8 ms·

Here's a dirty secret: You don't need a real estate agent, particularly a buy-side agent. Look at the housing markets in the UK and Australia. Buy-side agents

Here's a dirty secret: You don't need a real estate agent, particularly a buy-side agent. Look at the housing markets in the UK and Australia. Buy-side agents have never existed there, and are a particularly odd quirk of the U.S. market. When you close the deal you typically have a banker there, and ideally a lawyer. So what does the agent actually do? Drive you around to houses you have already previewed online? Being a real estate agent is no different than being an investment banker or a consultant. Realtors are deal-driven and therefore, not a true advocate for clients. If a client pays more for a house than they should, then the buy-side and sell-side agents make more commission. If a house sells quickly then it is less hassle for the sell-side agent. So to be fair, there is something of a balancing dynamic to the market, and there are surely good and skilled agents out there, but don't count your real estate agent in your corner. Their interests are not necessarily aligned with yours.

imglorp 10y ago
And there's more. Whereas most professionals work on a flat rate by the job or by the hour, real estate agents work on a percentage, which is especially shady because it takes about the same work regardless of the value of the property. So it works out to be more of a "piece of the action" like extorting, or gate keeping, than a service. There's other barriers to non-agents playing as well. For example, registering on the MLS has to be done by an agent. There are services that list for you, but they're agents. Bloody hell, it's just a database entry. I'm not saying the agents don't perform a valuable service--it's nice to have sometimes--but the system should be more open and the pay scheme more fair.
- rayiner 10y ago
  There is nothing wrong with being compensated proportionally to the value of a deal. A real-estate agent who sells a $10 million property more quickly has created more value for her customer than one who sells a $1 million property more quickly.
  - akiselev 10y ago
    Yeah except the same real estate agent will try to push you to sell that property for $9 million, against your interest, if they think that the extra commission on that $1 million is not worth their effort for several extra months or years, often using manipulative tactics. This is a very perverse incentive and should be replaced with regular time based billing, perhaps with bonuses for certain milestones based on the final sale price of the property, especially given the information assymetry between realtors and owners. Until realtors have a legal duty to their clients, like lawyers or doctors, predatory behavior in the industry will remain.
    - cwilkes 10y ago
      so if the agent is more incentivized to sell at $9m and make guaranteed money rather than $10m and making a little more at the risk of losing the deal, but it gains you ~$1m in income in selling it, doesn't that mean the agent should get a higher percentage of the sale? I can see this going either way where the seller is annoyed the you are making a lot more money for not that much more work or that the seller realizes that if he can make an extra $900k by paying someone $100k it would be worth a 10% commission.
      - akiselev 10y ago
        Who said anything about losing the deal? It just takes longer to sell the house when the seller is looking for a better deal. Studies have shown that when a realtor sells their own home, they have better returns and keep the property on the market longer because of information asymmetry [1][2][3] while also displaying the opposite behavior when they sell their own property in competition with their own clients, which is in and of itself a huge conflict of interest [4]. It's not about annoyance. If the realtor gets more money for the client they deserve more money themselves. Before that sale takes place, however, the commission creates a perverse incentive which combines with information asymmetry, resulting in shady behavior. If realtors were bound by law, like other professions or fiduciaries are, this wouldn't be a problem. [1] http://www.mitpressjournals.org/doi/abs/10.1162/rest.90.4.599 http://www.mitpressjournals.org/doi/abs/10.1162/rest.90.4.59... [2] http://www.sciencedirect.com/science/article/pii/105113779290012F http://www.sciencedirect.com/science/article/pii/10511377929... [3] http://www.sciencedirect.com/science/article/pii/S0304405X05000218 http://www.sciencedirect.com/science/article/pii/S0304405X05... [4] http://link.springer.com/article/10.1007%2Fs11146-015-9543-y http://link.springer.com/article/10.1007%2Fs11146-015-9543-y
- em3rgent0rdr 10y ago
  My understanding from a friend that works in the real estate business in US, is that especially in the post-crash world, there are so many complex laws that require a certain amount of specific education, simply to legally engage in a trade. Basically it is a scam.
  - brbsix 10y ago
    It has to be this. Otherwise newcomers would come in and compete the shit out of them. I can think of few other scenarios that would result in such a racket.
BadCookie 10y ago
Yeah, good luck seeing a house without a real estate agent. You might get lucky and make it to an open house, but in that case, the seller's agent holding the open house will very likely try to represent you as well (if that's legal in your state) for twice the commission. It's not like you can just call up the seller of a home and ask to see the house. It doesn't work like that (unless it's a for-sale-by-owner situation, which is rare). I'm not disagreeing with you in principle, but in practice, you almost always have to have an agent as a buyer even if all the agent does is unlock doors for you.
- aianus 10y ago
  Why is that? All else being equal, why would the seller or his agent prefer to pay extra commission to my agent?
  - Spooky23 10y ago
    The listing contract specifies a fixed commission that typically gets split with a buying agent. If there's no split, the listing agent gets the full commission.
rgbrgb 10y ago
You shouldn't need an agent but in the US when the listing is put on market (on the MLS) the seller allocates 5-6 percent for the buyer's and seller's agent to split. If you make an offer without an agent, the seller's agent is entitled to the whole thing (though they may be less likely to take your offer because you won't have an agent pushing along the close). That said, I've heard of people negotiating refunds directly with the seller's agent -- it's just less likely to work in competitive areas where they have the option to work with another agent on the deal. If you're looking to buy a home without the full concierge agent experience and you want a clear savings, I'd be remiss not to plug Open Listings (YC W15) [0] (disclaimer: I'm a cofounder). We refund half the commission back to the buyer, write, submit, and negotiate all the contracts, and make sure the close is smooth. While all of the contract generation is super efficient and online, we have a superb team of (human) agents who work hard to feel out the seller and get your offer accepted at the best terms. We coordinate showings, inspections, and answer your questions but we won't drive you around in a cadillac telling you what neighborhood is "safe". [0]: https://www.openlistings.com/ https://www.openlistings.com/
- gist 10y ago
  Fwiw in theory the selling agent getting the entire commission should be more willing to twist a seller to accept your offer, than if they are splitting with the buyers agent. Plus independent of ethics, they might be more willing to hold off another realtor asking about the property for their client (who they will have to pay a commission to) if your offer is in process. By hold off I mean not return a phone call immediately or try to stall in a way that wasn't obvious. Otoh there is a disadvantage to not having a realtor as an agent in the sense that the selling agent should be able to more accurately read your intent because they hear your voice and what you are saying. Now if you are good at the game you can get beyond that but most people aren't up to that skill level for home buying.
  - rgbrgb 10y ago
    We thought that would be the case, but in practice we've found that listing agents usually refuse to double-end deals. Instead they tend to refer clients that approach them to a friend (often another agent working under the same broker). I think the reasoning is that there's a higher chance of the deal falling through if the buyer doesn't have their own representation coaching them through it. There's a lot that's not intuitive about real estate deals (or at least violated our initial assumptions).
quadrangle 10y ago
Non-aligned interests also apply to almost any service you can imagine. Teachers have conflicts of interest in showing students alternative ways to learn. Dentists want more expensive jobs so find more worthwhile cavities to fix. Journalists want attention so find the spectacles instead of deeper value… The only problem with buyer's agents is the pretense that they strictly are on your side and have no conflicts of interest. A buyer's agent who explicitly acknowledges their conflict of interest and discusses that with a client is as good as you can get for reasonable and honestly, valuable service. Personally, I'm buying a home with help from a buyer's agent, and our agent has been so wonderfully helpful, was willing to admit his conflicts of interest, and emphasized that he'd rather us feel everything about the process (including getting the best price or missing a house to wait longer for the right one) was aligned with his interests because he values our review and referrals to others. He's interested in sustaining a long-term successful career rather than the immediate pay-off. That aligns his interests with ours more. He's also done a ton of good work and even been a great help as someone to discuss all steps of the process.
deleted 10y ago
[deleted]
pjmorris 10y ago
Anec-data in support of your point; We bought a (US, Florida) house without a realtor. Saw a classified ad in the paper (2004, we still read physical papers), owner had put it on the market, conducted his own open house. We saw it, loved it, offered, he accepted... and his lawyer and our lawyer made sure that all the money and other appropriate paperwork was handled properly. Realtors are a convenience, not a necessity. I probably wouldn't have been comfortable buying my first house without someone to walk me through the process, but we were very happy with the results of our realtor-less purchase. Funny story: our new next-door neighbor was a realtor, and she said he could've gotten another ~$20,000 on the sale price if he'd used a realtor... not noticing that that's about what the realtors in the deal would've taken as their share.
kzhahou 10y ago
So, in the Bay Area, how should one buy a house?
- defen 10y ago
  First, have 400K in liquid assets and a combined income of at least 300K...
danieltillett 10y ago
I can't talk for the UK, but here in Australia we have traditionally never had buy-side agents (they do exist, but they are relatively rare). Also the fee the agents get is much less - 1% to 2% and closer to 1% in the big markets. The other thing is in the large markets like Sydney most of the properties are sold at public auctions. The last two properties I bought I bought at public auction. Many people find this so stressful they hire agents to bid for them, but this is just a fee for service usually.
andrewvc 10y ago
Well, our (buy side) realtor really did earn his money helping us. We were first-time home buyers and he did a great job helping us understand what buying an old house in our neighborhood would be like, as well as vetting the mechanicals of the many many homes we looked at before making a buy. Additionally, he helped us understand what were sane, and what were insane demands when purchasing. I'm not sure if I'd need an agent next time around, but this time around it was a lifesaver.
- ghaff 10y ago
  That was my experience as well as a first-time buyer. Admittedly many years ago (pre-Web) and the price was such as to make any prospective Bay area buyer weep. That said, my realtor gave me what seemed good advice on offers and helped navigate through some tricky landscape related to agriculture liens and the like. (Funny thing though was that it turned out I knew the seller so we both could have potentially saved some money.)
  - dilemma 10y ago
    Without the agent you wouldn't know that you knew the seller :)
- ak217 10y ago
  Could you elaborate on the sane vs. insane demands (examples of each)?
dj_doh 10y ago
"Realtors are deal-driven and therefore, not a true advocate for clients" thank you and case closed.
Spooky23 10y ago
That's true and not true. A common business model for many real estate agents is to accumulate listings to get posted to MLS. There's one guy in my area who has like 350 listings. They aren't really equipped or motivated to service buyers (or sellers for that matter) and suck to deal with. Having a gofer deal with their bullshit who gets paid by someone else is pretty useful.
scurvy 10y ago
I must have found the only buyer's agent worth a salt. 4 offers all closely lumped together, and the seller's agent wanted to do anothe round of best and final offers. My buyer's agent convinced him not to, that he would tell us not to make another bid, that we were overly qualified to buy the place, that it would close fast, etc. The seller's agent said ok, you got the deal. He basically pulled some bullying mind control tactics and got us the place without having to go through crazy Bay Area bidding wars. Considering he actually got us into our place, at a good price, and without stress; I think his commission is definitely worth it (especially considering appreciation since).
- a_small_island 10y ago
  Perhaps there really weren't 3 other qualified offers?
  - throwaway_exer 10y ago
    If the house was in move-in condition, then yes, there were other offers guaranteed. And walking away from a house you like just means another bidding war tomorrow.
  - scurvy 10y ago
    There was at least 1 other. One of the non-winning parties later bought another unit in my building and came by to chat. We had some wine, and they told me what their offer was. It was only $3k less than ours. In vino, veritas.
prostoalex 10y ago
> You don't need a real estate agent, particularly a buy-side agent. It's pretty hard for someone who's not in the industry to get adequate protection. First off there's a variety of fees (title, title transfer, title insurance, escrow, HOA docs, miscellaneous city and county fees) that are split in a generally accepted (but un-recorded anywhere) manner. The buyer's agent would know of a fair split, the seller's agent will pile it all on the buyer in the hopes that it will be accepted. Then there's liens, unpaid taxes, Mello-Roos, special ordinances, leases on rooftop solar, delinquent HOA fees, etc. that are against the property and must be double-checked before accepting full possession. Then there are hidden gotchas like low-flush toilet requirements in some California cities. What you thought was going to be an easy plumbing fix turns into a major project required by law. In case of HOA there are financial docs that are hard to analyze for someone unsophisticated - is HOA in dire trouble? Or solid financial standing? Are fees going up any time soon? > When you close the deal you typically have a banker there, and ideally a lawyer. A typical deal involves a bunch of back-and-forths involving requests to fix or include certain items, and negotiating the prices of those (e.g. fix the dilapidated screen on a door or provide $200 credit at closing, seller's choice, seller counters with $100 credit instead). How can one find a real estate lawyer that would be cost-efficient? If it's buyer's agent's compensation that seems excessive, one can always find a hands-off guy with a real estate license who won't put in much work, but will rebate majority of his fee.
- JoeAltmaier 10y ago
  Get a home inspection. The split fees are only if there are 2 agents; with one (sellers') agent they should pay the fees. In Iowa there's a lawyer (by law) to do a title search; the "buyer's agent" doesn't do squat about that. CA has title-search companies; again your agent isn't any help there. What possible point is there in a hands-off guy that doesn't do much work? Read a book; buy your own house and save some money.
  - prostoalex 10y ago
    > with one (sellers') agent they should pay the fees In any active market such out-of-ordinary offers would be viewed as low-balling and not worth countering (as seller's net is suddenly lower than a similar offer, but with split fees). This would work, likely, with distressed sales, or in any situation where the buyer has an upper hand to begin with. P.S. I don't really have a horse in the game, and don't get secretly compensated by the powerful real estate lobby (I wish!), but in my short practice I've been on the buying side 3 times, all in California, and buyer's agent (Redfin for 2 out of 3 transactions) has been pretty helpful. I also agree with your approach, and know people that have gotten their own real estate license just to represent themselves (and occasionally their friends) in clear-cut transactions.
NotSammyHagar 10y ago
Real estate has been "disrupted" in some places, by companies like redfin. There is some much inertia in the market, since most people use a real estate agent when selling and just eat the 6% commission (3% to each side), people think "the commission is free or already priced in". Since almost everyone is in the 6% commission game, it puts you in the same thing.

imglorp 10y ago

And there's more. Whereas most professionals work on a flat rate by the job or by the hour, real estate agents work on a percentage, which is especially shady because it takes about the same work regardless of the value of the property. So it works out to be more of a "piece of the action" like extorting, or gate keeping, than a service. There's other barriers to non-agents playing as well. For example, registering on the MLS has to be done by an agent. There are services that list for you, but they're agents. Bloody hell, it's just a database entry. I'm not saying the agents don't perform a valuable service--it's nice to have sometimes--but the system should be more open and the pay scheme more fair.

rayiner 10y ago
There is nothing wrong with being compensated proportionally to the value of a deal. A real-estate agent who sells a $10 million property more quickly has created more value for her customer than one who sells a $1 million property more quickly.
- akiselev 10y ago
  Yeah except the same real estate agent will try to push you to sell that property for $9 million, against your interest, if they think that the extra commission on that $1 million is not worth their effort for several extra months or years, often using manipulative tactics. This is a very perverse incentive and should be replaced with regular time based billing, perhaps with bonuses for certain milestones based on the final sale price of the property, especially given the information assymetry between realtors and owners. Until realtors have a legal duty to their clients, like lawyers or doctors, predatory behavior in the industry will remain.
  - cwilkes 10y ago
    so if the agent is more incentivized to sell at $9m and make guaranteed money rather than $10m and making a little more at the risk of losing the deal, but it gains you ~$1m in income in selling it, doesn't that mean the agent should get a higher percentage of the sale? I can see this going either way where the seller is annoyed the you are making a lot more money for not that much more work or that the seller realizes that if he can make an extra $900k by paying someone $100k it would be worth a 10% commission.
    - akiselev 10y ago
      Who said anything about losing the deal? It just takes longer to sell the house when the seller is looking for a better deal. Studies have shown that when a realtor sells their own home, they have better returns and keep the property on the market longer because of information asymmetry [1][2][3] while also displaying the opposite behavior when they sell their own property in competition with their own clients, which is in and of itself a huge conflict of interest [4]. It's not about annoyance. If the realtor gets more money for the client they deserve more money themselves. Before that sale takes place, however, the commission creates a perverse incentive which combines with information asymmetry, resulting in shady behavior. If realtors were bound by law, like other professions or fiduciaries are, this wouldn't be a problem. [1] http://www.mitpressjournals.org/doi/abs/10.1162/rest.90.4.599 http://www.mitpressjournals.org/doi/abs/10.1162/rest.90.4.59... [2] http://www.sciencedirect.com/science/article/pii/105113779290012F http://www.sciencedirect.com/science/article/pii/10511377929... [3] http://www.sciencedirect.com/science/article/pii/S0304405X05000218 http://www.sciencedirect.com/science/article/pii/S0304405X05... [4] http://link.springer.com/article/10.1007%2Fs11146-015-9543-y http://link.springer.com/article/10.1007%2Fs11146-015-9543-y
em3rgent0rdr 10y ago
My understanding from a friend that works in the real estate business in US, is that especially in the post-crash world, there are so many complex laws that require a certain amount of specific education, simply to legally engage in a trade. Basically it is a scam.
- brbsix 10y ago
  It has to be this. Otherwise newcomers would come in and compete the shit out of them. I can think of few other scenarios that would result in such a racket.

BadCookie 10y ago

Yeah, good luck seeing a house without a real estate agent. You might get lucky and make it to an open house, but in that case, the seller's agent holding the open house will very likely try to represent you as well (if that's legal in your state) for twice the commission. It's not like you can just call up the seller of a home and ask to see the house. It doesn't work like that (unless it's a for-sale-by-owner situation, which is rare). I'm not disagreeing with you in principle, but in practice, you almost always have to have an agent as a buyer even if all the agent does is unlock doors for you.

aianus 10y ago
Why is that? All else being equal, why would the seller or his agent prefer to pay extra commission to my agent?
- Spooky23 10y ago
  The listing contract specifies a fixed commission that typically gets split with a buying agent. If there's no split, the listing agent gets the full commission.

rgbrgb 10y ago

You shouldn't need an agent but in the US when the listing is put on market (on the MLS) the seller allocates 5-6 percent for the buyer's and seller's agent to split. If you make an offer without an agent, the seller's agent is entitled to the whole thing (though they may be less likely to take your offer because you won't have an agent pushing along the close). That said, I've heard of people negotiating refunds directly with the seller's agent -- it's just less likely to work in competitive areas where they have the option to work with another agent on the deal. If you're looking to buy a home without the full concierge agent experience and you want a clear savings, I'd be remiss not to plug Open Listings (YC W15) [0] (disclaimer: I'm a cofounder). We refund half the commission back to the buyer, write, submit, and negotiate all the contracts, and make sure the close is smooth. While all of the contract generation is super efficient and online, we have a superb team of (human) agents who work hard to feel out the seller and get your offer accepted at the best terms. We coordinate showings, inspections, and answer your questions but we won't drive you around in a cadillac telling you what neighborhood is "safe". [0]: https://www.openlistings.com/ https://www.openlistings.com/

gist 10y ago
Fwiw in theory the selling agent getting the entire commission should be more willing to twist a seller to accept your offer, than if they are splitting with the buyers agent. Plus independent of ethics, they might be more willing to hold off another realtor asking about the property for their client (who they will have to pay a commission to) if your offer is in process. By hold off I mean not return a phone call immediately or try to stall in a way that wasn't obvious. Otoh there is a disadvantage to not having a realtor as an agent in the sense that the selling agent should be able to more accurately read your intent because they hear your voice and what you are saying. Now if you are good at the game you can get beyond that but most people aren't up to that skill level for home buying.
- rgbrgb 10y ago
  We thought that would be the case, but in practice we've found that listing agents usually refuse to double-end deals. Instead they tend to refer clients that approach them to a friend (often another agent working under the same broker). I think the reasoning is that there's a higher chance of the deal falling through if the buyer doesn't have their own representation coaching them through it. There's a lot that's not intuitive about real estate deals (or at least violated our initial assumptions).

quadrangle 10y ago

Non-aligned interests also apply to almost any service you can imagine. Teachers have conflicts of interest in showing students alternative ways to learn. Dentists want more expensive jobs so find more worthwhile cavities to fix. Journalists want attention so find the spectacles instead of deeper value… The only problem with buyer's agents is the pretense that they strictly are on your side and have no conflicts of interest. A buyer's agent who explicitly acknowledges their conflict of interest and discusses that with a client is as good as you can get for reasonable and honestly, valuable service. Personally, I'm buying a home with help from a buyer's agent, and our agent has been so wonderfully helpful, was willing to admit his conflicts of interest, and emphasized that he'd rather us feel everything about the process (including getting the best price or missing a house to wait longer for the right one) was aligned with his interests because he values our review and referrals to others. He's interested in sustaining a long-term successful career rather than the immediate pay-off. That aligns his interests with ours more. He's also done a ton of good work and even been a great help as someone to discuss all steps of the process.

deleted 10y ago

[deleted]

pjmorris 10y ago

Anec-data in support of your point; We bought a (US, Florida) house without a realtor. Saw a classified ad in the paper (2004, we still read physical papers), owner had put it on the market, conducted his own open house. We saw it, loved it, offered, he accepted... and his lawyer and our lawyer made sure that all the money and other appropriate paperwork was handled properly. Realtors are a convenience, not a necessity. I probably wouldn't have been comfortable buying my first house without someone to walk me through the process, but we were very happy with the results of our realtor-less purchase. Funny story: our new next-door neighbor was a realtor, and she said he could've gotten another ~$20,000 on the sale price if he'd used a realtor... not noticing that that's about what the realtors in the deal would've taken as their share.

kzhahou 10y ago

So, in the Bay Area, how should one buy a house?

defen 10y ago
First, have 400K in liquid assets and a combined income of at least 300K...

danieltillett 10y ago

I can't talk for the UK, but here in Australia we have traditionally never had buy-side agents (they do exist, but they are relatively rare). Also the fee the agents get is much less - 1% to 2% and closer to 1% in the big markets. The other thing is in the large markets like Sydney most of the properties are sold at public auctions. The last two properties I bought I bought at public auction. Many people find this so stressful they hire agents to bid for them, but this is just a fee for service usually.

andrewvc 10y ago

Well, our (buy side) realtor really did earn his money helping us. We were first-time home buyers and he did a great job helping us understand what buying an old house in our neighborhood would be like, as well as vetting the mechanicals of the many many homes we looked at before making a buy. Additionally, he helped us understand what were sane, and what were insane demands when purchasing. I'm not sure if I'd need an agent next time around, but this time around it was a lifesaver.

ghaff 10y ago
That was my experience as well as a first-time buyer. Admittedly many years ago (pre-Web) and the price was such as to make any prospective Bay area buyer weep. That said, my realtor gave me what seemed good advice on offers and helped navigate through some tricky landscape related to agriculture liens and the like. (Funny thing though was that it turned out I knew the seller so we both could have potentially saved some money.)
- dilemma 10y ago
  Without the agent you wouldn't know that you knew the seller :)
ak217 10y ago
Could you elaborate on the sane vs. insane demands (examples of each)?

dj_doh 10y ago

"Realtors are deal-driven and therefore, not a true advocate for clients" thank you and case closed.

Spooky23 10y ago

That's true and not true. A common business model for many real estate agents is to accumulate listings to get posted to MLS. There's one guy in my area who has like 350 listings. They aren't really equipped or motivated to service buyers (or sellers for that matter) and suck to deal with. Having a gofer deal with their bullshit who gets paid by someone else is pretty useful.

scurvy 10y ago

I must have found the only buyer's agent worth a salt. 4 offers all closely lumped together, and the seller's agent wanted to do anothe round of best and final offers. My buyer's agent convinced him not to, that he would tell us not to make another bid, that we were overly qualified to buy the place, that it would close fast, etc. The seller's agent said ok, you got the deal. He basically pulled some bullying mind control tactics and got us the place without having to go through crazy Bay Area bidding wars. Considering he actually got us into our place, at a good price, and without stress; I think his commission is definitely worth it (especially considering appreciation since).

a_small_island 10y ago
Perhaps there really weren't 3 other qualified offers?
- throwaway_exer 10y ago
  If the house was in move-in condition, then yes, there were other offers guaranteed. And walking away from a house you like just means another bidding war tomorrow.
- scurvy 10y ago
  There was at least 1 other. One of the non-winning parties later bought another unit in my building and came by to chat. We had some wine, and they told me what their offer was. It was only $3k less than ours. In vino, veritas.

prostoalex 10y ago

> You don't need a real estate agent, particularly a buy-side agent. It's pretty hard for someone who's not in the industry to get adequate protection. First off there's a variety of fees (title, title transfer, title insurance, escrow, HOA docs, miscellaneous city and county fees) that are split in a generally accepted (but un-recorded anywhere) manner. The buyer's agent would know of a fair split, the seller's agent will pile it all on the buyer in the hopes that it will be accepted. Then there's liens, unpaid taxes, Mello-Roos, special ordinances, leases on rooftop solar, delinquent HOA fees, etc. that are against the property and must be double-checked before accepting full possession. Then there are hidden gotchas like low-flush toilet requirements in some California cities. What you thought was going to be an easy plumbing fix turns into a major project required by law. In case of HOA there are financial docs that are hard to analyze for someone unsophisticated - is HOA in dire trouble? Or solid financial standing? Are fees going up any time soon? > When you close the deal you typically have a banker there, and ideally a lawyer. A typical deal involves a bunch of back-and-forths involving requests to fix or include certain items, and negotiating the prices of those (e.g. fix the dilapidated screen on a door or provide $200 credit at closing, seller's choice, seller counters with $100 credit instead). How can one find a real estate lawyer that would be cost-efficient? If it's buyer's agent's compensation that seems excessive, one can always find a hands-off guy with a real estate license who won't put in much work, but will rebate majority of his fee.

JoeAltmaier 10y ago
Get a home inspection. The split fees are only if there are 2 agents; with one (sellers') agent they should pay the fees. In Iowa there's a lawyer (by law) to do a title search; the "buyer's agent" doesn't do squat about that. CA has title-search companies; again your agent isn't any help there. What possible point is there in a hands-off guy that doesn't do much work? Read a book; buy your own house and save some money.
- prostoalex 10y ago
  > with one (sellers') agent they should pay the fees In any active market such out-of-ordinary offers would be viewed as low-balling and not worth countering (as seller's net is suddenly lower than a similar offer, but with split fees). This would work, likely, with distressed sales, or in any situation where the buyer has an upper hand to begin with. P.S. I don't really have a horse in the game, and don't get secretly compensated by the powerful real estate lobby (I wish!), but in my short practice I've been on the buying side 3 times, all in California, and buyer's agent (Redfin for 2 out of 3 transactions) has been pretty helpful. I also agree with your approach, and know people that have gotten their own real estate license just to represent themselves (and occasionally their friends) in clear-cut transactions.

NotSammyHagar 10y ago

Real estate has been "disrupted" in some places, by companies like redfin. There is some much inertia in the market, since most people use a real estate agent when selling and just eat the 6% commission (3% to each side), people think "the commission is free or already priced in". Since almost everyone is in the 6% commission game, it puts you in the same thing.