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Answers (17)
actually, Steve as you well know, many listings have variable commissions. So, the net amount a seller receives, and hence his/her likelihood of accepting an offer, is affected by whether or not the buyer has an agent.
Most people,honestly even most who think they know enough to go it without an agent probably shouldn't. But then again, I've seen many agents do their clients more harm than good, so it really depends on who you have working with you.
But lets not lie on here. A 200K home gets a full price offer, paying 6% commission, nets the seller 188K. Another offer comes in through the listing agent at 197K, and the lister has a 4% commission agreement if doing both sides, and the seller is now netting 189120.
Which offer is going to be accepted?
Most people,honestly even most who think they know enough to go it without an agent probably shouldn't. But then again, I've seen many agents do their clients more harm than good, so it really depends on who you have working with you.
But lets not lie on here. A 200K home gets a full price offer, paying 6% commission, nets the seller 188K. Another offer comes in through the listing agent at 197K, and the lister has a 4% commission agreement if doing both sides, and the seller is now netting 189120.
Which offer is going to be accepted?
- ZZipperhead
- Contributions:69
I agree that it would eliminate a potential conflict of interest if buyers and sellers would pay their agents out of their own pockets, as work is performed. However, neither buyers nor sellers seem interested in doing this, or it would be don. Therefore, it seems to me that economic principles has determined that neither a buyer nor a seller values the services of an agent enough to pay them up front, without proof of performance. You're simply going against nature here, Klarek. And your advice to buyers to do without an agent is irresponsible and probably doing more harm than good, to the extent anyone follows your advice.
"Without a conflict of interest, and at a fraction of the cost."
- OK, I think you're not paying attention here. The buyer isn't paying for his agent. The seller is. Therefore, "at a fraction of the cost" is an irrelevant comment.
Also, I question your assumption that a lawyer necessrily has no conflict of interest while an agent necessarily does. Lawyers bill by the hour; there is at least a colorable argument that the lawyer has a conflict of interest inasmuch as he wants to increase his billable hours to his client. The same could be said of an agent's conflict. In reality, most lawyers and most agents don't let this conflict affect their jobs. In fact, one could logically argue that the opposite is true: an agent who puts his interests ahead of his client's interests will be fired by the client in favor of another agent,and therefore will have put in a lot of work for no pay. In additon to risking the loss of his license. You're also confusing a potential conflict of interest with an actual, manifest one. Just because a potential conflict exists doesn't mean you're screwed by the person representing you. Nothing could be further from the truth.
Your comments on this topic simply aren't logically tautological, and don't hold water.
"Without a conflict of interest, and at a fraction of the cost."
- OK, I think you're not paying attention here. The buyer isn't paying for his agent. The seller is. Therefore, "at a fraction of the cost" is an irrelevant comment.
Also, I question your assumption that a lawyer necessrily has no conflict of interest while an agent necessarily does. Lawyers bill by the hour; there is at least a colorable argument that the lawyer has a conflict of interest inasmuch as he wants to increase his billable hours to his client. The same could be said of an agent's conflict. In reality, most lawyers and most agents don't let this conflict affect their jobs. In fact, one could logically argue that the opposite is true: an agent who puts his interests ahead of his client's interests will be fired by the client in favor of another agent,and therefore will have put in a lot of work for no pay. In additon to risking the loss of his license. You're also confusing a potential conflict of interest with an actual, manifest one. Just because a potential conflict exists doesn't mean you're screwed by the person representing you. Nothing could be further from the truth.
Your comments on this topic simply aren't logically tautological, and don't hold water.
- klarek the realist
- Contributions:7044
"But if the seller has an agent, the buyer's agent is free as far as the buyer is concerned, since the seller is paying for the buyer's agent too."
So I don't have to pay for it? No, I just pay for it when I sell. Basically by not paying the agent when you buy, there is a serious conflict of interest afoot.
"However, if you hire a lawyer, you ARE paying, out of your pocket."
Without a conflict of interest, and at a tiny fraction the cost.
"As an agent, I've also rarely, if ever, only done "a few hours of work." Again, I think you're missing an understanding of how the process works and how much time agents usually spend on a transaction."
With me it would only take a few hours, I just need the agent to open the door. I doubt the average buyer would take more than 20 hours. Either way the per hour cost so highly exceeds that of a RE attorney that you cannot even compare the two.
" Bottom line: use an agent; they're free to you as the buyer"
As I just pointed out, this is not entirely true and points to the fact that they aren't looking out for your interests.
So I don't have to pay for it? No, I just pay for it when I sell. Basically by not paying the agent when you buy, there is a serious conflict of interest afoot.
"However, if you hire a lawyer, you ARE paying, out of your pocket."
Without a conflict of interest, and at a tiny fraction the cost.
"As an agent, I've also rarely, if ever, only done "a few hours of work." Again, I think you're missing an understanding of how the process works and how much time agents usually spend on a transaction."
With me it would only take a few hours, I just need the agent to open the door. I doubt the average buyer would take more than 20 hours. Either way the per hour cost so highly exceeds that of a RE attorney that you cannot even compare the two.
" Bottom line: use an agent; they're free to you as the buyer"
As I just pointed out, this is not entirely true and points to the fact that they aren't looking out for your interests.
- ZZipperhead
- Contributions:69
"Well when I go to buy a house for $300k and my agent gets his $9000 for doing only a few hours of work, he'll essentially have earned $3000/hr. Thanks for making the RE attorney look like a freebie by comparison. "
Not true, in most cases. It might be true if you were paying for your agent as a buyer (as Pennoyer points out, where the seller isn't using an agent and it's a "for sale by owner"). But if the seller has an agent, the buyer's agent is free as far as the buyer is concerned, since the seller is paying for the buyer's agent too.
However, if you hire a lawyer, you ARE paying, out of your pocket. And depending on how many offers you need to make before you get an offer accepted, and how complex the transaction is, the legal costs can become quite significant. I'm not suggesting that a buyer shouldn't use a lawyer (although my personal feeling is that in most deals it's not necessary); I'm simply saying that from a cost perspective it's going to come out of the buyer's pocket, unlike an agent.
As an agent, I've also rarely, if ever, only done "a few hours of work." Again, I think you're missing an understanding of how the process works and how much time agents usually spend on a transaction.
Anyway, BobbieBRB, glad we could all help. Bottom line: use an agent; they're free to you as the buyer and their job is to help you minimize costs, get the best deal you can, and reduce your level of hassle and time.
- Sam DeBord, "SeattleHome.com"
- Contributions:3472
Glad you got some good information. Clearly we don't all agree here, but you get a good variety of viewpoints.
- BobbieBRB
- Contributions:20
Ty for your time guys some helpfull and good INFo here.
For one I had no clue that the seller pays the RE Like I said very new to all of this. So I dished out some Thums ups and most of all your time and info means a lot Ty
For one I had no clue that the seller pays the RE Like I said very new to all of this. So I dished out some Thums ups and most of all your time and info means a lot Ty
- Scott@Penner Law -Hartford Title-, "pennerlaw"
- Contributions:280
I'm not sure what the other responses in this thread are talking about. Real estate attorneys can often be found for quite reasonable prices, often flat fee. It depends exactly what you want them to do, but $150-$200+ per hour is simply ridiculous, unless you're buying a mansion. I'm not sure where you're located , BobbieBRB, but we could likely recommend someone for you, or handle it ourselves, at far less than that.
More to the point of the original question though, you are not paying a real estate agent. That's the main reason to have one. Even if they only help you a little bit, it doesn't cost you anything (in most cases). The seller is paying both RE agents, unless it's a for-sale-by-owner property. 99% of the time, the listing contract between the seller and his agent says that if the buyer doesn't have an agent, the listing agent gets both commissions.
In short:
1. You should always have an attorney.
2. There's no reason not to have an RE agent, as long as you don't use them for commission-free properties.
3. If your RE agent is not helpful, get a new one.
More to the point of the original question though, you are not paying a real estate agent. That's the main reason to have one. Even if they only help you a little bit, it doesn't cost you anything (in most cases). The seller is paying both RE agents, unless it's a for-sale-by-owner property. 99% of the time, the listing contract between the seller and his agent says that if the buyer doesn't have an agent, the listing agent gets both commissions.
In short:
1. You should always have an attorney.
2. There's no reason not to have an RE agent, as long as you don't use them for commission-free properties.
3. If your RE agent is not helpful, get a new one.
- klarek the realist
- Contributions:7044
"I also haven't seen a $150/hr attorney in a long time - usually it's well over $200/hr."
Well when I go to buy a house for $300k and my agent gets his $9000 for doing only a few hours of work, he'll essentially have earned $3000/hr. Thanks for making the RE attorney look like a freebie by comparison.
Well when I go to buy a house for $300k and my agent gets his $9000 for doing only a few hours of work, he'll essentially have earned $3000/hr. Thanks for making the RE attorney look like a freebie by comparison.
- ZZipperhead
- Contributions:69
One other thing to keep in mind is that you'll pay an attorney up front, but you won't pay an agent, since the seller pays both agents' commissions. I also haven't seen a $150/hr attorney in a long time - usually it's well over $200/hr.
One of the comments suggested that you try to get the seller to reduce the price by the 3%. This is usually the commission the seller's agent pays to the buyer's agent. Since the seller won't have to pay your agent (since you won't have one), the theory is that the seller can just reduce the price by that amount. But the seller can't do this, in most cases. The listing agreement with the seller's agent states that the seller's agent is entitled to a commission of x% of the sale price. The seller's agent then promises to pay a portion of his commission to the buyer's agent. If there is no buyer's agent, then the seller's agent is entitled, contractually, to the entire commission. The seller has no control over it, in most cases. So if you wanted to negotiate a reduction, you'd really have to do it with the seller's agent, not with the seller.
Don't hold your breath.
Anyway, since the agent service is free to you, you should probaby take advantage of it and use an agent to represent you. Unless, as has been pointed out, you're familiar enough with real estate transactions to do it yourself.
- Jeff Konstant, "jkonstant"
- Contributions:1970
If you are able to protect yourself by using an attorney, just about everything else a realtor does will be done anyway. Why? Because the seller's realtor gets paid when you close and you can bet they will do many if not all the necessary things to get paid. All you have done is replace realtor representation with legal and real representation and limited the possibility of a confidence being revealed.
- NTETS, "Mr Caveat"
- Contributions:6436
my attorney can always get me in the next business day.
there is no need to be submitting new documents at 7pm on a sunday in any re transaction. the other side wont return your calls either.
there is no need to be submitting new documents at 7pm on a sunday in any re transaction. the other side wont return your calls either.
- Sam DeBord, "SeattleHome.com"
- Contributions:3472
"It gets pricy though if you ask your 150/hr attorney to do more than submit offers and write up a contract or two. "
At least you got to the point at the end. Using an attorney to draw up the docs is great if everything goes smoothly. If you have an issue, have to change terms, or even back out--all of those savings you were hoping for are gone, and that attorney will not answer your call at 7 pm on Saturday night. You'll get a call-back in 48 hours and an appointment in a week.
"Most people need someone to help them negotiate the price
>many people who have agents end up paying the price on the sign or close to it...
inspection and financing timelines,
>you can do that
closing costs to be paid by seller
>ask for closing costs to be paid by the seller
, repairs after inspection
>ask for repairs after the inspection
So, we basically agree. If you're good at negotiating on your own, go ahead.
At least you got to the point at the end. Using an attorney to draw up the docs is great if everything goes smoothly. If you have an issue, have to change terms, or even back out--all of those savings you were hoping for are gone, and that attorney will not answer your call at 7 pm on Saturday night. You'll get a call-back in 48 hours and an appointment in a week.
"Most people need someone to help them negotiate the price
>many people who have agents end up paying the price on the sign or close to it...
inspection and financing timelines,
>you can do that
closing costs to be paid by seller
>ask for closing costs to be paid by the seller
, repairs after inspection
>ask for repairs after the inspection
So, we basically agree. If you're good at negotiating on your own, go ahead.
- NTETS, "Mr Caveat"
- Contributions:6436
Most people need someone to help them negotiate the price
>many people who have agents end up paying the price on the sign or close to it...
inspection and financing timelines,
>you can do that
closing costs to be paid by seller
>ask for closing costs to be paid by the seller
, repairs after inspection
>ask for repairs after the inspection
They really need an ATTORNEY if they decide to back out of a contract to make sure they do it correctly and don't lose their earnest money.
if you're cool with doing the leg work, go ahead and try to negotiate the 3% be rebated back to you and be represented by an attorney instead. it gets pricy though if you ask your 150/hr attorney to do more than submit offers and write up a contract or two.
>many people who have agents end up paying the price on the sign or close to it...
inspection and financing timelines,
>you can do that
closing costs to be paid by seller
>ask for closing costs to be paid by the seller
, repairs after inspection
>ask for repairs after the inspection
They really need an ATTORNEY if they decide to back out of a contract to make sure they do it correctly and don't lose their earnest money.
if you're cool with doing the leg work, go ahead and try to negotiate the 3% be rebated back to you and be represented by an attorney instead. it gets pricy though if you ask your 150/hr attorney to do more than submit offers and write up a contract or two.
- Ardell DellaLoggia, "ARDELL DellaLoggia"
- Contributions:231
My clients use me to make sure they don't pick the wrong house or overpay for it. But if you are sure abourt those things you can use a lawyer for a pretty cheap flat fee:
- Sam DeBord, "SeattleHome.com"
- Contributions:3472
Most people need someone to help them negotiate the price, inspection and financing timelines, closing costs to be paid by seller, repairs after inspection, etc. They really need an agent if they decide to back out of a contract to make sure they do it correctly and don't lose their earnest money.
If you can do all of those things and those mentioned below, maybe you don't need an agent. The average person has little to no experience in these things.
If you can do all of those things and those mentioned below, maybe you don't need an agent. The average person has little to no experience in these things.
"The agent will run a comparable market analysis to make sure the price you offer is reasonable, review the title report and HUD settlement sheet, help you find a loan (if you want assistance with that), help you with inspections, and guide you through the escrow and settlement process. "
FYI ... their loan officer can do everything you just mentioned.
FYI ... their loan officer can do everything you just mentioned.
- ZZipperhead
- Contributions:69
You could get a real estate lawyer to submit your documents for you, but they usually charge by the hour, so if you need to put in multiple offers on multiple properties before you get one accepted, these costs can add up. You might be able to get a lawyer to agree to a flat fee as well. For the most part, though, lawyers don't usually get involved with residential purchases unless there's something screwy or challenging going on.
Besides, just looking at houses yourself doesn't cover all of what the agent would do. The agent will run a comparable market analysis to make sure the price you offer is reasonable, review the title report and HUD settlement sheet, help you find a loan (if you want assistance with that), help you with inspections, and guide you through the escrow and settlement process. If you actually have the time to do all this yourself and you WANT to do it yourself, and you think you'd be able to navigate the paperwork and understand it, then by all means do it yourself. But most people find this stuff too bewildering, confusing, time consuming, frustrating, and or scary to go it alone. At the end of the day, though, it's your call.
Besides, just looking at houses yourself doesn't cover all of what the agent would do. The agent will run a comparable market analysis to make sure the price you offer is reasonable, review the title report and HUD settlement sheet, help you find a loan (if you want assistance with that), help you with inspections, and guide you through the escrow and settlement process. If you actually have the time to do all this yourself and you WANT to do it yourself, and you think you'd be able to navigate the paperwork and understand it, then by all means do it yourself. But most people find this stuff too bewildering, confusing, time consuming, frustrating, and or scary to go it alone. At the end of the day, though, it's your call.
I'm doing all the work So why have a agent
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