How do real estate agents work

[spidey07]

This is confusing me. My first home I bought from a builder and no real estate agent was involved. Now we have my home, plus hers to sell and purchase a new one. Sell two properties, purchase one.

I started doing the math. 7% of each homes selling price is a significant amount of money for what would amount to probably no more than 80 hours of work. How negotiable are these selling fees? One of the homes will sell very easily.

Then we go to our new home, where 7% is a crap load of money when all we're doing is picking out a home we like and buying it. I just don't see the need to use an agent to "find" a home. Can I knock off 3-5% on the price of the new home just because I'm not represented by an agent and just pay the listing agents commission? From what I understand the 7% commission fee is already built into the price of the home and the selling and buying agents split that.

Thanks in advance.

 

[bignateyk]

It's a big scam.

 

[Mike Gayner]

I don't know why anyone uses buying agents - what an incredible waste of money.

 

[JulesMaximus]

7%? Where are you that real estate commissions are 7%? 6% is traditional but even 5% split 50/50 between the buyer's agent and the seller's agent is very common.

 

[spidey07]

7%? Where are you that real estate commissions are 7%? 6% is traditional but even 5% split 50/50 between the buyer's agent and the seller's agent is very common.

The one's we've talked to say 7% and one said 6% if they bring the buyer. That's why I was wondering how much negotiating room I have. Meeting another one tonight.

If I'm selling two properties I "assume" I have more leverage.

 

[bignateyk]

Usually it's 5 or 6% split between the two agents, but the seller pays for the whole thing. So if you are selling a 300K house and a 7% commission, you pay out $21000 for the two agents. Like I said, it's a big scam.

 

[OCGuy]

The one's we've talked to say 7% and one said 6% if they bring the buyer. That's why I was wondering how much negotiating room I have. Meeting another one tonight.

6% 3.5/2.5 or 3/3 is very common. But each market is different, so nobody can really say what is typical for your area.

 

[OCGuy]

I don't know why anyone uses buying agents - what an incredible waste of money.

Luckily the buyer doesnt pay the agent a dime. So they are wasting $0.

 

[spidey07]

I don't know why anyone uses buying agents - what an incredible waste of money.

Wife kept going on and on about how much better they are at picking out homes for you and taking you to them.

We know exactly what area we want to be in, have all our must haves and can't stands worked out and have this thing called the intarweb. I really don't see the need but she really wants to use one.

 

[JulesMaximus]

The one's we've talked to say 7% and one said 6% if they bring the buyer. That's why I was wondering how much negotiating room I have. Meeting another one tonight.

If I'm selling two properties I "assume" I have more leverage.

You definitely have more leverage. I'd demand 5% on the properties you're selling or tell the agent you're going to list with someone else.

That said, I'd want an agent with a proven track record and many years of experience. Any fuckwit can get a real estate license...it takes someone with dedication and experience to be good at it.

 

[wyvrn]

It is 6% commissions, figure 2-3% on closing costs, and 1-2% on repairs/etc to get it show ready. Then you also have to factor in moving costs. Really, you are looking at 9-10% total spent when the ship sails.

I have tried selling myself, and have done so. However, real estate agents (good ones) are worth their money. Takes the stress off of doing the showings yourself. Plus if you FSBO, many buyers see that as a sign to discount their offer, so you will get less, anyway.

As much as a hate to say it, Real Estate agents are your best friend and there is a reason why they are still around, and most residential sales go through them.

When you find an agent, use the same one to sell both homes. They'll usually give you a percentage discount on each for the package.

Finding a home can be easy, but to get inside it, you will most likely agree to pay 3% to the selling broker anyway. (The Seller will, which can affect the sales price they accept from you - they are in the same boat you are selling your homes.)

 

[Via]

When I sell my house I think I'm going to at least try FSBO.

If no luck, then I'll get an agent.

 

[bignateyk]

Other than the fact that it's a big scam, i've never understood why the seller has to pay the buyers agent commission.

 

[waggy]

You definitely have more leverage. I'd demand 5% on the properties you're selling or tell the agent you're going to list with someone else.

That said, I'd want an agent with a proven track record and many years of experience. Any fuckwit can get a real estate license...it takes someone with dedication and experience to be good at it.

a few years ago it seemed like everyone was a real estate agent.

when we were looking for a house we talked to one agent that was nice until we started actually looking at houses. the lady tried to push us into a shitty run down house that was so far overpriced it was a joke. she refused to show us what we wanted and kept pushing on the one house (took us to it 3 times). finally i blew up at her and we never called her back.

i plan on never useing one again. not worth the 6% it cost

 

[Thump553]

Commission rates are negotiable. Seven percent is the top end of the range in my area, 5% is common through negotiation, especially when you are listing two homes. Make sure they don't hit you for extra BS fees like "document retention fees" Prudential here gouges $200-300 extra from their customers to pay for keeping ther files-files the state real estate board mandates the broker keep. Does your doctor, dentist or lawyer charge you similar fees? No.

Generally the listing agreement is between the seller and the broker. If another broker brings in a buyer, that's a co-broke, they get a portion of the commission agreed to by the seller. So you won't be able to knock anything off the price if you buy a listed house without your own broker (unless it is a sale by owner situation-but 99% of them have unrealistically high expectations on the price) the seller's broker keeps the full commission then. Having an exclusive buyer's broker listing gives you some advantage (so long as you don't agree to pay any extra fees) as your broker will work harder to find a house for you. With two sales and one buy you are a very juicy prospect to any broker.


Brokers are sales people, pure and simple. Good ones are well worth the commission. make sure you find a good one that you are comfortble with, then negotiate your entire listing/buying package with him/her. Keep the time limit realistic-I'd say three months in case it doesn't work out.

 

[Vette73]

Do a FSBO if the house is easy to sell. This way you can lowwer the price a little and still come out ahead.

Oh and if selling try to list it soon. Most shop/sell when school gets out. People don;t want to move their kids schools so they wait until "summer" kicks in.

 

[Zargon]

I don't know why anyone uses buying agents - what an incredible waste of money.

how easy is it w/o a RE Agent is it to see 30 homes w/o waiting for open houses that could cause competing offers?

 

[Slew Foot]

In the Bay Area it's a total joke. 60K for like 5 hours worth of work, f'n joke.

 

[spidey07]

how easy is it w/o a RE Agent is it to see 30 homes w/o waiting for open houses that could cause competing offers?

Thanks. You managed to actually point out one thing having a buying agent would be good for.

And thanks for all the other help. So 6% is normal and I have significant leverage to push for 5 on the sale of both houses. Will there be anything contractually that binds the sale of two, purchase of one all together or are they all treated as separate contracts/agreements?

I don't want to be locked into a buying agent if it turns out I didn't like them during the sale of our homes.

 

[Zargon]

I would imagine its however you want to do it

I would also imagine if you make it clear then the agent would work harder to do a good job so they can get repeat business

 

[Gibson486]

I don't know why anyone uses buying agents - what an incredible waste of money.

why wouldn;t you use it? it's a free service to the buyer.

 

[tk149]

Luckily the buyer doesnt pay the agent a dime. So they are wasting $0.

This is apparently a common misconception.

Who pays the Seller? You (the buyer).
Where does the Seller get the money to pay the agents (buyer's agent and seller's agent)? You (the buyer)

The price of the house has the seller's agent's fee built in. Typically that is split with the buyer's agent.

I've read in some internet forums that some buyers without buyer's agents have been able to lower the price by half the agent's commission (e.g. if the commission is 6%, the buyer can get the home for 3% less), and some have not.

Maybe it depends on where the house is located and the market conditions?

Anyway, a good buyer's agent presumably can help with all the necessary paperwork - including Title company, recommending a mortgage broker or bank loan officer, and home inspector. They can also help you decide if the price is comparable to other houses in the area, and provide information on taxes and schools. Of course, there is a thing called the internet.

I'm actually in the process of buying a condo, and was wondering whether to use a buyer's agent. I bought my first house using a buyer's agent, and while happy with her services, do wonder if it was worth the $6000 fee (3% of the closing price).

EDIT: I forgot to add that presumably a Buyer's Agent is better at negotiating than your average homebuyer, and supposedly can get you a better price.

 

[DivideBYZero]

Wow, talk about ass-raping. In the UK the selling agent is who you register with as a buyer. It costs you nothing and they suggest houses and take you around them. The seller will pay the agent a fee, usually between 1.5-3% of the sale price, upon completion of the deal. As a seller it's up to you to negotiate the percentage.

 

[ScottFern]

I know as a first time home buyer my real estate agent provided good advice, advocated for us strongly with negotiations when we found a house we liked, and she had referrals for all important services we needed during the buying process (home inspector, lawyer, radon testing service, etc) so it was nice to have her on our side as first timers.

 

[boomerang]

In this market I wouldn't even consider selling without a Real Estate agent. Now mind you, the market here is in the toilet, but I will go on.

Having the home in a multi-list is the best thing you could do. Every agent in the area at all the firms will see your home for sale. Having a hundred agents with the potential to sell your home far outweighs you trying to sell it yourself. These people, if they are pros, will weed out the lookers and those that can't afford to buy your home. They will be available to show your home when you are at work. They will handle advertising your home, will make sure your buyer is qualified in a timely manner and will handle the paperwork, inspections, etc., etc. Agents ignore FSOB homes. It's a fact and I know.

I sold RE many moons ago. There are tons and tons of lookers out there. It's a form of entertainment for them. Most of the folks that walked in the office could only afford a home priced at about 60% of what they wanted. As a FSBO, you will have to decide who is qualified and who isn't. You will be responsible for making sure they are keeping on top of the process of acquiring financing. You will also be responsible for finding out if they have sold the home they are in, or have even put it on the market. About 50% of my customers that walked into my office looking to purchase lied to me about something. Usually about how much they made. Often about the status of the home they were selling.

Your phone will be ringing at all hours and you will miss work to be there to show the home when a potential buyer wants to see it. Regardless of whether they qualify or not.

The thing about commissions is that when the market it bad, a RE agent is reluctant to cut their commission. It's not necessarily because they need the dough, it's because their costs have not been reduced. The time when you can for sure negotiate the commission is when the market is hot. Little advertising needs to be done and the home will sell quickly. By all means see if you can get it reduced. But let me tell you a little trick. Offering a commission of 1% above the going rate will attract the attention of agents in your area. Your home will become the top priority in the office which you list with and with agents at other offices too. .5% might get the job done. Your agent can tell you.

Paying a buyers agent is a personal choice. Your selling agent should be able to show you what's available with no problem. Let the seller pay him or her. As long as you're buying in the same area, go with your listing agent for your purchase.