help me sort out real estate agents
June 13, 2009 8:00 PM Subscribe
Does having a buyers real estate agent limit what the selling agent can tell you? Also: what are the benefits or disadvantages of having a buyers agent?
I'm a first time home buyer and I'm just starting to look. I don't have a real estate agent yet, which is something I ended having to tell each selling agent I saw at the open houses today. Once of the selling agents told me she wasn't permitted, by law, to tell me anything about the place if I was already working with an agent. Has anyone heard of this before?
I live in Minnesota if it matters from a state law perspective.
Also, I know that the seller usually pays the agent fees and that a buyer's agent can simplify some things but I don't have a solid understanding of what good and bad can come from a buyer's agent. What are the pluses and minuses of having a buyer's agent as opposed to doing it alone?
I'm a first time home buyer and I'm just starting to look. I don't have a real estate agent yet, which is something I ended having to tell each selling agent I saw at the open houses today. Once of the selling agents told me she wasn't permitted, by law, to tell me anything about the place if I was already working with an agent. Has anyone heard of this before?
I live in Minnesota if it matters from a state law perspective.
Also, I know that the seller usually pays the agent fees and that a buyer's agent can simplify some things but I don't have a solid understanding of what good and bad can come from a buyer's agent. What are the pluses and minuses of having a buyer's agent as opposed to doing it alone?
I think it comes down to how well you know the area that you are shopping in and how well you know what you want and how much it will cost you.
If you know these three things, then a buyer's agent might still be helpful but not necessarily.
If you are unsure about what you know, then an agent could be very helpful.
For example, if you are new to a city and you'd like a condo in a neighborhood with good public transportation a good agent ought to be able to narrow things down for you quite well.
posted by oddman at 8:25 PM on June 13, 2009
If you know these three things, then a buyer's agent might still be helpful but not necessarily.
If you are unsure about what you know, then an agent could be very helpful.
For example, if you are new to a city and you'd like a condo in a neighborhood with good public transportation a good agent ought to be able to narrow things down for you quite well.
posted by oddman at 8:25 PM on June 13, 2009
We had a buyer's agent (last year) and he was great. We had never bought a house before, and he was able to help with lots of things we wouldn't have thought of. We got recommendations from colleagues to find this guy. I would absolutely do it again.
He helped talk us through what we should be looking at, as we went through each house. This stuff in the basement ceiling, is it normal? What kind of windows are these (new or old)? Etc. There was a lot that we didn't know about houses. He was very honest with his impressions - this looks like good workmanship, this looks shoddy, I would be sure to get a roof inspection on this house, etc. When we made our offers he helped us figure out strategy for negotiation and handled the negotiations. When sellers or sellers' agents tried sneaky tricks, he explained them. When we needed service people (termite inspector, house inspector, title company, etc), he recommended ones who turned out to be very good at their jobs.
The seller pays the agent fees out of money they get from the buyer. And this is true of the buyer's agent too - they only get paid when YOU buy a house. So even though buyer's agents are supposed to be on your side, they do have some incentives to encourage you to buy. (At least, they may depending on what the laws are in your state.) This could lead to bad news - talking up a house that is really unsuitable, recommending service people who will keep the deal alive rather than doing the most thorough job they can to find problems, etc. We had a very good experience, but because of the potential for conflict of interest, it's important to get good references on any agent you're thinking of working with.
We also used the book Home Buying for Dummies; just picked up a copy at the library. It was extremely useful. A quick read and really spelled out all the many confusing parts of the process.
posted by LobsterMitten at 8:29 PM on June 13, 2009 [3 favorites]
He helped talk us through what we should be looking at, as we went through each house. This stuff in the basement ceiling, is it normal? What kind of windows are these (new or old)? Etc. There was a lot that we didn't know about houses. He was very honest with his impressions - this looks like good workmanship, this looks shoddy, I would be sure to get a roof inspection on this house, etc. When we made our offers he helped us figure out strategy for negotiation and handled the negotiations. When sellers or sellers' agents tried sneaky tricks, he explained them. When we needed service people (termite inspector, house inspector, title company, etc), he recommended ones who turned out to be very good at their jobs.
The seller pays the agent fees out of money they get from the buyer. And this is true of the buyer's agent too - they only get paid when YOU buy a house. So even though buyer's agents are supposed to be on your side, they do have some incentives to encourage you to buy. (At least, they may depending on what the laws are in your state.) This could lead to bad news - talking up a house that is really unsuitable, recommending service people who will keep the deal alive rather than doing the most thorough job they can to find problems, etc. We had a very good experience, but because of the potential for conflict of interest, it's important to get good references on any agent you're thinking of working with.
We also used the book Home Buying for Dummies; just picked up a copy at the library. It was extremely useful. A quick read and really spelled out all the many confusing parts of the process.
posted by LobsterMitten at 8:29 PM on June 13, 2009 [3 favorites]
I absolutely recommend a buyer's agent for any first-time home buyer. There is simply too much in the process that will be completely new to you, and you need someone who works for you that you can ask all your questions. Sellers agents represent nobody but themselves and the sellers.
posted by intermod at 8:30 PM on June 13, 2009
posted by intermod at 8:30 PM on June 13, 2009
Buyer's agents are committed by law to look out for the interest of the buyer. Seller's agents are committed by law to look out for the interest of the seller. Most of the time it is in everyone's best interest for each party-buyer and seller-to have their own agent.
Full disclosure-my hubby is in the business (now a broker in charge at his company's satellite office. )
posted by St. Alia of the Bunnies at 8:39 PM on June 13, 2009 [2 favorites]
Full disclosure-my hubby is in the business (now a broker in charge at his company's satellite office. )
posted by St. Alia of the Bunnies at 8:39 PM on June 13, 2009 [2 favorites]
Once of the selling agents told me she wasn't permitted, by law, to tell me anything about the place if I was already working with an agent. Has anyone heard of this before?
Also: the rationale for this, as I understand it, is that the division of the commission money is based on who "substantially introduced you to the property" (or words along those lines - I'm working from memory of the law in another state). Suppose there is 6% of the purchase price of the house that will go to commissions. If the seller's agent is the only agent, she'll get the whole 6%. If there's a seller's and a buyer's agent, they'll split the money.
If you are working with a buyer's agent, you will be asked to sign a contract with your agent saying that you'll only look at houses with him. This guarantees that he will be the agent who counts as "substantially introducing" the property to you -- and in turn, guarantees that he will get his share of the commission. Say you are working with a buyer's agent, and he spends 10 hours/week on you over 6 weeks. Then one day you go to an open house by yourself, and decide that you want to buy that house -- here, the buyer's agent was not present when you walked into the house for the first time, so the seller's agent can say "I'm not splitting the commission with that guy, he didn't bring you in here, he didn't put the deal together" and your agent would be out of luck, out of pocket for all the time he had spent on you previously. That scenario is what the contract is meant to avoid, and presumably your state has some law or real estate ethical guideline meant to prevent this kind of commission-poaching.
posted by LobsterMitten at 8:41 PM on June 13, 2009
Also: the rationale for this, as I understand it, is that the division of the commission money is based on who "substantially introduced you to the property" (or words along those lines - I'm working from memory of the law in another state). Suppose there is 6% of the purchase price of the house that will go to commissions. If the seller's agent is the only agent, she'll get the whole 6%. If there's a seller's and a buyer's agent, they'll split the money.
If you are working with a buyer's agent, you will be asked to sign a contract with your agent saying that you'll only look at houses with him. This guarantees that he will be the agent who counts as "substantially introducing" the property to you -- and in turn, guarantees that he will get his share of the commission. Say you are working with a buyer's agent, and he spends 10 hours/week on you over 6 weeks. Then one day you go to an open house by yourself, and decide that you want to buy that house -- here, the buyer's agent was not present when you walked into the house for the first time, so the seller's agent can say "I'm not splitting the commission with that guy, he didn't bring you in here, he didn't put the deal together" and your agent would be out of luck, out of pocket for all the time he had spent on you previously. That scenario is what the contract is meant to avoid, and presumably your state has some law or real estate ethical guideline meant to prevent this kind of commission-poaching.
posted by LobsterMitten at 8:41 PM on June 13, 2009
However, when there is only a buyers agent or sellers agent, they are bound by some kind of Realtor's ethics thing where they have to treat both sides fairly.
Once of the selling agents told me she wasn't permitted, by law, to tell me anything about the place if I was already working with an agent.
Should have asked her which law she was talking about. Far as I know, no such laws exist.
posted by gjc at 8:43 PM on June 13, 2009
Once of the selling agents told me she wasn't permitted, by law, to tell me anything about the place if I was already working with an agent.
Should have asked her which law she was talking about. Far as I know, no such laws exist.
posted by gjc at 8:43 PM on June 13, 2009
The other reason I'd go without an agent (and I could be wrong on this) is that I feel that if the selling agent has to split their fee with a buyer's agent, it would be in the buyers interest to be unencumbered by one.
Not exactly sure what this means, but somebody is getting the six percent. If a buyer doesn't have an agent, then the seller's agent is getting the whole six percent. If the buyer has an agent, then I think the buyer's agent and seller's agent each get three percent. If this is true, then how is it in the buyer's interest to be unencumbered by an agent?
I absolutely recommend a buyer's agent for any first-time home buyer.
Do you mean a real, bona fide buyer's agent, with whom you have entered into a contract to represent you exclusively?
posted by jayder at 10:21 PM on June 13, 2009
Not exactly sure what this means, but somebody is getting the six percent. If a buyer doesn't have an agent, then the seller's agent is getting the whole six percent. If the buyer has an agent, then I think the buyer's agent and seller's agent each get three percent. If this is true, then how is it in the buyer's interest to be unencumbered by an agent?
I absolutely recommend a buyer's agent for any first-time home buyer.
Do you mean a real, bona fide buyer's agent, with whom you have entered into a contract to represent you exclusively?
posted by jayder at 10:21 PM on June 13, 2009
I'm a broker in Missouri, so real estate laws will vary in your state. Here are the basics:
1. If you have a buyers agent - and that means a contract signed to have an agent represent you on potentially purchasing one or more properties - then the listing agent doesn't want to deal with you directly. There is no law as you described in my state, but there may be in yours.
2. As stated, someone is getting the 6% in this deal. If you don't have a buyers agent, that is 6% to the selling agent. If you do have one, it is generally split down the middle.
3. The benefit to you is a buyers agent is legally obligated to represent you, and it doesn't cost you any additional fees. That is all included in the 6%, paid either way. There are a few exceptions to this (Listing agent takes 5% if they sell it themselves, but it is very rare and no savings are passed on to you).
4. The listing agent wants to sell you the house at the full listed price, period. A buyers agent is obligated to negotiate the best price for you. You can obviously negotiate for yourself, but as a first time buyer I see no reason to not take advantage of your own representation.
5. The only sticking point is that you already have contact on some homes. 99% of the time it won't matter if you come back a second time with your buyers agent in tow. That other 1% could be a hard line listing agent who claims they are the "procuring cause" and thus don't owe the buyers agent 3%. Any agent in their right mind wouldn't do this (other agents would avoid them, potential loss of a sale), but it has happened. I would recommend asking friends and family if they've had any experience with agents, listing or buying, and find an agent to represent you as a buyer. This agent can then contact the listing agents of these and any other homes.
6. The final snag is if you look at a home outside of the usual "agent system", like For Sale By Owner homes. In that case, your contract with the buyers agent would most likely state they will make a best effort to get the 3% fee from the home seller, but if they cannot then you the buyer owes that fee. Obviously most FSBO's don't want to pay a commission, as they didn't list in the first place.
posted by shinynewnick at 10:49 PM on June 13, 2009
1. If you have a buyers agent - and that means a contract signed to have an agent represent you on potentially purchasing one or more properties - then the listing agent doesn't want to deal with you directly. There is no law as you described in my state, but there may be in yours.
2. As stated, someone is getting the 6% in this deal. If you don't have a buyers agent, that is 6% to the selling agent. If you do have one, it is generally split down the middle.
3. The benefit to you is a buyers agent is legally obligated to represent you, and it doesn't cost you any additional fees. That is all included in the 6%, paid either way. There are a few exceptions to this (Listing agent takes 5% if they sell it themselves, but it is very rare and no savings are passed on to you).
4. The listing agent wants to sell you the house at the full listed price, period. A buyers agent is obligated to negotiate the best price for you. You can obviously negotiate for yourself, but as a first time buyer I see no reason to not take advantage of your own representation.
5. The only sticking point is that you already have contact on some homes. 99% of the time it won't matter if you come back a second time with your buyers agent in tow. That other 1% could be a hard line listing agent who claims they are the "procuring cause" and thus don't owe the buyers agent 3%. Any agent in their right mind wouldn't do this (other agents would avoid them, potential loss of a sale), but it has happened. I would recommend asking friends and family if they've had any experience with agents, listing or buying, and find an agent to represent you as a buyer. This agent can then contact the listing agents of these and any other homes.
6. The final snag is if you look at a home outside of the usual "agent system", like For Sale By Owner homes. In that case, your contract with the buyers agent would most likely state they will make a best effort to get the 3% fee from the home seller, but if they cannot then you the buyer owes that fee. Obviously most FSBO's don't want to pay a commission, as they didn't list in the first place.
posted by shinynewnick at 10:49 PM on June 13, 2009
It just adds another layer of idiocy imho. But around here you can't get in to see a house unless you have an agent- sellers agents won't call you back unless you have a buyer's agent.
So I have a buyers agent and the sellers have a sellers agent. And both of them are idiots. Legally I'm not allowed to talk to the sellers agent directly; at this point that's probably for his protection. I now plan to contact the sellers directly and hash out the deal then present it to the agents because I can't stand any more of their ham handed "negotiating" and slacking off.
And supposedly my agent is one of the best in town. I fired the first one I had after he tried to (incompetently and obviously) rip me off.
posted by fshgrl at 10:51 PM on June 13, 2009
So I have a buyers agent and the sellers have a sellers agent. And both of them are idiots. Legally I'm not allowed to talk to the sellers agent directly; at this point that's probably for his protection. I now plan to contact the sellers directly and hash out the deal then present it to the agents because I can't stand any more of their ham handed "negotiating" and slacking off.
And supposedly my agent is one of the best in town. I fired the first one I had after he tried to (incompetently and obviously) rip me off.
posted by fshgrl at 10:51 PM on June 13, 2009
And to answer your initial question, there is no difference in what the listing agent can or is obligated to tell you with or without a buyers agent.
posted by shinynewnick at 10:52 PM on June 13, 2009
posted by shinynewnick at 10:52 PM on June 13, 2009
I was glad to have an agent the first time we bought. This time we are going without and hoping to get the selling agent to kick in some of that 6%.
In my experience any agents involvevd in the deal are there to serve the deal. Not so much the seller or the buyer, but the deal.
posted by pointilist at 12:02 AM on June 14, 2009
In my experience any agents involvevd in the deal are there to serve the deal. Not so much the seller or the buyer, but the deal.
posted by pointilist at 12:02 AM on June 14, 2009
The seller pays the agent fees out of money they get from the buyer. And this is true of the buyer's agent too - they only get paid when YOU buy a house. So even though buyer's agents are supposed to be on your side, they do have some incentives to encourage you to buy.
This. You're better off with your own agent than with the seller's but you're best off remembering that these people only get paid if you buy a house and they will be paid the same whether you buy the first house you walk into or the 253rd. They want you to buy and buy quickly. Don't hesitate to get your own lawyer/inspector/whatever rather than the person the agent always uses (they're always used because they never get in the way of a deal...).
Some buyer's agents are advertised as specializing in first time buyers. In my experience, these are the new agents. They get stuck with the traditionally skittish first timers that the more established agents don't want to deal with.
posted by the christopher hundreds at 12:11 AM on June 14, 2009
This. You're better off with your own agent than with the seller's but you're best off remembering that these people only get paid if you buy a house and they will be paid the same whether you buy the first house you walk into or the 253rd. They want you to buy and buy quickly. Don't hesitate to get your own lawyer/inspector/whatever rather than the person the agent always uses (they're always used because they never get in the way of a deal...).
Some buyer's agents are advertised as specializing in first time buyers. In my experience, these are the new agents. They get stuck with the traditionally skittish first timers that the more established agents don't want to deal with.
posted by the christopher hundreds at 12:11 AM on June 14, 2009
...a buyers agent is legally obligated to represent you...
A buyers agent is obligated to negotiate the best price for you.
Can somebody explain what this really means? If the buyer's agent is paid by commission, it seems obvious that they have a big incentive to keep the sale price high.
posted by jon1270 at 2:37 AM on June 14, 2009
A buyers agent is obligated to negotiate the best price for you.
Can somebody explain what this really means? If the buyer's agent is paid by commission, it seems obvious that they have a big incentive to keep the sale price high.
posted by jon1270 at 2:37 AM on June 14, 2009
If the sale price is too high, nobody is gonna buy that house (that is why there are appraisers.)
posted by St. Alia of the Bunnies at 4:29 AM on June 14, 2009
posted by St. Alia of the Bunnies at 4:29 AM on June 14, 2009
...a buyers agent is legally obligated to represent you...
A buyers agent is obligated to negotiate the best price for you.
I'm a real estate agent and when you represent buyers I do want to save them money. If I help someone negotiate a better deal on their house and it saves them thousands of dollars they are going to tell their friends and refer me to other people and that is a lot more important than the small amount my commission would rise because of that.
posted by Melsky at 5:29 AM on June 14, 2009 [2 favorites]
A buyers agent is obligated to negotiate the best price for you.
I'm a real estate agent and when you represent buyers I do want to save them money. If I help someone negotiate a better deal on their house and it saves them thousands of dollars they are going to tell their friends and refer me to other people and that is a lot more important than the small amount my commission would rise because of that.
posted by Melsky at 5:29 AM on June 14, 2009 [2 favorites]
The one thing I've found to watch for in a buyer's agent is to make sure they don't try to push you to buy a house you don't want. If you've looked at a house, decided it's not for you, and then your agent starts trying to hard sell you (so they can get the sale and the commission and move on), then get a different agent. Even if it's the seller that will be paying their fee, they still work for you. Yes, I've seen this happen a few times.
posted by azpenguin at 5:54 AM on June 14, 2009
posted by azpenguin at 5:54 AM on June 14, 2009
One benefit of not having a buyers agent is that you can use that fact to negotiate. You can usually get an easy 1% off the price just by telling the selling agent to knock a point off their commission- they would prefer to do your deal and get 5% than some other deal and only get 3%.
posted by gjc at 8:37 AM on June 14, 2009
posted by gjc at 8:37 AM on June 14, 2009
Sure they will, gjc-because you didn't have a buyer's agent that would have helped you negotiate the price of that house down lower...a good buyer's agent can and will do that for you any and every time that is possible. In other words, it's easy to be pennywise and pound foolish.
posted by St. Alia of the Bunnies at 9:13 AM on June 14, 2009
posted by St. Alia of the Bunnies at 9:13 AM on June 14, 2009
I had a buyer's agent for my first-time purchase last summer and I would recommend it. It's a big step to make for the first time and I really appreciated having the help. My agent was very good about pointing out problem areas on properties and steering me away from those properties that I would have a difficult time selling in the future. The reason? He wants my business again in the future and wants me to recommend him to friends.
Just keep in mind that your experience will only be as good as your agent is. This is where it really pays to do your homework; ask around. People who got a good deal on their home love to talk about it and will gladly recommend a good agent. I put a request for recommendations on the web classifieds at my workplace and received nearly a hundred emails. Then I interviewed what I considered to be my top recommendations and went from there. I'm glad I did--I was able to snag a house that was so underpriced that I was dealing with 8 competing offers in the midst of the economic collapse.
posted by TrialByMedia at 10:01 AM on June 14, 2009
Just keep in mind that your experience will only be as good as your agent is. This is where it really pays to do your homework; ask around. People who got a good deal on their home love to talk about it and will gladly recommend a good agent. I put a request for recommendations on the web classifieds at my workplace and received nearly a hundred emails. Then I interviewed what I considered to be my top recommendations and went from there. I'm glad I did--I was able to snag a house that was so underpriced that I was dealing with 8 competing offers in the midst of the economic collapse.
posted by TrialByMedia at 10:01 AM on June 14, 2009
"A buyers agent is obligated to negotiate the best price for you."
"Can somebody explain what this really means? If the buyer's agent is paid by commission, it seems obvious that they have a big incentive to keep the sale price high."
Consider that, at the typical agent rate of 3%, saving you $20,000 will only cost the agent $600. For any but the most expensive house saving 20k will be a big bonus for you and you will be very happy with your agent. The agent on the other hand will still make anywhere from $6,000 and up (for a $200,000) home.
Which is to say that the agent loses relatively little by helping you get a good deal and builds up a lot of goodwill that will almost certainly translate into future work from you, your friends, and your family. Even if he only ever gets one more sale out of your extended network, that would be another $6k, at least. So, letting go of $600 helps the agent make $12k or more.
posted by oddman at 11:05 AM on June 14, 2009 [1 favorite]
"Can somebody explain what this really means? If the buyer's agent is paid by commission, it seems obvious that they have a big incentive to keep the sale price high."
Consider that, at the typical agent rate of 3%, saving you $20,000 will only cost the agent $600. For any but the most expensive house saving 20k will be a big bonus for you and you will be very happy with your agent. The agent on the other hand will still make anywhere from $6,000 and up (for a $200,000) home.
Which is to say that the agent loses relatively little by helping you get a good deal and builds up a lot of goodwill that will almost certainly translate into future work from you, your friends, and your family. Even if he only ever gets one more sale out of your extended network, that would be another $6k, at least. So, letting go of $600 helps the agent make $12k or more.
posted by oddman at 11:05 AM on June 14, 2009 [1 favorite]
We bought our first house with the assistance of a buyer's agent and were pleased with the process.
Note that there are realtors who fall in multiple categories. Some act as buyer and seller agents, and some are buyer's agents only. That is, they list no property themselves, only representing buyers. We went with the latter kind, which helped because he could freely offer his opinions about all the craziness in the system. We let him handle negotiations and he did a good job, and also explained all the paperwork involved. For our second house we used our own agent, but she was a Realtor with her own listings as well.
I take the seller agent's reluctance to give you details as a good thing. It allows you to cleanly commit to a buyer's agent that you haven't already begun investigating or negotiating on a property with other agents. There is nothing wrong with going to open houses. The best policy is to not sign in and inform the agent that you already have an agent representing you, but just wanted to look around. Most will leave you in peace (how I prefer it) and maybe offer you the published fact sheet at that point.
Good luck, and have fun!
posted by meinvt at 12:46 PM on June 14, 2009
Note that there are realtors who fall in multiple categories. Some act as buyer and seller agents, and some are buyer's agents only. That is, they list no property themselves, only representing buyers. We went with the latter kind, which helped because he could freely offer his opinions about all the craziness in the system. We let him handle negotiations and he did a good job, and also explained all the paperwork involved. For our second house we used our own agent, but she was a Realtor with her own listings as well.
I take the seller agent's reluctance to give you details as a good thing. It allows you to cleanly commit to a buyer's agent that you haven't already begun investigating or negotiating on a property with other agents. There is nothing wrong with going to open houses. The best policy is to not sign in and inform the agent that you already have an agent representing you, but just wanted to look around. Most will leave you in peace (how I prefer it) and maybe offer you the published fact sheet at that point.
Good luck, and have fun!
posted by meinvt at 12:46 PM on June 14, 2009
« Older Can I get tornando warnings through email or text? | Success after failure; after 40 Newer »
This thread is closed to new comments.
We had a very clear idea of the area we were looking in and I were looking today, I'd just take down the numbers of the realtor's signs in that area and ask to be put on their email list. Also, the papers, Kijiji, etc.
The other reason I'd go without an agent (and I could be wrong on this) is that I feel that if the selling agent has to split their fee with a buyer's agent, it would be in the buyers interest to be unencumbered by one.
posted by bonobothegreat at 8:17 PM on June 13, 2009