Skipping a Buyer's Real Estate Agent

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arf1410
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Skipping a Buyer's Real Estate Agent

Post by arf1410 »

Thinking about buying a vacation home a couple hours away from a HCOL area. From a buyer's perspective, it's fairly easy to see what's available on the market via the usual web sites. I'm thinking about just communicating with the listing agent for a showing, and should we want to make an offer, just request the 2.5-3% buyer's agent commission be credited towards the purchase price. The seller shouldn't care, as they would get the same $$ into their pockets. I don't see using my own agent would add any real value or provide any sort of safety net, as they dont get paid unless the sale closes either.

Has anyone done this with either fine, or problematic results?
onourway
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Re: Skipping a Buyer's Real Estate Agent

Post by onourway »

Normally if the sellers agent agrees to show you the home and act as a dual-agent, they pocket both commissions. You may be able to negotiate a discount, but by no means would I expect that you will retain the entire 3%.

Vacation communities and rural towns within a few hours of VHCOL areas are generally BOOMING right now, so you it may be harder than you think to get your offer accepted in these market conditions. Like it or not, there is a lot of back-channel conversation that happens between agents and without one, you will likely be at a significant disadvantage. If this area is in fact hot, you will have little to no leverage to demand a discount unless your offer is the best one they have by a significant margin (ie. all cash, no contingencies, etc).

This varies widely by market however, so YMMV.
sailaway
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Re: Skipping a Buyer's Real Estate Agent

Post by sailaway »

Their contract with the seller generally says that they get x% commission, no matter who brings the buyer. They fully expect to make at least some sales where they get the full commission, without having to split it.

They might offer a discount to the seller if necessary to bridge a small gap, but it is naive to think they are just going to walk away from half of the commission, even if they are doing more work.
retiredjg
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Re: Skipping a Buyer's Real Estate Agent

Post by retiredjg »

The commission is set, often at 6%. Whether 1 agent gets all or only half does not save you any money.
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hand
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Re: Skipping a Buyer's Real Estate Agent

Post by hand »

I would do this, but not focus on minimizing the realtor's compensation...

Your goals should be 1) finding a good property, 2) minimizing what you pay, 3) closing the deal. If you're comfortable that you've found a good property, make a fair but low offer through the listing agent and let them work for you to close the sale by talking down the seller.

By putting the agent in a position to collect a double commission (plus some reasons why you're a good buyer even if not the highest offer) they are likely to be *very* motivated to push the sale to you. If it comes to cutting their commission (because they cant talk the seller down), let it be their decision to be the hero rather than you starting the relationship by trying to cut their pay.
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Re: Skipping a Buyer's Real Estate Agent

Post by stan1 »

retiredjg wrote: Mon Aug 31, 2020 3:47 pm The commission is set, often at 6%. Whether 1 agent gets all or only half does not save you any money.
Im my state a dual agency realtor representing both seller and buyer will usually go back to the seller and suggest the commission stated in the contract to list the house for sale be reduced.

Seller may choose to give all of that savings back to the buyer, give none of it back, or share it.
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Re: Skipping a Buyer's Real Estate Agent

Post by DesertDiva »

If you use the listing agent to represent both the seller and yourself, the agent’s fiduciary responsibility is towards the seller. This is a more important consideration that commissions IMHO.

OTOH, a buyer’s agent will reveal details that are materially relevant to you as the buyer. I wouldn't purchase property in an area I didn't know without buyer representation.

YMMV - agency specifics may vary by state.
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hand
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Re: Skipping a Buyer's Real Estate Agent

Post by hand »

DesertDiva wrote: Mon Aug 31, 2020 3:55 pm If you use the listing agent to represent both the seller and yourself, the agent’s fiduciary responsibility is towards the seller.
..and the agent's own family; not necessarily in that order!

While there may be some fig-leaf of "fiscal responsibility" for agents, marginal breaches (i.e. pushing a sale to one bidder vs another) are effectively impossible to enforce (and therefore often meaningless). My next purchase will be through the seller's agent to exploit the seller's belief the agent is actually working for them!
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arf1410
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Re: Skipping a Buyer's Real Estate Agent

Post by arf1410 »

DesertDiva wrote: Mon Aug 31, 2020 3:55 pm If you use the listing agent to represent both the seller and yourself, the agent’s fiduciary responsibility is towards the seller. This is a more important consideration that commissions IMHO.

OTOH, a buyer’s agent will reveal details that are materially relevant to you as the buyer. I wouldn't purchase property in an area I didn't know without buyer representation.

YMMV - agency specifics may vary by state.
/1/my understanding (maybe incorrect) that unless I showed up with an agent I had a specific contractual arrangement with, my agent's fiduciary duty was also with the seller, not me.

/2/ can you give me an example of a detail a buyers agent would know and reveal to me, that the seller's agent would not have an obligation to?
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Re: Skipping a Buyer's Real Estate Agent

Post by DesertDiva »

hand wrote: Mon Aug 31, 2020 4:02 pm
DesertDiva wrote: Mon Aug 31, 2020 3:55 pm If you use the listing agent to represent both the seller and yourself, the agent’s fiduciary responsibility is towards the seller.
..and the agent's own family; not necessarily in that order!

While there may be some fig-leaf of "fiscal responsibility" for agents, marginal breaches (i.e. pushing a sale to one bidder vs another) are effectively impossible to enforce (and therefore often meaningless). My next purchase will be through the seller's agent to exploit the seller's belief the agent is actually working for them!
Interesting take... here's another brilliant money-saving idea that you might like: if your wife files for divorce, share the same attorney (the one she picked) and expect him/her to represent you equally :idea:
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Re: Skipping a Buyer's Real Estate Agent

Post by hand »

arf1410 wrote: Mon Aug 31, 2020 4:17 pm
/2/ can you give me an example of a detail a buyers agent would know and reveal to me, that the seller's agent would not have an obligation to?
Anything negative about the property or the neighborhood... For example plans for a housing development on the farmland across the street, or a pending rezoning to allow commercial enterprise on your "residential" street.

Note a buyers agent would have to work against their interests to reveal same to you and still might fail to disclose, but still more likely to share than a seller's agent.
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galawdawg
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Re: Skipping a Buyer's Real Estate Agent

Post by galawdawg »

arf1410 wrote: Mon Aug 31, 2020 3:39 pm I'm thinking about just communicating with the listing agent for a showing, and should we want to make an offer, just request the 2.5-3% buyer's agent commission be credited towards the purchase price.
Your request is very unlikely to be met with success. Perhaps you should just find a buyer's agent who will rebate a portion of their commission to you. Then let them do their job. Particularly if the area you are considering is a couple of hours away from you. Photos of properties for sale are designed to showcase the best features of the property. A buyer's agent can do an initial viewing of the properties you are interested in and take video and/or additional photos to show what the selling agent doesn't want you to see.

Good luck.
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Re: Skipping a Buyer's Real Estate Agent

Post by DesertDiva »

arf1410 wrote: Mon Aug 31, 2020 4:17 pm
DesertDiva wrote: Mon Aug 31, 2020 3:55 pm If you use the listing agent to represent both the seller and yourself, the agent’s fiduciary responsibility is towards the seller. This is a more important consideration that commissions IMHO.

OTOH, a buyer’s agent will reveal details that are materially relevant to you as the buyer. I wouldn't purchase property in an area I didn't know without buyer representation.

YMMV - agency specifics may vary by state.
/1/my understanding (maybe incorrect) that unless I showed up with an agent I had a specific contractual arrangement with, my agent's fiduciary duty was also with the seller, not me.

/2/ can you give me an example of a detail a buyers agent would know and reveal to me, that the seller's agent would not have an obligation to?
1. True - a Buyer's Agent will have you sign an agreement.
2. It could be anything that is relevant information about the property or the seller. For example, someone with a fiduciary responsibility to the seller wouldn't necessarily reveal the seller's motivation for selling nor information that you would help you negotiate for a lower price.
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Re: Skipping a Buyer's Real Estate Agent

Post by sailaway »

DesertDiva wrote: Mon Aug 31, 2020 4:26 pm
arf1410 wrote: Mon Aug 31, 2020 4:17 pm
DesertDiva wrote: Mon Aug 31, 2020 3:55 pm If you use the listing agent to represent both the seller and yourself, the agent’s fiduciary responsibility is towards the seller. This is a more important consideration that commissions IMHO.

OTOH, a buyer’s agent will reveal details that are materially relevant to you as the buyer. I wouldn't purchase property in an area I didn't know without buyer representation.

YMMV - agency specifics may vary by state.
/1/my understanding (maybe incorrect) that unless I showed up with an agent I had a specific contractual arrangement with, my agent's fiduciary duty was also with the seller, not me.

/2/ can you give me an example of a detail a buyers agent would know and reveal to me, that the seller's agent would not have an obligation to?
1. True - a Buyer's Agent will have you sign an agreement.
2. It could be anything that is relevant information about the property or the seller. For example, someone with a fiduciary responsibility to the seller wouldn't necessarily reveal the seller's motivation for selling nor information that you would help you negotiate for a lower price.
How would a buyer's agent know that?
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arf1410
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Re: Skipping a Buyer's Real Estate Agent

Post by arf1410 »

If, hypothetically, a shopping mall was going to be built accross the street, my understanding is the Seller must disclose that, if he knows. But suppose the seller doesnt know about it, but the seller's Agent knows. Does it have to be disclosed?

It would also strike me that the seller's agent would likely be as, or more familiar with the neighborhood than the buyer's agent.

Maybe I'm just suspicious of of a person (ie buyer's agent) acting against their own financial interest, unless clearly legally required to, or they're a friend or family member.

here's a cash example with easy numbers. House is listed for $1M. After 6%, seller is OK keeping $940,000 with a full priced offer.

Suppose I offered $970,000, and specifically requested the $30,000 buyer's commission credited towards the selling price. My understanding is the sellers agent is legally required to bring that offer to the seller. As the seller would still pocket the expected full net of $940k, they should be OK with it... but if I simply offered $970k they then would only pocket $912k, so might decline offer?
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Re: Skipping a Buyer's Real Estate Agent

Post by Bobby206 »

hand wrote: Mon Aug 31, 2020 3:50 pm I would do this, but not focus on minimizing the realtor's compensation...

Your goals should be 1) finding a good property, 2) minimizing what you pay, 3) closing the deal. If you're comfortable that you've found a good property, make a fair but low offer through the listing agent and let them work for you to close the sale by talking down the seller.

By putting the agent in a position to collect a double commission (plus some reasons why you're a good buyer even if not the highest offer) they are likely to be *very* motivated to push the sale to you. If it comes to cutting their commission (because they cant talk the seller down), let it be their decision to be the hero rather than you starting the relationship by trying to cut their pay.
I agree with this 100%! It very likely might be they shave a point off but the bigger key is they have lots of incentive to make sure your offer work! In today's highly competitive real estate world this can be worth a lot to the buyer.
60B4E24B
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Re: Skipping a Buyer's Real Estate Agent

Post by 60B4E24B »

Why not just use a rebating brokerage, e.g. Redfin? You'll get 2/3 of the commission rebated to you, and you'll have representation.
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Re: Skipping a Buyer's Real Estate Agent

Post by hand »

arf1410 wrote: Mon Aug 31, 2020 4:44 pm If, hypothetically, a shopping mall was going to be built accross the street, my understanding is the Seller must disclose that, if he knows. But suppose the seller doesnt know about it, but the seller's Agent knows. Does it have to be disclosed?

It would also strike me that the seller's agent would likely be as, or more familiar with the neighborhood than the buyer's agent.

Maybe I'm just suspicious of of a person (ie buyer's agent) acting against their own financial interest, unless clearly legally required to, or they're a friend or family member.

here's a cash example with easy numbers. House is listed for $1M. After 6%, seller is OK keeping $940,000 with a full priced offer.

Suppose I offered $970,000, and specifically requested the $30,000 buyer's commission credited towards the selling price. My understanding is the sellers agent is legally required to bring that offer to the seller. As the seller would still pocket the expected full net of $940k, they should be OK with it... but if I simply offered $970k they then would only pocket $912k, so might decline offer?
Seller's agent likely has a contract with seller requiring 5% commission (6% is an outdated "aspirational" number) and is unlikely to be bullied into cutting their commission. Just offer $940k + 3% and let the seller's agent negotiate with the seller as to who gets to take the haircut assuming there aren't substantially better offers on the table. (Note the value of the "fiduciary" responsibility during this negotiation - "seller's agent" is now working on your behalf to talk the seller down!) No reason for you to be the bad guy here.
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Re: Skipping a Buyer's Real Estate Agent

Post by DesertDiva »

sailaway wrote: Mon Aug 31, 2020 4:41 pm
DesertDiva wrote: Mon Aug 31, 2020 4:26 pm
arf1410 wrote: Mon Aug 31, 2020 4:17 pm
DesertDiva wrote: Mon Aug 31, 2020 3:55 pm If you use the listing agent to represent both the seller and yourself, the agent’s fiduciary responsibility is towards the seller. This is a more important consideration that commissions IMHO.

OTOH, a buyer’s agent will reveal details that are materially relevant to you as the buyer. I wouldn't purchase property in an area I didn't know without buyer representation.

YMMV - agency specifics may vary by state.
/1/my understanding (maybe incorrect) that unless I showed up with an agent I had a specific contractual arrangement with, my agent's fiduciary duty was also with the seller, not me.

/2/ can you give me an example of a detail a buyers agent would know and reveal to me, that the seller's agent would not have an obligation to?
1. True - a Buyer's Agent will have you sign an agreement.
2. It could be anything that is relevant information about the property or the seller. For example, someone with a fiduciary responsibility to the seller wouldn't necessarily reveal the seller's motivation for selling nor information that you would help you negotiate for a lower price.
How would a buyer's agent know that?
Could be anything from performing a market analysis to chit-chat amongst agents. You would be surprised at what agents know about people in their marketing area, particularly in small communities.
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arf1410
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Re: Skipping a Buyer's Real Estate Agent

Post by arf1410 »

60B4E24B wrote: Mon Aug 31, 2020 4:58 pm Why not just use a rebating brokerage, e.g. Redfin? You'll get 2/3 of the commission rebated to you, and you'll have representation.
did not know that was an option! will investigate!
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Re: Skipping a Buyer's Real Estate Agent

Post by galawdawg »

arf1410 wrote: Mon Aug 31, 2020 4:44 pm If, hypothetically, a shopping mall was going to be built accross the street, my understanding is the Seller must disclose that, if he knows. But suppose the seller doesnt know about it, but the seller's Agent knows. Does it have to be disclosed?

It would also strike me that the seller's agent would likely be as, or more familiar with the neighborhood than the buyer's agent.

Maybe I'm just suspicious of of a person (ie buyer's agent) acting against their own financial interest, unless clearly legally required to, or they're a friend or family member.

here's a cash example with easy numbers. House is listed for $1M. After 6%, seller is OK keeping $940,000 with a full priced offer.

Suppose I offered $970,000, and specifically requested the $30,000 buyer's commission credited towards the selling price. My understanding is the sellers agent is legally required to bring that offer to the seller. As the seller would still pocket the expected full net of $940k, they should be OK with it... but if I simply offered $970k they then would only pocket $912k, so might decline offer?
Concerning the highlighted portion of your post, I don't know what state this property is in, but most states require a seller only to disclose known defects of the subject property. Not conditions in the general community that may potentially affect property values, property enjoyment and such. Check the requirements of your state.

The fact that you don't know this is an example of why you should have a buyer's agent. A competent and thorough buyer's agent whose loyalty is to you, the client, can exercise due diligence to provide you information about the property and community that you may not learn on your own or from the seller's agent.

If I was a seller and received your offer as stated, particularly for a $1M plus property, I would be unlikely to respond favorably unless it was a buyer's market and I was very motivated to sell. No offense, but it says to me "difficult buyer". Others may disagree. As I and others mentioned, just save yourself and everyone else the trouble and find a buyer's agent who rebates a portion of their commission. :happy
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Re: Skipping a Buyer's Real Estate Agent

Post by DesertDiva »

arf1410 wrote: Mon Aug 31, 2020 4:44 pm If, hypothetically, a shopping mall was going to be built accross the street, my understanding is the Seller must disclose that, if he knows. But suppose the seller doesnt know about it, but the seller's Agent knows. Does it have to be disclosed?

It would also strike me that the seller's agent would likely be as, or more familiar with the neighborhood than the buyer's agent.

Maybe I'm just suspicious of of a person (ie buyer's agent) acting against their own financial interest, unless clearly legally required to, or they're a friend or family member.

here's a cash example with easy numbers. House is listed for $1M. After 6%, seller is OK keeping $940,000 with a full priced offer.

Suppose I offered $970,000, and specifically requested the $30,000 buyer's commission credited towards the selling price. My understanding is the sellers agent is legally required to bring that offer to the seller. As the seller would still pocket the expected full net of $940k, they should be OK with it... but if I simply offered $970k they then would only pocket $912k, so might decline offer?
Here’s a more likely scenario: seller tells agent to list property for $1M because he replaced the carpet and planted a few trees and believes his house is “worth it” because his house is the best house ever in the history of houses - So the sellers agent agrees to list for $1M for a period of time, although he knows the market value (based on recent sales and the condition of the property) is $950k.

Heres what can happen:
1) The sellers agent will not disclose that the listing is overpriced. A buyers agent would run the market analysis and suggest an offer of $942. Meanwhile, the buyer’s agent learns through social contacts that the seller has lost his job and needs to move within a month or will face foreclosure. So suggested offer becomes $915K. Buyers agent will craft the offer appropriately, defend the asking price with data and make the offer more lucrative with dates that meet the sellers timeline.

2) Buyers agent mentions to his broker that he has a client making an offer on this wonderful property. Broker mentions that a) someone else in the office had listed the property a few years earlier and numerous issues were uncovered during inspection that killed the deal -or- b) there was a nearby chemical leak that affected houses in that particular area -or- c) property has a notorious history—perhaps something unusual that their state doesn't require be disclosed (pet cemetery? Site of alien spacecraft landing?). Buyers agent advises his client and allows him to decide if this information affects their decision to buy.

Yes, buyers agents want to make money. But a reputable agent will also work on building a business based on referrals.
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arf1410
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Re: Skipping a Buyer's Real Estate Agent

Post by arf1410 »

Well, you folks have mostly convinced me my idea is flawed, in particular because it is indeed a seller's market. Unfortunately, it appears Redfin does not offer "buyer's agents" in this area in question.

Now, If I can just figure out a way to buy the houses I saw listed in 2017 and 2018, at those prices, all would be good...
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Re: Skipping a Buyer's Real Estate Agent

Post by onourway »

arf1410 wrote: Mon Aug 31, 2020 4:17 pm
/2/ can you give me an example of a detail a buyers agent would know and reveal to me, that the seller's agent would not have an obligation to?
In our admittedly limited experience, our buyers agent has, through back-channel discussions with the other agent, helped us determine the “real” price the sellers might accept (when we were tempted to offer full price), helped us successfully feel out how far we could push on inspection items we were interested in having repaired, and so on. The agents clearly have a language they use regarding these issues, and in our case it saved us many times what was paid in commission.
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Re: Skipping a Buyer's Real Estate Agent

Post by fortunefavored »

I would go with a rebating agent or a flat fee agent. You can find one independently.

Ignore everyone saying to use a full price agent outside of very specific circumstances - 90% of them have a vested interest in the current monopoly. There is no ethics in the real estate agent world, and they are not required to disclose their own self-interest.
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Re: Skipping a Buyer's Real Estate Agent

Post by hand »

DesertDiva wrote: Mon Aug 31, 2020 5:37 pm But a reputable agent will also work on building a business based on referrals.
But, that's the rub, isn't it:

1) How do you find a reputable agent vs. a disreputable agent (especially in if you're not local)

2) According to a 2014 NAR study, 87% of agents leave the business in first 5 years - presumably because they don't make enough money. Seems like a pretty high percentage of agents are likely to care more about their next paycheck/meal than about building a long term referral base.
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Re: Skipping a Buyer's Real Estate Agent

Post by DesertDiva »

hand wrote: Mon Aug 31, 2020 5:51 pm
DesertDiva wrote: Mon Aug 31, 2020 5:37 pm But a reputable agent will also work on building a business based on referrals.
But, that's the rub, isn't it:

1) How do you find a reputable agent vs. a disreputable agent (especially in if you're not local)

2) According to a 2014 NAR study, 87% of agents leave the business in first 5 years - presumably because they don't make enough money. Seems like a pretty high percentage of agents are likely to care more about their next paycheck/meal than about building a long term referral base.
Ideas: 1) Find someone with an ABR designation. 2) Look for someone who has their own team and has a few agents working for them in a dedicated buyers agent role. 3) Ask about their agency arrangements and examples of negotiations in past deals.
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Re: Skipping a Buyer's Real Estate Agent

Post by onourway »

fortunefavored wrote: Mon Aug 31, 2020 5:47 pm I would go with a rebating agent or a flat fee agent. You can find one independently.

Ignore everyone saying to use a full price agent outside of very specific circumstances - 90% of them have a vested interest in the current monopoly. There is no ethics in the real estate agent world, and they are not required to disclose their own self-interest.
Until our most recent experience I would have 100% agreed with you. However in our most recent transaction, we had an excellent agent who a) knew all of the other agents in the area very well and b) was a significantly better negotiator than the other agents involved in both our purchase as well as in the sale of our own house. In the end we got the home we purchased for less than expected (in a red hot market), got the sellers to agree to tens of thousands of dollars of repairs, sold our home for significantly over asking price, while giving up less than $500 in repairs. This combined to put nearly an extra $60k into our pockets. They also moved us along much more aggressively than we would have done if not pushed - which again - was a key factor in having our offer accepted.

Unfortunately most agents are exactly as good as their reputation as a whole, but I’m now convinced that a good one is well worth the cost. The trouble is of course, how to find one.
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Re: Skipping a Buyer's Real Estate Agent

Post by gabbar »

I have only had one experience - but based on that, I completely agree with this statement. I would never go with a full price agent again. Even with a discount agent, I would use a reputable one (e.g. Redfin). Otherwise, be prepared for the buyer agent to lower your discount after the earnest money deposit has been made. At that stage, you cannot "walk away" without risking your earnest money.

From my experience in a HCOL area, the buyer agent has every incentive to put the "best" offer out so that you don't lose the deal.

Again just one experience, for what it is worth.
fortunefavored wrote: Mon Aug 31, 2020 5:47 pm I would go with a rebating agent or a flat fee agent. You can find one independently.

Ignore everyone saying to use a full price agent outside of very specific circumstances - 90% of them have a vested interest in the current monopoly. There is no ethics in the real estate agent world, and they are not required to disclose their own self-interest.
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Re: Skipping a Buyer's Real Estate Agent

Post by Watty »

I found my first house at at open house without an agent.

I don't remember all the details but the negotiations went back and forth then stalled when the prices were a little bit apart and the real estate agent volunteered to reduce the commission to make the deal work.

Years later when I sold the house the contract was written so that if there was only one agent the commission was automatically reduced.

I would just make your offer a bit lower and let them figure out how to handle it.

Just FYI, I don't recall where I heard it but somewhere along the way recall hearing that the selling real estate agents don't really like doing sales without another buyers real estate agent because they feel like they get stuck doing all the work that the buyers real estate agent would have done with it comes to getting the paperwork set up.
DoubleComma
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Re: Skipping a Buyer's Real Estate Agent

Post by DoubleComma »

I recently did essentially what you are suggesting. I purchased a mountain home, ~150 miles from SF Bay Area (VHCOL), where we agreed to allow the selling agent to handle both sides of the transaction. She was very clear that she had a fiduciary obligation to the sellers, so she would navigate the process for both of us, but would be a little limited in helping with pricing. I had zero desire to get the money rebated back as I wanted the lowest possible purchase price since that is what CA Prop Tax is based on forever. I basically made what I felt was low but fair offer, based on all the per sq ft historical I was able to look up in the area of the house. Only when I received the settlement documents at closing did I see that the agent rolled the commission back to 3%.

As soon as we closed I then listed our original mountain property with the same selling agent. We agreed to a sliding commission scale...5% for a traditional 2 agent sale 4% if I found the buyer (within 60 days) and there was two agents or 3% if I found the buyer and we shared the agent.

I knew I had a family friend who was a very interested buyer, but I also wanted my agent to have the opportunity to expose the property to her potential and her offices' potential buyers.

In the end we sold it to my buyer, one agent @ 3%.

So its possible, just not always probable.
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Re: Skipping a Buyer's Real Estate Agent

Post by AnEngineer »

galawdawg wrote: Mon Aug 31, 2020 5:20 pm
arf1410 wrote: Mon Aug 31, 2020 4:44 pm If, hypothetically, a shopping mall was going to be built accross the street, my understanding is the Seller must disclose that, if he knows. But suppose the seller doesnt know about it, but the seller's Agent knows. Does it have to be disclosed?

It would also strike me that the seller's agent would likely be as, or more familiar with the neighborhood than the buyer's agent.

Maybe I'm just suspicious of of a person (ie buyer's agent) acting against their own financial interest, unless clearly legally required to, or they're a friend or family member.

here's a cash example with easy numbers. House is listed for $1M. After 6%, seller is OK keeping $940,000 with a full priced offer.

Suppose I offered $970,000, and specifically requested the $30,000 buyer's commission credited towards the selling price. My understanding is the sellers agent is legally required to bring that offer to the seller. As the seller would still pocket the expected full net of $940k, they should be OK with it... but if I simply offered $970k they then would only pocket $912k, so might decline offer?
Concerning the highlighted portion of your post, I don't know what state this property is in, but most states require a seller only to disclose known defects of the subject property. Not conditions in the general community that may potentially affect property values, property enjoyment and such. Check the requirements of your state.

The fact that you don't know this is an example of why you should have a buyer's agent. A competent and thorough buyer's agent whose loyalty is to you, the client, can exercise due diligence to provide you information about the property and community that you may not learn on your own or from the seller's agent.

If I was a seller and received your offer as stated, particularly for a $1M plus property, I would be unlikely to respond favorably unless it was a buyer's market and I was very motivated to sell. No offense, but it says to me "difficult buyer". Others may disagree. As I and others mentioned, just save yourself and everyone else the trouble and find a buyer's agent who rebates a portion of their commission. :happy
I don't know about most states, but I know of a similar situation where the seller was required to disclose potential (unapproved) development.
fyre4ce
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Re: Skipping a Buyer's Real Estate Agent

Post by fyre4ce »

Look at my recent post about discount agents.
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Re: Skipping a Buyer's Real Estate Agent

Post by Dottie57 »

arf1410 wrote: Mon Aug 31, 2020 5:43 pm Well, you folks have mostly convinced me my idea is flawed, in particular because it is indeed a seller's market. Unfortunately, it appears Redfin does not offer "buyer's agents" in this area in question.

Now, If I can just figure out a way to buy the houses I saw listed in 2017 and 2018, at those prices, all would be good...
If you find a way, let me know.
barberakb
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Re: Skipping a Buyer's Real Estate Agent

Post by barberakb »

I did this recently with my vacation home. Still waiting to close.

It worked for me but YMMV.

Agent agreed to lower commission some so we could agree on the price. Agent will actually pay me $900+ at closing.

Agent also agreed to pay about $450 in repairs needed by the home inspection in order to make sure the deal closes.

That double commission can be a big motivator.
invest4
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Re: Skipping a Buyer's Real Estate Agent

Post by invest4 »

Bobby206 wrote: Mon Aug 31, 2020 4:47 pm
hand wrote: Mon Aug 31, 2020 3:50 pm I would do this, but not focus on minimizing the realtor's compensation...

Your goals should be 1) finding a good property, 2) minimizing what you pay, 3) closing the deal. If you're comfortable that you've found a good property, make a fair but low offer through the listing agent and let them work for you to close the sale by talking down the seller.

By putting the agent in a position to collect a double commission (plus some reasons why you're a good buyer even if not the highest offer) they are likely to be *very* motivated to push the sale to you. If it comes to cutting their commission (because they cant talk the seller down), let it be their decision to be the hero rather than you starting the relationship by trying to cut their pay.
I agree with this 100%! It very likely might be they shave a point off but the bigger key is they have lots of incentive to make sure your offer work! In today's highly competitive real estate world this can be worth a lot to the buyer.
The overall comments voiced by others in regard to the current state of play are valid. However, I think it is important not to simply accept the status quo, but push back where possible to create change. I believe sellers should wake up and either sign up for better contracts (ex: do not accept the agent receives more than X% if no buyer's agent) and / or relentlessly seek lower cost options including flat fee mls listings, etc. Similarly, buyers such as the OP do the same to get a better deal (good luck!). Grudging acceptance or apathy for how things currently operate only perpetuates it...at your significant expense. Of course, change is happening...albeit very slowly as those who profit resist it as long as possible.
hcs77135
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Re: Skipping a Buyer's Real Estate Agent

Post by hcs77135 »

I have purchased 6 properties, 3 in NYC and 3 outside. I have never used a buyer's agent; I have always worked directly with the seller's agent. It probably hasn't saved me any money, but I believe it has helped get me the properties I wanted. If a seller's agent is presented with two identical bids, and knows he or she will have to split the commission with the buyer's broker for one offer and retain the entire commission with my offer, the seller's agent has a preference for my offer. The seller may have an incentive as well. At least on one occasion the seller was using a discount broker that charged the same commission (3%) regardless of whether there was a buyer's broker involved or not. On another occasion the seller had negotiated a lower commission with the broker if there were no buyer's broker.

It requires more work for sure but I have closed on every property that I've wanted to purchase, including where multiple bids were involved in "Sellers' Markets".
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hand
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Re: Skipping a Buyer's Real Estate Agent

Post by hand »

onourway wrote: Mon Aug 31, 2020 5:45 pm In our admittedly limited experience, our buyers agent has, through back-channel discussions with the other agent, helped us determine the “real” price the sellers might accept (when we were tempted to offer full price), helped us successfully feel out how far we could push on inspection items we were interested in having repaired, and so on. The agents clearly have a language they use regarding these issues, and in our case it saved us many times what was paid in commission.
This sure seems like an example of a seller's agent working to close a deal / "earn" a commission by prioritizing the deal (commission) over highest price...
If seller's agent was willing to do this for half a commission isn't it likely they'd be even more willing to work against the seller's financial interest for a full commission?

For all the "fiduciary duty" posters - how would the seller get restitution for the full price offer they could have had but for the selling agent's back-channel "help" against what most sellers would understand to be the fiduciary responsibility to get the best deal for their house?
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Re: Skipping a Buyer's Real Estate Agent

Post by onourway »

hand wrote: Tue Sep 01, 2020 7:06 am
onourway wrote: Mon Aug 31, 2020 5:45 pm In our admittedly limited experience, our buyers agent has, through back-channel discussions with the other agent, helped us determine the “real” price the sellers might accept (when we were tempted to offer full price), helped us successfully feel out how far we could push on inspection items we were interested in having repaired, and so on. The agents clearly have a language they use regarding these issues, and in our case it saved us many times what was paid in commission.
This sure seems like an example of a seller's agent working to close a deal / "earn" a commission by prioritizing the deal (commission) over highest price...
If seller's agent was willing to do this for half a commission isn't it likely they'd be even more willing to work against the seller's financial interest for a full commission?

For all the "fiduciary duty" posters - how would the seller get restitution for the full price offer they could have had but for the selling agent's back-channel "help" against what most sellers would understand to be the fiduciary responsibility to get the best deal for their house?
There are, in many cases, such as ours, often a myriad of factors at play of which maximum selling price is only one of them. Additionally, because we moved so aggressively, and fit the other factors so well - our offer was accepted before any others even made it to the table. In this case, the sellers agent did exactly what the sellers wanted - find a buyer they were comfortable selling their family home to.

Note that I in no way stated that the sellers agent worked against the sellers interest financially. Rather that our agent was able to determine, through normal discussions with said agent, that there were other factors at play perhaps more important than maximizing sale price.
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hand
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Re: Skipping a Buyer's Real Estate Agent

Post by hand »

onourway wrote: Tue Sep 01, 2020 7:29 am
There are, in many cases, such as ours, often a myriad of factors at play of which maximum selling price is only one of them. Additionally, because we moved so aggressively, and fit the other factors so well - our offer was accepted before any others even made it to the table. In this case, the sellers agent did exactly what the sellers wanted - find a buyer they were comfortable selling their family home to.

Note that I in no way stated that the sellers agent worked against the sellers interest financially. Rather that our agent was able to determine, through normal discussions with said agent, that there were other factors at play perhaps more important than maximizing sale price.
Agree wholeheartedly with the myriad of factors at play, but find it unlikely that seller had no interest in maximizing sale price and only cared about finding a buyer they were comfortable with. Most sellers would prefer more money over less.

If you were willing to offer more, but the seller's agent shared that there were other factors at play which caused you to drop your offer, I'm not sure how that isn't working against the seller's interest. Seller would have had more money (and all the other factors in your offer would have been the same) if agent hadn't said anything.
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Re: Skipping a Buyer's Real Estate Agent

Post by Bobby206 »

invest4 wrote: Tue Sep 01, 2020 5:56 am
Bobby206 wrote: Mon Aug 31, 2020 4:47 pm
hand wrote: Mon Aug 31, 2020 3:50 pm I would do this, but not focus on minimizing the realtor's compensation...

Your goals should be 1) finding a good property, 2) minimizing what you pay, 3) closing the deal. If you're comfortable that you've found a good property, make a fair but low offer through the listing agent and let them work for you to close the sale by talking down the seller.

By putting the agent in a position to collect a double commission (plus some reasons why you're a good buyer even if not the highest offer) they are likely to be *very* motivated to push the sale to you. If it comes to cutting their commission (because they cant talk the seller down), let it be their decision to be the hero rather than you starting the relationship by trying to cut their pay.
I agree with this 100%! It very likely might be they shave a point off but the bigger key is they have lots of incentive to make sure your offer work! In today's highly competitive real estate world this can be worth a lot to the buyer.
The overall comments voiced by others in regard to the current state of play are valid. However, I think it is important not to simply accept the status quo, but push back where possible to create change. I believe sellers should wake up and either sign up for better contracts (ex: do not accept the agent receives more than X% if no buyer's agent) and / or relentlessly seek lower cost options including flat fee mls listings, etc. Similarly, buyers such as the OP do the same to get a better deal (good luck!). Grudging acceptance or apathy for how things currently operate only perpetuates it...at your significant expense. Of course, change is happening...albeit very slowly as those who profit resist it as long as possible.
Agreed with the concept in general for sure. Change is great and striving for change is great. However, the reality is that change in the real estate world is a long way off. I don't think it will change significantly in my lifetime. We shall see....
quantAndHold
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Re: Skipping a Buyer's Real Estate Agent

Post by quantAndHold »

Every home I’ve bought or sold has had a major impact on my financial situation, more than anything else I’ve done. I’ve always had a buyer’s agent. In my entire life, I’ve only bought a half dozen houses. I want someone who buys and sells houses full time on my side. They know better than I do how to evaluate the houses, how to structure the deal, and how to get through sticking points in the negotiations.

In this particular case, if you’re in a seller’s market where places are getting multiple offers, do you know how to structure the offer so yours is accepted? Asking for a rebate on the realtor’s fee is probably not a path to success. Offering a couple of percentage points less on the purchase price, in expectation that the selling agent will make the seller whole probably isn’t either, unless the offer has something else in it that’s compelling enough to compensate for that. When I was selling a house in a multiple offer situation, I wouldn’t have even considered an offer from someone without an agent, unless it was significantly better than the next best offer. I wanted a deal that would close smoothly, and part of why we chose the buyer we did was because their agent was a pro who could get the deal done with no fuss.
Yes, I’m really that pedantic.
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Re: Skipping a Buyer's Real Estate Agent

Post by FrugalProfessor »

I've only bought one home in my life, but I skipped the buyers agent and priced my offer at a 3% discount as a result. According to the closing docs the agent only took 3% in total commissions so it worked exactly to plan. This was likely renegotiated between the agent and the seller after I made my offer.

I'm of the opinion that no agent has your best interests in mind; rather, they are interested in closing the deal at any price ASAP (a la freakonomics). Cover your behind by being an informed buyer, make an informed offer, and get a good independent inspection.
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Re: Skipping a Buyer's Real Estate Agent

Post by illumination »

It's a good plan, except many of the contracts the seller signs with an agent specifies the selling agent gets either 5% (slight discount) or the whole 6% if the buyer has no agent. At least the ones I have seen have that language in there. Maybe have a discount agent that will kick the funds back to you?

I actually had a vacant lot for sale by owner (me) and a buying agent was asking that I pay her 6% because a client of hers drove by and saw my sign and wanted to buy it. I of course told her to pound sand, she wasn't happy about it. If you see a for sale by owner, don't engage a realtor unless you want to pay tens of thousands of dollars for nothing.

I do think this whole ridiculous model has a limited lifespan, can't happen soon enough.
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arf1410
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Re: Skipping a Buyer's Real Estate Agent

Post by arf1410 »

Can anyone provide an actual example of a buyer's agent actually "saving their bacon"? By that I don't mean simply negotiating a little better deal, but providing information that caused you to not make an offer, or offer substantially less $$ than you were originally planning on offering?
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Re: Skipping a Buyer's Real Estate Agent

Post by KyleAAA »

Depends on the market. In many HCOL markets right now, bidding wars are common. You won't be able to request 3% off for any reason. In Seattle, for instance you often can't even get away with adding an inspection contingency to an offer. Sellers simply won't allow it.
rascott
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Re: Skipping a Buyer's Real Estate Agent

Post by rascott »

arf1410 wrote: Mon Aug 31, 2020 4:44 pm If, hypothetically, a shopping mall was going to be built accross the street, my understanding is the Seller must disclose that, if he knows. But suppose the seller doesnt know about it, but the seller's Agent knows. Does it have to be disclosed?

It would also strike me that the seller's agent would likely be as, or more familiar with the neighborhood than the buyer's agent.

Maybe I'm just suspicious of of a person (ie buyer's agent) acting against their own financial interest, unless clearly legally required to, or they're a friend or family member.

here's a cash example with easy numbers. House is listed for $1M. After 6%, seller is OK keeping $940,000 with a full priced offer.

Suppose I offered $970,000, and specifically requested the $30,000 buyer's commission credited towards the selling price. My understanding is the sellers agent is legally required to bring that offer to the seller. As the seller would still pocket the expected full net of $940k, they should be OK with it... but if I simply offered $970k they then would only pocket $912k, so might decline offer?
The seller has a contract with their agent.... agent would have to be willing to amend their contract. Would they? Possibly.... but more than likely not. But making an offer contingent upon two other parties altering their listing contract is dubious.
rascott
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Re: Skipping a Buyer's Real Estate Agent

Post by rascott »

arf1410 wrote: Thu Sep 03, 2020 10:01 am Can anyone provide an actual example of a buyer's agent actually "saving their bacon"? By that I don't mean simply negotiating a little better deal, but providing information that caused you to not make an offer, or offer substantially less $$ than you were originally planning on offering?
Typically occurs more often when negotiating inspection repairs or other complications that come up.... and buyer is not experienced enough to know what's going on
rascott
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Re: Skipping a Buyer's Real Estate Agent

Post by rascott »

illumination wrote: Tue Sep 01, 2020 10:39 pm It's a good plan, except many of the contracts the seller signs with an agent specifies the selling agent gets either 5% (slight discount) or the whole 6% if the buyer has no agent. At least the ones I have seen have that language in there. Maybe have a discount agent that will kick the funds back to you?

I actually had a vacant lot for sale by owner (me) and a buying agent was asking that I pay her 6% because a client of hers drove by and saw my sign and wanted to buy it. I of course told her to pound sand, she wasn't happy about it. If you see a for sale by owner, don't engage a realtor unless you want to pay tens of thousands of dollars for nothing.

I do think this whole ridiculous model has a limited lifespan, can't happen soon enough.

6% is ridiculous.... but 3% is common in this scenario. Obviously you can take it or decline. But how many hours of work do you think a typical buyer's agent puts in for a client. It's a lot more time consuming than being a listing agent.
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Re: Skipping a Buyer's Real Estate Agent

Post by Jack FFR1846 »

I did what the OP is talking about once in a hot market. The result? The agent ghosted me and sold the house to someone else.
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