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+--- Thread: Why would any buyer go through a real estate agent? (/showthread.php?tid=76497)
Re: Why would any buyer go through a real estate agent? - mrbigstuff - 04-16-2009
Bill in NC wrote:
Buyer agents are also usually paid on a flat percentage of the sales price.
Unless you as buyer can change that formula (e.g. extra incentive for every $1000 below $XXXX) there's little incentive for the buyer's agent to aggressively negotiate the price of a house.
Plus, since they don't get paid until closing, they will pressure you to quickly choose a home and quickly come to an agreement on price.
Again, not exactly an incentive for them to negotiate a lower price for you as the buyer.
exactly!
Re: Why would any buyer go through a real estate agent? - davester - 04-16-2009
The pricing system for agents is ridiculous. As someone mentioned above, since the system is a fixed percentage of the sale price, the housing bubble resulted in massive increases for agents for doing no additional work. Also, the fixed percentage gives the same reward for an extremely simple listing that sells in a day and a complex property that takes months to sell. In addition, this system gives the wrong incentive to the buyer's agent...the more their client pays the more they get. It's also a monopoly. There are a couple of local realty companies that do it differently...fixed fee for MLS listings, advertising, signage, etc, and then hourly for the agent's time. However, the other agents tend to shun those companies by steering their buyers clear of those listings and FISBOs. This is unethical. I agree that agents do valuable work but their compensation system is a big scam.
Re: Why would any buyer go through a real estate agent? - rz - 04-16-2009
3d wrote:
[quote=vision63]
The listing agent will make at least 3% on the deal and possibly 6% if they're the sole agent. But suppose your sister the Real Estate Agent saw a cute house around the corner for sale and you became interested. She'll use the "key" at the property to show you around and if you wanted to bid on the house, she'd arrange for all of that. If the seller (who works with the listing agent) accepts your bid and everything passes muster, then the listing agent will "split" the commission with your sister and they each would earn 3% on the deal.
Hold on... Let's say the listing agent has an OpenHouse on the property. I walk in off the street and check out the place. I love it and place a bid on the property. She is the sole agent. She makes 6%?? By me walking in alone off the street, does the listing agent automatically become my agent as well? A double agent? Do I (the buyer) have to pay her?!
Yes, she would get 6%, or whatever she negotiated with the sellers. She is NOT your agent, however, she was the one who "brought you in" by holding the Open House. You, as the buyer, don't have to pay her anything. It is all paid by the seller.
Re: Why would any buyer go through a real estate agent? - Yoyodyne ArtWorks - 04-16-2009
A point to consider: the only way anybody (seller's agent or buyer's agent) makes any money is if the sale goes through. And home inspectors have a vested interest in seeing the sale go through, too, because they don't want to get a local reputation in the real estate community as a deal-killer.
So if you're a buyer, you're pretty much on your own. Typically EVERYBODY else in the transaction wants the sale to happen.
Are there exceptions? Of course, and a good buyer's agent can be worth his/her weight in gold.
Re: Why would any buyer go through a real estate agent? - TLB - 04-16-2009
In our state, a buyers agent isn't really a buyers agent unless the buyer has a signed contract with the agent. Many people think they are working with a buyer's agent when in reality they are working with a seller's agent "masquerading" as working solely for the seller.
Re: Why would any buyer go through a real estate agent? - Mac1337 - 04-16-2009
There is no question that real estate sales as we know it will go the way of travel agents. Won't be as fast but it will happen. MLS was their trump card back in the day but not any more. These days you often don't even know how the property is listed unless you look for the realtor logos. There is very little a realtor can do beyond listing the property. If the house doesn't sell, it doesn't sell. There are no secret mailing lists that she can tap into. If anything they sometimes hurt the sale by suggesting a high asking price.
Having said that, I too am reluctant to walk into a FSBO home. I don't know why. Is it the cheap signs or not knowing who you have to deal with? Invariably, the house isn't any cheaper because they want to keep the commission.
Re: Why would any buyer go through a real estate agent? - sekker - 04-17-2009
when we purchased our first home 10 years ago, we looked at over 100 houses in person with our agent
She earned her (modest by current standards) commission that she had to split with the seller's agent
When we moved, she helped us sell our house in 21 days in this tight market by helping us get our house ready and stage it for selling.
When we moved, our current agent knew the house we purchased was going to have its price dropped over a week in advance - because he knew what we were looking for and had his ears to the ground.
Houses are individual purchases, not commodities
I think we'll have agents for a long time
Re: Why would any buyer go through a real estate agent? - Sam3 - 04-17-2009
When we bought our first (and only so far) home, we used an agent. We signed a buyers agent agreement, that by law mandates that the agent works in the best interests of the buyer. We did not know anything about the home buying process, our agent explained each step, this made the process less harrowing.
I disagree that a home inspector has a vested interest in seeing the sale go through. They have their reputation at stake. If they were to "miss" some serious problems just to have a sale go through, they would be in serious doo-doo with the public as well as probably the law.
There was no lawyer present at the closing, the deal was handled between the seller, the buyer, the seller's agent, the buyers agent and the title company representative. We think that we got good value from our agent.
Remember that these people are experts in their fields. They know the laws, they know the building codes, they know procedures. Why do people pay forum members for services? The client could do a web page by themselves, they could create an ad by themselves. The tools are available now for a reasonable cost. Why do clients pay macresource members anything? Because the people on these boards are experts in what they do.
As far as I'm concerned, I certainly wouldn't mind a buyers agent when navigating car purchases. I don't negotiate well.
Re: Why would any buyer go through a real estate agent? - OWC Jamie - 04-17-2009
thermarest wrote:
[quote=billb]
[quote=3d]
If i was a seller i would love to bypass that agent and save $12,000 (3%) on a $400,000
home.
Am i missing something?
Without the agent, do you think you'd get $400,000 ?
In too many cases , the answer is no
This was the exact topic of one of the chapters in the Freakonomics book. They showed quite convincingly that the agent does not act in the seller's best interest. It is far more advantageous for the agent for the selling price to be lower and sell the property more quickly.
So, I suppose from this perspective that the agent is good for the buyer.
Here's a snippit and link to some discussion of the topic:
http://freakonomics.blogs.nytimes.com/2008/02/26/real-estate-agents-revisited/
"Do brokers add sufficient value to justify those commissions? We address this question using a unique data set pertaining to sales of faculty and staff homes on the Stanford University campus. We find no evidence that the use of a broker leads to higher average selling prices, or that it significantly alters average initial asking prices"
some find the colonic cleanser stories believable, too.
lots of 'data sets' there, too.
and not limited to staff homes on a campus