Realty Bites (Why do you still need an agent to buy a home?)

Slate ^ | Aug. 16, 04 | Douglas Gantebein

[churchillbuff]

..."The first thing we do, let's kill all the lawyers," a character in a Shakespeare play famously remarks.

I have a different suggestion: Make it realtors.

...[snip]the flat commissions paid to the realtors who handle the vast majority of those sales, averaging 5.1 percent, act as an enormous tax on the transaction process, taking wealth from both buyers and sellers in what for both is often the biggest financial transaction of their lives. It's true that selling a house is a complex task. But so is writing a will, and an attorney doesn't ask for 5 percent or 6 percent of your net worth as compensation. ...[snip]

[CobaltBlue]

You don't need an agent to buy a house but the sellers may be stuck with a contract requiring them to pay 6% commission. In cases like that, you may as well get your own (buyer's agent) who will split the commission with the seller but work for you.

Otherwise, if you act as your own agent, negotiate that you get the 3%.

[mlmr]

He doesnt get an argument from me. I have bought and sold both ways and the realtor doesnt help much either way.

[Dinsdale]

You don't. But the sellers agent will take the whole commission if you don't have one.

Also remember your agent is getting paid by the person selling the house. He wants you to spend every penny you can afford.

If your bargining position is strong ask for a point back on close of escrow, ask for two (you won't get it). Play them against each other. There are real estate agents everywhere. Get it in writing before signing anything.

If the deal is close to closing but you're stuck on a point or so squeeze both agents.

[NoControllingLegalAuthority]

I've only sold two houses and sold them both myself. I placed ads including a photo of the house. The second house was sold well below the appraisal of the buyer's bank so the buyer and I BOTH came out ahead.

You can learn all you need to sell your own house. It's not as difficult as most people think.

[The Iceman Cometh]

As a Realtor, I can relate to this article. The barrier to entrance into the industry is to low. This reduces the quality of the agent and the amount of training and information one starts out with.

I've also joined a "discount agency" as I felt that it was wrong to charge a full 6% to a seller when the house is sold very quickly. It was almost embarrassing to to see the commission amount as the largest item on the net sheet.

With the brokerage I am with, all we need to do is price the home correctly, get it staged for showings and move it quick. We make a small amount, the seller saves money and each party, buyer and seller, is represented properly.

As far as having the real estate world be totally FSBO (for sale by owner), this is a pipe dream.

We still run into many sellers who want to actually like the buyer of their home. We still see prejudices sinking into a transaction.

[noodler]

Realtors get paid for shuttling folks around to see properties within a buying scope from a database available to realtors.The actual paperwork seems pretty straightfoward considering long-form tax and myriad other bs the avg joe has to get into these days.Realtors have many hurdles and trials including; knowing when to sell all those properties they bought on inside info, coordinating repairs and improvements to speculative purchases for reasonable gain,finding out if Rolls-Royce makes an SUV and where to get it serviced.It's all very taxing.

[FReepaholic]

In the past the main reason to use an agent was to be able to get your property listed on the MLS.

Nowadays there are plenty of public MLS's out there. You can also pay a flat-fee MLS service to list it on non-public Board of Realtors systems. You'll need to agree to pay the buyer's agent a commission, however.

One of the biggest hassles of selling a house yourself is showing it to all the lookie-loos who aren't actually able to afford the place. In that case, just require they bring a pre-qualification letter from a bank or mortgage broker before you'll show it.

[1 spark]

I've recently heard radio ads for www.listmefree.com, which allows sellers to list a home in the MLS. A 2.5% fee is paid to the buyers agent. You save on the other half of the commission because there is no selling agent. I hope it catches on (unless i decide to sell real estate).

[Plutarch]

We are looking for a home, and doing it without a realtor mainly. When we did use a realtor to put an offer on one house it was like having two selling agents work us. For example, she gave us comps which we knew to be way out of line in favor of the house for sale. We have just been using the selling agent to write up our offer, which we believe is much more competitive without the burden of the buyer's agent 3%.

[Delta 21]

I bought my house 2 years ago with a banknote and a handshake.

[coloradan]

Paying 5% on a single large transaction is chickenfeed compared to paying about 30% of just about every dime I make in my entire life, on average.

[BunnySlippers]

OK, let's get rid of the agents ... then I have to hire an attorney.

[cookcounty]

What is a "discount agency?" I was going to call a realtor in the morning to talk about putting my home on the market.......it would be my first home sale ever, so I'm a little afraid to just wing it.

[isthisnickcool]

I have a horror story regarding a house purchased in the recent past. I may post about it once all the legal issues are settled. It's an amazing story. Like the movie "The Money Pit" but real.

I see one big downside if all the house sales were FSBO. In the event that the seller is intent on defrauding the buyer there are likely no deep pockets to protect the buyer. This is not the case with most "Realtors" (who should be forced to have liability insurance to be licensed).

BTW, in my opinion many of the Multiple Listing Services are less than forthcoming about the properties they list on the Internet. For example, a house may be listed for price "X" then the house is dropped to "Y". That information may not be disclosed and the listing may be presented as if it is "new". The same thing may happen when one Realtor takes the listing from another. It appears to be a new listing.

Many times a property may be sold several times "by" the same MLS over a number of years. The MLS should be required to have on their web sites EVERY disclosure that was presented by each seller for each time the house was sold in the past. Images of these documents should be provided on their public web sites.

At some point in the future some enterprising attorney is going to be successful in a class action against some MLS for these "hiding" these types of things that technology could allow them to easily provide. I won't shed a tear if that happens.

[Shannon]

When you use the "discount agency" yes, you'll pay a cheaper commission. But remember, you get what you pay for. Ask them if they'll advertise your home. If so, what magazines, newspapers etc. and for how long will they do this. If your house doesn't sell quickly will they continue to advertise it? Also, will you be in charge of showing your own home or will Realtors be showing it. Who sets the appointments? Who prequalifies the buyers? Point is, if you're paying a commission hopefully you'll be getting more than just a listing in the MLS.

[japaneseghost]

I don't know about the rest of the country, but here in N. Va. the RE agents are jacking up the prices. In the last 5 weeks, a one-bedroom condo in my neighborhood went from $205 to $250. It's a nice garden condo community, but surrounded on both sides by high-rise Sunni Moslem slums.

You wouldn't even want to take a walk at sunset, the neighborhood park is filled with ragheads. Sorry if you don't like my language, but they are taking over here. And they are NOT nice to moderate Moslems who want to assimilate.

[AUsome Joy]

We negotiated with our agent for 5%. We shop for agents also. We check their credentials and then find them at an open house and talk to them without them knowing that we are really interviewing them. Then we have 3 agents out to give a presentation.

We have sold with and without agents. I do think we set a higher price for our house when we have a realtor. They know the market better.

[The Iceman Cometh]

Our company is a full service brokerage that has a few ways to sell the property. One is our flat fee service where the seller pays a flat fee at closing. The company advertises the home in the newspaper every week, on the internet and of course with flyers and signage.

This method is very effective in attracting buyers directly. Over half of our homes sell via this method. The other half are sold through an outside agent bringing the buyer. In this case, the agent is of course looking to get paid. It is entirely up to the seller what, if any, compensation they are willing to pay the outside agent. We've also had the buyers get involved in compensating their own agent.

Our brokerage has grown by leaps and bounds since the truth is buying and selling a home is not complicated. Sellers and buyers do get represented as in the traditional model and realtors show the property. It is an awesome model. The average agent in our company carries 10X the amount of listings the standard agent does. Freepmail me if you want the name of our brokerage as we are a national franchise and I don't believe in pimping the name of my company in this forum.

[The Iceman Cometh]

BTW, in my opinion many of the Multiple Listing Services are less than forthcoming about the properties they list on the Internet. For example, a house may be listed for price "X" then the house is dropped to "Y". That information may not be disclosed and the listing may be presented as if it is "new". The same thing may happen when one Realtor takes the listing from another. It appears to be a new listing. Many times a property may be sold several times "by" the same MLS over a number of years. The MLS should be required to have on their web sites EVERY disclosure that was presented by each seller for each time the house was sold in the past. Images of these documents should be provided on their public web sites.

I can't speak for the MLS in your area. BTW, Realtors are required to carry E&O insurance (errors and ommissions). As for disclosure, it really depends on state law. In my state, the seller is required to fill out a three page disclosure form regarding the property. After receiving the information (which can be obtained at any time), the buyer has a right of recission.

Also, when a property is purchased, it is suggested to have a property inspection. Properly done, the inspector will look at the house from top to bottom and note any major or minor problems with the property. The buyer also has right of recission if the inspection report turns up items that the seller is unwilling to address.

With the MLS, disclosure if the key. Yes, each property will look new if it goes from agent to agent. Typically, this is done due to the fact that the property is overpriced or the seller is unmotivated. Any good Realtor would be able to show you the listing history of the property. In the end, it is up to the brokerage to update the MLS. Some brokers may be sloppy or way behind in getting updates into the MLS. I run into problems where the property has gone pending even though it shows Active in the MLS. That one is annoying.