Profile picture for shwekhaw

Buyer Agent Commission

We found a house we like without any agent. We are thinking of making an offer. I understand that without buyer agent, seller agent will probably pocket whole 6%. I have a friend who is real estate agent. Although we are not very close, I am thinking of including him as buyer agent and talk to him to split the commission he is going to get. I am not sure how to approach this. Is there any procedure for this like written agreement etc? I don't think I am the first one who came to this situation.

Or should I just go ahead without any buyer agent and offer what we willing to pay. May be seller would push his agent to lower commission to accept our offer?

BTW, what is the difference between agent and broker in Texas? 
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January 26 - Houston
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Profile picture for sunnyview
You could get your friend to write up the offer and shepherd  the deal, but mixing friends and business can be tricky. They often seem to feel like you should put up with more bs, yet they provide less professional service than they would to their straight client.

What about looking into a RedFin agent? They would offer you a partial rebate, allow you to avoid the friend traps and would not have the potential conflicts of the listing agent. You sound like a smart buyer so you might be able to negotiate a rebate directly with the listing agent of 1-2% if you feel comfortable negotiating yourself. That can carry greater risk, but some people choose to do if they are experienced.
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January 27
The commission split is usually 2 to 3% for the buyer's agent and the state where you are buying has to have the law in place. Most likely you will be required to sign an agreement. Feel free to visit our site for a list of real estate companies that offer the rebate.Please check with your states Real Estate commission to see the state's rules and regulations for the home buyer's rebates.
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February 18
Profile picture for sunnyview
Thanks for the best answer and I'm glad the information helped. Good luck with your home search!
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January 28
Profile picture for shwekhaw
Thanks everyone for your insight. Thank you sunnyview for introducing me to redfin. I think I will ask listing agent if she/he willing to rebate if we do not bring any agent in. If she does not want to then, I will probably get redfin agent to show us the house and negotiate. I want to offer opportunity to the agent friend but he could get me wrong and can sour friendship. Also it is hard to ask a friend to put everything on the paper. Also he works under coldwell banker agency so he might have to ask his superior to approve etc.
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January 28
The co-broker earns their commission when they write up a contract that's acceptable to the seller and carry it to completion. Otherwise, the listing broker has earned it.

The "carry it to completion" part, however, can be tricky. The advice of a skilled agent who is willing to advocate for you may provide a worthwhile alternative to an agent that perfunctorily checks off their duties - especially if you enlist them early in the process, when you can examine properties together and discuss the options with each other.

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January 27
Profile picture for Dunes ..
Dept of Justice Anti-Trust Division Web Site/Real Estate
TEXAS
"Allows brokers to offer rebates to consumers"

"Texas law requires real estate brokers to accept and present offers and counteroffers and answer their clients' questions in every real estate transaction, even if consumers do not wish to buy these services"

What are the laws in your state?

Perhaps you might be interested in the information provided by the DOJ about options (Rebates ect.) available to consumers

New business models are emerging that allow consumers to save thousands of dollars when they buy or sell a home

I agree with Sunnyview "You sound like a smart buyer"
Shop around..ask ask
It's YOUR Business Transaction ....Shop Smart & know your options

Happy Hunting


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January 27
Profile picture for shwekhaw
RedFin? I heard of the site before. But I did not know they have such service. I did the search and found redfin.com/buy-a-home/refund. About 1% refund on the house I am looking at. Better than nothing. I am going to do more research and see what others say. Thank you. 
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January 27
I actually would think twice about using a relative or friend for this type of deal. I would interview buyer agents and pick the most qualified for the job.
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January 27
Profile picture for shwekhaw
Re: Shawn Ownens
"You do realize you are asking advice from agents and brokers about how to avoid using our services so you can haggle a seller to receive a lower price?"

Who better to ask? I am really looking for advise on how to proceed. I may have no choice but to go traditional way and pick a lucky buyer agent and hand over 3% commission. But I won't be happy. So as professionals here, may be you guys can come up with another type of service that can serve people like us charging what you deserve and making the customers happy all the same. If I am going to buy a house for 500k, I should feel happy doing it. I just don't think old model of this seller/buyer agent things going to work out well for future generation of buyers and technology improvements. I really hope people of this industry can adapt their services instead of operating cartel like business.
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January 27
Profile picture for shwekhaw
First of all, I am sorry I was not responding some replies here. I could not find my own post :) on zillow. Secondly, I am sorry that I may have overstated..... when I say "we found the house". I just stated as a scenario that I would be facing soon. In fact there are two houses we really like so far. One is open house visit and for the another house, we only have called seller agent and asked about information I could not get online. We have not even seen that second one yet.

I wanted to know how to start before I start it. I am very well aware of the fact as soon as I asked seller agent to show the house without out own agent, I cannot bring in my own agent just to split the commission. I believe it is unethical except in open house visit.

When I purchased first house, I just called seller agent who showed us the house one time and got full commission. I don't want to do it again since I believe there are some conflict of interest for the seller agent when it comes to negotiation.

Also I am not sure if any agent deserves 3% commission when we did not need any agent to shop around. We have been looking for bigger house for about 6 months. We are not rushing to move to new house. We are really taking our time to get perfect one especially when we have kids going to a school. So we really do not want any pressure from any agent and we don't want any agent to wait 6 months for us to decide. So when I find a house, I don't feel right to pick one lucky agent and give 3% commission if I can use it as leverage to reduce our purchasing price. 

I am sorry to disagree with some advise of needing buyer agent to shop around in today market. I can find houses online. I can look up appraisal district for tax information, I can look up school zoning map, I can look up crime map, population data, GIS map for any hazard around the area. I believe title company will take care of ownership issues. I can find bank for the loan. So in my case, I am not sure what buyer agent could do more. Please don't get me wrong, I am sure seller agent deserve his/her part of commission for all the work. I just don't think he/she deserve that other 3% in our case.
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January 27

Dear buyer:

Laws of procurement vary from state to state (meaning, which agent procured the sale); pulling in your agent-friend after you already viewed the property with the listing agent can cause conflict and possible legal repercussions. Here are a couple of things to consider.  Did you respond to marketing that had the listing agent's name on it?  Did you make an appointment and view the property with the listing agent?  If you did, then it was that agent's efforts, money for marketing and time that brought you to the conclusion that you want to make an offer. 

If you bring your friend in to this after the fact and she writes and submits the contract without speaking to the listing agent, you may have some legal ramifications.  To avoid that whole mess if you don't get this house, start again by working with your own agent and have them show you properties.  Having your own agent will also assure that your interests are properly represented and you can have someone negotiate for you at arm's length.  It doesn't mean that the listing agent won't help you if you move forward on this house- he or she is obligated to treat you fairly and honestly, but it's not the same relationship as someone who knows your wants and needs and works on your behalf.

Working hard and occasionally getting the unrepresented buyer or having their own buyer does not make an agent greedy if they get both sides (6%).  Yes, there are a few agents who do play games unfairly, but most of us are cooperative and thankful if we get to represent a seller and a buyer and earned it through hard marketing and work.  Referrals and future sales are important to us, so if we are smart, we would bend over backward to treat you kindly and fairly. 

Unless you are working directly with a broker, most agents do not make 6%.  They split a portion of their commission with their broker and then because most agents are subcontractors, not salaried employees, most pay for their own marketing fees, MLS fees, Realtor fees, gas and time. They make much less after you subtract all of these expenses and splits.  If an agent does receive both sides of the commission, remember that a buyer came to them due to their activity and they will also have to assist the buyer in the transaction to bring it to a close.  It's not like they are working for free.  Having a buyer's agent cuts down the amount of work and that agent brought their own buyer, that is why they usually get half of the commission.

If there was a personality conflict or some other issue that makes you not want to work with that listing agent, then you should have your agent-friend contact the listing agent on your behalf to discuss representing you.  Chances are that the listing agent may say yes (maybe they could work out another arrangement such as a referral fee).  The listing agent might also refuse.  The point here is that as Realtors, we have to uphold good conduct, treat each other fairly and retain good relationships in our field, just as we have to do that with our prospects and clients.  Agents see each other often. 

As Realtors, we want to provide professional service & advice but know that not every buyer and seller knows the rules, so it's important to ask questions. I'm glad you did.  That's what we are here for. 

Happy hunting!  Keep smiling and keep the faith...

Leslie

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January 27
Just because the listing agent showed you the house, you DON'T have to work with them.  It is their job to market the home.

The difference betwen a broker and an agent are that the broker has a license that permits him to have other agents work under him.  He/she is not required to have their own company.  Many agents don't want to be brokers because of higher dues but are very well capable to handle any situation.

Some agents are greedy and just because they showed you the house, feel that they will pay the buyer's agent a lower commission.  You are entitled to work with whomever you want to and for your own representation.  The listing agent represents the seller and already is privy to confidential information about the seller that he/she cannot share with you.  You need someone to represent your best interest.

My suggestion is to discuss the situation with your friend and bring up the commission.  Remember, that you could lose a friendship over that too. Considering that you have already found the home and that the agent hasn't spent time showing you any homes, he/she may be happy to share a piece with you. You should be aware that he/she would have to also may be split a piece of it with their broker, pay taxes on it, insurance etc.

Lastly, the seller has already a written agreement with the listing agent's broker on how much he is paying the company.  Pushing his agent to do anything is just not something that is done, unless the agent is a pushover.

Naima
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January 27
If you have seen the house already with the listing agent then he is the agent you will work with.  The seller has a contract to pay that agent's broker some percentage, whatever they worked out.  That is a contract and you should not mess with it's terms.  It is between the agent's company and the Seller, PERIOD.

A BROKER owns a real estate company and has agents that work for him/her.  A BROKER can also work as an agent.

A REALTOR is an agent or broker that is a member of the National Association of REALTORS and the state and local boards of REALTORS.

REALTORS subscribe to a Code of Ethics that Non-Realtors do not.
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January 26
Please tell me the listing agent who's on the sign is who you called!!! Please tell me that!!!

You need to find out what the rules are in your area about representation - if the seller's agent showed you the home you may find that you can't get an agent who will represent you and make sure your interests are protected. 

If you decide to get your own agent you'll need to tell them the whole story just to be fair
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January 26
Usually, we don't find houses by ourselves, we find them because of the listing agent's efforts. When the listing agent's marketing is successful, the commission is theirs.

Your acquaintance may be willing to come into the transaction, but they can't do it as a "straw man." The listing agent is going to expect - if they are sharing the commission - that your broker actually provides brokerage services and responsibilities, which your pal may not be willing to take on.

The listing broker may be malleable, but then again, maybe not. They have a legal and ethical right to hold to the terms of their contract with the seller as regards commission, and I can tell you that many agents would rather co-broke and earn less than double-end the work and shave a bit off the fee.

We can't predict what will happen, but I wish you well.
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January 26
You do realize you are asking advice from agents and brokers about how to avoid using our services so you can haggle a seller to receive a lower price? The seller technically won't be saving any money and in this market your low offer may not take you far depending on the price and condition of the home. I would contact your agent friend about this. It is possible to receive a rebate at closing toward your costs as long as it is disclosed on the HUD-1 statement, but it is illegal to share commissions with unlicensed individuals that are not disclosed on the settlement statement and applied toward the transaction. A broker is a graduated license that allows you to sponsor and hold other agents licenses. Visit TREC.state.tx.us for more.
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January 26
You should always work with a professional. Ask yourself how many homes have you bought in the last year. Then how many in your lifetime. A agent has help by and sell many several homes in the last year and they can walk you through the process to make sure that your are not missing anything. It's not a matter of intellect or sophistication it's a matter of intimate knowledge of a specific field of work that someone that doesn't do it daily may miss a detail that could cost them big. Plus it's not about the money for you. You can never be sure how much a listing agent is making on a deal til you get a HUD-1 statement. You should call an agent that's competent to help you buy your home and if you want to make it about the compensation they would get you can ask for a rebate, but you will need to disclose that to your lender.
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January 26
 
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