normal financial arrangement). Her time commitment was as minimal as possible and the money was well worth her time.
2) She is a Broker (owns her own business) not just a real estate sales agent working for a brokerage company so she can do whatever she wants
3) The purchase price of the home was high enough that a significantly reduced fee was still worth her time. All in I’m guessing she spent maybe ten hours total for us, which was much more than I would have guess going in.
4) As a bonus, she is a lawyer, able to think outside the box. I went looking for a real estate lawyer (to avoid the conventional 3% financial relationship) but found a real estate broker and lawyer.

Anyway, good luck to all those house hunting! As someone said in this thread, the real estate industry is ripe for disruption. go disrupt! 3% commission IS highway robbery!

I am glad it worked out for you. I am curious, how did you find this house without a realtor? Specifically, did you see the house before making a bid? I ask because there are rules around that (which vary by state I believe). You generally cannot go see a house saying you have no agent and then show up the next day to buy it with one.

Also, your agent being a broker means she doesn't have to share the commission (with a boss). The fact that an agent that is also an attorney accepted 1/10th the customary commission is certainly unusual and I don't know that I would tout that as actionable.

To be clear, I am not a realtor or anyway related to one. I've actually sold 3 places myself (though I did pay the buyer's realtor). I've just been expressing what I've seen myself and heard from realtors I know.

[Sandi_k]

I am glad it worked out for you. I am curious, how did you find this house without a realtor? Specifically, did you see the house before making a bid? I ask because there are rules around that (which vary by state I believe). You generally cannot go see a house saying you have no agent and then show up the next day to buy it with one.

How in the world is this knowable, or enforceable? Stopping at an Open House without a representative is not against the law, and there's no legal requirement that I'm aware of for you to sign their "attendance" log...

[michaeljc70]

I am glad it worked out for you. I am curious, how did you find this house without a realtor? Specifically, did you see the house before making a bid? I ask because there are rules around that (which vary by state I believe). You generally cannot go see a house saying you have no agent and then show up the next day to buy it with one.

How in the world is this knowable, or enforceable? Stopping at an Open House without a representative is not against the law, and there's no legal requirement that I'm aware of for you to sign their "attendance" log...

You didn't state it was found at an open house. Usually asking if your have an agent is one of the first things they ask at an open house. Also, did every home you were interested in have an open house? Of course they cannot force you to sign in.

[pshonore]

I am glad it worked out for you. I am curious, how did you find this house without a realtor? Specifically, did you see the house before making a bid? I ask because there are rules around that (which vary by state I believe). You generally cannot go see a house saying you have no agent and then show up the next day to buy it with one.

How in the world is this knowable, or enforceable? Stopping at an Open House without a representative is not against the law, and there's no legal requirement that I'm aware of for you to sign their "attendance" log...

Any good agent will ask who you're working with (unless there are lots of folks there and the agent doesn't get a chance to talk to you. ) That also avoids intra-office squabbles when you call on Monday and speak to the floor agent. The RE business is very competitive.

[mrgeeze]

You can do it but it probably won't save you much if any money. Most sellers contracts dictate the 6% and if there's no buyer's agent the seller's agent gets more. You might get 1%, MAYBE 1.5%. Unless you find a FSBO home.

Not anymore!

The internet and the likes of Zillow, etc are reducing the 6% off the top skim of the real estate industry.
REJOICE!!!

I recently sold a property in one of the hottest real estate markets in the US- Washington Dc/Northern Virginia.
I gave the listing agent 2% and the buyer agent 2.5%. A lot less than 6%. exactly 25% less according to my friend the calculator.
I might have paid less if I had beaten them up a little more.
They (buyer and seller agent) didn't push back hard. They know you can't get 6% in this market.

I'm sure it varies by market but the general trend is clearly downward.
Perhaps if you are a residential realtor its a good time for a career change.

I do believe realtors provide some value in a house sale, especially for those uneducated buyers.
A couple of grand should more than suffice for such services.
The idea that 2 realtors split 30k on a $500k deal is, in my opinion usury.
Nice to see those days are coming to an end

Remember, everything is negotiable!!

[e5116]

Not interested in "customer service" for tens of thousands of dollars!

You're not paying for it nor do you have a choice in the matter. The commission is paid by the seller.

Well the deal is done and I am sitting in my new home. Thought I would update the thread in case anyone is interested or wants to search this in the future. It certainly worked out well for us and I would recommend trying to do the same.

I negotiated a flat rate with my realtor and she agreed to return the balance of her 3% buyers commission to me in the form of a "realtor commission credit.” It saved us tens of thousands of dollars. The credit was actually so much that it was more than the bank would use for closing cost and she had to cut us a check for the remainder. (The bank won’t allow a commission credit to exceed closing costs. The realtor cannot “help with the down payment.” They are only able to pay for lender fees, prepaid taxes, prepaid insurance, and any points purchased.) All said, we were able to reduce the 3% (0.03) commission to 0.298% (0.00298). We paid less than 1/10th the normal commission! Which even according to our realtor is “highway robbery.”

I think this worked for at least 3 reasons:
1) We found our realtor AFTER we found our house. We called her up and said we are ready to bid tonight, here is the house, here is our pre-approval letter, we are willing to pay you X for your expertise and assistance (yes yes, I know. The seller pays the 3% not the buyer. But the buyer is the gatekeeper to that 3%. The agent can either take X and refund the rest, or take 3% of nothing.) Also, come ready to strike. I doubt a realtor will be interested in long, drawn out house hunting misadventure with you for a lower flat rate. It could take forever and you may not even end up bidding on any house. But a quick flat rate? Yes. Come ready to offer, having already done your research, your comps (if you cant do that, you probably do need a realtor with a normal financial arrangement). Her time commitment was as minimal as possible and the money was well worth her time.
2) She is a Broker (owns her own business) not just a real estate sales agent working for a brokerage company so she can do whatever she wants
3) The purchase price of the home was high enough that a significantly reduced fee was still worth her time. All in I’m guessing she spent maybe ten hours total for us, which was much more than I would have guess going in.
4) As a bonus, she is a lawyer, able to think outside the box. I went looking for a real estate lawyer (to avoid the conventional 3% financial relationship) but found a real estate broker and lawyer.

Anyway, good luck to all those house hunting! As someone said in this thread, the real estate industry is ripe for disruption. go disrupt! 3% commission IS highway robbery!

Glad it worked out for you! However, I'd say the new thread title is misleading as you ended up using a realtor that simply rebated her commission to you. That is not the same as only using an attorney (in this case, understood that the same person doubled as both). The moral is that anything is negotiable, but it only worked because you were able to negotiate with a third party that represented you and didn't have to do it through the seller's agent. Important distinction. Nice work!

I actually worked with a real estate company that gives the option for hourly rate OR commission-based with rebate based on a sliding scale for the price of the house (like you said, it's not that much more effort as a buyer's agent to assist in the sale of a very expensive home). We did NOT already find the house when we got our agent, though and were planning to be patient with what we wanted, so we went the commission + rebate route. He probably set up 8 showings for us, and ended up helping us through 3 offers (first one fell apart of a long back-and-forth with a homeowner in financial distress, second one lost to another bidder, third one we got). After that was done, we ended up getting money back after inspection towards closing and rebate would have exceeded closing costs, so ended up getting a check as well. I think the agent received about 1.5% of the sale of the house for us, which seems reasonable given the work done in our case.

I agree with you that the real estate transaction system is ripe for disruption with much lesss information asymmetry and buyers being able to research on their own. Companies like Redfin are trying....They also have a buyer's rebate program although certainly not as significant as you were able to negotiate.

[RickBoglehead]

I totally agree that the title is misleading.

Buying, or Selling, a home without using a real estate attorney is risky. No realtor or broker takes the place of an attorney, and even if one is also an attorney, unless you retain them in that position, they aren't.

[LSLover]

In most states the seller signs a listing contract that identifies the selling and buying agent's commission. The seller pays the commissions out of the proceeds of the sale (yes the buyer's agent actually works for the seller not for the buyer). If that's the practice in your state you'd have to convince the seller and possibly the seller's agent to give you the 3% for the buyer's agent back to you. Let us know what state you are in and you might get some more specific advice (especially if it is Florida or Louisiana).

Also 6% commission is pretty much history in many places. It's 5% and sometimes 4.5% if you ask. I'm sure there's some places where 6% is still common, perhaps you don't live there.

I am intrigued by your Florida comment. Can you elaborate?

[blaugranamd]

A bit off topic but I have never understood the ethicality of having the buyer's agent paid a commission based the sale price of the home. Reeks of conflicts of interest not altogether different than a commissioned investment broker who gets paid more to put you in more expensive funds.

[staythecourse]

You can do it but it probably won't save you much if any money. Most sellers contracts dictate the 6% and if there's no buyer's agent the seller's agent gets more. You might get 1%, MAYBE 1.5%. Unless you find a FSBO home.

This is correct. The seller usually has in their contract IF there is no buyers agent they are to get the full commission. So yes the sellers agent will LOVE you, but not for the reason you think. They double their commission with you vs. another buyer.

My advice. Do all your DD and find the property you like and make SURE the sellers agent is not helping you at all. If the latter does happen they will later sue based on law of procurement. Then find a buyers agent who will split the commission with you. That should be reasonable as it is free money for them without doing much work. This way you are guaranteed to get a discount AND the house vs. thinking you will get a discount and find out on the closing docs that the sellers agent kept the entire commission.

Good luck.

[serbeer]

The thing is, you still must offer 2.5% buyer agent comissions to attract buyer agents to bring in their clients. So negotiable portion is really sellers agent comissions. When I sold the house I negotiated 1.5% (for a total of 4%) but that probably worked because I also bought new house with the same agent.

Does not hurt to try DYI if you'd like first, and my neighbor went that route a year ago, but they still had to offer 2.5% to buyer agent to get good exposure, else you may save on comission but lose out on sale price.

[michaeljc70]

Where I live (Chicago), 5% has been the norm for some time.

Since people think that realtors "aren't worth it", I'll relay a story I just heard from a realtor friend. He got a $2.8M townhome listing. So, I thought my friend was going to make an easy $50k+, but he got zero. He had to compete against several other agents and do his "pitch". Then they (the brokerage firm/realtor) had to hire someone to do a floor plan of the place, someone to take drone pictures outside, someone to take the inside pictures, create the marketing materials, etc. After a couple months (and running over to the place left and right) they had multiple offers. After a lot of dilly dallying, the buyer insisted on getting a $250k cash credit at closing due to an ongoing dispute (with the county) over the property taxes. The deal fell apart. The owner decided it best not to sell because the court date regarding the taxes was in October and this issue would probably keep coming up. When she goes to sell it again (assuming she doesn't change her mind), maybe the owner will use my friend as their agent and he can still make some money.

Of course, I realize some deals come together very easily and it seems like they are getting a big commission. I've said many times it is an industry ripe for disruption. However, there are deals that fall through, people that look for 2 years at properties and never buy, very slow periods (winters here and when rates rise, the economy isn't great, etc).

[michaeljc70]

A bit off topic but I have never understood the ethicality of having the buyer's agent paid a commission based the sale price of the home. Reeks of conflicts of interest not altogether different than a commissioned investment broker who gets paid more to put you in more expensive funds.

To me, the analogy would be the realtor putting you into a bigger house like the investment broker tries to get you to invest more of your funds (rather than an expensive fund). The realtors commission % is usually not changing regardless of the home price while the broker's commission will vary based on product.

I often think it is the opposite. It depends on their deal with the brokerage, but they might be getting 1/2 of 1/2 of 5% or 1.25%. They would rather sell you something for $300k fast than waste a lot of time selling you something for $350k and taking a long time. In the end, they would only get $675 more out of $3750. This is especially true when selling.

I've thought it should be a flat amount (to cover basic expenses like putting it into the MLS, photos, etc) and then an add-on commission based on a sliding scale.

[Sandi_k]

How in the world is this knowable, or enforceable? Stopping at an Open House without a representative is not against the law, and there's no legal requirement that I'm aware of for you to sign their "attendance" log...

Any good agent will ask who you're working with (unless there are lots of folks there and the agent doesn't get a chance to talk to you. ) That also avoids intra-office squabbles when you call on Monday and speak to the floor agent. The RE business is very competitive.

Yeah, I know. But they won't forbid you from attending the Open House if you don't tell them.

[JuniorBH]

I often think it is the opposite. It depends on their deal with the brokerage, but they might be getting 1/2 of 1/2 of 5% or 1.25%. They would rather sell you something for $300k fast than waste a lot of time selling you something for $350k and taking a long time. In the end, they would only get $675 more out of $3750. This is especially true when selling.

Reminds me of the section in Freakonomics which deals with this.

[michaeljc70]

How in the world is this knowable, or enforceable? Stopping at an Open House without a representative is not against the law, and there's no legal requirement that I'm aware of for you to sign their "attendance" log...

Any good agent will ask who you're working with (unless there are lots of folks there and the agent doesn't get a chance to talk to you. ) That also avoids intra-office squabbles when you call on Monday and speak to the floor agent. The RE business is very competitive.

Yeah, I know. But they won't forbid you from attending the Open House if you don't tell them.

If it were my home, I wouldn't want the realtor letting people who refuse to give any information wandering through my home. If you still live there, all your stuff is there. Obviously, they aren't going to check their passports......

Then again, I don't do open houses when I've sold. I think they are more for the realtor to get new clients and nosey neighbors to look at your home. I figure if a buyer is serious, they can make the effort to make an appointment.

[birdy]

One of the homes I lived in I decided to sell myself. I used FSBO, a company that for a flat fee markets and then takes care of all the paperwork to close on a house. This was at a time when I bought high and the house didn't maintain it's high value. I was going to loose money if I used a realtor. So at least by selling it using this process I ended up not having to bring more money to the table to pay off the mortgage.

birdy

[Ben Mathew]

But if he still gets his 3% it shouldn't be a problem. But I don't want him getting 6% just because I came to the table with no buyer's agent. I want that 3% to reduce MY costs.

Generally it works best to use a buyers agent who will take that 3% commission and rebate part of it to you. Otherwise the listing agent will walk away with 6%. You could try to negotiate the listing agents commission down from 6%, but that will probably be harder than having your discount agent take the 3% and then rebate part of it to you.

I used Marc Holmes of Walaw Realty when I bought my current house. He's basically a lawyer who also acts as a real estate agent, charges a flat fee, and rebates the rest of the commission. I found him to be much more competent and honest than the buyers agent I used to buy my first house. Fees have gone up since I bought, but it still adds up to a substantial rebate. Note that this includes lawyer fees.

Not every city has a high quality flat-fee operation, as I found out when my sister was buying a house in the Phoenix area recently. Fortunately, my sister saw a pre-sale sign on a house in the neighborhood she wanted. I don't remember all the details, but I think the "pre-sale" meant that it wasn't officially listed in the MLS yet. The listing agent had an explicit arrangement with the seller for a reduced buyers commission if an unrepresented buyer appears during the pre-sale phase. So she effectively saved money via a lower sale price. (Someone with a buyers agent would have had to offer a higher price to be competitive with her offer). I have never seen this arrangement before. It must be unique to hot markets, where simply posting a sign out front will bring in serious buyers. I don't think it's very common.

I was told to bid X minus 3% (assuming the seller negotiated a 6% fee for agents.).

Bidding X-3% will work only if the listing agent agrees to give up the 3% buyers commission. You could try to negotiate that, but the listing agent might not budge. It's more straightforward if you have a discount broker who will take the 3% and pass on some of it to you.

P.S. I'm surprised that in this day and age, with all the technological advances, the 3% agent is still the norm. I think a lot of people aren't comfortable making decisions on such a large purchase without having the psychological comfort of having an "expert" on their side, even when the expert is of questionable value. It's kind of like having a financial advisor. They have perfected the art of saying the right things and hiding the fees. Getting buyers to think that their buyers agent is "free" was a masterstroke.

[audioaxes]

Why not use a discount broker instead of a lawyer? That way you are getting a credit from the buyers agent commission (that will be allocated in the sale regardless of if you have an agent or not) instead of coming out of pocket on a lawyer.

[Hulk]

I am glad it worked out for you. I am curious, how did you find this house without a realtor? Specifically, did you see the house before making a bid? I ask because there are rules around that (which vary by state I believe). You generally cannot go see a house saying you have no agent and then show up the next day to buy it with one.

How in the world is this knowable, or enforceable? Stopping at an Open House without a representative is not against the law, and there's no legal requirement that I'm aware of for you to sign their "attendance" log...

You didn't state it was found at an open house. Usually asking if your have an agent is one of the first things they ask at an open house. Also, did every home you were interested in have an open house? Of course they cannot force you to sign in.

We saw maybe 20 houses. I'd say a dozen were open houses. 2 or 3 were shown by the listing agent. I just called them up and asked to see the house. One was with Listing Spark. We also saw half a dozen or so last fall with Redfin (I told them we wouldnt be serious buyers until the spring and they were cool with that. No commitment)

The house we bought was one we had seen in an open house

[Hulk]

I'd say the new thread title is misleading as you ended up using a realtor that simply rebated her commission to you. That is not the same as only using an attorney (in this case, understood that the same person doubled as both). The moral is that anything is negotiable, but it only worked because you were able to negotiate with a third party that represented you and didn't have to do it through the seller's agent. Important distinction. Nice work!

True, I went looking for a lawyer, found a few options in lawyers who were not agents but were very comfortable in real estate transactions. Offered to charge me an hourly rate, said they had done it before and estimated costs would be between 3,200 and 5,000 depending on hours. I instead ended up going with basically a RE agent who also happened to go to law school, yes. She was on the more expensive side but seemed the best fit for what I was trying to do, she swam in this water every day. I just needed someone competent who would take a lower fee. I also liked paying her a set fee as opposed to an hourly rate that could end up being 2x of the estimate

(I also changed the title a few days ago, which may have contributed to it seeming misleading. After the deal went through I wanted people to know that yes, it is possible to not pay 3%, so I changed the title. I have now changed it back to the original