Thinking of trying to buy without an agent, is this foolish?

The only thing you may need an agent for is to write the offers and contracts and perhaps a real estate attorney can do that instead . All the research, looking , and contacting can all be done by you just be careful.

Lisa

Star is on the money... fact is attorney may be far more better equiped in their knowlege of contract laws. 

rustycage1,

You can definitly pay an agent hourly.   Just let an Agent know what you want to do and see if they are comfortable giving you advice.  I would make sure that the Agent/Broker has a track record of some sort, because no sense getting advice from someone who doesn't know diddly.

I am confused.  If I was going to do something without a realtor, it would be selling because that's where I lose the money.  Buying is the free side of things so why not take the help?

If you are in a buyers market, I would usually discount by 10 to 15%.   Maybe more.  Of course, that depends on the area and what the CMA says.  The 3% you are trying to save wouldn't be enough for me.

Yes, the attorney thing works fine and there are agents who will work for a flat fee or hourly.

la457:

While technically (HUD-1 Statement) the seller pays the commission. The reality is the buyer puts all that money into the line before the deductions for commissions and all other fees. All sellers take commission into consideration when determining their listing price.

"Buying is the free side of things so why not take the help?"

Nope.  As Jkonstant just stated above (kudos!), the commissions are included in the purchase price.  In actuality, it is the buyer that finances the agents' commissions AND pays interest on them as part of the mortgage loan.

BUYING WITHOUT AN AGENT - Looks easy, but remember looks can be deceiving.  Of course the seller would be happy to cut their price and hand over the keys to avoid paying a commission.  There in lays the problem.  That seller has no legal right or obligation to notify you the buyer of any problems, pitfalls etc.  Once you are locked into a purchase agreement you are committed to buying this home.  The attorney's responsibility will be strictly to review the contract for legal obligations.  Attorneys have neither the knowledge or the OBLIGATION to advise you from the prospective a licensed real estate professional.  For example, a local judge in my area listed his condo with a real estate agent.  My client and I viewed the home and we were preparing to submit an offer.  I then began my due diligence on behalf of the buyer and found out that the condo was located in a flood plain area.  The seller (the judge) failed to disclose this information.  Had my buyer made an offer to purchase, she would have had an additional $85 per month in flood zone insurance.  Can you afford to take any RISK with that big of an INVESTMENT.  Hire a full time licensed professional who knows the market in your area. (If you need a referral - ask me).  What if the seller lists the house for say $380,000 and cuts it to $370,000?  Is that a great deal for you??? What if your licensed sales professional told you that the most anyone has ever paid for a home with similar features and benefits is $360,000?  Now you just overpaid. 

Oh Linda, there you go again.

"Once you are locked into a purchase agreement you are committed to buying this home."

You seem to be an endless pool of misleading and self-serving statements.  A good RE attorney will ensure that there are appropriate inspection and financing contingencies in the purchase and sale agreement - at minimum.  And (unlike RE agents) attorneys have the capacity to include further contract terms to protect the buyer in the event they might be necessary (for items such as flood zones, etc.).  If those contingencies are not met, then the buyer is not "locked in" to the purchase.

You're not a first time buyer.  You don't need an agent.  Be prepared to put some more time into it, but you'll save yourself a lot of money.

These questions remain:

1. if you manage to get the listing agent to agree to knock off the 3% commission, how do you really know that it was indeed the commission that was done away with?
2. Are you able to discern the HUD-1 closing statement just before closing to confirm that the commission was really done away with?
3. Or alternatively, was this 3% savings something that the seller would have conceded anyway?

That's very easy Stephen.  You negotiate a sale price, then you tell the seller that you want an additional 3% / 2.5% / 2% (half of whatever the full commision is) off the price since there's no buyers side to pay.

The seller is then free to pay full commision to the selling agent if they like, it doesn't matter to the buyer.

I thought the buyer was required to disclose anything they know to be wrong with their house. And as for flood plain issues well that is part of any research a buyer can do also . I mean some realtors know their stuff but some dont.

Lisa

Sorry the seller is required to disclose anything... silly me.

Lisa

Mikal and K101 (since I know you are interested in this):

The offer to purchase could be put in through an attorney.  If this is the case however, the full terms and conditions would have to be negotiated up front in the purchase agreement.  Therefore, there is no "automatic" way to reduce the commission that the seller pays to the agent.  The agreement was made with the seller's agent (as many of us have tried to explain).  The attorney has no right to discount the amount of the commission that the seller has to pay.  It is a matter of an agreement between the seller and the sellers agent.  Even though it may SEEM to be worked into the price and usually is, the sellers agent would have to agree to lower the amount of commission because it is not an "automatic" that they were only to recieve 3%.

My advice, make an agreement on the price that you feel the house is worth, even it is 40% or 50% off of the price...you can try whatever you like.  But that 3% extra after the fact is still not coming out of the agent's pocket (unless agreed upon between Seller and Seller's agent).

I'm very sorry if this sounds forward at all, but what is not being understood is that THAT agreement was made between Seller, and Sellers agent.  The minute that any attorney gets a contract, they take out the clause that it is a lien on the sales price to be payable if either party breeches contract.  The reason they do this is simple, because it's a seperate service agreement having nothing at all to do with the buyer.

A listing agreement is a fully enforceable contract between seller and broker.  A seller cannot unilaterally cancel that contract.  If you want to offer 3% below asking price, JUST DO IT.  Forget about the commissions.  What if the listing agreement is only 4% (2% for each side)?  Are you only interested in offering 2% off list price?

I have bought and sold using a Real Estate Lawyer. Worked out great for me. At least with a Lawyer, you have somebody representing your interests. In Chicago, at least 8 years ago, the city required sellers/buyers to have legal representation when purchasing a home. The realtor was optional.

There are lawyers that specialize in real estate. Get one of those. They will be savvy enough to be aware of something as obvious as being in a flood zone, or hiring a good inspector and having the inspection part of the contract contingency.

Linda is just trolling for a $1000 finders fee by offering to "(If you need a referral - ask me)."

OK realtor folks, lets review this one more time.  The buyer is funding the deal, you're being paid out of the funds that the buyer brings to the table.  Where those funds go does matter - motivation is important, yes? 

Yes, the contract between the seller and the listing agent is just that, and is not something that the buyer can directly effect.  But in a scenario where the difference between closing a deal is a matter of 2%, 3% or even 4% then the seller may be much more motivated to close the deal if that percentage isn't coming out of their end.  Yes?

So again, feel free to wave your contract around and blow up the deal because you won't get both sides of a transaction (or even less than half the full fee).  What do they say about 50% being better than.....?  And here I thought that a major value that a realtor brought to the table was their negotiating ability.  Oh well.

I guess it's natural for realtors to be protective of their fee structure, but the pressure on that structure, perhaps even on the standard "exclusive" listing agreement is only increasing. 

You go find a lawyer to write up a contract that is in essence saying seller must breach contract with broker to make this sale close.  If you find one to do it, I can guarantee he/she got their law degree from the same place I did.

Commissions cannot be a contingency of a sale (unless the REA is the principal), otherwise, I could say I want 6% for bringing in the buyer and if Mr. & Mrs. Seller don't agree to it, I'm taking my buyer down the street.

So bash REAs all you want, but a contract is a contract and if you want to offer less than asking price, do it.   Most brokers would cut their commission to make a sale go through if they had to, but the buyer cannot demand it.

"That's very easy Stephen. You negotiate a sale price, then you tell the seller that you want an additional 3% / 2.5% / 2% (half of whatever the full commision is) off the price since there's no buyers side to pay.
The seller is then free to pay full commision to the selling agent if they like, it doesn't matter to the buyer."

Mikal1,

It does not work that way; one cannot unilaterally amend the purchase & sale agreement after it has been agreed upon. The listing agent would be the primary person to agree to a reduction of the commission since you have opted not to be represented, which a lot of them will not agree to.

So the question remains: Is a buyer being “penny wise, pound foolish” by attempting to do this?

Yep, Marci is right. The buyer cannot negociate the seller's contract. The seller entered into the contract with their agent and the buyer has NO say in the matter. Period. To ask the seller to breach the contract is illegal in itself.

Regarding using an attorney, is possible that the attorney might have an interest in the buyer not purchasing the first few properties, insomuch as he/she is earning money while the clock is running? Unlike with a buyer’s broker, an attorney gets paid no matter what you decide to do.

And here I thought that a major value that a realtor brought to the table was their negotiating ability.

I'm not arguing with you about how much money is being made, and I've helped deals go through by lowering commission, but for a buyer to demand that 2, 3, 4% comes out of my pocket to make a deal work is absolutely absurd.  That is OUR business.  If you'd like to accomplish what you are saying...here's what you may be able to do...but check state law.

1.  There are brokerages out there that will give you back a percentage of the commission as a rebate (so I've heard, I haven't seen that in NJ)

2.  If you can find a lawyer with a real estate license, try to make the same agreement with them.

Otherwise, since there is no "commission split" when only 1 Realtor is involved, then there is only 1 agreement in effect, and that is the agreement for the seller to pay the Realtor.

I'm not sitting here trying to fight you, and I do agree that the real estate industry as a whole needs to be revamped, but there is a service involved, and it does get a little redundant to consistantly hear people completely bash the industry.

You may not need an agent however you should always have representation.

Jim,

Good response, I really don't have an argument with anything you said, except that you're still reading a lot into what I've stated.  Again, as I've already said, starting with my first post, the seller is free to bite the bullet and eat the difference themselves, but as the buyer I'm going to do everything I can to ensure that the seller is thinking about positive ways to close the deal.  And apologies if I'm not being clear enough in what I'm saying - I never said anything along the lines of writing the fee structure into a purchase agreement, or about specifically and contractually dictating where any funds go once they leave the buyers hands.  Sorry if I'm not getting my point across about motivation and trying to align the buyer and seller in the best way possible to close a deal.  But you made my point when you admitted that you've renegotiated your contract to close a deal.  I've know that we have at least one realtor on here who say's he's never done that or heard of it happening, but I think he's in an area where things might work a bit differently.  It's not an uncommon practice in at least one area that I'm very familar with.

It's really not about "bashing" realtors, I always try to be specific about seperating the good from the bad in any service industry.  And about understanding the different levels of value that the good can bring to different transactions depending on the transaction itself and the parties involved.

I'm not going to address a number of incorrect statements made in some responses above.  Apparently some people feel I'm attacking them or their livelyhood.  OK, but that's not really my intent.

Sorry, the bashing thing came out because I've been reading a lot of that kind of stuff lately, and some who like "damn the whole lot".  The INDUSTRY is a service oriented industry, and has a good purpose, but there are those that have bastardized the industry in such a way that it makes it difficult for an honest agent to feel proud of what they do.

That being said, it's kind of like Religion in a sense.  Any 1 Religion probably started for good purpose, and still has good intent, but the intentions of man are quickly lost when money is involved.

Marci wrote it a few times--offer what you think the property is worth and what you're willing to pay.  There are a number of brokers you can use to get a rebate back as Jim stated (It's not legal in NJ so he hasn't really seen how it works yet.)  if you are concernced about getting money back by not using a REA.  Just search online for home buyers rebate.

You do not need a REA at all--write up the offer and submit it.  If the house is listed with an agent the selling agent will review it as their broker will.  Hire a RE attorney.  Make sure you have all the necessary forms (WA now has new Distressed Homeowners forms) and go for it.   You do not know the agreement between the listing agent and their client. Perhaps in their contract it states they do not get the full 5-6% listing fee if the buyer is not represented.  It might be lower.   Also please do not assume the listing fee is always split in half.  it is not.  I list for 5% but only get 2% with the SOC at 3%  and I am not the only one.  a lot of brokerages do that.  What if the seller only wants to pay a 4% listing fee and the listing agent knows other agents won't show it unless they get 3%?  The contract could be written that the listing agent gets 1% and the SOC is 3%.  You don't know unless you have access to the MLS.  so please do not assume it's always a 50/50 split. :)

best of luck!

The only people i know who sell real estate struggled to finish high school or entered the "profession" following a divorce (after struggling to get out of high school). I need their advice? The simple fact of the matter is that real estate agents are used house salesmen, nodifferent from used car salesmen. You don't need them if you spend a little time reading. That's all they did. Real estate agents don't take entrance exams.

Sorry you feel that way.

I can only speak for California.  With all the myriad of disclosures, I always recommend the use of a competent Realtor.

Like any field, you have good and bad.

Do your research and try to find a good one with some valid references.

Could save you in more ways than one in the end.

Best Regards

Anything is doable if you do the research, but I'd have to agree with Wayne, there are numerous compentant, professional realtors out there.  It doesn't cost you a thing to have someone represent you on purchasing a new home.  "Interview" several if need be.