OT: Realtor Negotiations

[ZombieKissinger]

I’m going to buy something in 12-24 months. I’ve been saving for a while, and I’ll probably get something nice that I want to live in a long time.

Since SPS seems to be negotiation experts, how do you go about setting rates with realtors? I don’t want to go 2-3% on a big purchase and would much rather get some flat rate. I’m easy to work with and won’t waste their time looking at houses I won’t buy. Curious how others have approached this.

edit: I own a house. I’ve been through the process multiple times, so I know what realtors lead with. I just haven’t negotiated realtor rates before and plan to buy something more expensive than I have in the past, so the 2.5-3% feels painful

 

[civildawg88]

Just buy without a realtor. Usually the selling realtor will help you out with the paperwork to make the deal if you come to an agreement on purchase price

 

[karlchilders.sixpack]

I’m going to buy something in 12-24 months. I’ve been saving for a while, and I’ll probably get something nice that I want to live in a long time.

Since SPS seems to be negotiation experts, how do you go about setting rates with realtors? I don’t want to go 2-3% on a big purchase and would much rather get some flat rate. I’m easy to work with and won’t waste their time looking at houses I won’t buy. Curious how others have approached this.

Sounds like you are being optimistic.
JMO.

 

[OG Goat Holder]

A good realtor can help you. The seller pays realtor fees (make sure about that depending on your state) so I would suggest picking someone you like.

Yeah I get that the fees are built into the price but that’s just reality so may as well take advantage. So be leery buying a house that being sold without a realtor, because you will get stuck with your realtor’s fee.

3% is typical.

 

[Pookieray]

don't get a realtor for yourself, just offer the price you want to pay for the house. if it's a FSBO get a home and have the seller pay for it or be prepared to walk away.

 

[patdog]

Just buy without a realtor. Usually the selling realtor will help you out with the paperwork to make the deal if you come to an agreement on purchase price

Actually just finalized the deal buying without a realtor today. You can research to know about what a house is worth yourself. And seller agent drew up the contracts. I had an attorney review them & comment. A realtor may have helped a little, but hard to think one could have saved me what it cost. I’ll get one to sell my old house though.

 

[Ridgeland Dog]

Normally when the listing agent is the only agent he/she gets both sides of the commission.

 

[The Peeper]

The last 3 houses I've been involved with purchasing/selling I've done without a realtor for myself, only an attorney for the closing. I did one a couple years ago and neither myself nor buyer used a realtor and we agreed on the same attorney for the closing, it helps a lot for having no commissions. I think we paid the attorney $450 to prepare the docs. He has all the forms pre-prepared in their computer, fills in the blanks, pushes print and it spits the docs out

 

[GulfDawg]

You usually don’t save money by using the listing agent. The listing agent will get both sides of the commission and their loyalty is to the seller not you. It’s best to hire a realtor to represent your interests.

 

[MSUDAWGFAN]

You usually don’t save money by using the listing agent. The listing agent will get both sides of the commission and their loyalty is to the seller not you. It’s best to hire a realtor to represent your interests.

The problem wkth that is that the agent gets a percent of the sale so a higher price is against their best interest. I've had my realtor try to screw me out of more money when I was buying.

 

[ZombieKissinger]

The problem wkth that is that the agent gets a percent of the sale so a higher price is against their best interest. I've had my realtor try to screw me out of more money when I was buying.

They also want volume over single deal maximization, which I’ve run into. They don’t want the highest price for you. They want a decent price that gets the deal done ASAP

 

[stateu1]

The problem wkth that is that the agent gets a percent of the sale so a higher price is against their best interest. I've had my realtor try to screw me out of more money when I was buyin

Wait….the agent gets a percent so a higher price is bad? wtf. If I’m getting a percent I want a high price. Not sure about you.
Who pays closing costs is always negotiable

 

[MSUDC11-2.0]

Honestly, a good seller’s agent is worth every penny, IMO. We sold our house in Starkville about a year ago and I had a list price in my head that I would’ve gone with but our agent listed it for $15-20K more than that…. And within 2 days we had 3 offers over list price. Ended up accepting an offer for $7K above the listing. Our realtor earned her commission big time. Worked her tail off for us and was super communicative.

 

[ZombieKissinger]

Honestly, a good seller’s agent is worth every penny, IMO. We sold our house in Starkville about a year ago and I had a list price in my head that I would’ve gone with but our agent listed it for $15-20K more than that…. And within 2 days we had 3 offers over list price. Ended up accepting an offer for $7K above the listing. Our realtor earned her commission big time. Worked her tail off for us and was super communicative.

I’m not selling, I’m buying. I wouldn’t sell on my own, though, and am keeping my current house. For me, it feels like at some point the percent has to not hold because the work for 300k vs 500k vs 700k vs 900k is about the same, but the commission is triple if you go percent vs flat

 

[MSUDAWGFAN]

Wait….the agent gets a percent so a higher price is bad? wtf. If I’m getting a percent I want a high price. Not sure about you.
Who pays closing costs is always negotiable

A higher price was bad for me because I was the buyer and my realtor negotiated against me to help HER get a higher price from me.

 

[mstateglfr]

Pretty sure comments on here are a mix of opinions about using an agent to SELL and house and using an agent to BUY a house. The comments about selling are not applicable to the OP. And the comments that $ was saved by not using an agent to buy are questionable since none specify that the saved $ went to a lower sale price vs just going to the seller's pocket or to the realtor's pocket.

 

[JackShephard]

Just like everything else, a realtor's fee can be negotiated. I've seen it done up front, and I've seen it done on the back-end (I'll pay/accept this price, if the realtors will agree to split 4% instead of 6%). I would ask a realtor you wouldn't mind working with. The worst that can happen is they say "no" and you say, "thanks for your time".

 

[johnson86-1]

Normally when the listing agent is the only agent he/she gets both sides of the commission.

You usually don’t save money by using the listing agent. The listing agent will get both sides of the commission and their loyalty is to the seller not you. It’s best to hire a realtor to represent your interests.

The fact that people just assume the selling agent would screw the seller out of another 2% or 3% doesn't speak well of realtors.

A good buyer's agent can certainly more than pay for themselves if you are not familiar with an area. It's hard to know who a good buyer's agent is though. Lots of realtors are basically door openers and either don't know enough to give you good market intelligence or are more focused on closing the sale and getting their commission than giving good advice.

But if you are buying in an area you are familiar with and are reasonably sophisticated, I'd just submit a written offer and as part of the offer communicate that you aren't using a buyer's agent and without buyer's fees, the offer is actually higher on net than a similar offer from a represented buyer.

Realtor's generally have to submit written offers to their clients. If the agent wants to be unethical and not communicate that there is no buyers fee owed, or get pissy about not double dipping on the commission and trash the offer all together, I don't know what you can do. I wouldn't pay an extra two or three percent based on an assumption that the realtor is going to be unethical.

 

[Perd Hapley]

I’m not selling, I’m buying. I wouldn’t sell on my own, though, and am keeping my current house. For me, it feels like at some point the percent has to not hold because the work for 300k vs 500k vs 700k vs 900k is about the same, but the commission is triple if you go percent vs flat

Its actually not that way….its the opposite of what you’d expect. 300k to 500k to 700k to 900k….the work is actually less and less while the money gets higher and higher. Fewer and fewer buyers as you get higher up in price, therefore fewer showings, open houses, etc. Zillow and Trulia do all the marketing work. Listings may sit a bit longer, but its still a good problem to have as an agent to have manageable buyer traffic on a property you don’t have to babysit, and you get a huge windfall at the end. Sell one $900k in a month or three $300k houses in a month? Which option requires the most work?

 

[ZombieKissinger]

Its actually not that way….its the opposite of what you’d expect. 300k to 500k to 700k to 900k….the work is actually less and less while the money gets higher and higher. Fewer and fewer buyers as you get higher up in price, therefore fewer showings, open houses, etc. Zillow and Trulia do all the marketing work. Listings may sit a bit longer, but its still a good problem to have as an agent to have manageable buyer traffic on a property you don’t have to babysit, and you get a huge windfall at the end. Sell one $900k in a month or three $300k houses in a month? Which option requires the most work?

I was expecting the work to be about the same per house. Maybe it’s true that the more expensive ones take less work on the sell side. What I’m trying to get across, though, is that I’m on the buy side, and at some point the percent approach gets ridiculous. I’m not buying anything close to this, but a $3 million house would be a commission of $60k at 3%, which is dumb. Trying to understand when people get away from percentages and offer flat rates instead

 

[topbulldawg]

A higher price was bad for me because I was the buyer and my realtor negotiated against me to help HER get a higher price from me.

I can’t imagine that is true. If it is, that is illegal and would get their license revoked unless they disclose they are a dual agent

 

[topbulldawg]

The fact that people just assume the selling agent would screw the seller out of another 2% or 3% doesn't speak well of realtors.

A good buyer's agent can certainly more than pay for themselves if you are not familiar with an area. It's hard to know who a good buyer's agent is though. Lots of realtors are basically door openers and either don't know enough to give you good market intelligence or are more focused on closing the sale and getting their commission than giving good advice.

But if you are buying in an area you are familiar with and are reasonably sophisticated, I'd just submit a written offer and as part of the offer communicate that you aren't using a buyer's agent and without buyer's fees, the offer is actually higher on net than a similar offer from a represented buyer.

Realtor's generally have to submit written offers to their clients. If the agent wants to be unethical and not communicate that there is no buyers fee owed, or get pissy about not double dipping on the commission and trash the offer all together, I don't know what you can do. I wouldn't pay an extra two or three percent based on an assumption that the realtor is going to be unethical.

Some selling agents may cut their commission if they bring a buyer to the table, but that isn’t the norm. Sellers typically agree up front on the commission rate. The seller is l told if they bring the buyer, they keep the 6%. If they don’t, they split the commission with the buyers agent. Those things are disclosed at the start of the listing contract. The buyer doesn’t get a say in that

 

[HWY51dog]

A lot of misinformation in this post. You now as of 8/24 have to sign a buyers broker agreement before you look at houses with an agent. Several different ways for an agent to get paid. Including buyer paying, seller paying or both paying a portion.

If you use the listing agent, it’s called dual agency and you don’t have full representation. If a house is listed, I would never use the listing agent but that’s just me.

 

[MSUDAWGFAN]

I can’t imagine that is true. If it is, that is illegal and would get their license revoked unless they disclose they are a dual agent

Well the buyer for my house wanted a roof inspection. When I said I wanted one on the house that I wanted to buy, she said I didn't need to because my inspection showed no granular loss. I told her that the one on my house showed no granular loss either because the home inspector doesn't inspect the roof.

That was only one of the ways, but it was theater straw. I used a different realtor to buy with after that.

 

[Perd Hapley]

I was expecting the work to be about the same per house. Maybe it’s true that the more expensive ones take less work on the sell side. What I’m trying to get across, though, is that I’m on the buy side, and at some point the percent approach gets ridiculous. I’m not buying anything close to this, but a $3 million house would be a commission of $60k at 3%, which is dumb. Trying to understand when people get away from percentages and offer flat rates instead

I get what you’re saying….and was actually agreeing with you about the percentage thing. Just highlighting that its even worse than you think….because you actually get paid more to do less. Buying side is no different. Someone in the market for a $900k house isn’t going to be looking to do 30 showings in a week.

If I was a realtor, I think something like a staggered rate structure would make sense. 3% of the first $300,000, 2% for the next $300,000 ($300,001~$600,000), 1% for the next $300,000 ($600,001~$900,000). That’s 2% on a $900,000 sale. I can’t imagine anyone selling at that price would ever sign on to anything over 4% total commission.

2% on a $900k sale is also $18,000, which is the same as 3% on a $600k sale. The percentages definitely get dumb past a certain point.

 

[johnson86-1]

Some selling agents may cut their commission if they bring a buyer to the table, but that isn’t the norm. Sellers typically agree up front on the commission rate. The seller is l told if they bring the buyer, they keep the 6%. If they don’t, they split the commission with the buyers agent. Those things are disclosed at the start of the listing contract. The buyer doesn’t get a say in that

I think most sellers believe bring a buyer means representing a buyer, not a buyer finding them on mls just like a realtor would. If the seller realizes his or her agent is going to take another $12k or whatever for one or two extra showings when there isn’t a buyers agent to pay, they can put pressure on the realtor to negotiate. If the realtor isn’t willing to negotiate, then the seller can and should badmouth them to other potential clients so they know to either not use that realtor or negotiate a split when there is no buyers agent to pay.

 

[johnson86-1]

A lot of misinformation in this post. You now as of 8/24 have to sign a buyers broker agreement before you look at houses with an agent. Several different ways for an agent to get paid. Including buyer paying, seller paying or both paying a portion.

If you use the listing agent, it’s called dual agency and you don’t have full representation. If a house is listed, I would never use the listing agent but that’s just me.

You have to have a brokers agreement if you are working with a buyers agent. Seller agents are still allowed to show their own listings to unrepresented buyers. If any local realtor groups try to force buyers to have a buyers agreement in order to see a house, that will be the location of the next massive antitrust suit they have to pay for.

 

[HWY51dog]

You have to have a brokers agreement if you are working with a buyers agent. Seller agents are still allowed to show their own listings to unrepresented buyers. If any local realtor groups try to force buyers to have a buyers agreement in order to see a house, that will be the location of the next massive antitrust suit they have to pay for.

Correct. I was explaining using a buyers agent, you have to have the agreement now. And why wouldn’t use the listing agent.