Wednesday, April 27, 2011

What Do You Save By Not Having A Buyer's Agent?

This ties nicely with each of the last three posts to this BLOG. It was a post to the Berkley Parents Network forum, and begs the question of why people begrudge the commission earned by real estate agents, when they know so little about even the most basic aspects of the business.

We could save $45,000 by not having an agent

May 2010 

My husband and I own a home in Oakland and we are moving to Lamorinda soon. We are looking at homes priced around $1.5m. My husband recently read an article on buying a home without an agent and is now very interested to do so (we would hire an attorney to represent our legal interests in this case). With commissions to the buying agent at 3%, we could potentially save $45,000 by not having an agent. 

We don't need many of the services that an agent can offer as we can find our own home, we can attend our own open houses, we don't need handholding, etc. Paying someone $45,000 simply to present our offer and negotiate the deal/paperwork seems ridiculous. Has anyone gone this route and how did it work out? Alternatively, are there any agents who work on a flat fee or who work for, say, a 1% commission (that's still $15,000 in our scenario)? We're open to paying an agent or attorney a reasonable fee, but would like to get away from the traditional compensation model. Any tips and advice would be greatly appreciated! Thank you! 

Just as an aside, we are planning to use an agent to sell our home in Oakland. I can see the benefit of using an agent on the sell side of the transaction more than the other way around. East Bay Mom 

The next question is how much more can East Bay Mom's (EBM) husband (H) be earning than he deserves if he is so unaware as to believe he will save money just to negotiate a sales price and shuffle a few papers.

First, the seller pays the commission. EBM & H would therefore have to look only at FSBOs to deny an agent the commission. How then would EBM & H know whether the asking price was in line with the property's value? It's not uncommon for FSBOs to price property 30% or more above their value. Then too, they would be limiting their search to 11% of the available properties on the market.

What if EBM & H do look at agency listed properties? The agent they contact will represent the seller, and get the whole $90,000 commission without doing more than making sure the seller gets the best end of the bargain and shuffling the paperwork—and without even holding her hand. Is that "fair?"

In the decade (plus) that I have been in the business, I have encountered numerous professionals with decades of experience who seem not to know what they are doing. Nonetheless, EBM & H would do well to follow the advice the respondents posted to her post, and find a buyer's agent—and find one who has earned the ABR® designation.

No comments:

Post a Comment