Comments on: Adventures in Real Estate – Buying without an Agent

By: James

James — Wed, 10 Feb 2010 04:54:47 +0000

I am thinking about attempting to go without a buyers agent I have a home in mind and the homeowner invited me in while I was picking up a flyer My wife and I were given a tour of the home the owner is an elderly women who has started with building another home right next door but has found that she is unable to get financing (she said 4 banks told her money was tight) I was thinking of putting a proposal together and giving it in person to the owner and asking for the 3% to be taken off the asking price as a condition.Anyone have any feelings about this? Also asking for closing costs and wanted that deducted from cost of home also.

By: Mani

Mani — Sun, 31 Jan 2010 19:32:45 +0000

All agents who want to be dual agent for us have consistently refused to part with the buyer’s agent’s commission. Their brokers (Prudential or whatever) will keep all of it since local state law only obligates them to pay the buyer’s agent, provided the buyer has a signed contract with his agent. Since I do not have a signed contract with any buyer’s agent, they are very eager for my business as they get to keep all of the commission. They are even willing to work with the seller to reduce the price of the house (screw the seller), but they (the agent and the brokerage) gets to keep the entire commission (which by the way is as low as 4.5% in some cases). Isn’t that a sweet deal for the agents/broker?

By: mike

mike — Sun, 31 Jan 2010 07:31:03 +0000

Hi Mani – I would search local classifieds, you can probably at least find an agent that will do the work for a 1.5-2% commission (better than the ridiculous 3% they want to charge). Here in California, these agents are easy to find – I’m not sure about other regions where home prices are lower.

I think going after the dual-agent is just fine too. There are legal risks here, so be careful. But if you are comfortable with doing this yourself, you can simply go into dual agency and then ask for 3% off the sticker price. This should be no problem, since the agent is already getting 3% from the seller, and the amount of additional work is negligible. They’ll probably say, “ok, how about 3% is given back to you through escrow”, and that is not horrible, but kind of silly, because it means your property tax assessment will include the 3% as though it were part of the purchase price, even though you got it back through escrow.

By: Mani

Mani — Sun, 31 Jan 2010 05:20:24 +0000

Mike, you make a lot of sense. I am trying to buy without an agent in the North East. It is a buyer’s market now. I get the sense that seller’s agents are very interested when they find out I am ‘not represented’. Some beg me to make them my buyer’s agents, others want to be dual agents. Clearly, it is in their interest, since I have researched the neighborhood and the house I want to buy pretty thoroughly. My understanding is that the Broker (i.e. company they work for), keeps 50%-70% of the commission while the agent keeps about 30%-40%. This is because the ‘Broker’ knows how little skill it takes to be an agent. I am about to make an offer. Where can I find out about a limited service broker?
Thanks.

By: mike

mike — Sun, 31 Jan 2010 04:04:58 +0000

J – If you, the buyer of real estate agent services is happy, then that is great. I’m just pointing out that Real Estate agents have a conflict of interest. And while they tell you (the buyer of their service) that they are helping you, they’re first-and-foremost a business to make money. Unfortunately, making money for them means selling your house as quickly as possible, not for the highest price.

One example which affirms my claims is the popular book Freakonomics, where he describes how Real Estate Agents are similar to the Ku Klux Klan. You should read it. Here is a blog post which is similar: http://www.wisebread.com/why-you-cant-trust-a-real-estate-agent As the author points out, there is data that shows clearly that when a real estate agent sells *his own* home, he keeps it on the market longer and gets a better price (on average) than when selling someone else’s house. It all makes perfect sense, and you’d be a fool to not recognize this problem.

By: J

Sun, 31 Jan 2010 01:01:29 +0000

mike, you’re quite wrong. In this business, I worked with many agents who had my best interest and they saved me quite a bit of money. you may have had a bad experience but it doesn’t give you the right to insult people doing good business.

By: mike

mike — Thu, 19 Nov 2009 23:56:05 +0000

Joy, you’re wrong. While I’m not a fan of lawyers, at least they are trained in something. A real estate agent is a salesperson, with one goal in mind – making the sale and cashing a check. No training is required! A lobotomized monkey could be a real estate agent. There are countless books (including the well known Freakonomics) which also note that a real estate agent DOES NOT have the interest of the buyer at heart.

By: Joy

Joy — Sun, 08 Nov 2009 23:52:25 +0000

Entering a real estate transaction without an agent is like going to court without an attorney. You can do it, but its generally not in your best interest.

By: mike

mike — Tue, 29 Sep 2009 04:44:36 +0000

No – dual agency is far worse. In fact, some agents refuse to act in dual agency because of the inherent conflict of interest. If you sign up for an agent with dual responsibilities – its the same as if you have no agent – this person is NOT negotiating on your behalf. You cannot trust this person with any financial information about you – because you have no way of knowing what information (directly or indirectly) will get back to the seller. Acting as your own agent is the best course – that way you are negotiating, rather than some real estate agent that has no clue except that they want the sale so they can pad their own wallet.

By: charlotte buyers agent

charlotte buyers agent — Sat, 26 Sep 2009 07:44:02 +0000

Dual agency is better option .But you should be straightforward with your agent and ask them about how this will work to make sure that it works in a way you approve.

By: berkeley buyer

berkeley buyer — Fri, 21 Aug 2009 21:33:41 +0000

why not just make your offer without an agent and ask the listing agent to change their listing agreement with seller to 3%, then in the negotiations have the seller credit you the buyer 3%?

By: chicago buyer

chicago buyer — Mon, 23 Mar 2009 02:21:19 +0000

check out a newish service called redfin. they rebate back 50% of commission.

By: Charlotte agent buyer

Charlotte agent buyer — Wed, 03 Dec 2008 03:02:13 +0000

I don’t think what the agent did was bad. The bank still need to approve the sale at the price that was offered. Your realtor and the agent already said your offer was too low. You probably would have spend several month waiting and still not get the place even if the agent didn’t do what he did. The agent was trying to gain interest in the place by lowering the price and hopefully have someone bid above the price. He still has a duty to his client to sell the place.

By: Cash Back Realtor Buyer's Agent Rebate - Testimonials Atlanta, GA Georgia

Cash Back Realtor Buyer's Agent Rebate - Testimonials Atlanta, GA Georgia — Wed, 04 Jun 2008 21:41:24 +0000

The Washington Post gives buyers the “heads up” on how a real estate transaction works in the real world.

“Some people just don’t like working with agents. Other buyers go without them thinking they can negotiate a better deal on their own by working directly through the listing agent. Often they think that by working on their own, they are entitled to a discount on the sales price equal to what the buyer’s agent would have received as commission. But the payment structure doesn’t work that way. In that situation, the seller’s agent just keeps the whole commission.”

http://www.washingtonpost.com/wp-dyn/content/article/2007/11/10/AR2007111000046.html

Perhaps the home buyer doesn’t need full service and is willing to incur some of the legwork. In that case, a buyer’s rebate might be appropriate and is merely a price reduction of buyer-agency services.

Finally, a buyer should seek out a good buyer’s agent who is focused on saving the buyer money through strong negotiations throughout the entire transaction.

By: Stephen Graham - Buyer's Agent Atlanta, GA

Stephen Graham - Buyer's Agent Atlanta, GA — Mon, 19 May 2008 22:13:34 +0000

Good job, Feng. You can get a good buyer’s agent to negotiate a lower price on behalf of the buyer and a get rebate too.