4 ms·

I'm from the UK where it works differently. If you're a buyer, what does the realtor do? Do they sort the legal stuff? Or are you (/seller) paying 3% to find y

I'm from the UK where it works differently. If you're a buyer, what does the realtor do? Do they sort the legal stuff? Or are you (/seller) paying 3% to find you a house? How does the legal mechanics of this work, do realtors have an obligation to work in the interests of the person that engaged them, or the person that's paying them? Presumably its who engaged them, as they won't know who's paying them. Why then are they allowed to not show certain homes???

vkou 8y ago
> Do they sort the legal stuff? No, you pay a lawyer to do that.
- benj111 8y ago
  3% seems a lot just for finding a house then, what's the value add? Or is just that buyers aren't paying (directly) so they don't care?
  - Latteland 8y ago
    They usually don't add any value unless you are maybe a naive buyer. They goal is complete the sale at any cost, otherwise they get nothing, and that's a bad incentive. At this point there's no real basis for a percentage commission.
gnopgnip 8y ago
In contrast to other systems used, The US system ensures the buyers are able to make a competitive offer without forgoing representation(because the buyers agent is paid for even if the buyers are unrepresented), and that almost all transactions have both the buyer and seller represented by separate agents. If the buyer is unrepresented, the listing agent is in practice representing them, and the seller still pays 5-6% so most buyers would want their own agent. Buyers agents usually sign an exclusive representation agreement outlining their duties to the buyer, and state law also covers their responsibilities to the buyer even if the buyer is not paying them directly. Real estate agents are only compensated when a sale closes, unlike real estate attorneys, or most everyone else in the real estate industry who are compensated when a service is rendered. This aligns the incentives of the real estate agents with the home buyers and sellers. Real estate agents are spending a lot of money on marketing, which is what allows for sites like Zillow to exist and for buyers to find homes for sale without directly involving an agent.
- benj111 8y ago
  You seem positive about the situation? As a point of reference in the UK it's around 1% commission to sell your house, they do the marketing, including on a variety of websites.
  - gnopgnip 8y ago
    There is a noticeable difference having agents as a buffer when buying or selling a home. For many it is an emotional experience and without representation the sale would not close. There is also a difference between transactions where everyone is represented by an attorney who is paid even if the deal falls through, or where they are represented by agents who are only paid when the deal closes. Having a financial incentive to have everyone represented is overall a positive. In the US the realtors recommend repairs or other changes before listing the home, sometimes handle staging the home, arrange a professional photographer, pull data for comparable recently sold homes, call the listing agent on pending home for sale to get the contract price(likely will be closed by the time the appraisal is happening) and have knowledge of the local market to help you decide on the list price. After listing a home they handle showings and setting up the lockbox, and this includes screening potential buyers, usually requiring that they have a mortgage pre approved before viewing a home. Really the buyers agent is doing most of the work showing homes. In many cases the listing agent will hold an open house to get more people to view the home, but this is more for the agents benefit than the seller. After getting an offer the listing agent still has a lot of work. They will negotiate counter offers. They will help with preparing the required disclosures. There is a lot of following up with third parties, the loan officer at the bank, making sure an appraisal is scheduled, being present with the home inspector, following up with the buyers agent to get contingency releases, negotiating repair requests or other amendments. Then there is last minute stuff that needs to be done, driving a contract somewhere to get a wet signature the day before closing, getting the county to confirm a deed was recorded today, so escrow can be released before 5pm. Buyers agents are used in the UK too, mainly by the wealthy. Less well off clients go without because they cannot afford it and still make a competitive offer. 1% is on the low end, and it does not include VAT. If you go with a full service estate agent they are charging 2.5%, and you are paying 3% out of pocket for a buyers agent. 1.5%, and paying 1.8% total inc vat is closer to the average. In a lot of cases that is not far off from what is paid in the US. Another big difference is the US has the MLS, with virtually every home listed, and the UK has multiple marketplaces and not everyone will see every home. To reach almost everyone you need to use multiple agents and pay a higher fee, if you use a sole agent, you are not reaching all registered buyers. This is more of a problem in a buyers market, if you have a home in a hot market you will find a buyer either way. Multiple agency is not needed in the US.
crooked-v 8y ago
Note that "realtor" is a trademarked brand name invented by a trade association to distinguish from the generic "real estate agent".
- benj111 8y ago
  Thanks didn't know. I have visions of them sueing 'Tor' now, because they're the real ones.

vkou 8y ago

> Do they sort the legal stuff? No, you pay a lawyer to do that.

benj111 8y ago
3% seems a lot just for finding a house then, what's the value add? Or is just that buyers aren't paying (directly) so they don't care?
- Latteland 8y ago
  They usually don't add any value unless you are maybe a naive buyer. They goal is complete the sale at any cost, otherwise they get nothing, and that's a bad incentive. At this point there's no real basis for a percentage commission.

gnopgnip 8y ago

In contrast to other systems used, The US system ensures the buyers are able to make a competitive offer without forgoing representation(because the buyers agent is paid for even if the buyers are unrepresented), and that almost all transactions have both the buyer and seller represented by separate agents. If the buyer is unrepresented, the listing agent is in practice representing them, and the seller still pays 5-6% so most buyers would want their own agent. Buyers agents usually sign an exclusive representation agreement outlining their duties to the buyer, and state law also covers their responsibilities to the buyer even if the buyer is not paying them directly. Real estate agents are only compensated when a sale closes, unlike real estate attorneys, or most everyone else in the real estate industry who are compensated when a service is rendered. This aligns the incentives of the real estate agents with the home buyers and sellers. Real estate agents are spending a lot of money on marketing, which is what allows for sites like Zillow to exist and for buyers to find homes for sale without directly involving an agent.

benj111 8y ago
You seem positive about the situation? As a point of reference in the UK it's around 1% commission to sell your house, they do the marketing, including on a variety of websites.
- gnopgnip 8y ago
  There is a noticeable difference having agents as a buffer when buying or selling a home. For many it is an emotional experience and without representation the sale would not close. There is also a difference between transactions where everyone is represented by an attorney who is paid even if the deal falls through, or where they are represented by agents who are only paid when the deal closes. Having a financial incentive to have everyone represented is overall a positive. In the US the realtors recommend repairs or other changes before listing the home, sometimes handle staging the home, arrange a professional photographer, pull data for comparable recently sold homes, call the listing agent on pending home for sale to get the contract price(likely will be closed by the time the appraisal is happening) and have knowledge of the local market to help you decide on the list price. After listing a home they handle showings and setting up the lockbox, and this includes screening potential buyers, usually requiring that they have a mortgage pre approved before viewing a home. Really the buyers agent is doing most of the work showing homes. In many cases the listing agent will hold an open house to get more people to view the home, but this is more for the agents benefit than the seller. After getting an offer the listing agent still has a lot of work. They will negotiate counter offers. They will help with preparing the required disclosures. There is a lot of following up with third parties, the loan officer at the bank, making sure an appraisal is scheduled, being present with the home inspector, following up with the buyers agent to get contingency releases, negotiating repair requests or other amendments. Then there is last minute stuff that needs to be done, driving a contract somewhere to get a wet signature the day before closing, getting the county to confirm a deed was recorded today, so escrow can be released before 5pm. Buyers agents are used in the UK too, mainly by the wealthy. Less well off clients go without because they cannot afford it and still make a competitive offer. 1% is on the low end, and it does not include VAT. If you go with a full service estate agent they are charging 2.5%, and you are paying 3% out of pocket for a buyers agent. 1.5%, and paying 1.8% total inc vat is closer to the average. In a lot of cases that is not far off from what is paid in the US. Another big difference is the US has the MLS, with virtually every home listed, and the UK has multiple marketplaces and not everyone will see every home. To reach almost everyone you need to use multiple agents and pay a higher fee, if you use a sole agent, you are not reaching all registered buyers. This is more of a problem in a buyers market, if you have a home in a hot market you will find a buyer either way. Multiple agency is not needed in the US.

crooked-v 8y ago

Note that "realtor" is a trademarked brand name invented by a trade association to distinguish from the generic "real estate agent".

benj111 8y ago
Thanks didn't know. I have visions of them sueing 'Tor' now, because they're the real ones.