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I bought a few years back and we didn't really use an agent to find the house at all. Looking into it, I found that a certain percentage of the sale amount goes

I bought a few years back and we didn't really use an agent to find the house at all. Looking into it, I found that a certain percentage of the sale amount goes to pay the agent(s); 6% I think. If there are two agents, they each get half. If one person doesn't use an agent... the other person's agent gets it all. The person without an agent doesn't get to keep their half... it just all goes to the other agent. Wtf... So anyways, we wound up bringing in an agent to help us out with the last bits, because we had to pay the money anyways, it might as well go to someone that helped us in some way. The real estate process is fairly broken, as far as I'm concerned.

stronglikedan 3y ago
It was 6% when I bought, but I can tell you that my ex put our realtor through hell during the process - same questions over and over, daily phone calls for status updates once under contract, etc. I would have felt bad, but I knew how much she stood to make, so I didn't say anything and just let it all happen. I feel she earned it, lol.
majormajor 3y ago
> I bought a few years back and we didn't really use an agent to find the house at all. Looking into it, I found that a certain percentage of the sale amount goes to pay the agent(s); 6% I think. If there are two agents, they each get half. If one person doesn't use an agent... the other person's agent gets it all. The person without an agent doesn't get to keep their half... it just all goes to the other agent. Wtf... In hot markets this is a way people often get an advantage as a buyer: tell the selling agent you want to use them as your agent too, so they get the whole 6% if the seller picks your offer. So if the bids end up being close, the agent ends up lobbying for you (or lobbying you to make your offer closer). Some selling agents refuse to do this because it's pretty shady, but definitely not all. I've also heard of similar things including negotiating down the selling agent's cut as part of it but haven't seen as much of that firsthand.
- _aavaa_ 3y ago
  > Some selling agents refuse to do this because it's pretty shady, but definitely not all. This is a blatant conflict of interest. My god.
  - ska 3y ago
    The entire thing is a bit of a racket.
  - ethbr1 3y ago
    It's only a conflict of interest if either the seller or the buyer expect their agents to negotiate price for them. Generally agents steer well clean of that, for legal and time reasons. A realtor is there to put properties in front of you / put your properties in front of others, and then close the deal when you tell them which property you're interested in. Volume pays realtors, not price-over/under-replacement.
    - _aavaa_ 3y ago
      It’s a conflict regardless of negotiating price. Your realtor (as the seller) is now going to give preferential treatment to one buyer for their own personal gain.
      - ethbr1 3y ago
        The realtor doesn't care which side of the party "wins", as long as the deal goes through. So they're only preferring whoever is bitching the loudest?
    - DavidPeiffer 3y ago
      >It's only a conflict of interest if either the seller or the buyer expect their agents to negotiate price for them. There are other details that come up through a transaction that many people wouldn't even think about. Are appliances included? Window treatments? Leftover paint? What year the transaction closes could impact taxes or incentives for either party. Inspections (what types of inspections are permitted, their timeline, what will be repaired prior to sale). If there are disagreements about any of those, or if the property was materially misrepresented by the selling agent, it's way more messy than if another agent is involved and it's clear who represents who.
jliptzin 3y ago
Yea, it’s fucked. As a buyer, I had an agent for a while, thinking that since the same commission is coming out from the seller’s side anyway, it can’t hurt. Wrong. I kept having my offers turned down without any good reasons, getting slow walked on offers that were for the seller’s full asking price, etc, until I dropped the buyer’s agent and just went directly to the seller’s agent and it was amazing how fast the offer was accepted.
dminor 3y ago
We used a real estate lawyer instead of an agent and the seller worked it out with their agent to keep the 3%. The seller's agent told us that's what ended up making our bid the most attractive.
trey-jones 3y ago
It's like this throughout the real estate and real estate development industries to be honest. Building my own house I expected plenty of savings over buying (and to be fair, I still did of course), but even beyond permitting (which is also more about who you know than what you know) I encountered things like this (roughly from most mind-boggling to least): - You can't build a septic system, you have to use sewer because you're in city limits (later rescinded when they realized they would have to pump my sewage up to the city sewer. - You need to hire an engineer to make sure your lumber is ok (we milled our own lumber) - You need to hire an architect to make sure your plans are ok - You didn't finish in 6 months? Buy a new permit please. I know there were a million more things like this, but it's been over ten years and some things you don't want to remember... Contractors act like I'm taking food out of their kids' mouths by wanting to do the work myself, and the municipality is on their side.
- mholm 3y ago
  The municipality is on their side because many people who try to get variances on these things are legitimately cutting terrible corners that compromise both the safety of the inhabitants (present and future) and the neighbors. It's inconvenient, but these regulations save a lot of lives/QoL from bad/naive actors.
  - ethbr1 3y ago
    The municipality is on their side because they're overworked. In even the smallest town, if any appreciable percentage of new builds required custom handling... the system would instantly be person-starved and start backing up. Business-as-usual is the fast/efficient path from a paperwork standpoint. Anything odd is (a) discouraged and (b) looked at with annoyance because it takes more time. One reason it's almost always cheaper to tear-down fire damaged houses with still viable framing. No one wants to take the time to quantify exactly how much the framing was damaged.
    - salamanderss 3y ago
      My town solved the guilty until proven innocent issue regarding permits by just giving people carte blanche. Imo this is far more rational: if the county can't/won't verify paperwork they should default towards freedom and let the property owner have at it rather than presuming guilt and saying you haven't the money/people to check it. Granted people aren't rich where I live so we'd rather them live in potentially a subpar house and maybe have it fall in on them than be homeless and die from the elements. Re below: USA / Arizona. Pick the right county and no code inspections.
xyzelement 3y ago
It doesn't sound like you negotiated well and is a sign you could use an agent :) But seriously, imagine you and I are both bidding $1,000,000 on a house. You have an agent, so if your bid is accepted, your agent and the sellers agent each get $30,000. I don't have an agent. In my offer, I write "the sellers agent gets the usual 3%, and I am allocating the 3% that the buyer's agent would get towards the seller instead." That means for the seller's agent there's no difference whether I use an agent or not, but to the seller themselves, my offer looks $30,000 better than yours because I am sweetening the deal using that $ I'd otherwise give my realtor. All that said, I used a realtor on my house purchase despite being financially savvy and a good negotiator because they actually helped us find the right house, and they were well worth the fee.
- ralph84 3y ago
  The commission is spelled out in the listing contract between the seller and their agent. The buyer is not a party to that contract and can’t dictate changes to it.
  - sib 3y ago
    Well, sorta. The contract between the seller and their broker/agent definitely reserves (typically) 3% for the buyer side broker/agent. What happens to that 3% is definitely under the influence of the buyer. We negotiated a 50/50 split of the 3% back to us as the buyer in the most recent house that we bought. I guess we could have instead offered it as an incremental incentive to the selling party to sweeten the deal.
    - xyzelement 3y ago
      Yeah totally it's the same thing. The bottom line is you now have an extra 3% to "play with" between you, the seller's agent, and the seller that would have previously gone to the buyer's agent. How you split up that 3% depends on who's got most of the leverage in the scenario.
  - ethbr1 3y ago
    FYI, here's what an example seller's contract from northeast FL MLS looks like: >> Broker will cooperate with and compensate, as stated below, NEFMLS brokers and any broker who reciprocates with NEFMLS. For finding a buyer ready, willing and able to purchase the Property, SELLER will pay BROKER, no later than the date of closing, a broker transaction fee of 5% of the Purchase Price, whether a buyer is secured by BROKER, SELLER, or any other person. BROKER agrees to offer cooperating broker compensation of: 2.5% of the Purchase Price to a single agent for a buyer; or 2.5% of the Purchase Price to a transaction broker for a buyer; or 1% of the Purchase Price to a non-representative broker. >> If no cooperating broker compensation is offered, the Property cannot be placed in NEFMLS. SELLER hereby directs closing attorney/settlement agent to disburse at closing all compensation to brokers payable hereunder So in this case, the seller's broker is entitled to 5%, of which 2.5% is required to be shared with a buyer's broker, if existent. In the event that no buyer's broker exists... it would be a conversation with the seller's broker as to how to dispose of the 2.5% (refund to the deal, etc.).
nicholasjarnold 3y ago
I used an attorney specializing in real-estate to represent our side of the house during my first home purchase. We subsequently reduced the bid by 3% with an explicit note about why (no buyer's agent commission to pay). The seller's agent was a broker and was apparently motivated because they accepted our deal along with fixing a list of little items uncovered during inspection. We paid our lawyer a $2-3k iirc. I'll never know if that broker got 6% from the seller or took 3% to close the deal, but our strategy worked: I paid 5 figures less for the home than what was being asked for at a time when houses were selling for over asking price in this area. It's worth a shot I guess. 2 warnings: Some seller's agents will get very pissed at you (b/c this and other things like Redfin's 1% is disrupting their cash cow and they're not stoked about it). It might be difficult to find an attorney since most RE attorneys focus on commercial deals.
- cgh 3y ago
  Same, we used a notary public for most of the paperwork and a lawyer for a bit of it. I think I calculated that we saved around $20,000.
francisofascii 3y ago
Yep, I learned that the hard way when we bought our first house a long time ago. I naively thought I would be a more attractive buyer because they don't have to pay my agent. There ended up being two other offers. Anyway, I remember seeing in the closing documents the amount allotted to their agent, the full 6%. Wtf, indeed.
conductr 3y ago
Technically, the 6% goes to the Seller agent. They promote on the listing how much they're willing to share with the Buyer's agent; half is customary but not set in stone. There are agents for your situation. They'll collect the 3% (or whatever it is) and rebate it back to you at or after closing; less some fixed fee ($600 in my experience). They are not going to do much for you, but if you already found the house yourself and are familiar with the buying contracts/process. It's an option that can save you a lot. This may differ by state of course. My experience is limited to Texas. But I've bought and sold property using these type of agents. When selling, you just do all the work (hire a photographer $200-500, write the description $0+, and they load it to the MLS for you as the listing agent). I'm of the opinion that for most properties, the only value added marketing is the MLS. When they talk about their websites and portals and ads they run in print media I roll my eyes.
- philips 3y ago
  In Oregon it is illegal, by statute, to give a refund to a real estate client.

stronglikedan 3y ago

It was 6% when I bought, but I can tell you that my ex put our realtor through hell during the process - same questions over and over, daily phone calls for status updates once under contract, etc. I would have felt bad, but I knew how much she stood to make, so I didn't say anything and just let it all happen. I feel she earned it, lol.

majormajor 3y ago

> I bought a few years back and we didn't really use an agent to find the house at all. Looking into it, I found that a certain percentage of the sale amount goes to pay the agent(s); 6% I think. If there are two agents, they each get half. If one person doesn't use an agent... the other person's agent gets it all. The person without an agent doesn't get to keep their half... it just all goes to the other agent. Wtf... In hot markets this is a way people often get an advantage as a buyer: tell the selling agent you want to use them as your agent too, so they get the whole 6% if the seller picks your offer. So if the bids end up being close, the agent ends up lobbying for you (or lobbying you to make your offer closer). Some selling agents refuse to do this because it's pretty shady, but definitely not all. I've also heard of similar things including negotiating down the selling agent's cut as part of it but haven't seen as much of that firsthand.

_aavaa_ 3y ago
> Some selling agents refuse to do this because it's pretty shady, but definitely not all. This is a blatant conflict of interest. My god.
- ska 3y ago
  The entire thing is a bit of a racket.
- ethbr1 3y ago
  It's only a conflict of interest if either the seller or the buyer expect their agents to negotiate price for them. Generally agents steer well clean of that, for legal and time reasons. A realtor is there to put properties in front of you / put your properties in front of others, and then close the deal when you tell them which property you're interested in. Volume pays realtors, not price-over/under-replacement.
  - _aavaa_ 3y ago
    It’s a conflict regardless of negotiating price. Your realtor (as the seller) is now going to give preferential treatment to one buyer for their own personal gain.
    - ethbr1 3y ago
      The realtor doesn't care which side of the party "wins", as long as the deal goes through. So they're only preferring whoever is bitching the loudest?
  - DavidPeiffer 3y ago
    >It's only a conflict of interest if either the seller or the buyer expect their agents to negotiate price for them. There are other details that come up through a transaction that many people wouldn't even think about. Are appliances included? Window treatments? Leftover paint? What year the transaction closes could impact taxes or incentives for either party. Inspections (what types of inspections are permitted, their timeline, what will be repaired prior to sale). If there are disagreements about any of those, or if the property was materially misrepresented by the selling agent, it's way more messy than if another agent is involved and it's clear who represents who.

jliptzin 3y ago

Yea, it’s fucked. As a buyer, I had an agent for a while, thinking that since the same commission is coming out from the seller’s side anyway, it can’t hurt. Wrong. I kept having my offers turned down without any good reasons, getting slow walked on offers that were for the seller’s full asking price, etc, until I dropped the buyer’s agent and just went directly to the seller’s agent and it was amazing how fast the offer was accepted.

dminor 3y ago

We used a real estate lawyer instead of an agent and the seller worked it out with their agent to keep the 3%. The seller's agent told us that's what ended up making our bid the most attractive.

trey-jones 3y ago

It's like this throughout the real estate and real estate development industries to be honest. Building my own house I expected plenty of savings over buying (and to be fair, I still did of course), but even beyond permitting (which is also more about who you know than what you know) I encountered things like this (roughly from most mind-boggling to least): - You can't build a septic system, you have to use sewer because you're in city limits (later rescinded when they realized they would have to pump my sewage up to the city sewer. - You need to hire an engineer to make sure your lumber is ok (we milled our own lumber) - You need to hire an architect to make sure your plans are ok - You didn't finish in 6 months? Buy a new permit please. I know there were a million more things like this, but it's been over ten years and some things you don't want to remember... Contractors act like I'm taking food out of their kids' mouths by wanting to do the work myself, and the municipality is on their side.

mholm 3y ago
The municipality is on their side because many people who try to get variances on these things are legitimately cutting terrible corners that compromise both the safety of the inhabitants (present and future) and the neighbors. It's inconvenient, but these regulations save a lot of lives/QoL from bad/naive actors.
- ethbr1 3y ago
  The municipality is on their side because they're overworked. In even the smallest town, if any appreciable percentage of new builds required custom handling... the system would instantly be person-starved and start backing up. Business-as-usual is the fast/efficient path from a paperwork standpoint. Anything odd is (a) discouraged and (b) looked at with annoyance because it takes more time. One reason it's almost always cheaper to tear-down fire damaged houses with still viable framing. No one wants to take the time to quantify exactly how much the framing was damaged.
  - salamanderss 3y ago
    My town solved the guilty until proven innocent issue regarding permits by just giving people carte blanche. Imo this is far more rational: if the county can't/won't verify paperwork they should default towards freedom and let the property owner have at it rather than presuming guilt and saying you haven't the money/people to check it. Granted people aren't rich where I live so we'd rather them live in potentially a subpar house and maybe have it fall in on them than be homeless and die from the elements. Re below: USA / Arizona. Pick the right county and no code inspections.

xyzelement 3y ago

It doesn't sound like you negotiated well and is a sign you could use an agent :) But seriously, imagine you and I are both bidding $1,000,000 on a house. You have an agent, so if your bid is accepted, your agent and the sellers agent each get $30,000. I don't have an agent. In my offer, I write "the sellers agent gets the usual 3%, and I am allocating the 3% that the buyer's agent would get towards the seller instead." That means for the seller's agent there's no difference whether I use an agent or not, but to the seller themselves, my offer looks $30,000 better than yours because I am sweetening the deal using that $ I'd otherwise give my realtor. All that said, I used a realtor on my house purchase despite being financially savvy and a good negotiator because they actually helped us find the right house, and they were well worth the fee.

ralph84 3y ago
The commission is spelled out in the listing contract between the seller and their agent. The buyer is not a party to that contract and can’t dictate changes to it.
- sib 3y ago
  Well, sorta. The contract between the seller and their broker/agent definitely reserves (typically) 3% for the buyer side broker/agent. What happens to that 3% is definitely under the influence of the buyer. We negotiated a 50/50 split of the 3% back to us as the buyer in the most recent house that we bought. I guess we could have instead offered it as an incremental incentive to the selling party to sweeten the deal.
  - xyzelement 3y ago
    Yeah totally it's the same thing. The bottom line is you now have an extra 3% to "play with" between you, the seller's agent, and the seller that would have previously gone to the buyer's agent. How you split up that 3% depends on who's got most of the leverage in the scenario.
- ethbr1 3y ago
  FYI, here's what an example seller's contract from northeast FL MLS looks like: >> Broker will cooperate with and compensate, as stated below, NEFMLS brokers and any broker who reciprocates with NEFMLS. For finding a buyer ready, willing and able to purchase the Property, SELLER will pay BROKER, no later than the date of closing, a broker transaction fee of 5% of the Purchase Price, whether a buyer is secured by BROKER, SELLER, or any other person. BROKER agrees to offer cooperating broker compensation of: 2.5% of the Purchase Price to a single agent for a buyer; or 2.5% of the Purchase Price to a transaction broker for a buyer; or 1% of the Purchase Price to a non-representative broker. >> If no cooperating broker compensation is offered, the Property cannot be placed in NEFMLS. SELLER hereby directs closing attorney/settlement agent to disburse at closing all compensation to brokers payable hereunder So in this case, the seller's broker is entitled to 5%, of which 2.5% is required to be shared with a buyer's broker, if existent. In the event that no buyer's broker exists... it would be a conversation with the seller's broker as to how to dispose of the 2.5% (refund to the deal, etc.).

nicholasjarnold 3y ago

I used an attorney specializing in real-estate to represent our side of the house during my first home purchase. We subsequently reduced the bid by 3% with an explicit note about why (no buyer's agent commission to pay). The seller's agent was a broker and was apparently motivated because they accepted our deal along with fixing a list of little items uncovered during inspection. We paid our lawyer a $2-3k iirc. I'll never know if that broker got 6% from the seller or took 3% to close the deal, but our strategy worked: I paid 5 figures less for the home than what was being asked for at a time when houses were selling for over asking price in this area. It's worth a shot I guess. 2 warnings: Some seller's agents will get very pissed at you (b/c this and other things like Redfin's 1% is disrupting their cash cow and they're not stoked about it). It might be difficult to find an attorney since most RE attorneys focus on commercial deals.

cgh 3y ago
Same, we used a notary public for most of the paperwork and a lawyer for a bit of it. I think I calculated that we saved around $20,000.

francisofascii 3y ago

Yep, I learned that the hard way when we bought our first house a long time ago. I naively thought I would be a more attractive buyer because they don't have to pay my agent. There ended up being two other offers. Anyway, I remember seeing in the closing documents the amount allotted to their agent, the full 6%. Wtf, indeed.

conductr 3y ago

Technically, the 6% goes to the Seller agent. They promote on the listing how much they're willing to share with the Buyer's agent; half is customary but not set in stone. There are agents for your situation. They'll collect the 3% (or whatever it is) and rebate it back to you at or after closing; less some fixed fee ($600 in my experience). They are not going to do much for you, but if you already found the house yourself and are familiar with the buying contracts/process. It's an option that can save you a lot. This may differ by state of course. My experience is limited to Texas. But I've bought and sold property using these type of agents. When selling, you just do all the work (hire a photographer $200-500, write the description $0+, and they load it to the MLS for you as the listing agent). I'm of the opinion that for most properties, the only value added marketing is the MLS. When they talk about their websites and portals and ads they run in print media I roll my eyes.

philips 3y ago
In Oregon it is illegal, by statute, to give a refund to a real estate client.