Benefit of hiring a real estate agent for buyer if we found the property?

[Anonymous]

We found a property in Arlington, VA that will be listed soon and want to make an offer on it. I know that the seller pays the real estate fee and the fee will be split between the two agents (one representing the seller and buyer) if we end up using a buyers agent.
This is probably illegal, but maybe not unheard of: Because the selling agent will have more incentive for us to get the property (he/she gets all the fee), will it increase our chances to get the property? Would he help us get it by giving us hints or non-direct signals or something? Has anyone experienced this type of situation?
What are the upsides and downsides of using a buyers agent?

[Anonymous]

If I were you I'd go knock on the home-owner's door and say you love the house and want to pay fair value.
Also say since you do not have a "buyer's agent" that you will pass some savings on to them.

A seller only cares about his bottom line, after whatever fees. More fees equals more money the buyer must bring to the table, and less money the seller gets.

[Anonymous]

We bought without a real estate agent and the seller passed the savings onto us. Sale was straight forward. This was not our first time buying a house so we were familiar with the process. Seller had long standing great reputation in the community.

[Anonymous]

Anonymous wrote:If I were you I'd go knock on the home-owner's door and say you love the house and want to pay fair value.
Also say since you do not have a "buyer's agent" that you will pass some savings on to them.

A seller only cares about his bottom line, after whatever fees. More fees equals more money the buyer must bring to the table, and less money the seller gets.

Elaborating on this...

As a buyer, you have to realize that the listing agent has a fiduciary duty only to the seller. Keep this in mind. Setting aside the principal-agent problem that ultimately the agent wants to maximize his or her fee and get the property sold, the listing agent really isn't going to do you any favors unless it is in his or her interest. This matters in three ways: 1) Negotiating price of the house; 2) Negotiating the home inspection items; 3) Getting to the settlement table.

That said, the pp is right. If you are a good negotiator, you can buy without a buyer agent. HOWEVER, I wouldn't let the seller agent pocket the entire 6%. You want a piece of that percentage yourself if possible.

Imagine the property sells for $1 million (simply for the sake of easy math). The real estate commission is $60,000.

Under a typical arranagement, that $60,000 would be split between two agents. $30,000 a piece.

Now, say you want to put in a house without a buyers agent. You write an offer for that $1 million (again, keeping the math simple) but ask for all closing costs to be paid by agent. On a milllion dollar house the closing costs will be about $17,000 or thereabouts, including prepaids. Now the agent is making $43,000 in commission, which is less than the full $60,000 but more than the $30,000. The seller is happy b/c he gets full price.

[Anonymous]

To 10:04, OP here: Do people do this often? Is it common? Does it poison the offer -- meaning would the would the selling agent discourage acceptance of my offer b/c I asked for (some/all) closing costs from his pocketbook. He may be OK giving a fellow real estate agent 1/2 of the 6% commission, but may HATE giving it to someone off the street.

[Anonymous]

If you're confident enough to move forward without representation from your own agent, make an offer and ask for the seller to have their agent rebate you the 3% buyer's agent fee. or Find an agent with whom you're friendly, have them rep you as a buyer, pay them $100 or some nominal figure and have them rebate their fee to you.

Seller's agent has a fiduciary duty to the seller, so they are unlikely to care who gets the other half of the fee. And if you go with a buyer's agent and have your agent rebate the fee, they'll never know.

[Anonymous]

Just hire an agent to represent you. Using the sellers agent is a conflict of interest. Sure maybe you can save some money but you also don't have someone who is giving you fair advice on negotiating or what to do with the home inspection.

[Anonymous]

If you know it's coming on the market have they already picked an agent?
If not, make them an offer. If they already have an agent, figure out what will get the deal done, then cut off 1-2%. That way everyone shares in the savings. If you go and get an agent (for no reason IMO), the seller (and you via a higher purchase price), will have to pay 2.5 - 3% more.
I've bought and sold a few houses without an agent. In your situation, I see zero use for an agent other than providing a template contract.

[Anonymous]

Even if you don't hire an agent, hire a real estate lawyer to look over the contract for you and to advise you on things like inspection contingencies. The inspections process is very stressful, and it's also where lots of deals fall apart. You'll want good advice during that time, you'll want to know what your rights are, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If I were you I'd go knock on the home-owner's door and say you love the house and want to pay fair value.
Also say since you do not have a "buyer's agent" that you will pass some savings on to them.

A seller only cares about his bottom line, after whatever fees. More fees equals more money the buyer must bring to the table, and less money the seller gets.

Elaborating on this...

As a buyer, you have to realize that the listing agent has a fiduciary duty only to the seller. Keep this in mind. Setting aside the principal-agent problem that ultimately the agent wants to maximize his or her fee and get the property sold, the listing agent really isn't going to do you any favors unless it is in his or her interest. This matters in three ways: 1) Negotiating price of the house; 2) Negotiating the home inspection items; 3) Getting to the settlement table.

That said, the pp is right. If you are a good negotiator, you can buy without a buyer agent. HOWEVER, I wouldn't let the seller agent pocket the entire 6%. You want a piece of that percentage yourself if possible.

Imagine the property sells for $1 million (simply for the sake of easy math). The real estate commission is $60,000.

Under a typical arranagement, that $60,000 would be split between two agents. $30,000 a piece.

Now, say you want to put in a house without a buyers agent. You write an offer for that $1 million (again, keeping the math simple) but ask for all closing costs to be paid by agent. On a milllion dollar house the closing costs will be about $17,000 or thereabouts, including prepaids. Now the agent is making $43,000 in commission, which is less than the full $60,000 but more than the $30,000. The seller is happy b/c he gets full price.

This is silly. This doesn't benefit the buyer at all. Also, in Arlington, without points, closings costs are about $6k on a $1milliom house. Sorry MDers. I know you hate to hear that. Why not buy the house for $970 or $975k. Seller gets the same net and buyer gets a good deal.

[Anonymous]

Definitely try to do a friendly sale with 2%+ agent rebate to you. The boilerplate purchase agreements are not bad once a lawyer walks you through it in 10 minutes.

Realtors' heydays in DC are over, in fact their 6% fees are cannibalizing their very own market. How many people do you know not selling because they cannot clear the 6% agent fee hurdle? MANY

How many countries have realtor fees above 1.0-1.5% of purchase price? ONE - the U.S.
(Europe is 1% to the listing agent only, s/he does the viewings)

[Anonymous]

Keep in mind that you will have to pay taxes on the rebate. It's much better to just lower the price of the house.