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We’ve bought two houses, sold one, bought a lot to built a house for my parents. We’ve never hired a real estate agent. The seller had an agent for the first tr

We’ve bought two houses, sold one, bought a lot to built a house for my parents. We’ve never hired a real estate agent. The seller had an agent for the first transaction, none of the other counterparties had an agent. Paying a lawyer by the hour to handle things is simpler, cheaper, and a random lawyer is dramatically more competent than a random agent (the most complex transaction ended up costing us maybe $4k in lawyer fees-the standard 6% on that sale would have been $40k!)

WirelessGigabit 3y ago
The problem in this case is that the seller's agent takes the whole 6%. It's not that they only take 3% (which is the most disgusting part here).
- arcticgeek 3y ago
  It is customary, at least in some locales (US-AK), that the commission is split evenly between the agents.
  - poulsbohemian 3y ago
    I would caution against assuming that anything related to commissions is actually customary, including an even split. All of this really is negotiable, and when I think about the past year, I've seen multiple occasions where different splits were offered. For example - I referred some business to an agent in Tennessee, who in order to pay my referral* convinced seller to offer a lesser split to the buyer's agent. I know of at least one agent in my market who does similar. I know of another agent who charges at least 10% on any land deal, while others are flat-fee. * If I were a member of the public, I'd be more upset about referral fees than commissions. This is a far more grey / nebulous area of real estate compensation. We have to disclose and discuss commissions up front, but referral fees are often in the shadows and definitely can cause buyers / sellers to pay more.
    - arcticgeek 3y ago
      yep, agreed. I know and have talked to some brokers about this in the past, and also closed a few deals as both a buyer and a seller. The commission was split evenly in my experiences but I should have said ‚typical‘ even if only as a starting point in negotiations.
- neogodless 3y ago
  6% and 3% are negotiable figures. Right now one of the realtors we've interviewed takes 5% and offers 2.5% to the buyer's agent. Not much better. They also offer 4% if they are a dual agent. But I know of cases where a buyer without an agent got the seller agent to accept 4% overall while only representing the seller (but handling the paperwork necessary to complete the transaction.) That 2% was a worthwhile part of negotiating, allowing the buyer to get a lower price.
danielvaughn 3y ago
^ this is good advice. There are really two things you need to rely on in real estate deals. The first is the legal aspect, which 100% absolutely should be handled by a lawyer. The second is negotiations, assuming you yourself aren't a skilled negotiator. Neither of these things require an agent, and neither are worth $40K.
- AnimalMuppet 3y ago
  Negotiations could easily be worth $40K. It could easily be worth 6%. Or it may not. Worse: If I use the agent, I don't know whether the agent gained me 6% of the price in the negotiations. If I don't use the agent, I don't know if I cost myself 6% of the price (or more!) in the negotiations. Someone could do a study, looking at sale prices of "for sale by owner" versus sale prices of comparable sales through agents, for comparable periods. Even that study is fraught - for us to trust it, it would have to be by non-realtors, but also by people not involved in the "for sale by owner" world in some way. And yet the study would have to get the comparables right - not just right, but clearly right, so that the results of the study will be believed. Without such a study, we're all kind of just believing what we believe.
  - deleted 3y ago
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  - corethree 3y ago
    True. But agents aren't incentivized to negotiate lower prices because payment on both sides is proportional to total price sold. So logically only sellers would benefit from this.
    - scarface_74 3y ago
      Actually they are. It’s about volume not the few extra pennies they get on a sale - especially once you consider the brokerage takes some of that money. The Freakonomics book went into this in detail. https://freakonomics.com/2008/02/real-estate-agents-revisited/ https://freakonomics.com/2008/02/real-estate-agents-revisite... If your house sales for $50K more, each agent gets $1500 more and the brokerage gets 20-40% of that. Let’s say 30%. That means the agent will get a little over $1000 extra. They would much rather sell your house for $50K less and move on than convincing you to hold out for $50K more.
jperras 3y ago
Canadian here. Sadly, it's common practice around these parts for buyer agents to completely ignore listings that don't have a selling agent attached; it's their form of industry protectionism. As a result you end up losing out on a large surface area of buyers who rely on their buying agent to find properties, which puts you at a disadvantage.
- dixie_land 3y ago
  A "selling" agent IS the buyer's agent, a "seller's" agent (listing agent) works for the seller. That tells you how the agents view their job responsibilities, the buyers agent ultimately sells a house (to the buyer), the sellers agent advertises (lists) it.
- LeifCarrotson 3y ago
  Are the buyers not getting a feed of every MLS listing in their target area? That entirely solved our purchasing problem - we got automated daily or sometimes hourly emails parametrically filtered by school district, build date, price, square footage, and lot size whenever a new listing went up. It would have been stupid to have our agent filter them based on the deals that were better for him or his industry. We had a uniquely good agent who spent hundreds of hours with us filtering hundreds of listings, visiting probably 60 different houses at all times of day over the course of a year before we finally bought, submitting a dozen offers, and helping us through the closing process, and then using his builder's license to help us ready the home we bought for move-in. He was extremely knowledgeable about all kinds of building inspection issues and the procedural minutiae. We happily paid him the 6%, it would have been far more costly to bring along an inspector/attorney/general contractor at an hourly rate.
- tverbeure 3y ago
  Whenever we’ve bought a house, we told the agent to not bother sending us listings or set up viewings. We simply checked open houses on Redfin and Zillow ourselves, and if we liked a house, we’d ask the agent to prepare an offer, at a price we set. It is not to figure out what a house will sell for if there are enough other sales in that neighborhood. For their reduced work, we’d ask a reduction of their commission.
MarkusWandel 3y ago
Canadian here too. I only ever bought one house, in 2005, and I'm still living in it. But I seem to recall that the agent - a good one, referred by friends, and referred onward - had a boilerplate contract in which I was responsible for his commission even if I independently bought a FSBO (pronounced "fizzbo" in realtor lingo, i.e. completely off-system For Sale By Owner house) during the contract period. I had that scratched out before signing. For realtors it's very simple. Why spend time on something they won't get paid for? Why bother arranging a tour of a FSBO house, unless that one says "agents welcome" in its listing which means they will pay the buyer agent fee. But if that contract is standard, what's the disincentive? Just the unpleasantness of actually enforcing it when necessary? Common here seem to be "flat rate MLS listing" services, where you pay a few hundred dollars and they list it, and you're your own selling agent. You still pay the 2.5% to the buying agent and say so in the listing. And yeah, the dream customer of every selling agent is a clueless first-time buyer who just calls up the agent on the for-sale sign. Double commission!
- llm_nerd 3y ago
  >For realtors it's very simple. Why spend time on something they won't get paid for? Isn't that almost everyone doing work? I don't do work for free. >the dream customer of every selling agent is a clueless first-time buyer I've purchased multiple homes without a 'buyer's agent'. I'm certainly not clueless. It's actually a great negotiating tactic and often yields real savings. Agents are grossly overpaid, but buyer agents in particular are just an enormous waste of time. It was actually our first home purchase where we did use a buyer agent and it was...eye opening. People under illusions that buyer agents are actually informed or acting in the buyer's interests are the most clueless of all.
  - MarkusWandel 3y ago
    It does depend on the agent. I trusted mine and saw no red flags during, or after the transaction. He was referred to me by a colleague who is a serial house ownership addict, and I referred him on to several others, and all were pleased. My own house was listed at $X, so I simply asked him "what's it really worth?" He said $Y, where, at the time, Y<X and houses took time to sell, and we went through a few rounds of the haggling thing with the seller until they counteroffered $Y, and then accepted, easy peasy. And the house I now live in is one he added to a tour of several I had picked, and THAT was the one I instinctively liked and still do. That's really how it's supposed to go, right?
briffle 3y ago
If you were in the US, most likely the Sellers agent then kept the full 6% fee unless you negotiated it down on that first transaction.
- stephencanon 3y ago
  In our case, the agent accepted a lower commission because both they and the seller got more money from our offer then they would have from the competing offer which had a buyer's agent. We didn't negotiate that though, because that's entirely between the seller and their agent.
deleted 3y ago
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WirelessGigabit 3y ago

The problem in this case is that the seller's agent takes the whole 6%. It's not that they only take 3% (which is the most disgusting part here).

arcticgeek 3y ago
It is customary, at least in some locales (US-AK), that the commission is split evenly between the agents.
- poulsbohemian 3y ago
  I would caution against assuming that anything related to commissions is actually customary, including an even split. All of this really is negotiable, and when I think about the past year, I've seen multiple occasions where different splits were offered. For example - I referred some business to an agent in Tennessee, who in order to pay my referral* convinced seller to offer a lesser split to the buyer's agent. I know of at least one agent in my market who does similar. I know of another agent who charges at least 10% on any land deal, while others are flat-fee. * If I were a member of the public, I'd be more upset about referral fees than commissions. This is a far more grey / nebulous area of real estate compensation. We have to disclose and discuss commissions up front, but referral fees are often in the shadows and definitely can cause buyers / sellers to pay more.
  - arcticgeek 3y ago
    yep, agreed. I know and have talked to some brokers about this in the past, and also closed a few deals as both a buyer and a seller. The commission was split evenly in my experiences but I should have said ‚typical‘ even if only as a starting point in negotiations.
neogodless 3y ago
6% and 3% are negotiable figures. Right now one of the realtors we've interviewed takes 5% and offers 2.5% to the buyer's agent. Not much better. They also offer 4% if they are a dual agent. But I know of cases where a buyer without an agent got the seller agent to accept 4% overall while only representing the seller (but handling the paperwork necessary to complete the transaction.) That 2% was a worthwhile part of negotiating, allowing the buyer to get a lower price.

danielvaughn 3y ago

^ this is good advice. There are really two things you need to rely on in real estate deals. The first is the legal aspect, which 100% absolutely should be handled by a lawyer. The second is negotiations, assuming you yourself aren't a skilled negotiator. Neither of these things require an agent, and neither are worth $40K.

AnimalMuppet 3y ago
Negotiations could easily be worth $40K. It could easily be worth 6%. Or it may not. Worse: If I use the agent, I don't know whether the agent gained me 6% of the price in the negotiations. If I don't use the agent, I don't know if I cost myself 6% of the price (or more!) in the negotiations. Someone could do a study, looking at sale prices of "for sale by owner" versus sale prices of comparable sales through agents, for comparable periods. Even that study is fraught - for us to trust it, it would have to be by non-realtors, but also by people not involved in the "for sale by owner" world in some way. And yet the study would have to get the comparables right - not just right, but clearly right, so that the results of the study will be believed. Without such a study, we're all kind of just believing what we believe.
- deleted 3y ago
  [deleted]
- corethree 3y ago
  True. But agents aren't incentivized to negotiate lower prices because payment on both sides is proportional to total price sold. So logically only sellers would benefit from this.
  - scarface_74 3y ago
    Actually they are. It’s about volume not the few extra pennies they get on a sale - especially once you consider the brokerage takes some of that money. The Freakonomics book went into this in detail. https://freakonomics.com/2008/02/real-estate-agents-revisited/ https://freakonomics.com/2008/02/real-estate-agents-revisite... If your house sales for $50K more, each agent gets $1500 more and the brokerage gets 20-40% of that. Let’s say 30%. That means the agent will get a little over $1000 extra. They would much rather sell your house for $50K less and move on than convincing you to hold out for $50K more.

jperras 3y ago

Canadian here. Sadly, it's common practice around these parts for buyer agents to completely ignore listings that don't have a selling agent attached; it's their form of industry protectionism. As a result you end up losing out on a large surface area of buyers who rely on their buying agent to find properties, which puts you at a disadvantage.

dixie_land 3y ago
A "selling" agent IS the buyer's agent, a "seller's" agent (listing agent) works for the seller. That tells you how the agents view their job responsibilities, the buyers agent ultimately sells a house (to the buyer), the sellers agent advertises (lists) it.
LeifCarrotson 3y ago
Are the buyers not getting a feed of every MLS listing in their target area? That entirely solved our purchasing problem - we got automated daily or sometimes hourly emails parametrically filtered by school district, build date, price, square footage, and lot size whenever a new listing went up. It would have been stupid to have our agent filter them based on the deals that were better for him or his industry. We had a uniquely good agent who spent hundreds of hours with us filtering hundreds of listings, visiting probably 60 different houses at all times of day over the course of a year before we finally bought, submitting a dozen offers, and helping us through the closing process, and then using his builder's license to help us ready the home we bought for move-in. He was extremely knowledgeable about all kinds of building inspection issues and the procedural minutiae. We happily paid him the 6%, it would have been far more costly to bring along an inspector/attorney/general contractor at an hourly rate.
tverbeure 3y ago
Whenever we’ve bought a house, we told the agent to not bother sending us listings or set up viewings. We simply checked open houses on Redfin and Zillow ourselves, and if we liked a house, we’d ask the agent to prepare an offer, at a price we set. It is not to figure out what a house will sell for if there are enough other sales in that neighborhood. For their reduced work, we’d ask a reduction of their commission.

MarkusWandel 3y ago

Canadian here too. I only ever bought one house, in 2005, and I'm still living in it. But I seem to recall that the agent - a good one, referred by friends, and referred onward - had a boilerplate contract in which I was responsible for his commission even if I independently bought a FSBO (pronounced "fizzbo" in realtor lingo, i.e. completely off-system For Sale By Owner house) during the contract period. I had that scratched out before signing. For realtors it's very simple. Why spend time on something they won't get paid for? Why bother arranging a tour of a FSBO house, unless that one says "agents welcome" in its listing which means they will pay the buyer agent fee. But if that contract is standard, what's the disincentive? Just the unpleasantness of actually enforcing it when necessary? Common here seem to be "flat rate MLS listing" services, where you pay a few hundred dollars and they list it, and you're your own selling agent. You still pay the 2.5% to the buying agent and say so in the listing. And yeah, the dream customer of every selling agent is a clueless first-time buyer who just calls up the agent on the for-sale sign. Double commission!

llm_nerd 3y ago
>For realtors it's very simple. Why spend time on something they won't get paid for? Isn't that almost everyone doing work? I don't do work for free. >the dream customer of every selling agent is a clueless first-time buyer I've purchased multiple homes without a 'buyer's agent'. I'm certainly not clueless. It's actually a great negotiating tactic and often yields real savings. Agents are grossly overpaid, but buyer agents in particular are just an enormous waste of time. It was actually our first home purchase where we did use a buyer agent and it was...eye opening. People under illusions that buyer agents are actually informed or acting in the buyer's interests are the most clueless of all.
- MarkusWandel 3y ago
  It does depend on the agent. I trusted mine and saw no red flags during, or after the transaction. He was referred to me by a colleague who is a serial house ownership addict, and I referred him on to several others, and all were pleased. My own house was listed at $X, so I simply asked him "what's it really worth?" He said $Y, where, at the time, Y<X and houses took time to sell, and we went through a few rounds of the haggling thing with the seller until they counteroffered $Y, and then accepted, easy peasy. And the house I now live in is one he added to a tour of several I had picked, and THAT was the one I instinctively liked and still do. That's really how it's supposed to go, right?

briffle 3y ago

If you were in the US, most likely the Sellers agent then kept the full 6% fee unless you negotiated it down on that first transaction.

stephencanon 3y ago
In our case, the agent accepted a lower commission because both they and the seller got more money from our offer then they would have from the competing offer which had a buyer's agent. We didn't negotiate that though, because that's entirely between the seller and their agent.

deleted 3y ago

[deleted]