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- wildonion773
- Contributions:28
(continued from previous post)
So how can the commission system be reformed? Write your government representatives and your state department of justice. Let them know you want control over the buyer’s agent commission. On an average house that costs around $200,000, you could save around $6,000 with the changes outlined below:
1 - Real estate agencies must provide buyer and seller commissions in MLS listings and in all advertising and open houses.
2 - Real estate agencies must state in MLS listings and in all advertising and open houses that buyers who do not have an agent can reduce the price by the amount of the buyer’s agent commission if they choose not to use an agent.
3 - Ban real estate agents from claiming the buyer’s agent is “free” because it is “paid” by the seller. Currently this is acceptable practice and is in the National Association of Realtors code of ethics. It serves to confuse the transaction in favor of real estate agents, not the home buyer or the home seller.
These changes also benefit the home seller. The $6,000 commission could make the difference between selling a home or not.
Buying a house is probably the most expensive purchase a consumer makes. Home sellers have the choice whether to pay for real estate services or not. Home buyers should have this option as well. These changes will keep housing prices more affordable and keep more money in the hands of homeowners, not the real estate industry.
So how can the commission system be reformed? Write your government representatives and your state department of justice. Let them know you want control over the buyer’s agent commission. On an average house that costs around $200,000, you could save around $6,000 with the changes outlined below:
1 - Real estate agencies must provide buyer and seller commissions in MLS listings and in all advertising and open houses.
2 - Real estate agencies must state in MLS listings and in all advertising and open houses that buyers who do not have an agent can reduce the price by the amount of the buyer’s agent commission if they choose not to use an agent.
3 - Ban real estate agents from claiming the buyer’s agent is “free” because it is “paid” by the seller. Currently this is acceptable practice and is in the National Association of Realtors code of ethics. It serves to confuse the transaction in favor of real estate agents, not the home buyer or the home seller.
These changes also benefit the home seller. The $6,000 commission could make the difference between selling a home or not.
Buying a house is probably the most expensive purchase a consumer makes. Home sellers have the choice whether to pay for real estate services or not. Home buyers should have this option as well. These changes will keep housing prices more affordable and keep more money in the hands of homeowners, not the real estate industry.
- Daniel Nesemeier, "dnesemeier"
- Contributions:1379
Rebuttal:
Buyers may offer whatever they like for a home whether they are represented by an agent or not. They may simply offer less than asking price to compensate for the realtor's fee.
An agent may perform ministerial acts in terms of writing an offer for an unrepresented buyer, and also retains the right of charging for that service or declining to write the offer altogether. If an agent declines to serve as a dual agent more than likely he or she will not want to write the offer at all, and in some states, dual agency is not legal.
This makes 1, 2, 3 unnecessary because consumers are free to choose what they think is the fair market value of the home when they make an offer. Consumers are also free to choose whether to use an agent or not, and if they choose to use an agent, the terms and conditions of the agent's employment are clearly explained.
A listing agreement is a contract between the seller and the agent and is fully negotiable and confidential between the seller and the agent. Buyers are not privvy to the information provided in the listing agreement. The same holds true for an exclusive right to represent the buyer agreement.
A buyer cannot interfere with the agreed amount paid by the listing agent to the selling agent, which is advertised in local multiple listing services; however, a buyer is free to negotiate how much he will pay his or her agent for representation. The fee, which in most buyer's agreements is paid by the buyer, is offset by the amount paid by the listing agent to the buyer's agent. If the terms of a buyer's agreement state that the fee is 3%, and the listing agent is paying 2.5%, the buyer owes the additional half point to his agent. If the buyer's agreement fee is 3%, and the listing agent pays 3%, the service is in fact free to the buyer's agent because of the offset.
Buyers may offer whatever they like for a home whether they are represented by an agent or not. They may simply offer less than asking price to compensate for the realtor's fee.
An agent may perform ministerial acts in terms of writing an offer for an unrepresented buyer, and also retains the right of charging for that service or declining to write the offer altogether. If an agent declines to serve as a dual agent more than likely he or she will not want to write the offer at all, and in some states, dual agency is not legal.
This makes 1, 2, 3 unnecessary because consumers are free to choose what they think is the fair market value of the home when they make an offer. Consumers are also free to choose whether to use an agent or not, and if they choose to use an agent, the terms and conditions of the agent's employment are clearly explained.
A listing agreement is a contract between the seller and the agent and is fully negotiable and confidential between the seller and the agent. Buyers are not privvy to the information provided in the listing agreement. The same holds true for an exclusive right to represent the buyer agreement.
A buyer cannot interfere with the agreed amount paid by the listing agent to the selling agent, which is advertised in local multiple listing services; however, a buyer is free to negotiate how much he will pay his or her agent for representation. The fee, which in most buyer's agreements is paid by the buyer, is offset by the amount paid by the listing agent to the buyer's agent. If the terms of a buyer's agreement state that the fee is 3%, and the listing agent is paying 2.5%, the buyer owes the additional half point to his agent. If the buyer's agreement fee is 3%, and the listing agent pays 3%, the service is in fact free to the buyer's agent because of the offset.
- dspotten
- Contributions:1
Let's also put Safeway out of business by demanding that we can all buy from the wholesalers for the same price Safeway pays.
But we still want the convenience of Safeway, so make them buy all the stuff and put it on shelves so it's there when we're ready to buy it.
Yes, that is how ridiculous your post sounded.
But we still want the convenience of Safeway, so make them buy all the stuff and put it on shelves so it's there when we're ready to buy it.
Yes, that is how ridiculous your post sounded.
- Terri Linnell, "DebtsNMesses"
- Contributions:6728
I'm sorry, but I am NOT against agents. I know my area very, very well. But when I went 15 miles away, I needed an agent. She told me what areas had good riding trails, what areas were good kid areas, etc. She's worth every dime, since I don't know each street like I do here.
- Dee Spraker, "agentdetective"
- Contributions:1
First - wildonion has violated FTC anti-trust laws by discussing commissions!! I take offense to the fact that anyone makes a statement in regards to "typical commission" as we all know that commissions are highly negotiable and what may be typical for you is NOT typical for me or many others. Please reframe from discussing commission rates.
Wildonion,
Excellent post!!!
I applaud you and agree on all points - especially #3. There were some agents on this board that claimed that buyers' agents were free to buyers. While it may be debated who, in fact, "pays," it is clear that some portion of that burden is borne by the unrepresented buyer in the traditional model. I even had one agent accuse me of advocating for a late night TV "scheme" when I suggested that a buyers' side commission should be reduced from the purchase price if a buyers' agent is not being used.
The issue that you have raised has been veiled in darkness due to a lack of general information among the public of how the traditional system operates. It is time we blew the lid off of this sucker.
Excellent post!!!
I applaud you and agree on all points - especially #3. There were some agents on this board that claimed that buyers' agents were free to buyers. While it may be debated who, in fact, "pays," it is clear that some portion of that burden is borne by the unrepresented buyer in the traditional model. I even had one agent accuse me of advocating for a late night TV "scheme" when I suggested that a buyers' side commission should be reduced from the purchase price if a buyers' agent is not being used.
The issue that you have raised has been veiled in darkness due to a lack of general information among the public of how the traditional system operates. It is time we blew the lid off of this sucker.
"I'm sorry, but I am NOT against agents. I know my area very, very well. But when I went 15 miles away, I needed an agent. She told me what areas had good riding trails, what areas were good kid areas, etc. She's worth every dime, since I don't know each street like I do here. "
Debts, this is not about liking or not liking agents. Buyers agents play a very useful role in the home buying process for many - and they should be compensated. However, buyers that choose not to utilize those services should not be charged.
Debts, this is not about liking or not liking agents. Buyers agents play a very useful role in the home buying process for many - and they should be compensated. However, buyers that choose not to utilize those services should not be charged.
- aussiebear
- Contributions:10
Travel agents? Anyone can book airfare or a hotel, but getting the best deal takes a lot of leg work. I know because I travel a lot, internationally. That said, booking a hotel or air is a whole lot different than buying a house, the most expensive thing you're ever likely to buy in your life. Its a highly complex legal transaction and getting through escrow is a nightmare without the right agent. I would never dream of buying or selling a house on my own, and I'm a real estate attorney!
- Aileen La Bouff, "Aileen.LaBouff"
- Contributions:327
The only comment I will add to this is that if a buyer is not represented by an agent and there is any kind of issue with the transaction - including if the buyer just didn't read the disclosures properly - the first person to be named in a lawsuit is the seller's agent. This applies whether or not the agent offered any advice or assistance to the buyer.
I have no objection to people trying to save a few dollars by representing themselves, but I would be very uncomfortable being the seller's agent in such circumstances.
I have no objection to people trying to save a few dollars by representing themselves, but I would be very uncomfortable being the seller's agent in such circumstances.
Aileen,
Perhaps therein lies the problem, as there should be no "fiduciary" burden upon a listing agent toward a buyer under any circumstances. I have no problem with having to shoulder my own risk in the process - as long as the listing agent is performing the duties that are mandated by law (providing the disclosures, for example).
It really isn't that difficult to document, is it?
Perhaps therein lies the problem, as there should be no "fiduciary" burden upon a listing agent toward a buyer under any circumstances. I have no problem with having to shoulder my own risk in the process - as long as the listing agent is performing the duties that are mandated by law (providing the disclosures, for example).
It really isn't that difficult to document, is it?
- Daniel Nesemeier, "dnesemeier"
- Contributions:1379
But K,
The compensation structure for listing and selling is contained in the listing agreement by the seller and the broker. Any and all fee structures are subject to negotiation prior to the listing agreement being signed. That compensation isn't subject to change by the buyer, so the buyer can compensate by offering less for the house. That's part of the deal.
There are buyers who use attorneys instead of agents to write offers but that doesn't change the listing agreement between the seller and broker. That agreement has already been set in place prior to the buyer finding the house, and, as I mentioned on an earlier post, once its put in writing, a deal is a deal.
The compensation structure for listing and selling is contained in the listing agreement by the seller and the broker. Any and all fee structures are subject to negotiation prior to the listing agreement being signed. That compensation isn't subject to change by the buyer, so the buyer can compensate by offering less for the house. That's part of the deal.
There are buyers who use attorneys instead of agents to write offers but that doesn't change the listing agreement between the seller and broker. That agreement has already been set in place prior to the buyer finding the house, and, as I mentioned on an earlier post, once its put in writing, a deal is a deal.
- aussiebear
- Contributions:10
As a real estate lawyer, I can tell you that the attitude of "how hard can it be, anyway?" is the very thing that brings clients to my office. You wouldn't perform your own medical diagnosis, you shouldn't represent yourself in court, and no, you shouldn't buy or sell a house without an agent's representation. Pound-wise, penny-foolish.
- Aileen La Bouff, "Aileen.LaBouff"
- Contributions:327
K101,
Logic would say that it isn't so difficult to document who did what, but unfortunately when these things go south, a lawyer needing to protect their client needs to name everyone involved in the transaction just to get to the facts. Especially the agents, as the perception is that we have abnormally deep pockets. (95% of agents don't earn a huge income.)
So, then an agent is at great risk of needing to cover huge legal fees and lost income just to show their non-involvement.
The perception is almost always that if something goes wrong, it is the fault of the professional involved.
Sometimes it's difficult enough for newer agents to keep up with the constantly changing disclosure requirements and mandatory documentation. When a buyer is representing themselves, especially for the first time, it's often almost impossible for them to be completely sure of what is required of them - even down to the correct printing dates on standard forms they're provided.
As a professional agent and as a mildly maternal personality, it is very, very difficult not to just help someone out when they're obviously uncertain of themselves. But the liability risks are horrendous for an agent who just wants to do the right thing.
As I said earlier - I have no objection to someone wanting to save a few dollars, but not if it puts myself and my family at financial risk unecessarily.
I think Daniel's point is relevant also. The commission has pretty much already been negotiated with the seller. I come from an overseas market where commissions are set up very differently and there are traditionally no buyer's agents. It isn't pretty.
Logic would say that it isn't so difficult to document who did what, but unfortunately when these things go south, a lawyer needing to protect their client needs to name everyone involved in the transaction just to get to the facts. Especially the agents, as the perception is that we have abnormally deep pockets. (95% of agents don't earn a huge income.)
So, then an agent is at great risk of needing to cover huge legal fees and lost income just to show their non-involvement.
The perception is almost always that if something goes wrong, it is the fault of the professional involved.
Sometimes it's difficult enough for newer agents to keep up with the constantly changing disclosure requirements and mandatory documentation. When a buyer is representing themselves, especially for the first time, it's often almost impossible for them to be completely sure of what is required of them - even down to the correct printing dates on standard forms they're provided.
As a professional agent and as a mildly maternal personality, it is very, very difficult not to just help someone out when they're obviously uncertain of themselves. But the liability risks are horrendous for an agent who just wants to do the right thing.
As I said earlier - I have no objection to someone wanting to save a few dollars, but not if it puts myself and my family at financial risk unecessarily.
I think Daniel's point is relevant also. The commission has pretty much already been negotiated with the seller. I come from an overseas market where commissions are set up very differently and there are traditionally no buyer's agents. It isn't pretty.
Dan,
I understand that the seller/listing agent contractual model is the one currently being used. Perhaps, though, there could be a provision within it to provide a discount to the seller in the case of the unrepresented buyer - which then may free that seller to take the lower offering price (as you suggested the buyer make above)? I know that my listing agreement dealt with it directly, with my agent to receive 3.5% total if she worked with an unrepresented buyer.
Aussiebear, not all buyers are uneducated morons. In fact, I am an attorney and am fully aware of the requirements of proper documentation. It really isn't that difficult. Further, as you know, a good RE attorney can fulfill those needs for a buyer not fully versed in RE/contracts, generally at a lesser cost. The buyer should be utilizing an attorney during the contract phase anyway.
I understand that the seller/listing agent contractual model is the one currently being used. Perhaps, though, there could be a provision within it to provide a discount to the seller in the case of the unrepresented buyer - which then may free that seller to take the lower offering price (as you suggested the buyer make above)? I know that my listing agreement dealt with it directly, with my agent to receive 3.5% total if she worked with an unrepresented buyer.
Aussiebear, not all buyers are uneducated morons. In fact, I am an attorney and am fully aware of the requirements of proper documentation. It really isn't that difficult. Further, as you know, a good RE attorney can fulfill those needs for a buyer not fully versed in RE/contracts, generally at a lesser cost. The buyer should be utilizing an attorney during the contract phase anyway.
- aussiebear
- Contributions:10
K101, as you know, being an attorney does not mean you can practice law comfortably outside of your chosen field. And the purchase of a home is specifically and obviously a real estate transaction. Even a lawyer shouldn't represent themselves in the purchase of a home. There is more at issue than the documents themselves. How would know if you received all of the required disclosures? Where would get that list of disclosures? How would you know how to interpret the disclosures and know which ones were red flags and others not? For example, here in Los Angeles we have a radon gas discloure and the report will give you a 1, 2, or 3 risk. Which number are you comfortable with? An agent can answer all these questions. As a buyer who is represented by an agent, you wouldn't need to pay me, for example, my hourly fee of $400/hour to answer these questions for you.
- Anita Crum
- Contributions:413
As much as I hate to hear these topics regarding realtors not earning or deserving their commissions, and as much as I hate to say it, to some degree we (realtors) have created this situation ourselves.
Aussie, I agree with you that it's important to have a professional represent you. But unfortunately, it's becoming quite clear that there are a lot of agents out there that are not the experts they claim to be. The consumers are becoming much more educated in the process and knowledgeable about the market thanks in large part to the internet. Too many agents are resting on their licensed status to claim expertise without taking the necessary action to stay informed and on top of the market and the business as a whole.
One of the reasons I became a realtor was that when I was buying my house, I did a lot of the research and work that my agent should have done. I figured how hard could it be? Well now I know that there is a lot more involved than I thought. And that is one thing that I do want to point out to the buyers and sellers. Good agents do a lot of work besides just putting a sign in the yard and running a few ads or showing you some houses and writing a contract. There are a lot of details and troubleshooting that we take care of to make sure the transactions go as smoothly as possible.
Ok, stepping off my soapbox now.
Aussie, I agree with you that it's important to have a professional represent you. But unfortunately, it's becoming quite clear that there are a lot of agents out there that are not the experts they claim to be. The consumers are becoming much more educated in the process and knowledgeable about the market thanks in large part to the internet. Too many agents are resting on their licensed status to claim expertise without taking the necessary action to stay informed and on top of the market and the business as a whole.
One of the reasons I became a realtor was that when I was buying my house, I did a lot of the research and work that my agent should have done. I figured how hard could it be? Well now I know that there is a lot more involved than I thought. And that is one thing that I do want to point out to the buyers and sellers. Good agents do a lot of work besides just putting a sign in the yard and running a few ads or showing you some houses and writing a contract. There are a lot of details and troubleshooting that we take care of to make sure the transactions go as smoothly as possible.
Ok, stepping off my soapbox now.
"Sometimes it's difficult enough for newer agents to keep up with the constantly changing disclosure requirements and mandatory documentation. When a buyer is representing themselves, especially for the first time, it's often almost impossible for them to be completely sure of what is required of them - even down to the correct printing dates on standard forms they're provided."
Well, perhaps more education and training is needed then. After all, these agents are "professionals" making top dollar involving a major financial transaction between parties. Sorry, but that doesn't cut it. Would you say that about a young attorney?
Well, perhaps more education and training is needed then. After all, these agents are "professionals" making top dollar involving a major financial transaction between parties. Sorry, but that doesn't cut it. Would you say that about a young attorney?
- klarek the realist
- Contributions:7044
The whole agent commission thing is B.S. If confronted about it, the dishonest agents throw their hands in the air like you made it up and say "hey, shop around." But I was floored when the other day the realtor quiz link somebody posted here had a question about the commission, where the correct answer (and I thought it was satire) said "no, you work hard and you deserve it" or some vague unapologetic crap.
- Daniel Nesemeier, "dnesemeier"
- Contributions:1379
K,
In some cases it is called out, and it others it's dealt with if the situation occurs during the listing through a renegotiation of the agreement. Having an unrepresented buyer isn't a normal occurence. If a buyer wants to represent himself it may make sellers with agents very happy since in most cases the negotiating experience of the agent would assure top dollar for their client.
Attorneys are good negotiators too but unless they are practicing the buying and selling of homes on a daily basis and have the tools necessary to perform market analyses they'd be negotiating with one hand behind their back (and that would be enough for some agents ;-) ). The RE attorneys I know are either working commercial deals or at title companies, they don't do residential sales, and they don't want to.
Caveat Emptor!
In some cases it is called out, and it others it's dealt with if the situation occurs during the listing through a renegotiation of the agreement. Having an unrepresented buyer isn't a normal occurence. If a buyer wants to represent himself it may make sellers with agents very happy since in most cases the negotiating experience of the agent would assure top dollar for their client.
Attorneys are good negotiators too but unless they are practicing the buying and selling of homes on a daily basis and have the tools necessary to perform market analyses they'd be negotiating with one hand behind their back (and that would be enough for some agents ;-) ). The RE attorneys I know are either working commercial deals or at title companies, they don't do residential sales, and they don't want to.
Caveat Emptor!
Yes Klarek,
I think the question was something like, under what circumstances should you offer a concession on your commission - and the correct "answer" was never - you earned it!
I think the question was something like, under what circumstances should you offer a concession on your commission - and the correct "answer" was never - you earned it!
Aussiebear,
At 400/hr you would not be my choice for a RE attorney.
Further, as you well know, representing yourself in a RE transaction is not "practicing law" - or there would be no agents at all.
At 400/hr you would not be my choice for a RE attorney.
Further, as you well know, representing yourself in a RE transaction is not "practicing law" - or there would be no agents at all.
- klarek the realist
- Contributions:7044
k101, it wasn't the only question that seemed too outrageous to be true, but it shocked me how open they are with their collective greed. I say that not about agents in general, just the lying organization they have to carry the card of.
- aussiebear
- Contributions:10
Daniel, I agree. There is much more to buying and selling property than negotiating skills. I'm confounded that so many people believe they are "experts" in the buying and selling of property. We don't all believe we are experts at manufacturing clothing, growing a harvest, raising livestock, or doing our tax returns. We effectively farm that job out by, for example, paying a higher price for a finished piece of clothing that we didn't have to make ourselves, etc... It astounds me that real estate is the exception in the public mind set. In my opinion, the state of California should make it a requirement that real estate agents have their law licenses. There's a lot of case law that comes out of residential real estate sales. And that's with the use of agents. Why does the guy on the street think he can do it better? I think it's even more complicated than the state allows for; the public mind set is entirely incorrect.
For the same reasons we can't price fix, the government cannot tell us what business model we have to use. There are brokers out there that are willing to negotiate a listing agreement.
"If a buyer wants to represent himself it may make sellers with agents very happy since in most cases the negotiating experience of the agent would assure top dollar for their client."
Dan, I understand your point. The sad truth is that in my experiences the agents really did very little to negotiate anything. They were basically messengers, and it was left to us to decide everything with fairly little guidance. I can't help but believe that that is the norm.
Negotiation is area that sets truly good agents apart. If you were local to me, I would certainly consider requesting your services - or those of Elvis, Rob or Marci. And, if I did, I would ensure that you were appropriately compensated. However, if I am not going to get the benefit of your services and am going to be shouldering the work on my own, then I sure as hell don't want to line the listing agents' pockets nonetheless.
Dan, I understand your point. The sad truth is that in my experiences the agents really did very little to negotiate anything. They were basically messengers, and it was left to us to decide everything with fairly little guidance. I can't help but believe that that is the norm.
Negotiation is area that sets truly good agents apart. If you were local to me, I would certainly consider requesting your services - or those of Elvis, Rob or Marci. And, if I did, I would ensure that you were appropriately compensated. However, if I am not going to get the benefit of your services and am going to be shouldering the work on my own, then I sure as hell don't want to line the listing agents' pockets nonetheless.
- aussiebear
- Contributions:10
K, you missed my point entirely. If you are a pension attorney, and you try to do some legal work for a client who has a real estate issue, well, you'd be a bit out of your league. Just because you are a lawyer doesn't mean you can totally understand the real estate contracts and process, and ramifications thereof, as comfortably as you could read a pension plan. That's my only point. And if you as a lawyer would have some trouble totally understanding everything in a real estate transaction, at least without some significant legal research (what are all those state law code sections referred to in that pesky purchase contract and all those disclosure statements), then what about someone with no law degree? I'm happy that you are a champion of the man in the street; but the man in the streets needs assistance of a good agent.
- aussiebear
- Contributions:10
Aileen, I can't respond to you as I don't have outlook. but no, I'm not Austrailian, sorry to say. And if you've been reading, I'm in LA.
"Just because you are a lawyer doesn't mean you can totally understand the real estate contracts and process, and ramifications thereof, as comfortably as you could read a pension plan."
Sorry Aussie - but you have lost credibility with this statement.
Further, I have been advocating the use of a RE attorney throughout this thread. There is no way that I am doing a title search!
Sorry Aussie - but you have lost credibility with this statement.
Further, I have been advocating the use of a RE attorney throughout this thread. There is no way that I am doing a title search!
- Daniel Nesemeier, "dnesemeier"
- Contributions:1379
I think there's at least one state (NY, maybe MA too, but I could be wrong) that leaves the contracting up to the attorneys. The agents use letters of intent to get the ball rolling.
There are certainly people out there who can do the research on their own and get a good deal and that's great. Most people are looking toward Realtors for good service and a minimal amount of headache when they buy or sell and are willing to pay a fee for that. And there are others who just loathe us. I think the primary reason for that loathing is a lack of trust of the industry. There are a lot of people around who don't trust others, and it isn't isolated to only realtors, or lawyers, or doctors...some people just don't trust anyone.
So, loathers aside, I applaud anyone who can work their own transaction and be happy with the outcome. The loathers, on the other hand, will always look to blame someone for their bad deal. It's really a shame.
There are certainly people out there who can do the research on their own and get a good deal and that's great. Most people are looking toward Realtors for good service and a minimal amount of headache when they buy or sell and are willing to pay a fee for that. And there are others who just loathe us. I think the primary reason for that loathing is a lack of trust of the industry. There are a lot of people around who don't trust others, and it isn't isolated to only realtors, or lawyers, or doctors...some people just don't trust anyone.
So, loathers aside, I applaud anyone who can work their own transaction and be happy with the outcome. The loathers, on the other hand, will always look to blame someone for their bad deal. It's really a shame.
- aussiebear
- Contributions:10
K, the credibility loss is on your side I'm afraid. Everyone understands the meaning of being an expert in something. If all you do is pension law, you could read through a pension plan and spot problems at the speed of light. If you then read all the RE contracts, suddenly you're at a snales pace and doing research to boot. That's a pretty simple concept. No credibility lost on my side at all. And a buyer who spends money hiring a RE lawyer to represent him or her in a purchase is wasting their money. That's what the agent is there for, at no cost to the buyer. I understand there are some regions of the country wherein RE lawyers are used, and perhaps you are in one of them. But in California, buyers and sellers don't hire lawyers to represent them in RE transactions. Perhaps you are indeed a real etate attorney advocating the lining of your own pocket at the expense of the agents. I'm checking out now. I have to go earn my $400/hour helping my most recent seller client who completed a residential sale with a buyer who was not represented by an agent and who got sued by the buyer after the close because the buyer didn't understand the disclosures. And it's not the seller's agents duty to explain them. The buyer should have had an agent or he wouldn't be in the pickle he's now in. Good night.
Time to reform commissions paid to real estate agents
In the typical home sale, the seller and seller’s agent write a contract agreeing to a seller’s agent commission and a buyer’s agent commission if the buyer has an agent.
If the buyer does not have an agent, the seller and seller’s agent agree in the contract to split the buyer’s agent commission for themselves. For example, the typical seller’s agent commission is around 3% and the typical buyer’s agent commission is also around 3%. If the buyer does not have an agent, the seller’s agent may take the original 3% seller’s agent commission and a 2% buyer’s agent commission. The seller gets to keep the remaining 1% buyer’s agent commission.
Since all of this is agreed to in a contract between the seller and the seller’s agent, the independent buyer is prevented from competing for the buyer’s commission. The seller and seller’s agent are effectively overcharging independent buyers, inflating housing prices, and eliminating any competition.
The internet has fundamentally changed the real estate business. It has made it very easy for a home buyer to purchase a home on their own. The MLS is now available on many web sites and allows anyone to easily search for the type of house they want. In addition, there are many web sites that will let you check recent home sale prices in the area you are interested in such as Zillow. Setting up appointments to see a home is a simple email or phone call. Attorneys can, and in my opinion should, be hired to write and review contracts and attend the closing. For a typical sale, the fee is less than $1,000. So unless you are new to town, need a very expensive chauffer, or do not like to bargain, a buyer’s agent really is not necessary (continued next post).
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