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How to buy a house without using a buyer's agent?


By 1sfrenter   Follow   Thu, 1 Mar 2012, 1:45pm PST   8,877 views   39 comments   Watch (1)   Share   Quote   Permalink   Like   Dislike  

I am hoping that RE agents eventually go the way of travel agents and the dodo bird.

Would like advice on how to buy a house without using a buyer's agent. Sheesh, all they do is open some lock boxes for you (can't the listing agent do that?) and drive you around in their big fancy cars (no thanks I can drive myself to open houses). In 2 months he hasn't told me about anything that I didn't already find listed online myself.

If you know what you want and you know the neighborhood and the comps, do you really need a buyer's agent?

Can't I just go to several of the top-selling listing agents in the neighborhoods I want to live and tell them what I am looking for. When a house I want comes up, offer dual agency and hire my own RE lawyer and inspector.

What are the pros and cons of this? What am I missing?

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profesor100   befriend   ignore   Thu, 1 Mar 2012, 4:48pm PST   Share   Quote   Like (4)   Dislike     Comment 1

I just bought a condo without using a buying agent. I did all my research. I used Redfin as a base for information, went to police station by, asked future neighbors and friends that live in the area. Then I ran the number using various online excel tables and of course Patrick's Real Estate Tools. Compare similar rents in the area and bingo I am saving $825 per month. Although it took me more than a year to find the right property that served my needs.

MoneySheep   befriend   ignore   Fri, 2 Mar 2012, 1:09am PST   Share   Quote   Like   Dislike     Comment 2

1sfrenter says

When a house I want comes up, offer dual agency and hire my own RE lawyer and inspector.

I think you should specifically spit it out so everyone understand, you mean ..... then listing (dual) agent give me kick back of 50% of the commission (usually 3%).

I was looking to buy and one buyer Realtor offer me a % kick back of the commission she would receive after the close, whether the listing was hers or not.

PockyClipsNow   befriend   ignore   Fri, 2 Mar 2012, 1:33am PST   Share   Quote   Like (1)   Dislike     Comment 3

Why would you ask for a part of the commission? Its stupid it will scuttle the deal and if you get the house it will be top dollar price. Of course if its allready way over market price the agent might give you some of his commssion just to unload it. SO it means any agent offering to cut you part of the commision means that house is overpriced. The 'good deals' and good properties sell fast and they can wait for a agreeable buyer (by this I mean they double dip and you are easy to work with).

Remember they are vampires and the listing agent has the loan owner hypnotized. If its a bank/short sale the relationship is even more slanted toward listing agent have all the power control.

In fact according to the law the loan owner doesnt own the listing of his own home - the Listing agent does. Loan owner cant even change agents for 6 months normally in CA (standard CAR listing form has 6 month expiration of lstings. Of course I crossed this off when I listed a home with an agent before I got a clue and got my own license).

1sfrenter   befriend   ignore   Fri, 2 Mar 2012, 1:44am PST   Share   Quote   Like (1)   Dislike     Comment 4

My (buyer's) agent is not really adding anything to my search right now. I might need his help when it comes to making an offer and escrow, though.

With everything online now, seems like what I want to buy might be better found if I can find it before it ever gets listed.

If a listing agent knows they will get the entire 6%, might they pick up the phone and call me first and try to get the house sold to me before a slew of buyers and their agents jump on it?

If the seller and the listing agent are hoping for multiple offers and a bidding war, then this wouldn't work.

bubblesitter   befriend   ignore   Fri, 2 Mar 2012, 1:45am PST   Share   Quote   Like (1)   Dislike     Comment 5

PockyClipsNow says

Why would you ask for a part of the commission?

Exactly. Just let em take that damn 6%,who cares how they want to split. Just reduce your offer by 6%.

drtor   befriend   ignore   Fri, 2 Mar 2012, 1:51am PST   Share   Quote   Like (1)   Dislike     Comment 6

PockyClipsNow says

Why would you ask for a part of the commission?

I am thinking about the same question as OP (thanks for posting thread). I understand that if the seller has an agent they will have to get their 3%. Seller's choice. But if I don't want an agent, I would like to ensure that the 3% normally going to buyer's agent instead goes directly to the seller. I don't need any complicated kick-back scheme. I just want it to go directly to the seller, anticipating that he or she will consider my bid ~3% more valuable than same bid by someone else with a buyer's agent.

Possible?

1sfrenter   befriend   ignore   Fri, 2 Mar 2012, 1:56am PST   Share   Quote   Like (1)   Dislike (1)     Comment 7

drtor says

But if I don't want an agent, I would like to ensure that the 3% normally going to buyer's agent instead goes directly to the seller. I don't need any complicated kick-back scheme.

I see an advantage to NOT getting a kick back (although in a slow market you could ask):

you get first dibs on all good listings if the listing agent knows they will personally make commission by selling to you.

In a tight market with low inventory, as it is where we are, this is major. Anything decent gets pounced on within a week.

PockyClipsNow   befriend   ignore   Fri, 2 Mar 2012, 2:03am PST   Share   Quote   Like (1)   Dislike     Comment 8

drtor says

I would like to ensure that the 3% normally going to buyer's agent instead goes directly to the seller. I don't need any complicated kick-back scheme.

NO!
This NEVER happens. Contractually in the listing contract which is legally binding in a court of law the listing agents gets the whole 6% if there is no selling agent. The loan owner CANNOT get this money. Its possible in rare cases the owner is smart and crossed out or changed the contract so that in this case the 'loan owner' gets the selling side commission but its rare (i did this, but I have a clue).

I know clueless buyers who have wanted to do this before. I used to think this would work. It wont and cant. You wont even be allowed to communicate with the seller. You tell the listing agent you want the seller to have half his commission and see how fast he stops calling you. (this is legal since he can say you 'are not a serious buyer' and he is actually correct! lol)

ALSO according to CA law (IIRC) just because you 'dont want an agent' the listing agent is legally representing you anyway. Its like you as a buyer are considered a minor with no rights. There have been many many abuses over the centuries and CA law hold agents liable for fair dealing. Lots of laws are like this the most annoying is that binding financial advisors which is why you see posts 'this is not legal/financial/investing advice'.

Your actions such as merely walking into a home for sale start a series of legal events which you are unaware of. Learn them. Such as 'procuring agent gets commision' means u cant change agents. And a seller cannot cancel a listing contract before it expires (breach of contract) without paying the 6% to the listing agent (its in the CAR listing form, read them).

All this is not trivial. People get legally sucked in like this:
1. walk into open house to check it out with no agent next to you (you have just chosen the listing agent to represent you! unless your hand picked buyers agent found the home and is physically there with you - listing agent gets commission).
2. call on a listing you are driving by - agent shows u the home -your wife loves it. Guess what? you just chose the listing agent to represent you. the first agent to stand next to you while u view the house (whether you sign anything or not or are serious about buying or not doesnt matter) has procured that sale for the seller and the seller owes that party commssion if you close(buy) on that home.

*this is not legal or financial advice (hahaha! so annoying isnt it!)

drtor   befriend   ignore   Fri, 2 Mar 2012, 2:35am PST   Share   Quote   Like (1)   Dislike (1)     Comment 9

PockyClipsNow says

NO!
This NEVER happens.

Thanks a lot for this information, very valuable. And annoying.

Another process that comes to mind is this. I have a friend who is realtor part time. Suppose re 1. and 2. that I declare upon entering house that I do have an agent who could not make it today . Then when I have looked around at houses at my own pace and am ready to make a move I call on friend to assist in final steps of transaction only. We split her fees some way on account of the fact that her realtor workload was very light. Possible?

PockyClipsNow   befriend   ignore   Fri, 2 Mar 2012, 2:49am PST   Share   Quote   Like (2)   Dislike     Comment 10

Yes you can use your own buyers agent. Just tell the listing agent at open house - "I have an agent and they sent me here but cannot make it themselves- my agent is the procuring agent for this property and will write up the offer if I decide to buy".
Thats pretty clear and they will know 'you know how it works'.

This should establish procuring cause and the listing agent will also leave you alone and not try to adopt you as a buyer.

Of course I like the idea of dual agency to get super lowball price but I have not actually done this yet- havent bought a home since 2004.

http://homebuying.about.com/od/realestateagents/qt/Procuringcause.htm

drtor   befriend   ignore   Fri, 2 Mar 2012, 3:12am PST   Share   Quote   Like (1)   Dislike     Comment 11

PockyClipsNow says

Of course I like the idea of dual agency to get super lowball price but I have not actually done this yet- havent bought a home since 2004.
http://homebuying.about.com/od/realestateagents/qt/Procuringcause.htm

Thanks a lot PockyClipsNow. Obviously lowball price is part of it but honestly I just don't want an agent to follow me around. I like to just spontaneously stop by open houses at random places and take my time. And it wouldn't be fair to the agent either - I may do this for several years and then not decide to buy!

swilliamscc   befriend   ignore   Sun, 4 Mar 2012, 8:29pm PST   Share   Quote   Like (1)   Dislike     Comment 12

If you don't use a buyer's agent, the listing agent will just take all the commission. It won't save you a dime. That's how it works. I'm a former realtor.

LASVEGASWINNER   befriend   ignore   Mon, 5 Mar 2012, 2:46am PST   Share   Quote   Like (1)   Dislike (1)     Comment 13

Not having a Buyer's Agent in the rough and tumble business of real estate is like not needing a manager for the New York Yankees. When you have 9 great players getting a Billion dollars a year, why do you need a manager.
35 Years investing experience guarantees I know more than you, and many hours of negotiating training guarantees you will be at a disadvantage.

bubblesitter   befriend   ignore   Mon, 5 Mar 2012, 3:00am PST   Share   Quote   Like   Dislike     Comment 14

LASVEGASWINNER says

negotiating training

You mean,negotiating with the sellers agent to screw your client,so that you both can enjoy the big fat commission check. LOL.

JG1   befriend   ignore   Mon, 5 Mar 2012, 4:36am PST   Share   Quote   Like   Dislike     Comment 15

In my experience, what you are missing is that when I tried this, I still couldn't get access to half the houses I saw listed online but wanted to see - the ones that didn't have open houses. Many of the listing agents would not return phonecalls, or when they did, they didn't take me seriously as a buyer without me having a buyer's agent. So, in short, the lock box access was a major part that I was missing without an agent.

gregpfielding   befriend   ignore   Mon, 5 Mar 2012, 6:39am PST   Share   Quote   Like   Dislike (1)     Comment 16

1sfrenter says

Would like advice on how to buy a house without using a buyer's agent. Sheesh, all they do is open some lock boxes for you (can't the listing agent do that?) and drive you around in their big fancy cars (no thanks I can drive myself to open houses). In 2 months he hasn't told me about anything that I didn't already find listed online myself.

If you know what you want and you know the neighborhood and the comps, do you really need a buyer's agent?

This is a common misunderstanding of what it is that we as agents actually do. You are completely correct: opening lockboxes is of little value.

Selling (buyers') agents really earn their money by helping educate their clients about neighborhoods and the local market. But most of their value comes during escrow, helping the buyer navigate through the process of inspections, appraisals, negotiating repairs, etc. On clean deals, things can go smoothly, but most deals have a number of issues where good real estate advice can make or save clients a lot of money.

Again, bad real estate advice is worthless. But good advice can benefit a buyer by far more than the 2-3% that the agent earns.

gregpfielding   befriend   ignore   Mon, 5 Mar 2012, 6:44am PST   Share   Quote   Like   Dislike     Comment 17

1sfrenter says

Can't I just go to several of the top-selling listing agents in the neighborhoods I want to live and tell them what I am looking for. When a house I want comes up, offer dual agency and hire my own RE lawyer and inspector.

What are the pros and cons of this? What am I missing?

You probably aren't saving the Sellers any money and therefore aren't going to end up getting any kind of better deal. You will likely end up with no financial benefit by working directly with the listing agent and are actually risking not getting sound advice as a buyer in the deal.

Instead of focusing on the unlikely possibility that you might be able to get the house a little cheaper, find a good agent who you trust will give you sound advice through the process.

PockyClipsNow   befriend   ignore   Mon, 5 Mar 2012, 6:55am PST   Share   Quote   Like (2)   Dislike     Comment 18

I would estimate, in my experience, that about 1 out of 3 offers 'get flushed' when submitted by a buyers agent. Agents know this is illegal so they do things like not return calls, keep property locked via chain and padlock, steal key from lockbox, put glue in door lock, put in mls for sale but 'no showings allowed for fake reason'. In rural or cheaper areas maybe everyone is more honest but with commission of 30k on the line the shenanigans start.

I will add my experience is limited.

1sfrenter   befriend   ignore   Mon, 5 Mar 2012, 6:58am PST   Share   Quote   Like   Dislike     Comment 19

gregpfielding says

You probably aren't saving the Sellers any money and therefore aren't going to end up getting any kind of better deal.

It's not so much getting a better deal that I am after, but getting a heads up/first dibs on listings, as anything decent is still garnering multiple offers in the nabes we are interested in.

1sfrenter   befriend   ignore   Mon, 5 Mar 2012, 7:02am PST   Share   Quote   Like   Dislike     Comment 20

gregpfielding says

Selling (buyers') agents really earn their money by helping educate their clients about neighborhoods and the local market.

I've been a renter in the neighborhood where we hope to buy for the last 20 years. Following the bubble pretty closely since 2000.

Most everything you need to know is on line now (comps, sales history of a certain house, property taxes, etc.) Between MLS, Redfin, Trulia, zillow, the assessor's parcel info. online and property shark, anyone who is at all comfortable on the web can find out a lot.

drtor   befriend   ignore   Mon, 5 Mar 2012, 7:58am PST   Share   Quote   Like   Dislike     Comment 21

1sfrenter says

gregpfielding says



Selling (buyers') agents really earn their money by helping educate their clients about neighborhoods and the local market.


I've been a renter in the neighborhood where we hope to buy for the last 20 years. Following the bubble pretty closely since 2000.


Most everything you need to know is on line now (comps, sales history of a certain house, property taxes, etc.) Between MLS, Redfin, Trulia, zillow, the assessor's parcel info. online and property shark, anyone who is at all comfortable on the web can find out a lot.

This is the point right here. Yes, some realtors in some situations do earn their money by educating customers who are new to an area and visit a lot of houses.

The problem is that the seller sets the commission schedule leaving no choice, no optionality, and certainly no price competition for a buyer who may want and need much less service.

I would make the modest proposal that sellers should not be allowed to specify the buyer agent's commission. It would then be up to the buyer to hire an agent to support them for a price they agree on. Or not.

I am not a lawyer but to me this looks like a solid antitrust case. Seller setting buyer agent's commission at a fixed rate, and in a way that benefits seller and agent, leaving no option for buyer - could it be any less competitive than this?

If you think I am a dreamer, note that NAR was forced to open up MLS to aforementioned online options in 2008 because of an antitrust case.

gregpfielding   befriend   ignore   Mon, 5 Mar 2012, 8:05am PST   Share   Quote   Like   Dislike     Comment 22

1sfrenter says

It's not so much getting a better deal that I am after, but getting a heads up/first dibs on listings, as anything decent is still garnering multiple offers in the nabes we are interested in.

This does have value. If you know exactly what neighborhood you want to be in and there is an agent who tends to know lots of the listings before they come up, absolutely consider working with them as your buyer's agent.

They've earned your business with their specialized expertise.

gregpfielding   befriend   ignore   Mon, 5 Mar 2012, 8:14am PST   Share   Quote   Like   Dislike     Comment 23

drtor says

I would make the modest proposal that sellers should not be allowed to specify the buyer agent's commission.

First off, the seller absolutely can pay less if they want to. While 2.5 and 3% are most common, we do occasionally see 1.5 or 2% being offered as compensation.

The issue is that it is in the seller's best interests to get local agents excited to show their house and keep it in mind when talking with potential buyers. If you are discounting your commission, you are going to turn some people off.

Depending on the scenario, they could even end up netting more cash by offering more commission or a bonus to the buyer's agent.

I agree with you all here that it seems like a racket. But this is the system we have and, because NAR seems to own the politicians, it's not going to change.

My advice to everyone here is to worry less about how to beat the system to potentially get a small discount, and focus on finding and working with a good agent. We are out there.

drtor   befriend   ignore   Mon, 5 Mar 2012, 10:34am PST   Share   Quote   Like   Dislike     Comment 24

gregpfielding says

First off, the seller absolutely can pay less if they want to. While 2.5 and 3% are most common, we do occasionally see 1.5 or 2% being offered as compensation.

Agreed. Seller's commissions work better.

The issue is that it is in the seller's best interests to get local agents excited to show their house and keep it in mind when talking with potential buyers. If you are discounting your commission, you are going to turn some people off.

Depending on the scenario, they could even end up netting more cash by offering more commission or a bonus to the buyer's agent.

Are you suggesting that some buyers' agents would steer their principals towards properties with higher commissions rather rather than towards properties that are in the buyer's best interest? I am shocked. Shocked. Seriously though, this is another important argument why the seller should not be setting the buyer's agent commission rate.

I agree with you all here that it seems like a racket. But this is the system we have and, because NAR seems to own the politicians, it's not going to change.

Good point - although note that the MLS antitrust case was brought by the Department of Justice, without the need for, and indeed going against, the owned politicians. That is why I like to think there is some small hope for my idea.

My advice to everyone here is to worry less about how to beat the system to potentially get a small discount, and focus on finding and working with a good agent. We are out there.

What I learned in this thread (that seller's agent gets to claim buyer's agent commission if buyer shows up without agent) could well save me 1/2 a regular commission, or $15k on a $1MM house. That is significant to me.

I don't doubt that there are good agents out there. And actually that brings me to another point. The non-competitive commission rates invite all sorts of unserious people to the business, and the NAR does very little self-policing. That gives the good agents out there an undeserved bad rep.

drtor   befriend   ignore   Mon, 5 Mar 2012, 11:39am PST   Share   Quote   Like   Dislike     Comment 25

gregpfielding says

Again, bad real estate advice is worthless. But good advice can benefit a buyer by far more than the 2-3% that the agent earns.

I don't disagree that good real estate advice can be worth more than 2-3%, but I do challenge to what extent the typical agent is able and motivated to provide such advice.

Also, bad real estate advice is much worse than worthless. Consider the 2006 NAR campaign that it was a great time to buy a home. Following that advice cost many people their life savings. And how many buyers' agents in 2006 advised their principals to stay clear of real estate?

gregpfielding   befriend   ignore   Tue, 6 Mar 2012, 2:09am PST   Share   Quote   Like (1)   Dislike     Comment 26

drtor says

I don't disagree that good real estate advice can be worth more than 2-3%, but I do challenge to what extent the typical agent is able and motivated to provide such advice.

Also, bad real estate advice is much worse than worthless. Consider the 2006 NAR campaign that it was a great time to buy a home. Following that advice cost many people their life savings. And how many buyers' agents in 2006 advised their principals to stay clear of real estate?

Agree completely. NAR has no credibility and their shameless spin makes all of us look bad. While any individual agent can be working to achieve the best outcome for their clients, NAR is working to achieve the best outcome for NAR - which is not necessarily in the public's best interest.

If I could sell real estate without being a member, I would. But they control the MLS systems, so we are all stuck.

gregpfielding   befriend   ignore   Tue, 6 Mar 2012, 2:17am PST   Share   Quote   Like   Dislike     Comment 27

drtor says

What I learned in this thread (that seller's agent gets to claim buyer's agent commission if buyer shows up without agent) could well save me 1/2 a regular commission, or $15k on a $1MM house. That is significant to me.

What do you mean by this? That the listing agent will take less commission if they double-end the deal?

It is common that a listing agent my offer to take 1/2% to 1% total less commission from the sellers if they double-end it. So, the sellers could net the same amount by selling it to you for a little less, but that doesn't mean they will automatically be willing to do it. Usua