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[quote author="awgee" date=1241003348][quote author="Mcdonna1980" date=1240995425][quote author="awgee" date=1240994162][quote author="Mcdonna1980" date=1240991427][quote author="gypsyuma" date=1240985696]





I refuse to use an agent, so I was doing all this on my own. Why jack up the price of a home, when I have a cell phone, a laptop, and a GPS system??? </blockquote>


Gypsyuma, I recommend you read through <a href="http://www.irvinehousingblog.com/forums/viewthread/4163/">this thread</a> where we discussed the pros and cons of using a buyer's agent.



If you go into the transaction without an agent, you are not going to save money because the seller's agent will keep the full 6% commission.</blockquote>


I disagree 1000%. No one in my family has used a buyer's agent in the last twenty years. We make our offers with the decreased commission in mind. So far, not one transaction has included a full commission.</blockquote>


Well, from my understanding of the thread discussion I linked. In order to avoid the seller's agent getting less than 6% rate, you would have to amend the contract between the seller and seller's agent. I'm not sure how to do this. If this is not correct, then how do decrease the rate to say 3% for the seller's agent?

In one of your previous posts, you suggested offering 3% less on the purchase price in order to compensate for the lack of a buyer's agent. However, if you do that then the seller's agent will still get 6% of the amount offered. How does this put you in a better position to get an accepted offer from the seller? IMO, getting a buyer's agent that will kick you back a portion of the commission would be the cheapest route for both the seller and buyer.</blockquote>


The seller's contract is between the seller and the agent, just as USC says. It is not appropriate for the buyer to try and negotiate the seller's contract.







And we make our offers low enough with the knowledge that the agent will lower their commission. I have not been privy to the actual contract. I only know what the seller or seller's agent told us. Maybe they were lying? It seems important to the seller's agent to let us know that we are getting such a deal because they are halving "their" commission.







And YES, it is that simple. It is a lot simpler than having a buyer's agent who actually represents their own interest, (commission), and not the buyer's interest. Our family has found that real estate transactions go much smoother with one less agent involved.





And you must remember that the seller's agent is NOT a dual agent with a non-represented buyer. The seller's agent legally represents the seller and has a contract only with the seller.





To those who think that a buyer's agent represents the buyer's interest in a real estate transaction, Good Luck. IMO, it is a fallacy propagated by the real estate industry using a scare tactic that the transaction is too complicated for you to understand and you need the help of an expert. The escrow company takes care of most of the issues after the offer contract. The papers the buyer has to sign are standard. Very few re agents are expert in anything, especially real estate. The most successful agents are expert in sales.







We use listing agents because they are experts at marketing, (sales). And only about 5% of the listing agents out there are any good at marketing.</blockquote>
It is true that if the listing agent really wants to get the deal done with a buyer who is not using agent, they'll go ahead and lower their commission (especially if the seller presses them about it). It's not uncommon and I'm sure it's done, but it's definitely not the norm. You are completely right that the real estate forms are standard forms that the California Realtor Association provides via WinForms and the seller's agent can provide the buyer all the forms to sign for their file. Real estate transactions are not rocket science or brain surgery, but many people don't have the time or patience to deal with all the BS and speedbumps that are encountered during the process. You are also correct that the listing agent is not a dual agent until the buyer's sign a representation agreement with the buyers. Although you are right that escrow does handle a lot of the issues, agents do a lot more work than you think behind the scenes because no real estate transaction every goes as smooth as silk. There's always things that pop up that need to be handled outside of the scope/responsibility of the escrow/title officer. And you won't get any argument from me that very few real estate agents are experts in anything, most are useless.



I think you and I have different ideas of what makes an agent successful. Probably in your eyes, a successful agent is one who makes millions of dollars and has more transactions than they can handle. For me, a successful agent is one who educates their party with unbiased information and acts as a consultant and an advocate for them. Like for me, I never became an agent to make a living from it so I'd never push anyone into a transaction (creates bad karma too). I'll go ahead and stick with accounting/banking/finance skills to pay the bills.



There are different skill sets that make a good listing agent and a good buyers agent. As you said, a good listing agent has great marketing/sales skills. While a good buyer's agent has great negotiation/mediation/conflict resolution skills. Personally, I'm enjoying being on the buy side.



Let me ask you this question...do the incentives between the buyer and buyer's agent become more aligned as the buyer's agent increases the contribution of their commission to the buyers?
 
This is a great discussion.





USC or IR2, what do you think of the idea of a fixed fee for the buyer's agent? Removing the price-dependency would seem to me to align the interest of the buyer and their agent more closely.



So 3% of a $500k house is $15,000, which is way to much for an educated buyer who doesn't make their agent run around (though may be appropriate for say someone relocating to a new area who needs "full-service")



Now it seems like buyer's agents will "kick back" (what, 1%-2%), which seems more reasonable, but still aligns the agent's interest with the sale price.



What if the buyer says "my budget is ~$500k, so I'm willing to offer you $7.5k to do the deal, and you will kick back any difference between that and 3% (whatever that works out to be).



Is this the future in your (or others?) opinions?
 
[quote author="freedomCM" date=1241052857]USC or IR2, what do you think of the idea of a fixed fee for the buyer's agent?</blockquote>


<strong>Fair pay for fair service sounds good by me.</strong>

I'm open to hearing what people's proposals are.

I recognize the determination of "fair" is where the grey area lies.



I'd advise in a RE relationship (and most all relationships) to follow the same 3 simple rules:

<strong><span style="color: blue;">1. Open communication.

2. Honest dealings.

3. Treatment with respect.</span></strong>



(and it goes both ways.)



If you think your broker is not earning their fee, tell them.

If you are happy with them, tell them.

Express your expectations.



An analogous example:

<strong>What is a fair price for dinner?</strong>

Some people want a nice Filet.

Some people want a hot dog.

I would be suspicious of a vendor selling the former at the latter's price, and vice versa.



[quote author="freedomCM" date=1241052857]Removing the price-dependency would seem to me to align the interest of the buyer and their agent more closely.</blockquote>


I disagree (and am strangely closer to being with awgee on this one...)

If you are only focusing on the short-term, you see the following for each to maximize their own returns, respectively:



The buyer's interest - get the best price on the right home.

The RE agent's interest - get the deal done. (we only receive payment upon closing)

***add***

The RE lawyer's interest - get the deal <u>un</u>done (and keep the billable hours rolling.)



No matter how much you raise or lower the pricing, the objectives remain the same, and are never truly aligned.

If commissions are raised, it would seem that any one deal might cause the agent to be overly-interested in closing a sale.

If commissions are lowered, one could just as easily argue that the broker has to close more sales to see the same $$$ and so would be prone to higher-pressure tactics.



If you focus on the long-term, it is much simpler:

Recognize that a good review from someone, in this business, goes a long way. And a bad review goes even further.



This was probably not the answer you were looking for, but hopefully helpful nonetheless.

Good luck, please resume...

-IR2
 
[quote author="usctrojanman29" date=1241006970]



Let me ask you this question...do the incentives between the buyer and buyer's agent become more aligned as the buyer's agent increases the contribution of their commission to the buyers?</blockquote>


Maybe more, but that is just speculation as I have never been involved in a contribution of commission to the buyer. But, my father was once brought an offer by a realtor for the realtor's client on a property that was not even on the market. My dad countered with an offer that included no commission and was quite honest that the realtor represented the buyer and the buyer would have to make his own arrangements. There were no problems. The buyer and my dad became friends and are friends to this day.





IMO, the whole "there are always problems is a real estate transaction" is another realtor scare tactic which has no basis in reality. Of course there will be problems in a large, possibly complicated transaction, but the idea that a buyer's agent is necessary or even helpful in solving those problems is nonsense. Bottom line is that the buyer or the seller or a combination of the two will always have to either compromise or obtain necessary paperwork or increase their understanding or whatever, and the agent will neither contribute the money at issue or the paperwork or the whatever. The most a buyer's agent can do is offer an explanation for an issue, but it is nothing the seller's agent can not do or the escrow company can not do or the lender can not do or ...



Adding one more person to a deal does not simplify the deal. It complicates it because each person has their own interest and motivations.







In my experience, those who put their integrity above obtaining money never find it necessary to tell anyone.







And a story about a "problem" I encountered in a real estate sale. A couple of weeks after escrow opened, our agent, (we were the sellers), told us that the buyer's agent contacted her and said the loan would not go through because the appraisal was not close enough to the contracted sale price, and we would need to "renegotiate" the sales price. I asked our agent to please thank the potential buyer for their offer, and we would move on to the back up offer. Within an hour the appraisal magically was fine and the sale went through as originally contracted for. And no, we did not have an actual back up offer.
 
[quote author="freedomCM" date=1241052857]This is a great discussion.





USC or IR2, what do you think of the idea of a fixed fee for the buyer's agent? Removing the price-dependency would seem to me to align the interest of the buyer and their agent more closely.



So 3% of a $500k house is $15,000, which is way to much for an educated buyer who doesn't make their agent run around (though may be appropriate for say someone relocating to a new area who needs "full-service")



Now it seems like buyer's agents will "kick back" (what, 1%-2%), which seems more reasonable, but still aligns the agent's interest with the sale price.



What if the buyer says "my budget is ~$500k, so I'm willing to offer you $7.5k to do the deal, and you will kick back any difference between that and 3% (whatever that works out to be).



Is this the future in your (or others?) opinions?</blockquote>


The problem with a flat-fee arrangement is that there is no connection between time invested and compensation earned (the problem is even worse with percentage-based commission structures). IMO, the best arrangement is a flat fee to cover transaction coordination and profit and a time-and-materials billing to cover costs of work the goes in to finding a property and negotiating a deal. This way, if a buyer finds a property with a minimum of searching, they get a significant refund at the closing table. If they buyer looks at a great many properties, they will pay a larger commission (get a smaller refund or none at all).



I have also come to the conclusion that the percentage-based system has no justification at all. It takes no more effort for a realtor to facilitate a transaction on a $2,000,000 property than it does on a $200,000 property. There is no justification at all for a 10-fold increase in commission on the more expensive property--other than greed.



The other problem with realty in general is the certainty of getting paid. Realtors could charge much less if they knew they were going to get paid for the work they did. People need to realize that when you pay a realtor a 3% commission, you are not just compensating them for the time you spent with them, you are compensating them for the time they spent with the other clients who did not buy a property and generate a commission. The amount you are paying is ridiculously high because the other people who did not pay at all. (This is the same problem plaguing our healthcare system in a different form).



awgee's argument about realtors actually being a hindrance is probably true for more sophisticated buyers and sellers. Sometimes the realtor can actually kill the deal by passing misinformation or attempting to pull some transparent negotiating tactic that the sophisticated parties see through (like in his example). However, the less sophisticated parties may benefit from a skilled negotiator who is familiar with the process of negotiating and navigating escrow. Much depends on the individuals involved.
 
I would think it takes a lot more work to sell a $2,000,000 home than a $200,000 home just because if you list a 200k home in orange county you will probably have multiple offers within a month (as long as it isn't falling apart). It would probably take at minimum five times as long to sell a 2 million dollar home just because there are a lot less people who are able to buy.
 
[quote author="ABC123" date=1241079337]I would think it takes a lot more work to sell a $2,000,000 home than a $200,000 home just because if you list a 200k home in orange county you will probably have multiple offers within a month (as long as it isn't falling apart). It would probably take at minimum five times as long to sell a 2 million dollar home just because there are a lot less people who are able to buy.</blockquote>


On the listing side, this is true. A listing agent will spend much more time, effort and money marketing a $2,000,000 property than a $200,000 one--although 10 times the commission is still may not be warranted (probably isn't).



On the buyer's agent side of the equation, there really is no difference except that someone looking at more expensive properties may look at more of them.
 
[quote author="ABC123" date=1241079337]I would think it takes a lot more work to sell a $2,000,000 home than a $200,000 home just because if you list a 200k home in orange county you will probably have multiple offers within a month (as long as it isn't falling apart). It would probably take at minimum five times as long to sell a 2 million dollar home just because there are a lot less people who are able to buy.</blockquote>




You missed reading what was written (by IR and me too). We were/are talking about the compensation for the *BUYERS* agent.
 
IR-



Why do you think a buyer should use a real estate salesperson rather than a per-hour real estate lawyer, then?



(sorry, that is, for a "high functioning" buyer who doesn't need assistance finding the property they want to make an offer/close on, rather than a buyer in need of much more assistance (out of town or uneducated, etc)
 
[quote author="freedomCM" date=1241079731]IR-



Why do you think a buyer should use a real estate salesperson rather than a per-hour real estate lawyer, then?



(sorry, that is, for a "high functioning" buyer who doesn't need assistance finding the property they want to make an offer/close on, rather than a buyer in need of much more assistance (out of town or uneducated, etc)</blockquote>
Because if the transaction falls out of escrow you don't have to pay the buyer's agent anything but you would be stuck with a bill from the lawyer. Remember, a lawyer's cost isn't depending on the transaction closing and the clock keeps ticking on the billable hours until their services are no longer needed.
 
[quote author="freedomCM" date=1241079731]IR-



Why do you think a buyer should use a real estate salesperson rather than a per-hour real estate lawyer, then?</blockquote>


It is nearly impossible to eliminate the salesperson from the transaction, particularly for a listed property. If you go in without a buyer's broker, the listing agent will become the buyer's broker and take a 6% commission. awgee has the right idea by not getting within 3% of a seller's lowest offer and force the listing agent to reduce the commission to close the deal. Of course, the problem with that strategy is that agents are greedy and many will kill the deal rather than cut their commission. At least if you go in with your own buyer's broker, you can negotiate the kick-back.



If you know how to negotiate the deal yourself, you don't need the lawyer. They are a costly added expense. You could simply negotiate directly with the seller, draft your own escrow instructions, and go straight to an escrow agent to close the transaction. Most buyers are not sophisticated enough to draft their own escrow instructions, so I suppose you could use a lawyer or an escrow agent to help with that part. If you have those skills, you should do it yourself and try to save the full 3% on the buy side of the transaction.



Good brokers have some skill with negotiation, and they can be helpful to those without much practice, experience or confidence in their abilities in this area. Of course, many brokers have poor negotiating skills, and they become transaction leeches who hinder the process. This recession is driving many of them out of the industry--thankfully.
 
[quote author="usctrojanman29" date=1241080237][quote author="freedomCM" date=1241079731]IR-



Why do you think a buyer should use a real estate salesperson rather than a per-hour real estate lawyer, then?



(sorry, that is, for a "high functioning" buyer who doesn't need assistance finding the property they want to make an offer/close on, rather than a buyer in need of much more assistance (out of town or uneducated, etc)</blockquote>
Because if the transaction falls out of escrow you don't have to pay the buyer's agent anything but you would be stuck with a bill from the lawyer. Remember, a lawyer's cost isn't depending on the transaction closing and the clock keeps ticking on the billable hours until their services are no longer needed.</blockquote>


Exactly, and is exactly one of the reasons I would rather pay a lawyer or some other expert, even a realtor, on a time basis. If payment is dependent upon the deal closing and the deal is not in my best interest, it is a sham that the so called expert is working in my best interest. I would much rather pay for what I get. There is no free lunch. And the buyers who think they are not paying the agent's commissions because the commissions are coming out of the seller's proceeds, are fools. Not only are they paying the commissions, but the buyers are also paying property taxes, escrow fees, title insurance, etc. on the commissions.
 
[quote author="IrvineRenter" date=1241080445][quote author="freedomCM" date=1241079731]IR-



Why do you think a buyer should use a real estate salesperson rather than a per-hour real estate lawyer, then?</blockquote>


It is nearly impossible to eliminate the salesperson from the transaction, particularly for a listed property. If you go in without a buyer's broker, the listing agent will become the buyer's broker and take a 6% commission. awgee has the right idea by not getting within 3% of a seller's lowest offer and force the listing agent to reduce the commission to close the deal. Of course, the problem with that strategy is that agents are greedy and many will kill the deal rather than cut their commission. At least if you go in with your own buyer's broker, you can negotiate the kick-back.



If you know how to negotiate the deal yourself, you don't need the lawyer. They are a costly added expense. You could simply negotiate directly with the seller, draft your own escrow instructions, and go straight to an escrow agent to close the transaction. Most buyers are not sophisticated enough to draft their own escrow instructions, so I suppose you could use a lawyer or an escrow agent to help with that part. If you have those skills, you should do it yourself and try to save the full 3% on the buy side of the transaction.



Good brokers have some skill with negotiation, and they can be helpful to those without much practice, experience or confidence in their abilities in this area. Of course, many brokers have poor negotiating skills, and they become transaction leeches who hinder the process. This recession is driving many of them out of the industry--thankfully.</blockquote>


Why nearly impossible? Impossible to have no agent involved? Or impossible to eliminate just the buyer's agent? It is actually very easy to eliminate the buyer's agent. And you do not have to "force" anything. It is quite easy. You make your offer. You do not have to worry about the agent's commission. You make your offer with the "assumption" that there is 3% less commission involved. And unlike the horror stories, (more realtor scare tactic), of a selling agent not wanting to work with us, the opposite has proven to be true. It only takes a small bit of logic to figure this out. Can you negotiate a better deal with two agents getting a commission or with one agent getting a commission? Are there more complications with four entities negotiating or three, all of whom have their own conflicting interests at heart. If truth be known, the seller's agent is in reality trying to get the seller to lower their price as much as possible, which is in the buyer's best interest, and the buyer's agent is trying to get the buyer to pay as much as possible, which is in the seller's best interest. I can see the wheels turning now, "OH no, not us. Our realtor is a professional and we know that he/she has our best interest in mind." Reality says different folks. The realtor does not get paid unless the deal closes and their strongest motivation is to get paid.
 
[quote author="freedomCM" date=1241052857]This is a great discussion.





USC or IR2, what do you think of the idea of a fixed fee for the buyer's agent? Removing the price-dependency would seem to me to align the interest of the buyer and their agent more closely.



So 3% of a $500k house is $15,000, which is way to much for an educated buyer who doesn't make their agent run around (though may be appropriate for say someone relocating to a new area who needs "full-service")



Now it seems like buyer's agents will "kick back" (what, 1%-2%), which seems more reasonable, but still aligns the agent's interest with the sale price.



What if the buyer says "my budget is ~$500k, so I'm willing to offer you $7.5k to do the deal, and you will kick back any difference between that and 3% (whatever that works out to be).



Is this the future in your (or others?) opinions?</blockquote>
Honestly, the best idea to fix the whole incentive issue might be to go to an hourly or per job payment system for buyer's agents like Awgee mentioned. However, there is no perfect pricing/commission model for realtors out there and fighting the NAR to change the current system is like pushing a car up a cliff because it's like fighting a cartel. It is impossible to perfectly align the interests between a buyer and the buyer's agent. Maybe set up a fixed price model with incentive bonuses like developers have with general contractors on cost plus contracts? But it is so hard to set up a fixed price because the amount of work a buyer's agent spending with one buyer versus another can vary greatly. Maybe set up an hourly rate...how then you get into who sets the hourly rate and how does the buyer know they aren't being over billed on hours. The reality is that there is no way to set up a perfect compensation system for a buyer's agent. Honestly, I never understand why the commission percentage wasn't reduced as the price of the home increases because for the most part it takes the same amount of work on average for a buyer's agent to work with their buyers to close on a $100k home as it does to close a $1MM home. So I'll keep doing what I'm doing and other agents will keep doing what their doing.
 
[quote author="IrvineRealtor" date=1241068848][quote author="freedomCM" date=1241052857]USC or IR2, what do you think of the idea of a fixed fee for the buyer's agent?</blockquote>


<strong>Fair pay for fair service sounds good by me.</strong>

I'm open to hearing what people's proposals are.

I recognize the determination of "fair" is where the grey area lies.



I'd advise in a RE relationship (and most all relationships) to follow the same 3 simple rules:

<strong><span style="color: blue;">1. Open communication.

2. Honest dealings.

3. Treatment with respect.</span></strong>



(and it goes both ways.)



If you think your broker is not earning their fee, tell them.

If you are happy with them, tell them.

Express your expectations.



An analogous example:

<strong>What is a fair price for dinner?</strong>

Some people want a nice Filet.

Some people want a hot dog.

I would be suspicious of a vendor selling the former at the latter's price, and vice versa.



[quote author="freedomCM" date=1241052857]Removing the price-dependency would seem to me to align the interest of the buyer and their agent more closely.</blockquote>


I disagree (and am strangely closer to being with awgee on this one...)

If you are only focusing on the short-term, you see the following for each to maximize their own returns, respectively:



The buyer's interest - get the best price on the right home.

The RE agent's interest - get the deal done. (we only receive payment upon closing)

***add***

The RE lawyer's interest - get the deal <u>un</u>done (and keep the billable hours rolling.)



No matter how much you raise or lower the pricing, the objectives remain the same, and are never truly aligned.

If commissions are raised, it would seem that any one deal might cause the agent to be overly-interested in closing a sale.

If commissions are lowered, one could just as easily argue that the broker has to close more sales to see the same $$$ and so would be prone to higher-pressure tactics.



If you focus on the long-term, it is much simpler:

Recognize that a good review from someone, in this business, goes a long way. And a bad review goes even further.



This was probably not the answer you were looking for, but hopefully helpful nonetheless.

Good luck, please resume...

-IR2</blockquote>
Very well put! I think it is important that buyers select an agent that they feel comfortable dealing with (remember, your gut feeling is usually the right one about an agent). I've always believed that if you do the right thing then good things will happen to you (that whole karma thing). Referrals are the biggest form of flattery and really go a long way in letting the agent know that they did a good job and really had satisfied their clients.
 
[quote author="awgee" date=1241073087][quote author="usctrojanman29" date=1241006970]



Let me ask you this question...do the incentives between the buyer and buyer's agent become more aligned as the buyer's agent increases the contribution of their commission to the buyers?</blockquote>


Maybe more, but that is just speculation as I have never been involved in a contribution of commission to the buyer. But, my father was once brought an offer by a realtor for the realtor's client on a property that was not even on the market. My dad countered with an offer that included no commission and was quite honest that the realtor represented the buyer and the buyer would have to make his own arrangements. There were no problems. The buyer and my dad became friends and are friends to this day.





IMO, the whole "there are always problems is a real estate transaction" is another realtor scare tactic which has no basis in reality. Of course there will be problems in a large, possibly complicated transaction, but the idea that a buyer's agent is necessary or even helpful in solving those problems is nonsense. Bottom line is that the buyer or the seller or a combination of the two will always have to either compromise or obtain necessary paperwork or increase their understanding or whatever, and the agent will neither contribute the money at issue or the paperwork or the whatever. The most a buyer's agent can do is offer an explanation for an issue, but it is nothing the seller's agent can not do or the escrow company can not do or the lender can not do or ...



Adding one more person to a deal does not simplify the deal. It complicates it because each person has their own interest and motivations.







In my experience, those who put their integrity above obtaining money never find it necessary to tell anyone.







And a story about a "problem" I encountered in a real estate sale. A couple of weeks after escrow opened, our agent, (we were the sellers), told us that the buyer's agent contacted her and said the loan would not go through because the appraisal was not close enough to the contracted sale price, and we would need to "renegotiate" the sales price. I asked our agent to please thank the potential buyer for their offer, and we would move on to the back up offer. Within an hour the appraisal magically was fine and the sale went through as originally contracted for. And no, we did not have an actual back up offer.</blockquote>
You and your family are obviously very savy, sophisticated buyers/sellers so to you guys a run of the mill agent will only get in the way and complicate things for you. I'm in the same boat where I would be more than comfortable with representing myself even if I wasn't an agent because of my knowledge. It is unfortunate that buyers don't have access to certain things that realtors do (looking up detailed property information like loan information). You can thank the cartel formally known as the NAR for that. We'll have to agree to disagree with the fact that less sophisticated buyers can benefit from working with a good buyer's agent. If everyone was half as sophisticated as you, we would have never gotten into the real estate mess we are in today because I'm sure you try to take the emotional aspect out of a real estate transaction as much as you can and focus on the analytical side making it an objective decision.



Nice job on calling the bluff of that buyer's agent, but you know that he should have called your bluff and pulled his offer if the appraisal really did come in lower and/or his buyers wanted to spend the amount a certain amount after the fact. However, like with most agents he feared that he would have lost the transaction along with the commission and came crawling back with his tail between his legs because he wanted to get paid. haha
 
[quote author="awgee" date=1241091606][quote author="IrvineRenter" date=1241080445][quote author="freedomCM" date=1241079731]IR-



Why do you think a buyer should use a real estate salesperson rather than a per-hour real estate lawyer, then?</blockquote>


It is nearly impossible to eliminate the salesperson from the transaction, particularly for a listed property. If you go in without a buyer's broker, the listing agent will become the buyer's broker and take a 6% commission. awgee has the right idea by not getting within 3% of a seller's lowest offer and force the listing agent to reduce the commission to close the deal. Of course, the problem with that strategy is that agents are greedy and many will kill the deal rather than cut their commission. At least if you go in with your own buyer's broker, you can negotiate the kick-back.



If you know how to negotiate the deal yourself, you don't need the lawyer. They are a costly added expense. You could simply negotiate directly with the seller, draft your own escrow instructions, and go straight to an escrow agent to close the transaction. Most buyers are not sophisticated enough to draft their own escrow instructions, so I suppose you could use a lawyer or an escrow agent to help with that part. If you have those skills, you should do it yourself and try to save the full 3% on the buy side of the transaction.



Good brokers have some skill with negotiation, and they can be helpful to those without much practice, experience or confidence in their abilities in this area. Of course, many brokers have poor negotiating skills, and they become transaction leeches who hinder the process. This recession is driving many of them out of the industry--thankfully.</blockquote>


Why nearly impossible? Impossible to have no agent involved? Or impossible to eliminate just the buyer's agent? It is actually very easy to eliminate the buyer's agent. And you do not have to "force" anything. It is quite easy. You make your offer. You do not have to worry about the agent's commission. You make your offer with the "assumption" that there is 3% less commission involved. And unlike the horror stories, (more realtor scare tactic), of a selling agent not wanting to work with us, the opposite has proven to be true. It only takes a small bit of logic to figure this out. Can you negotiate a better deal with two agents getting a commission or with one agent getting a commission? Are there more complications with four entities negotiating or three, all of whom have their own conflicting interests at heart. If truth be known, <strong>the seller's agent is in reality trying to get the seller to lower their price as much as possible, which is in the buyer's best interest, and the buyer's agent is trying to get the buyer to pay as much as possible, which is in the seller's best interest</strong>. I can see the wheels turning now, "OH no, not us. Our realtor is a professional and we know that he/she has our best interest in mind." Reality says different folks. The realtor does not get paid unless the deal closes and their strongest motivation is to get paid.</blockquote>
That is one big "assumption" you are making about the 3% less commission. I think you just contradicted yourself in the bolded statement. The commission increases the same amount for the listing agent and the buyer's agent as the price increases. And why the hell would a buyer's agent (or even a listing agent) want to risk trying to make an extra couple of $100 in commissions by squeezing out an extra $10k-$20k in the sales price at the risk of losing the entire commission??? Makes no sense to me. Both the seller's and the buyer's agents are incentivized to get the transaction closed and with a realistic and motivated seller that would generally result in a lower final sales price because as you mentioned both want to get the deal done to get paid. I still stand by my belief that good buyer's agents do provide a valuable service to less sophisticated buyers.
 
Awgee you are much more cynical than I. Maybe I'm naive. But I know so many people that do right by their clients. Flat fee, %, no fee whatever. If someone is a bad person they are going to try to screw you no matter how they get paid. What is paramount as a buyer is not to stand up for what you want. Most people know in their gut when they are being dicked around. You just have to have the nerve to tell your agent to F*uck off if they go realtard on you.



I will say I quite like the relationship I have with my buyers agent. (SC and I are working together in case you don't know) Never have I felt like he is trying to get me to bid more to get a bigger commission. In fact, it's usually the exact opposite since he has gone all urber bear. Our conversation go something like this "M80:I want to offer $600k on this house, SC: we should offer $500k, M80:really? that low? SC: Let the prices come to you. and remember those foreclosures coming, M80: Dame realtor talking sense in me, SC: Be Patient.



But, if he goes Realtard on me I'll be the first to let you know. Best thing about using a realtor on this board.
 
[quote author="Mcdonna1980" date=1241096264]Awgee you are much more cynical than I. Maybe I'm naive. But I know so many people that do right by their clients. Flat fee, %, no fee whatever. If someone is a bad person they are going to try to screw you no matter how they get paid. What is paramount as a buyer is not to stand up for what you want. Most people know in their gut when they are being dicked around. You just have to have the nerve to tell your agent to F*uck off if they go realtard on you.



I will say I quite like the relationship I have with my buyers agent. (SC and I are working together in case you don't know) Never have I felt like he is trying to get me to bid more to get a bigger commission. In fact, it's usually the exact opposite since his gone all urber bear. Our conversation go something like this "M80:I want to offer $600k on this house, SC: we should offer $500k, M80:really? that low? SC: Let the prices come to you. and remember those foreclosures coming, M80: Dame realtor talking since in me, SC: Be Patient.



But, if he goes Realtard on me I'll be the first to let you know. Best thing about using a realtor on this board.</blockquote>
"Going realtard on you" what a great phrase. haha I dunno that I've become an uber bear more than I don't want you guys to overpay for their homes based upon what's going on in the market and what's to come. I guess you can say Graph, IR, and Awgee helped me to see the light, but it was really more about what happened at my former bank that really hit home. Back in late August of last year the bank toward us (the lending officers) that we were "on hold" for the time being to absorb all the loans we made in the first half of 2008. Well, I came to quickly find out that the bank was lying to us and not telling us that they sustained large loan losses and even larger losses on fannie mae/freddie mac preferred security investments (it was a privately held bank so no full disclosure financial statement were available to be reviewed). At that point I began to realize how bad things are getting and shortly after listed my condo for sale because I figured that my employment at the bank was going to be short lived.
 
[quote author="usctrojanman29" date=1241095519]

That is one big "assumption" you are making about the 3% less commission.

</blockquote>
Actually, experience has shown that it is a very small and likely assumption. All because of the reason I keep expounding. The realtor does not get paid unless the deal closes and the realtor's main motivation is to get paid.







[quote author="usctrojanman29" date=1241095519]

I think you just contradicted yourself in the bolded statement. The commission increases the same amount for the listing agent and the buyer's agent as the price increases. And why the hell would a buyer's agent (or even a listing agent) want to risk trying to make an extra couple of $100 in commissions by squeezing out an extra $10k-$20k in the sales price at the risk of losing the entire commission??? Makes no sense to me.

</blockquote>
You are right. That makes no sense. And that is not what I said, not what I meant.

Obviously I was unclear. Let me try again.

The realtor, like anyone else, goes to work to GET PAID. That is their main motivation. It is not to help people and contribute to society. It is to get paid. If that is cynical, so be it. It is true.

In order for the realtor to get paid, a deal must close.

For the deal to close, the seller and the buyer must negotiate, most of the time.

To avoid further confusion, I will now switch to an example:

Seller wants $500,000 for their home.

Buyer only wants to pay $450,000 for the seller's house.

Seller's only contact with the buyer is through the seller's agent.

Buyer's only contact with the seller is through the buyer's agent.

In order to get paid, the seller's agent must influence the seller to lower their price, The seller's agent has no contact with the buyer and thus can not influence the buyer to pay more. Let us repeat that. The seller's agent has no direct influence on getting the buyer to increase their price.

In order to get paid the buyer's agent must influence the buyer to pay more.

Do you see where this is going?

The selling agent's biggest motivation is to get his/her client to lessen their price.

The buying agent's biggest motivation is to get his/her client to raise their offer.

This is not cynicism. This is fact.







Yeah, I know, all the realtor's on the IHB are different. And yeah, I know, all the posters here are too smart and too discerning to hire an agent who lets their personal motivation to get paid outweigh their client's best interest.







Personally, when I am making the biggest deal of my life, I will put every advantage I can find on my side.



[quote author="usctrojanman29" date=1241095519] Both the seller's and the buyer's agents are incentivized to get the transaction closed and with a realistic and motivated seller that would generally result in a lower final sales price because as you mentioned both want to get the deal done to get paid. I still stand by my belief that good buyer's agents do provide a valuable service to less sophisticated buyers.</blockquote>






The buyer's agent has no influence on the seller or the seller's price. The buyer's agent has contact only with the buyer and the seller's agent. The buyer has influence only on the buyer, and thus has motivation to influence the buyer to raise their bid. By nature of the commission structure, the buyer's agent motivation is to get the buyer to pay MORE, not LESS.



I have no belief. I am pointing out the motivations and facts of the transaction.
 
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