Profile picture for chillcut

Do I really need a real estate agent? Buying a cheap condo, low down payment...

So first time home buyer, looking at a few condos in the $75k range. We have found 2 that we want. Should we just contact the selling agent and haggle with them and avoid having to pay an agent or is it more beneficial to hire an agent to help negotiate and explain the contract and cover our backs?

How does it all work? Pros and Cons?

Also, which type of loan should we pursue? We will probably only put down the minimum 3% if we can.

Thank you for any and all responses.
  • December 01 2011 - US
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Answers (30)

By now you have probably bought your condo. But if not, use a buyers agent at any price point. You need the protection of your own realtor to be your advocate from contract to close. The seller is paying the commission to either one person or two. You will generally pay the same price for the unit.
  • January 02 2012
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Profile picture for PukonYukon
what did you end up doing?
  • December 27 2011
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Why not have someone in your corner to represent you? It doesn't cost you anything and it's their job to be certain they are looking out for you. This is especially true if you have a buyers agent represnting you. Get a Realtor...it makes so much sense!!
  • December 27 2011
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I think you just answered your own question.  Hire an Agent and have representation, it is priceless in purchasing a home no matter what the price of the home is.  Remember, you as the Buyer do not pay commission.
Ania
  • December 19 2011
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From experience the cheaper the property is the more complicated the transaction is. Hire a realtor. 
  • December 14 2011
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Profile picture for susanisaacsre
I think you've answered your own question simply by posting it. If you need to ask advice on a real estate transaction, you should have professional representation.

So many things can occur in a property transaction and no two are exactly alike. Why risk making costly mistakes or missing opportunities when you can have expert representation without cost to you?

Buyer agency commissions are factored into the list price. Just because buyers don't utilize a real estate agent doesn't mean anyone is going to credit that savings to you.

Purchase price is just one of many important factors in a real estate transaction. Do yourself a big favor and have someone guide you through the process.
  • December 14 2011
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Profile picture for Liz Lauer
As a homebuyer, you do not have to pay the Realtor, the Seller does that. So, if you are a buyer, I highly suggest that you enlist the help and advice aof a Realtor.  They will negotiate better and get you into the right lenders.
  • December 14 2011
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A "cheap condo" doesn't always sound cheap to me.  When buying a condo, the list price is only one of the costs you should be looking at.  You should have a Realtor help you research the HOA and decide if the reserves are sufficient, if the dues are going to go up, if the building is in good condition, etc. A $75K condo with expensive dues which are on their way up, and a possible $20,000 special assessment is not a cheap condo!

While all those facts are ultimately up to you to research, it will help to have a good Realtor to remind you of those important things.  Good luck!
  • December 14 2011
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I don't know where you are located, but where we are in Oklahoma, the seller pays the Realtor's commission. This means it doesn't cost you anything to use a professional and have them negotiating on your (buying) side. We typically represent our buyers as "single party brokers" which means our duties include representing you and working out a deal to your benefit. When you work with the listing agent, they are, first and foremost, trying to please their seller and work a deal pleasing to them. Not to you! Who doesn't want professional negotiating tactics and advice for free?

There are many different kinds of loans but if you are wanting to put down 3%, you'll most likely need to be approved for an FHA insured loan unless you have past military experience and can qualify for a VA guaranteed loan. A good lender will be able to explain the differences to you and recognize your concerns and financial situation to give you the most suitable loan.

Feel free to contact us with any questions!
  • December 14 2011
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Profile picture for Caveat Emptor
get the agent(but not just any agent do your research). your new REA will have phone numbers and forms that you'll need, inspectors and broker relationships. while the "buyer's agent is free" line is just a BS line, its still true enough that you need to be sure that you fall in the catagory of educated buyers that can prove it false.

however, my guess is that your fiscal situation is tight enough that the opposing agent couldnt get you to commit more if they wanted to(just a guess) and there IS an incentive to get that extra 2% commish from you so they wont scuttle the deal on the off chance it could prove financially beneficial to their ACTUAL client...

my advice, nevertheless is to find an agent unless you have some reason to think that you can do better.
  • December 08 2011
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Profile picture for Dunes ..
"We are Relocation Specialist, and would be happy to help you get in contact with"

And just what would be the Referral Fee/Cost for the Agent/Agency
25%....30%.....40%?...?.. for the "would be happy to help you get in contact with"


Referral Fees from One Brokerage to Another and Agent Split

I know Agents have Expenses ...what does buying a Client cost?
What do Top Producing Companies and Agents pay?

  • December 07 2011
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Definitely get a professional to help you with the negotiations as well to guide you through the process. Besides, the seller will pay the fees of the broker you select. Make sure you have an experienced  broker working for you. 
  • December 07 2011
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Profile picture for Dunes ..
Take a look at what the Department of Justice has to say about Services offered by RE Agents, your rights, what's legal in your State, Rebates, Flat Fee, Competition ect.

Competing models of real estate brokerage

What are the laws in your state?"

Consumers can save thousands of dollars in commissions

Competition and Real Estate
  • December 07 2011
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Lots of interesting answers....however, contrary to what some others have posted,  I would like to point out that many agents work for Brokers who DO NOT ALLOW them to arbitrarily cut their commissions, particularly if a listing agreement is in place with pre determined amounts.

Additionally, depending upon the laws in CA regarding agency, their may or may not be fiduciary responsibility to the seller.  It is different from state to state.

Last but not least, there is an absolute value to having an agent who is working with you as a combined effort to find the right home to meet your needs within your budget as opposed to moving agent to agent if one deal doesn't work out and you are on to the next....not to mention having an agent who will walk you thru every step of the home buying process as a first time home buyer.

Best of luck to you....I hope you find the home you are looking for. :-)

Warm Regards,
Charlene Weston
Realtor

  • December 07 2011
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My advise... don't even consider buying without using a Realtor "Buyers" agent... and this is why. The Listing agent representing the seller has a contractual fiduciary responsibility to represent the Seller's best interest... so who is watching out for you? When you use the listing agent you have a natural "conflict of interest". Plus, listing agents very rarely would ever consider giving up part of the commission because a buyer goes directly to them, they have more work to do. You save nothing and gain trouble by not having your own agent. It is just simply... NOT smart.

Also FYI, be careful buying a condo or town house. There are a lot of "Home Owner's Associations" in trouble right now. With the foreclosure rate being as high as it is, the HOA's have been hurt in not collecting the HOA dues needed to properly run the facilities. So, when you go to buy... you can get far into the loan process, pay your appraisal money and find the HOA is in litigation, has low reserves or a low owner occupancy rate and does not qualify for financing. This can make your lender shut your loan down and you are out your appraisal fee. You wont be happy about that! So, do all of the up front research you can on the HOA before hand. Ask around, look to see if there are any recent sales in the complex that got financing. 

You may think buying a cheep condo means easy transaction... not so. A condo is more time consuming and needs more research than most homes. Wait and see... the pile of papers you end up will be hundreds of papers. There are many things to consider when buying a condo... or you can end up buying trouble.

Be careful... get a good Realtor to advise you and Good Luck!
  • December 04 2011
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I would have a buyers agent. You don't pay to have an agent, the agent is paid by the seller. As a first time home buyer, a buyers agent can help you in price negotiation and help you with any contract points that you may not be familiar with. My main point is that having a good buyers agent can not hurt you financially.
  • December 04 2011
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Hi chillcut, 

You've gotten a lot of answers so mine will only serve to reinforce what many have said. A buyer's agent is an important part of the transaction, don't do yourself a disservice, get an agent to assist you through the process. Although FHA financing for condos is tenuous, it certainly can happen (someone below said they never heard of it, not true) but you will need an agent and a lender familiar with the process to help you through it; it's even possible to get spot condo approvals, not something you can accomplish on your own. It's likely a listing agent isn't going to go out of their way to do your end of the work!
  • December 02 2011
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As a first time home buyer, I would 100% recommend you have a buyer's agent assist you, unless you have a family member or close friend helping you who knows what they are doing, as it is very easy for unethical sellers or scam artist to take advantage of you. 

Even if the seller would credit you the commission the buyers agent would earn, you are talking about $2,200. That is not much amortized over 30 years. 

A good buyer's agent may not only be able to assist you in the whole process, with the paperwork and making sure that the process goes smoothly, but may be able to negotiate the deal to more than make up for their expense. 

Good luck. 
  • December 01 2011
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Profile picture for NinaHarris
Agreed.  Get a buyer's agent.  There is so much more involved in the sale of a property than you can imagine - especially in today's market with emotions running on the high side.  Most listings compensate for buyer agency commission which is being paid by the seller.  A buyer agent looks out for your best interests while the seller's agent represents the seller and his best interest.  Also, from my experience most condo's require a 10% to 20% down payment.  I don't recall ever seeing a FHA loan given for a condo.

Do yourself a favor and get a buyer's agent to represent you. 

Good luck!
  • December 01 2011
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A Listing Agent may be more likely to cut the commission because you have a good Agent than they would be because you don't. You being unrepresented means more for them to do, not less. Just an opinion, based on my limited experience.
  • December 01 2011
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Profile picture for chillcut
Thank you for the responses!
That was my understanding. I am the kinda person that does extensive research and is always looking for the best deal I can get, even if it takes a long time.

I would like to know the process then for buying without an agent and seeing if the selling agent will take a commish cut since they do not have to share with the buying agent. Is it that simple? This is in California btw if that makes any difference.
  • December 01 2011
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Profile picture for PukonYukon
you don't need one.  but it doesn't save you money if that selling agent doesn't take a commission cut.  so might as well have your own.  things get messy sometimes.  sometimes there are issues- you need to pick someone you see as competent to assist you.

unless of course the listing agent is willing to give you a discount if your state laws allow.  or cut their commission since THEY don't have to pay the buyer's agent.   It can be done.   My agent takes a small cut when she brings the buyer- it's one reason I list with her when i am ready to sell a property - too bad that she rarely has the buyer.
  • December 01 2011
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Profile picture for sunnyview
"The buyer can't make the selling agent to cut a commission."

Semi true. You can present the agent with a choice and let them decide.  Although the commission is pre negotiated between the seller and the listing agent, the listing or buyers agent can give the buyer an agreed rebate in escrow in many states. Commissions on real estate are supposed to be negotiable according to the Justice Department here.
  • December 01 2011
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Nobody needs one. Most benefit by hiring one, in some, or many, ways.
Combine the info from the answers below, and why you, probably, should have one, becomes clear. If the condos are distressed sales, of some kind, you definitely need one.
  • December 01 2011
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Profile picture for kapyarets
I agree with the first response.

I don't agree with the second.

The buyer can't make the selling agent to cut a commission. The seller agent has an agreement with the seller for commissions baste on selling price before the property is on the market. If there is no disclosure about differentiated commission it's wrong to expect that working directly with the seller's agent will get the buyer better deal and reduce the seller's agent commissions. If property is on MLS the seller agent will share commissions with the buyer's agent and that share is disclosed on MLS.

Base line - get your own agent who will help you to incorporate all necessary contingencies in the offer. There are lots of contingencies should be in a offer when you buying a condo.  
  • December 01 2011
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Profile picture for Matt Hiatt
A Buyers agent should cost you nothing, they are paid by the seller. Remember, the selling agent is representing the seller's best interest, unless it is a dual agency where they are representing both. Could you imagine going to court and having the prosecutor also be your defense attorney? In my opinion, you are better to have an agent that only represents you. You can go FHA, but have your agent check it out, a lot of condos do not qualify for FHA financing. For example, there have to be a certain number of owner/occupied as compared to renters.
  • December 01 2011
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Profile picture for sunnyview
You can, but you need to know that you have to play your emotional and financial cards close to vest and that their is no advantage to going through the listing agent unless you negotiate a commission rebate upfront.

As a first time buyer, I am not sure that it would be worth the risk to me. There are a lot of things when you buy your first house that you do not even know that you don't know. It can really help to have a good agent in your corner to look for anything out of place on the other side that need more investigation/attention.
  • December 01 2011
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The seller pays the buyer agent, you get someone to negotiate and get you to the table.  Unless you are pretty familiar with the process in your state, I would find a good agent and ask them to help you.

Best of luck!
  • December 01 2011
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Get ready to get inundated with responses.

A buyer's agent won't cost you anything unless it's being sold By Owner.
This is because the seller pays their fee to the seller's agent who then 'shares' a part of that commission with the buyer's rep.

FREE. sort of.

And it may sound like a b.s. sale pitch, but there is no doubt that a solid agent will save you the difference in their commission based on what you'd pay without an agent. Not to mention the hassle you will have in negotiating the mortgage and contract process.

And the loan you are asking about, by the way, is FHA.

Good luck.
  • December 01 2011
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Profile picture for PukonYukon

only if you are going to try to get the selling agent to cut their commission and discount that to you.

  • December 01 2011
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