Why do we need a real estate agent?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The commission agreement is in the contract between the seller and the seller's agent. A seller is entirely within his or her right to say "After thinking about it, I'm not willing to sell this house through you unless you agree to reduce your commission from 5% to 3% so that I can accept this pending offer."

And, as the Economist Article nicely points out, this argument is circular. Agents tell sellers they'll build the commission into the cost of the house, and tell buyers they're not hurt by the commission. Its not possible that both are true.

You just contradicted yourself. The seller is not within his or her right to change the terms of a listing contract in this way. Not at all. In fact, if the agent brings a ready, willing and able buyer and the seller tried to do this and the buyer walked because of it, the seller would legally owe the agent a commission, whether or not the house has sold since the agent fulfilled the terms by bringing a ready, willing, and able buyer.

So, once there's a contract, a seller actually has no right at all to say "I'm not wiling to sell this house through you unless you agree to reduce your commission from 5% to 3%." That's what a contract IS.

The agent didn't bring a ready, willing, and able buyer if the buyer is willing only if the commission is cut and the agent is not willing to cut the commission. That's question-begging.

Not really. No buyer's going to write an offer based on the commission being cut. The buyer doesn't CARE because the buyer isn't a party to that agreement or contract. The buyer MIGHT offer 3% less than list or ask the seller for closing help, but the buyer doesn't add a clause to the offer saying "but i'll only buy the house if you renegotiate the commission you pay to your agent." Do you even understand how absurd that sounds?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The commission agreement is in the contract between the seller and the seller's agent. A seller is entirely within his or her right to say "After thinking about it, I'm not willing to sell this house through you unless you agree to reduce your commission from 5% to 3% so that I can accept this pending offer."

And, as the Economist Article nicely points out, this argument is circular. Agents tell sellers they'll build the commission into the cost of the house, and tell buyers they're not hurt by the commission. Its not possible that both are true.

a seller can negotiate the commission before signing the contract, and for sure can try to find an agent who agrees to work for a 3% or even less. but after the contract with the agent is signed, the seller cannot unilaterally refuse the pay if the contract with the agent, like most contracts, specifies that the seller's agent has exclusivity for a certain time and has to right to get x% in commission if an acceptable offer comes in. so if there is an acceptable offer, the seller has to pay the agreed upon commission in its entirety to the agent.

Right, if the agent refuses to reduce the commission, he or she can point out that the seller won't be able to sell the house unless the seller goes through with the contract. The seller can then counter that if the house has to go off the market, the agent will lose the commission. Then the two can meet somewhere in the middle. That's how a re-negotiation works. They both have an incentive to reach a mid-point.

No, most contracts are written so that you'd still owe a commission even if the listing expires and you sell within a certain time frame after. So, yeah, you could pull your house from the market but you may not be able to duck the commission for 6 months or so... meanwhile, what's that costing you in mortgage and tax payments?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The commission agreement is in the contract between the seller and the seller's agent. A seller is entirely within his or her right to say "After thinking about it, I'm not willing to sell this house through you unless you agree to reduce your commission from 5% to 3% so that I can accept this pending offer."

And, as the Economist Article nicely points out, this argument is circular. Agents tell sellers they'll build the commission into the cost of the house, and tell buyers they're not hurt by the commission. Its not possible that both are true.

You just contradicted yourself. The seller is not within his or her right to change the terms of a listing contract in this way. Not at all. In fact, if the agent brings a ready, willing and able buyer and the seller tried to do this and the buyer walked because of it, the seller would legally owe the agent a commission, whether or not the house has sold since the agent fulfilled the terms by bringing a ready, willing, and able buyer.

So, once there's a contract, a seller actually has no right at all to say "I'm not wiling to sell this house through you unless you agree to reduce your commission from 5% to 3%." That's what a contract IS.

The agent didn't bring a ready, willing, and able buyer if the buyer is willing only if the commission is cut and the agent is not willing to cut the commission. That's question-begging.

Not really. No buyer's going to write an offer based on the commission being cut. The buyer doesn't CARE because the buyer isn't a party to that agreement or contract. The buyer MIGHT offer 3% less than list or ask the seller for closing help, but the buyer doesn't add a clause to the offer saying "but i'll only buy the house if you renegotiate the commission you pay to your agent." Do you even understand how absurd that sounds?

As already outlined, the buyer would tell the seller directly that they'll offer x price and that the seller should make up the difference in the commission. Why would any of this be reflected in the offer papers?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The commission agreement is in the contract between the seller and the seller's agent. A seller is entirely within his or her right to say "After thinking about it, I'm not willing to sell this house through you unless you agree to reduce your commission from 5% to 3% so that I can accept this pending offer."

And, as the Economist Article nicely points out, this argument is circular. Agents tell sellers they'll build the commission into the cost of the house, and tell buyers they're not hurt by the commission. Its not possible that both are true.

You just contradicted yourself. The seller is not within his or her right to change the terms of a listing contract in this way. Not at all. In fact, if the agent brings a ready, willing and able buyer and the seller tried to do this and the buyer walked because of it, the seller would legally owe the agent a commission, whether or not the house has sold since the agent fulfilled the terms by bringing a ready, willing, and able buyer.

So, once there's a contract, a seller actually has no right at all to say "I'm not wiling to sell this house through you unless you agree to reduce your commission from 5% to 3%." That's what a contract IS.

The agent didn't bring a ready, willing, and able buyer if the buyer is willing only if the commission is cut and the agent is not willing to cut the commission. That's question-begging.

Not really. No buyer's going to write an offer based on the commission being cut. The buyer doesn't CARE because the buyer isn't a party to that agreement or contract. The buyer MIGHT offer 3% less than list or ask the seller for closing help, but the buyer doesn't add a clause to the offer saying "but i'll only buy the house if you renegotiate the commission you pay to your agent." Do you even understand how absurd that sounds?

As already outlined, the buyer would tell the seller directly that they'll offer x price and that the seller should make up the difference in the commission. Why would any of this be reflected in the offer papers?

Because a written offer is the only way you actually get a ratified contract?

How do you see this working exactly? A house is worth $100,000. You offer $95,000 and tell the buyer "if you want the other $5,000 tell your agent to forego her commission?"

That's absurd. Just offer the $95,000 and let seller decide whether or not to accept it. Bringing up the listing agent's commission is just absurd.

The other thing you could do is offer the $100,000 and ask for $2,500 in closing costs (which would be half the commission). But you don't say "and we'll call that half the commission".

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The commission agreement is in the contract between the seller and the seller's agent. A seller is entirely within his or her right to say "After thinking about it, I'm not willing to sell this house through you unless you agree to reduce your commission from 5% to 3% so that I can accept this pending offer."

And, as the Economist Article nicely points out, this argument is circular. Agents tell sellers they'll build the commission into the cost of the house, and tell buyers they're not hurt by the commission. Its not possible that both are true.

You just contradicted yourself. The seller is not within his or her right to change the terms of a listing contract in this way. Not at all. In fact, if the agent brings a ready, willing and able buyer and the seller tried to do this and the buyer walked because of it, the seller would legally owe the agent a commission, whether or not the house has sold since the agent fulfilled the terms by bringing a ready, willing, and able buyer.

So, once there's a contract, a seller actually has no right at all to say "I'm not wiling to sell this house through you unless you agree to reduce your commission from 5% to 3%." That's what a contract IS.

The agent didn't bring a ready, willing, and able buyer if the buyer is willing only if the commission is cut and the agent is not willing to cut the commission. That's question-begging.

Not really. No buyer's going to write an offer based on the commission being cut. The buyer doesn't CARE because the buyer isn't a party to that agreement or contract. The buyer MIGHT offer 3% less than list or ask the seller for closing help, but the buyer doesn't add a clause to the offer saying "but i'll only buy the house if you renegotiate the commission you pay to your agent." Do you even understand how absurd that sounds?

As already outlined, the buyer would tell the seller directly that they'll offer x price and that the seller should make up the difference in the commission. Why would any of this be reflected in the offer papers?

no, the buyer is going to offer x price period. it is up to the seller to accept of refuse the offer. the seller cannot go to the agent and say I will pay you less than agreed upon becuase I got an offer for lower than I wanted, same as he cannot go to the painter who repainted the house to prepare it for the sale and say I agreed to pay you $3000 for the painting job and this is what it is in our contract, but now because the house is selling for less than I though I will give you only $2000.

if there is an acceptable offer, the seller's agent could sue the seller who refuses to pay the full commission in the contract

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The commission agreement is in the contract between the seller and the seller's agent. A seller is entirely within his or her right to say "After thinking about it, I'm not willing to sell this house through you unless you agree to reduce your commission from 5% to 3% so that I can accept this pending offer."

And, as the Economist Article nicely points out, this argument is circular. Agents tell sellers they'll build the commission into the cost of the house, and tell buyers they're not hurt by the commission. Its not possible that both are true.

You just contradicted yourself. The seller is not within his or her right to change the terms of a listing contract in this way. Not at all. In fact, if the agent brings a ready, willing and able buyer and the seller tried to do this and the buyer walked because of it, the seller would legally owe the agent a commission, whether or not the house has sold since the agent fulfilled the terms by bringing a ready, willing, and able buyer.

So, once there's a contract, a seller actually has no right at all to say "I'm not wiling to sell this house through you unless you agree to reduce your commission from 5% to 3%." That's what a contract IS.

The agent didn't bring a ready, willing, and able buyer if the buyer is willing only if the commission is cut and the agent is not willing to cut the commission. That's question-begging.

Not really. No buyer's going to write an offer based on the commission being cut. The buyer doesn't CARE because the buyer isn't a party to that agreement or contract. The buyer MIGHT offer 3% less than list or ask the seller for closing help, but the buyer doesn't add a clause to the offer saying "but i'll only buy the house if you renegotiate the commission you pay to your agent." Do you even understand how absurd that sounds?

As already outlined, the buyer would tell the seller directly that they'll offer x price and that the seller should make up the difference in the commission. Why would any of this be reflected in the offer papers?

Because a written offer is the only way you actually get a ratified contract?

How do you see this working exactly? A house is worth $100,000. You offer $95,000 and tell the buyer "if you want the other $5,000 tell your agent to forego her commission?"

That's absurd. Just offer the $95,000 and let seller decide whether or not to accept it. Bringing up the listing agent's commission is just absurd.

The other thing you could do is offer the $100,000 and ask for $2,500 in closing costs (which would be half the commission). But you don't say "and we'll call that half the commission".

This is not complicated. There would ultimately be a ratified contract. The buyer tells the seller "I am willing to offer you X-Y of your list price. Try and get the difference from a reduced commission." The seller than tells the agent "I want to get this under contract. Can you please reduce the commission by Y amount." The seller and the seller's agent both have incentives to reach a midpoint number in a commission reduction. Once they do, the seller or seller's agent tells the buyer, who submits an offer. It is accepted, and the transaction is completed as normal.

I have actually done this successfully, so I'm not particularly persuaded by your protest that it is absurd.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The commission agreement is in the contract between the seller and the seller's agent. A seller is entirely within his or her right to say "After thinking about it, I'm not willing to sell this house through you unless you agree to reduce your commission from 5% to 3% so that I can accept this pending offer."

And, as the Economist Article nicely points out, this argument is circular. Agents tell sellers they'll build the commission into the cost of the house, and tell buyers they're not hurt by the commission. Its not possible that both are true.

You just contradicted yourself. The seller is not within his or her right to change the terms of a listing contract in this way. Not at all. In fact, if the agent brings a ready, willing and able buyer and the seller tried to do this and the buyer walked because of it, the seller would legally owe the agent a commission, whether or not the house has sold since the agent fulfilled the terms by bringing a ready, willing, and able buyer.

So, once there's a contract, a seller actually has no right at all to say "I'm not wiling to sell this house through you unless you agree to reduce your commission from 5% to 3%." That's what a contract IS.

The agent didn't bring a ready, willing, and able buyer if the buyer is willing only if the commission is cut and the agent is not willing to cut the commission. That's question-begging.

Not really. No buyer's going to write an offer based on the commission being cut. The buyer doesn't CARE because the buyer isn't a party to that agreement or contract. The buyer MIGHT offer 3% less than list or ask the seller for closing help, but the buyer doesn't add a clause to the offer saying "but i'll only buy the house if you renegotiate the commission you pay to your agent." Do you even understand how absurd that sounds?

As already outlined, the buyer would tell the seller directly that they'll offer x price and that the seller should make up the difference in the commission. Why would any of this be reflected in the offer papers?

no, the buyer is going to offer x price period. it is up to the seller to accept of refuse the offer. the seller cannot go to the agent and say I will pay you less than agreed upon becuase I got an offer for lower than I wanted, same as he cannot go to the painter who repainted the house to prepare it for the sale and say I agreed to pay you $3000 for the painting job and this is what it is in our contract, but now because the house is selling for less than I though I will give you only $2000.

if there is an acceptable offer, the seller's agent could sue the seller who refuses to pay the full commission in the contract

Well sure, if you just change the fictional scenario to something different then it no longer works.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The commission agreement is in the contract between the seller and the seller's agent. A seller is entirely within his or her right to say "After thinking about it, I'm not willing to sell this house through you unless you agree to reduce your commission from 5% to 3% so that I can accept this pending offer."

And, as the Economist Article nicely points out, this argument is circular. Agents tell sellers they'll build the commission into the cost of the house, and tell buyers they're not hurt by the commission. Its not possible that both are true.

You just contradicted yourself. The seller is not within his or her right to change the terms of a listing contract in this way. Not at all. In fact, if the agent brings a ready, willing and able buyer and the seller tried to do this and the buyer walked because of it, the seller would legally owe the agent a commission, whether or not the house has sold since the agent fulfilled the terms by bringing a ready, willing, and able buyer.

So, once there's a contract, a seller actually has no right at all to say "I'm not wiling to sell this house through you unless you agree to reduce your commission from 5% to 3%." That's what a contract IS.

The agent didn't bring a ready, willing, and able buyer if the buyer is willing only if the commission is cut and the agent is not willing to cut the commission. That's question-begging.

Not really. No buyer's going to write an offer based on the commission being cut. The buyer doesn't CARE because the buyer isn't a party to that agreement or contract. The buyer MIGHT offer 3% less than list or ask the seller for closing help, but the buyer doesn't add a clause to the offer saying "but i'll only buy the house if you renegotiate the commission you pay to your agent." Do you even understand how absurd that sounds?

As already outlined, the buyer would tell the seller directly that they'll offer x price and that the seller should make up the difference in the commission. Why would any of this be reflected in the offer papers?

Because a written offer is the only way you actually get a ratified contract?

How do you see this working exactly? A house is worth $100,000. You offer $95,000 and tell the buyer "if you want the other $5,000 tell your agent to forego her commission?"

That's absurd. Just offer the $95,000 and let seller decide whether or not to accept it. Bringing up the listing agent's commission is just absurd.

The other thing you could do is offer the $100,000 and ask for $2,500 in closing costs (which would be half the commission). But you don't say "and we'll call that half the commission".

This is not complicated. There would ultimately be a ratified contract. The buyer tells the seller "I am willing to offer you X-Y of your list price. Try and get the difference from a reduced commission." The seller than tells the agent "I want to get this under contract. Can you please reduce the commission by Y amount." The seller and the seller's agent both have incentives to reach a midpoint number in a commission reduction. Once they do, the seller or seller's agent tells the buyer, who submits an offer. It is accepted, and the transaction is completed as normal.

I have actually done this successfully, so I'm not particularly persuaded by your protest that it is absurd.

did you try this in a hot seller's market, with multiple offers, escalation clauses, pre-offer inspections and the like? because this is currently the market (or at least it has been until very recently) for desirable areas around here, even in OP's price range

[Anonymous]

16:04,
Sounds like the idea is that the seller gets an offer that's lower than what they wanted and they tell the agent they would like to receive a certain amount of proceeds on the sale of the house and would agent be willing to forego some of the commission to make that happen. When making the offer, perhaps the buyer could mention that although the offer is less than asking price buyer is unrepresented and perhaps seller can recoup some of the difference by having agent receive a lower commission (2.5% vs. 5%).

I suppose it really only works if the housing market is slow and that's the only offer or the best offer on the table.

[Anonymous]

Anonymous wrote:16:04,
Sounds like the idea is that the seller gets an offer that's lower than what they wanted and they tell the agent they would like to receive a certain amount of proceeds on the sale of the house and would agent be willing to forego some of the commission to make that happen. When making the offer, perhaps the buyer could mention that although the offer is less than asking price buyer is unrepresented and perhaps seller can recoup some of the difference by having agent receive a lower commission (2.5% vs. 5%).

I suppose it really only works if the housing market is slow and that's the only offer or the best offer on the table.

Damn, 16:10 types faster than me.

[Anonymous]

Anonymous wrote:

Anonymous wrote:if there is an acceptable offer, the seller's agent could sue the seller who refuses to pay the full commission in the contract

Setting aside that there's no written offer in this scenario, this simply isn't true. If someone is asking $100,000 for a property and gets an offer for $97,000, the seller is not obligated to accept it. The seller could perfectly legally say to his or her agent "Look, I can only afford to sell it at $97,000 if you can reduce your commission."

And even if this weren't legal, what would the seller's agent sue the seller for? To force him or her to sign the contract? To force him or her to disgorge profits on a sale that never went through?

[Anonymous]

Y'all are right that this isn't going to work if offers are coming in at above asking. But that's just yet another reason not to let an agent talk you into trying to start a bidding war.

[Anonymous]

You don't need an agent (or a lawyer). I've bought and sold many houses without an agent, including my first house. If you know the area and are comfortable with pricing and negotiation, it's not necessary.
The only caveat is that the seller agrees to pay the commission of, say, 6%. So, if you don't have an agent, the listing agent SHOULD agree to only take her 3%. In theory, you should get a further reduction of maybe 2%.
If you have signed with a buyer's agent, and you buy a FSBO, in generally you would be responsible for her commission unless the seller says they will pay it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The commission agreement is in the contract between the seller and the seller's agent. A seller is entirely within his or her right to say "After thinking about it, I'm not willing to sell this house through you unless you agree to reduce your commission from 5% to 3% so that I can accept this pending offer."

And, as the Economist Article nicely points out, this argument is circular. Agents tell sellers they'll build the commission into the cost of the house, and tell buyers they're not hurt by the commission. Its not possible that both are true.

You just contradicted yourself. The seller is not within his or her right to change the terms of a listing contract in this way. Not at all. In fact, if the agent brings a ready, willing and able buyer and the seller tried to do this and the buyer walked because of it, the seller would legally owe the agent a commission, whether or not the house has sold since the agent fulfilled the terms by bringing a ready, willing, and able buyer.

So, once there's a contract, a seller actually has no right at all to say "I'm not wiling to sell this house through you unless you agree to reduce your commission from 5% to 3%." That's what a contract IS.

The agent didn't bring a ready, willing, and able buyer if the buyer is willing only if the commission is cut and the agent is not willing to cut the commission. That's question-begging.

Not really. No buyer's going to write an offer based on the commission being cut. The buyer doesn't CARE because the buyer isn't a party to that agreement or contract. The buyer MIGHT offer 3% less than list or ask the seller for closing help, but the buyer doesn't add a clause to the offer saying "but i'll only buy the house if you renegotiate the commission you pay to your agent." Do you even understand how absurd that sounds?

As already outlined, the buyer would tell the seller directly that they'll offer x price and that the seller should make up the difference in the commission. Why would any of this be reflected in the offer papers?

no, the buyer is going to offer x price period. it is up to the seller to accept of refuse the offer. the seller cannot go to the agent and say I will pay you less than agreed upon becuase I got an offer for lower than I wanted, same as he cannot go to the painter who repainted the house to prepare it for the sale and say I agreed to pay you $3000 for the painting job and this is what it is in our contract, but now because the house is selling for less than I though I will give you only $2000.

if there is an acceptable offer, the seller's agent could sue the seller who refuses to pay the full commission in the contract

And would win. You forgot to add that. There would be a summary judgment. Take about 5 minutes.

[Anonymous]

By the way, the median number of days that houses costing between $1.25-$1.5 million have been on the market in the DC area as of today is 71.