Profile picture for user5911663

Buyers Agents

Why do people still use buyers agents? The last home I purchased, all my agent did was open the door, we found all the listings ourselves on the Internet. I probably could have been able to get a better price if the buyers agent didnt have to split their commission. I don't think I will ever use a buyers agent again, they only seem to add cost to the transaction.
  • April 20 2014 - US
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Answers (18)

Best Answer

Profile picture for faridabadi
@mack, of course there are no commission savings. You just like most other realtors are stuck with the same commission structure that was born before I was (and that was long time ago). 

You still believe that merely "bringing the buyer" makes you (or your counterpart) earn the commission. In fact in this day and age of internet, match-making could be easily done by technology. But unfortunately sellers pre-pay the tax of 6% at the time of signing the "standard" listing contract. So there is no incentive for Buyers of not having Buyers agent.

As consumers get more savvy this deadlock WILL be broken.
  • April 20 2014
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Profile picture for UpNest
Honeslty, there are hot markets (like San Francisco), where having a top, well connected buyer agent makes a huge difference in actually winning a bid.  And if you've done some of the legwork, they'll also rebate a portioin of their commission to you, saving you thousands in the process.  A service like ours is a great way to find top buyer agents and buyer rebates.  Check out our site to learn more.
  • April 21 2014
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@user5911663

"Your experiences and knowledge may not be universally held, or even common."

-So your assumption is that buyers are generally stupid.......Hmmm, and when a buyer is seller isn't, they still are required to be treated as such.

I would appreciate you not putting words in my mouth. 

There is an enormous difference between "Consumers often don't have a lot of knowledge of the details of buying and selling real estate" and "People are stupid."  It's incorrect and utterly inappropriate for you to say that I said or even suggested the latter.

---

If the agent is truly working in the best of interest if the seller, then I can't see why he/she wouldn't.  The agent stands to make more than a co-op sale and the seller gets to sell their home sooner than later. Maybe you could enlighten me as to why an agent would be opposed to this?

There are a variety of possibilities.  The overall deal may be less attractive for the seller ("sold sooner" is hardly the sole important criterion).  The agent may have listed the house at a deep discount already (as mentioned before) and not be able to cut the fee any further.

---
"Honestly, it is often less hassle for the seller and listing agent to deal with a co-op versus an unrepresented buyer, who often requires more time and attention."

Really, your going there?  ie...it's too much work, I only want the easy deals......

It has precious little to do with "easy."  It's about mitigating the risk of attempting to serve two masters.  Every interaction with an unrepresented buyer carries risk, whether to the seller or their agent.  I'd rather have the buyer represented by someone who serves their interests directly.
---

Well, if I know I'm my agent is the same as the sellers, I know the agent stands to make the double the commission over a co-op deal. 

As an unrepresented buyer, your agent IS NOT "the same" as the sellers.  You don't have an agent.  You are a customer, not a client.  The agent's level of ethical and legal obligation to the sellers is considerably higher than to you - as it should be.

  • April 21 2014
  • 1Yes

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Profile picture for JoshBarnettREIB
sounds like you had a GREAT buyer's agent if it was a perfect transaction and you were not bothered by what goes on behind the curtains.  
  • April 21 2014
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Profile picture for lisake1
We're in the midst of selling our home in one state to relocate (and hopefully buy a home) in another. My husband has already relocated to the new state and begun the house hunt there. We are using an agent that sold our home for us there when we moved to our new state five years ago. She was referred to us from a friend who successfully bought and sold with her, then we referred her to two other family members who used her services, and now we're using her again as our buyer's agent.

This agent is smart--she takes care of her clients and their needs, makes sure they're happy with their transactions, and she has received several referrals because of it. She's in it for the long-term, not making a quick commission on one sale.

With the internet, I can do a lot of searching on my own from long distance and glance over the MLS listings she sends us. Then my husband will drive by to take a look, and if we're still interested, he'll ask the agent to arrange a showing.

But we know her work doesn't end with us finding the right house. We'll need her to point out the downsides of a potential house when we're glossy eyed in love with a place, advise us on our offer, negotiate on our behalf,  put us in touch with the right loan originators, inspectors, contractors, etc.


So we anticipate that our buyer's agent will be well worth the zero cost to us in the transaction.

 

 
  • April 21 2014
  • 1Yes

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Profile picture for user5911663
Jason, first my apologies for the "word salad",  I posted from my iPad, and apparently ios doesn't get along very well with this sites protocols.  My original response was formatted, but it was all compressed when posted.  Let's take a look at some of your points;

"Your experiences and knowledge may not be universally held, or even common."

-So your assumption is that buyers are generally stupid.......Hmmm, and when a buyer is seller isn't, they still are required to be treated as such. 


'No doubt about it, though - all of the things you wrote are quite possible with the right combination of motivated parties.  You *might* get an agent to cut their fee to put a deal together"

-If the agent is truly working in the best of interest if the seller, then I can't see why he/she wouldn't.  The agent stands to make more than a co-op sale and the seller gets to sell their home sooner than later. Maybe you could enlighten me as to why an agent would be opposed to this? 


"If I cut my fee by, say, 1%, and the buyer demands that point in concessions, price reductions, etc. it makes no difference to the seller's bottom line over a co-op sale"

-I'm not exactly sure what your driving at.  I think your assuming there is a co-op sale in hand or at least immanent.  That's a pretty big assumption.  Lots of what ifs there.  What if the co-op offer never materializes? Of if the co-op offer is not as credit worthy? What if the co-op offer can't settle as fast. 


"Honestly, it is often less hassle for the seller and listing agent to deal with a co-op versus an unrepresented buyer, who often requires more time and attention."

Really, your going there?  ie...it's too much work, I only want the easy deals......
 

"Question:  How would you know how to structure your offer if you don't know the commission rate the agent is charging the seller?  What if there isn't room to cut the fee in the first place?)"

Well, if I know I'm my agent is the same as the sellers, I know the agent stands to make the double the commission over a co-op deal. 
 
"The fact remains though - the agreement is between the listing agent and the seller.  The buyer's desires don't obtain.  If I cut my fee to get a deal done, the seller gets to decide what happens to that money - not me, not the buyer.  The buyer certainly isn't *entitled* to the difference." 

And as a seller, I would be more able/willing to offer concessions to close a deal if my agent offered to help offset them.  If a deal is close and I know the agent brought the buyer himself, I'm going to ask him to share in any concessions.  I wouldn't feel bad about asking, because he/she would still be making more than a co-oped deal.   

Jason, I looked at your listings and they were in the low $100's.  Obviously there is a lot less dollars to work with in your case. I'm more perturbed with homes that are listed for 300k- 400k and up.  In these cases, the seller is looking at paying $25,000 in commissions and up.  Sweet payday for the agents, but how much work is there really over a deal like yours that might produce $8,000 in commissions? Add to it the fact that a seller doesn't really have a choice.  Realtors control of the housing market in a way that would make any mafioso proud. Try going with a flat fee discount broker or doing a FSBO and risk having your home at the least avoided and worst, "tainted". I don't feel like wasting anymore energy on this. I've been beat into submision by the realtor syndicate. They soon will have much more of MY MONEY than I think they deserve.... 
  • April 21 2014
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@ user5911683: I presented my comments in what seemed like a manner that is easy to read and follow, versus a word-salad format devoid of paragraph and line breaks.  I'm sorry that rendered them "pompous" in your eyes.  I hope it didn't cause undue stress on this lovely Easter Sunday.
 
Your experiences and knowledge may not be universally held, or even common.  If the questions I see on these and other message boards are any indication, a LOT of people don't understand the process very well at all.

No doubt about it, though - all of the things you wrote are quite possible with the right combination of motivated parties.  You *might* get an agent to cut their fee to put a deal together (There are in fact agents who will write such things into their listing agreements.  Shocking, I know.) 

(Question:  How would you know how to structure your offer if you don't know the commission rate the agent is charging the seller?  What if there isn't room to cut the fee in the first place?)

If I cut my fee by, say, 1%, and the buyer demands that point in concessions, price reductions, etc. it makes no difference to the seller's bottom line over a co-op sale.  

Honestly, it is often less hassle for the seller and listing agent to deal with a co-op versus an unrepresented buyer, who often requires more time and attention.  Further, from an ethical and liability standpoint, I would prefer the buyer be represented by someone legally obligated to their best interests, even if it means I make less money.
 
The fact remains though - the agreement is between the listing agent and the seller.  The buyer's desires don't obtain.  If I cut my fee to get a deal done, the seller gets to decide what happens to that money - not me, not the buyer.  The buyer certainly isn't *entitled* to the difference.  

Lastly, it would behoove you to lay off the personal insults and vitriol and snark. It makes it seem like you started this thread to find people to verbally abuse, rather than have a discussion on the utility of buyers' agents.

  • April 20 2014
  • 1Yes

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- You still believe that merely "bringing the buyer" makes you (or your counterpart) earn the commission.

Yes, that's what it states in my contract.

-  In fact in this day and age of internet, match-making could be easily done by technology.

What "technology?" What great technological advance has allowed home shoppers to find listings on the internet?

  • April 20 2014
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faradibadi, there is no "commission savings." The sellers pays me a commission for bringing the buyer, and if I do so, then I have earned the commission. If I need to rely on a co-broker to bring the buyer, then I share the commission with them, because, clearly, I didn't bring the buyer.

themorrigan, I defer to your experience, even though I have never heard of such things before. Although I am curious . . . why did you insist that the listing agent remain the seller's agent instead of being a dual agent?

Also, you have made one incorrect assumption. Even a "stranger" represents a potential deal and perhaps future referrals to us; a "fellow agent" represents competition. Every one of my transactions and referrals came from people who were once strangers (except the family); no local agent has ever referred me business.

At the risk of sounding repetitive, we real estate agents do not hang. We don't party together, we're not cliquey, we would much more readily trash another agent than we would remain decorous "for the good of the profession," which is why the Realtor® COE considers trash-talking a violation. Except in some subsets of the practice, very few of us do multiple deals with the same agent in a decade, let alone on a regular basis. Maybe if there's one superstar listing agent.

More than anything, I want to acknowledge that it's shameful that you have had such bad experiences that you feel the need to devote your time to warn the public about real estate agents and their practices.

  • April 20 2014
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user 591x, I caution you against hubris - home shoppers today aren't really any more sophisticated than they were a generation ago; I know it seems as if you're on the forefront of some great change, but that change has been predicted for about a century now.

In my experience, home shoppers (especially first-timers) are much less sophisticated than they were twenty years ago. "Back In The Day," more shoppers in my market actually knew something about how houses were built, they knew what the value and cost of repairs and modifications and improvements would be, and when I say they "knew," I don't mean that they simply had access to a catalog or some other source of information - they tended to have parents who involved them in the caretaking of a home, or they may have had some blue-collar work in their background, but they were sophisticated and they knew their stuff.

What I'm finding nowdays is that buyers tend to know nothing about houses except what they've read. More of them have never used anything stronger than an IKEA wrench, they don't know what "on 16" refers to, they just know what another 3-BR/1.5 BA house down the block sold for and, using the pictures and the tax assessors records, think they know what the value of this house is.

Oh, and as far as "bringing the buyer" - I never act as a dual agent. I will represent the seller, and the buyer can be unrepresented. Or, they can go get an agent. It's OK. It's on me!

  • April 20 2014
  • 2Yes

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Profile picture for user5911663
Wow Jason, really!? That's just it, you assume everyone are morons and don't have clue. Let me pompously list my points like you did. 1. When I list with an agent I make sure my agreement states that if the listing agents represents both sides, I get a reduced rate. 2. If and when my buyers agent comes along with a buyer, I will be more willing to consider a price cut, help at closing, or other incentives to help close the sale. 3. In the event I'm a buyer, I would know if the seller is also represented by the same agent and I would structure my offer accordingly. Chances are if the buyer doesn't take my offer, the next offers are likely to be cooped and the listing agent would only earn half of the commission. Any half brained sales rep (real estate or other field) would do what it takes to make my offer work, even if it meant shaving point/point and a half to make the deal go through. In this case the agent still makes out better than a cooped deal. 4. Jason, you look young so I'm going to share some wisdom with you. The world has changed, just ask anyone who was a stock broker 20 years ago. The last hold outs are realtors, only because they have been able to facilitate stealth collusion. People are becoming wise, and it's only a matter of time before there is a revolution in the realty industry. I will never deal with a buyers agent again. And to Tim, who said she " She hauled you around and you bought the house you wanted and you paid NOTHING to he". B.S. B.S B.S,!!!!!! When I come up with a listing price for a home I want to sell, I always account for my sales costs which include agents fees. If I can't get my price, I'm not listing, period! So don't blow that smoke up my A$$ Timmy. Guy and Gals, you've done a good job delaying change, in fact it's been down right impressive. But change is coming one person like me at a time.
  • April 20 2014
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I wonder if there's not a fundamental misunderstanding afield of how real estate sales commissions are structured.  Briefly:

1. The seller hires an agent to market and sell their home.  In the listing agreement, a total commission is agreed upon by the seller and the agent.  That amount is payable regardless of the source of the buyer, unless specified otherwise.

2.  If/when a buyer's agent comes along with the buyer, they are paid out of that total fee.  (In many listing agreements, the buyer's agent's fee is *also* specified by the seller and their agent.)  

3.  In the event the seller's agent procures a buyer themselves, the listing brokerage receives the entire fee.

4. In order for a buyer to receive a cut in price or other concession from the seller in the manner you describe, two things would have to happen:

  A) The seller and their agent would have to agree on a lower commission;
  B) The seller would have to be willing to pass that on to *you,* versus keeping it themselves.

  • April 20 2014
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Profile picture for themorrigan20
Mack, my experience seems the opposite.  I've had listing agents refuse to show me a property and tell me to get an agent.  I even had one in VA tell me it is illegal in VA to buy or sell property without an agent.  She said that in writing after changing one of the docs from "sellers agent" to "dual agency" after I'd told her I would not agree to that.  I walked away and told the seller exactly why.  (Nice way to look out for your seller, eh?  Skunk a sale so you can collect a few more bucks.)  The VA REC saw nothing at all wrong with what the realtor had done. 

Who knew FSBOs were illegal in Virginia?

I think realtors -- shall we say -- "play nice" with each other more than they look out for a stranger who does not have access to all the information they do, and with whom they will likely never have to deal again.

Agree 100% with OP, and I will never again use one either.
  • April 20 2014
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Profile picture for faridabadi
@mack- of course why would you pass on the commission savings to the Seller? 

@user5911663- You are spot on with your assessment. Good news is that sellers are getting smarter now and putting in reduced commission as part of the contract if Buyer came un-represented, there by making that Buyer's offer stronger.
  • April 20 2014
  • 5Yes

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I think our sellers would often prefer that there wasn't a buyer's agent involved, and most of us will be glad to keep the commission that we have contractually earned.

  • April 20 2014
  • 0Yes

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Profile picture for Phil
But isn't it nice when someone opens the door for you?
  • April 20 2014
  • 4Yes

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Actually buyers agents are there to protect the buyer. We are there to advise them, to help them, to educate them and anything else they might need. There are so many terms and steps that they could go at it alone but why should they? Especially for first time home buyers it can be very intimidating. Honestly, I love working with buyers.  I'm so sorry your experience wasn't a great one. 
  • April 20 2014
  • 2Yes

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Profile picture for Outer Banks N C
The seller pays the same commission with or without 2 agents, so you don't save anything by having just one. It sounds like you did not need much help, if you had you probably only needed to ask. I have had buyers show me listings they wanted to see in a specific search with 4 beds, 2100-2500 sq ft, 2 lots form the ocean, 5-10 years old with a swimming pool. They found 10 homes and I found the same 10 on the mls. You could say you found them, but that was all there was to find. The internet has gotten very good at being able to find all the listings, so sometimes an agent can't find anymore that meet the search criteria the buyer sets. She hauled you around and you bought the house you wanted and you paid NOTHING to her, so you did ok it sounds like to me.
  • April 20 2014
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