Why would any buyer go through a real estate agent?

[Mike Johnson]

I wouldn't buy a house without an agent or attorney representing me. I don't want the only trained RE pro in the room to be working for the other guy.

Nor would I buy a house that was For Sale By Owner. I wouldn't even look at it. I've looked at FSBOs and every single one was overpriced. The sort of person who goes FSBO is often the sort of person you don't want to negotiate a half million dollar contract with. (Not every FSBO is a skinflint a-hole, but there are enough of them to keep me away from FSBOs generally).

Those detailed listings with the virtual tours? A well crafted mls entry must be pretty hard to do, since so many are poorly done. I can't imagine using that information and then trying to sneak around the agent that worked to advertise the house, that got you interested.

With all that said, a bad agent is a bad agent. You should check references on three or four agents before you select one, whether you're buying or selling. Get an agent you can trust, and then trust them. If they say to list your house at $329, and you insist on listing it at $374, it's not their fault when it takes eight months to sell your house and you only get $298.

[Psurfer]

I'm sure there are some great agents who are worth their pay, but from what I've seen, the Vast majority are like used car salespeople, but much less informed about what they're selling.

The agents are always telling everyone that "buyers don't like to talk to the owners", that somehow an intermediary is required for even viewing a house. But in fact, the only way a buyer can find out anything about a property (other than what's already written on the disclosure statement, and before paying for an inspection) is asking the only person involved who knows Anything about it- the owner.

And just forget about relying on Any agent's guidance for any possible contract complexity, a contract or RE lawyer is for that, and they charge much less, represent you at the close if needed (which can sometimes prove to be a prudent move) and actually Are looking out for your best interests, not whether you go through w/the purchase or the size of their commission.

[3d]

Are you guys saying that a real estate attorney is NOT required at closing in some states?? That's insane.

My closing took almost 3 hours and that's WITH an attorney there (NY) explaining things to me and and guiding me along. A real estate agent on the otherhand...

[thermarest]

billb wrote:
[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/20...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"

[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.

[Bill in NC]

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.

[3d]

thermarest wrote:
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/20...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"

Interesting. Which might explain why Mike Johnson says that "I've looked at FSBOs and every single one was overpriced." And he was nice enough to qualify the statement afterwards with, "Not every FSBO is a skinflint a-hole..." Haha.

So according to Freakonomics, it's not that FSBO sellers are skinflint a-holes, it's just that seller's agents are more willing to go down on the price for a quick sale to get the commission and seal the deal rather than haggle over .05% on the counter bid. While if you were dealing directly with the skinflint a-hole... errr.. i mean the owner directly, the owner would be less willing to budge on the price.

Thanks for the link, I'll read into it more later at home.

[3d]

vision63 wrote:
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?!

[vision63]

That state-licensed agent would not be obligated to split their commission with you, a non-licensed agent 3D. Much of this is regulated via state laws, but anything is "negotiable." But it would be highly unlikely to get an agent/broker to budge from their commission since they still have to further split with their agency (though a much smaller cut).

[mrbigstuff]

3d wrote:
Are you guys saying that a real estate attorney is NOT required at closing in some states?? That's insane.

My closing took almost 3 hours and that's WITH an attorney there (NY) explaining things to me and and guiding me along. A real estate agent on the otherhand...

I think PSurfer and I are saying exactly the same thing - the only person required is the attorney.

It's my belief that the bank's loan officer and a good attorney are the only folks you need to buy a house. I'm quite surprised that other folks are really that reliant upon brokers.