Why do we need a real estate agent?

[Anonymous]

This is a genuine question from a first-time home buyer. We are considering buying a home, and DH is adamant that he doesn't want to use an agent because he begrudges the fee. I have a feeling there are things we don't know about that a realtor would help us with, but I'm also uneasy at the dollar amount (we're looking in the $1.3 million range, so the commission seems like a lot of money to us when we think about it in dollars). We're looking in a very specific neighborhood that we're pretty familiar with, and I've been eyeing the market in this neighborhood for a long time. So I don't need help finding a place or determining what a reasonable offer price would be for any houses that we like. Occasionally we look at houses that are "for sale by owner," so in those instances the seller wouldn't have an agent either. (If that's right, and if we did have an agent, then would the agent get the entire 6% commission to herself, or would she just get 3%?)

What can an agent do for us that, say, a real estate lawyer could not? I'm assuming a lawyer would be cheaper because she'd get paid by the hour, so reviewing/drafting whatever documents are needed and...I'm not sure what else.

Thanks for any input. This is absolutely nothing against real estate agents. I don't want to screw this up, but I also don't want to pay extra if we don't have to, just like I understand when new clients come to me and want to save money if possible. I don't take it personally!

[Anonymous]

Seller pays the commission. Start interviewing realtors. No way you should be buying a $1m house without one if you are a first time home buyer and are asking the questions in your OP.

[Anonymous]

Buyer doesn't pay any fee to the seller agent. You could argue the fee is baked into the price of the house, but the commission is what the commission is for the listing contract anyway. If you go into a transaction without an agent, all that's going to happen is the listing agent gets 6% instead of 3%, and you've got no one representing your interests at the negoitiating table.

As first-time home buyers you need an agent who knows how to best negotiate for you, not only on price but also on things like home inspection items. A good agent also knows when houses are coming on the market before they do, which could give you a leg up if you are in a competitive market.

I know there's a lot of agent hate here. But I wouldn't go without an

[Anonymous]

cut off. I wouldn't go without an agent untless you are an experienced homebuyer.

[Anonymous]

Also be very VERY wary of For Sale By Owner (FSBO).

They are often priced unrealistically relative to comps and the sellers are generally cheap. This means they in all likelihood haven't done all the maintenance on the house, and will nickle and dime you on the way to closing.

Not true on all cases, but there's a certain "cheap" mentality that goes FSBO that you will encounter.

[Anonymous]

You and your husband need to do more research. Seller pays the commission.

[Anonymous]

Thanks, PPs, especially 7:34 and 7:36 for your specifics. I should have said that I know the seller pays the commission but we assumed that the amount is factored into the sale price, so it effectively gets passed on to the buyer?

Looking forward to hearing more about what agents do for buyers.

[Anonymous]

We bought our house through Redfin and got the 1.5% cash back. It worked out well for us. Like you, we knew where we wanted to buy and did our own research on comps.

[Anonymous]

Anonymous wrote:Thanks, PPs, especially 7:34 and 7:36 for your specifics. I should have said that I know the seller pays the commission but we assumed that the amount is factored into the sale price, so it effectively gets passed on to the buyer?

Looking forward to hearing more about what agents do for buyers.

The negotiating and buying process today is much more complicated. What a good agent does for you on the front end is help you to negotiate the best price. On the back end, having an agent that can help with the closing process can make all the difference between everything getting done and done correctly and the deal falling through. Good agents know the inspectors, work with the lenders and the settlement companies and when issues come up, know how to work through them. There is such much paperwork and dcoumentation that is needed to close the sale of a house. A good closing department will make the process much better.

[Anonymous]

I am generally a basher of real estate agents. In general, no one grows up wanting to be a real estate agent. People become agents as a plan B. Anyhow, spending that much money, why would you even care about the commission? As it is paid for the by seller, while it is baked in, the agents do offer some service and help - at least they should. If the agent knows well the area you want to live in, that can only help. They may be aware of prior owners, problems in the house, neighborhood, that the sellers won't be willing to tell you about. The agent should be able to get key information on the seller(how motivated they are, are they under water on the property, is the owner being transfered, is the house house sale a tax manuever, etc.

[Anonymous]

Spending $1.3M on a first time do-it-yourself real estate transaction? Wow. Maybe if you are buying in a new sub division.

[Anonymous]

I had agent skepiticism and found a great one who ended up being incredibly helpful. Value add for us on the buy side (she was also great on the sell side, but you don't seem intersted in that right now):

- She pre-screened houses for us after we told her what we wanted. So we were only looking at realistic options given our criteria. This saved us a lot of time. (We were looking with a pre-schooler.)
-She previewed several properties for us before they were on the market. This is HUGE. A lot of times the best properties don't even go on the market. You'll never see these if you don't have a plugged-in agent.
-She was very agressive negotiating price, which made me nervous. I would have NEVER done this on my own dealing directly with a seller. It's a lot less awkward to play hard ball when you're doing it third hand via your agent. At the end, we got a great price.
-She had a lot of direct experience with the area we were looking and knew the history of the sales patterns and prices and had been in many of the homes. This was probably part of what helped her be confidently agressive in negotiating a price.
-We didn't end up needing to do this, but in the area we are looking in, escalation clauses can be typical. I have no idea how to do this and she does.
-She dealt with setting up home inspection, negotiated what items needed to be fixed (again, she was more agressive than I would have been), and followed up tenaciously to make sure all items were addressed. A few items were not properly addressed at the walk through and she insisted that they be fixed after we moved in (and had a document at the ready for us to sign at our closing that indicated these things needed to be fixed).
-When our lender was being difficult, she called and helped move that along. (The lending situation right now is terrible even if you're the most qualified buyer in the world.)
-She found the settlement agent and set all that up. She just told us when and where to show up.

I think real estate transactions can get weirdly personal for people. I think dealing directly with a seller will be awkward and you likely won't get the same results as a good agent doing it for you.

[Anonymous]

I think it totally depends on the agent. My agent didn't provide comps or information that I didn't already had from the internet and her bid recommendation was just pushing us to bid the max every time without even considering the neighborhood (i.e., overbidding in locations with no bidding wars). Ultimately, while she knew lenders, etc. they weren't necessarily the best referrals - just people she worked with. If you have a bad agent, you are just paying a lot of money to fill out a contract and you might as well go with redfin or some other arrangement.

Now, if I had an agent like PP, I would have said that the agent was worth every penny. There were two houses on my block that were sold before the open house so I have to imagine there were agents plugged in and getting their clients an advanced look. Maybe talk to a few agents to see what they can offer and not go exclusive right away.

[Anonymous]

Anonymous wrote:I had agent skepiticism and found a great one who ended up being incredibly helpful. Value add for us on the buy side (she was also great on the sell side, but you don't seem intersted in that right now):

- She pre-screened houses for us after we told her what we wanted. So we were only looking at realistic options given our criteria. This saved us a lot of time. (We were looking with a pre-schooler.)
-She previewed several properties for us before they were on the market. This is HUGE. A lot of times the best properties don't even go on the market. You'll never see these if you don't have a plugged-in agent.
-She was very agressive negotiating price, which made me nervous. I would have NEVER done this on my own dealing directly with a seller. It's a lot less awkward to play hard ball when you're doing it third hand via your agent. At the end, we got a great price.
-She had a lot of direct experience with the area we were looking and knew the history of the sales patterns and prices and had been in many of the homes. This was probably part of what helped her be confidently agressive in negotiating a price.
-We didn't end up needing to do this, but in the area we are looking in, escalation clauses can be typical. I have no idea how to do this and she does.
-She dealt with setting up home inspection, negotiated what items needed to be fixed (again, she was more agressive than I would have been), and followed up tenaciously to make sure all items were addressed. A few items were not properly addressed at the walk through and she insisted that they be fixed after we moved in (and had a document at the ready for us to sign at our closing that indicated these things needed to be fixed).
-When our lender was being difficult, she called and helped move that along. (The lending situation right now is terrible even if you're the most qualified buyer in the world.)
-She found the settlement agent and set all that up. She just told us when and where to show up.

I think real estate transactions can get weirdly personal for people. I think dealing directly with a seller will be awkward and you likely won't get the same results as a good agent doing it for you.

Wow! I wish I had your real estate agent! I've gone around with several and they're horrible. They spend more time making me sign commision papers than showing me the houses. I've also never had one suggest another house or show me houses that I didn't find myself.

[Anonymous]

Anonymous wrote:I had agent skepiticism and found a great one who ended up being incredibly helpful. Value add for us on the buy side (she was also great on the sell side, but you don't seem intersted in that right now):

- She pre-screened houses for us after we told her what we wanted. So we were only looking at realistic options given our criteria. This saved us a lot of time. (We were looking with a pre-schooler.)
-She previewed several properties for us before they were on the market. This is HUGE. A lot of times the best properties don't even go on the market. You'll never see these if you don't have a plugged-in agent.
-She was very agressive negotiating price, which made me nervous. I would have NEVER done this on my own dealing directly with a seller. It's a lot less awkward to play hard ball when you're doing it third hand via your agent. At the end, we got a great price.
-She had a lot of direct experience with the area we were looking and knew the history of the sales patterns and prices and had been in many of the homes. This was probably part of what helped her be confidently agressive in negotiating a price.
-We didn't end up needing to do this, but in the area we are looking in, escalation clauses can be typical. I have no idea how to do this and she does.
-She dealt with setting up home inspection, negotiated what items needed to be fixed (again, she was more agressive than I would have been), and followed up tenaciously to make sure all items were addressed. A few items were not properly addressed at the walk through and she insisted that they be fixed after we moved in (and had a document at the ready for us to sign at our closing that indicated these things needed to be fixed).
-When our lender was being difficult, she called and helped move that along. (The lending situation right now is terrible even if you're the most qualified buyer in the world.)
-She found the settlement agent and set all that up. She just told us when and where to show up.

I think real estate transactions can get weirdly personal for people. I think dealing directly with a seller will be awkward and you likely won't get the same results as a good agent doing it for you.

+1,000