As a buyer, how can I leverage new Realtor commission rules for my benefit?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Okay can someone who isn’t a realtor shill kind of weigh in on the best ways to leverage these new rules? I’m tired of absolute idiots becoming realtors just showing me a house I want to see, then maybe do some limpwristed, but most likely conspiratorial negotiations with a seller agent, and filling out a couple forms and charging a big percent. It’s a joke. I get realtors will continue to try their best to abuse the new rules so they can continue the grift, but how can we get around that? What hard and fast stipulations can a buyer or seller employ to mitigate the fckery these days?

The best way to leverage these new rules is to not use a buyer's agent. Ask the listing agent to show you the home. You should not have to pay extra or sign any agreements to pay compensation for this.

Here's how this will help buyers:

Buyer A uses a buyer's agent and owes them 2% commission. They offer $1M with a seller concession of 2% to go to the buyer's agent. So effectively, Buyer A is offering $980K (actually a little less because the seller has to pay taxes and commission on that extra 2%/$20K).

Buyer B is unrepresented. They offer $985K. No seller concessions.

So all else being equal, Buyer B just won the house while paying $15K less than the other offer. Both the buyer and seller are better off for not having a second greedy realtor trying to get cut in on the deal.

That's just the thing, however. It's extremely rare for "all else being equal" to be true with competing offers where the only consideration is a tiny differential in price offered. Also, in your example, Buyer B is overpaying for the house.

Are you saying that Buyer B should instead offer $980,001? Sure, if they knew what Buyer A was offering, but they don't. So isn't it the case then that every highest bid offer is "overpaying" if they are more than $1 over the next highest offer?

Also, why wouldn't "everything being equal" be true? Again, the "special sauce" that a buyers agent brings is, what exactly? If it's "waive contingencies", then why wouldn't the seller just go back to Buyer B and say "if you can keep your offer at the same level, but waive contingencies, we will accept? Sending that email is worth an extra $5k if I am the seller.

Say you have two offers like you outline, with a $5K difference. Things that could be different in them:

1) Contingencies, including home sale contingency
2) Settlement dates
3) Rent backs
4) Requests for closing credits (especially help w/ closing costs)
5) Financial strength of the buyer. I'm not taking an offer for 5K more if their financials are materially weaker
6) Requests for things to convey

Just to name a few off the top of my head.

You're acting like money is the only thing that makes offers different. It's not.

None of those have anything to do with whether a buyers agent is present or not. And all of them can be negotiated (with or without an agent), and even included in the seller requirements to all people offering. And the closing credit is EXACTLY the issue that an unrepresented buyer makes stronger, since they don't need that credit to pay their agent.

There you go again, being awfully sure and very wrong.

Closing cost credits take a variety of forms. Usually, they are literally to pay for things like title fees and taxes. Buyers request these things for cash flow reasons more than anything. Sometimes they'll even say "I'll pay you $10,000 more if you'll give me $10,000 in closing cost help." This has NOTHING TO DO WITH PAYING A BUYER AGENT.

Sure, people can negotiate these things themselves. But you're a case in point of people who don't understand these dynamics and how they affect and offer -- you're your worst enemy in negotiations, because you're so sure you know everything ... and you actually don't have a clue. This goes back to your simplistic "all things being equal" comment. There's no such thing. No two offers are going to be exactly alike except for the price.

Are agents overpaid? Yes, but that's a factor of the higher value of houses. Are buyer agents pointless? I know you think so, but your absurd thinking is so black and white. You are, simply, far too emotional about these things. And the entire reason for agency is to take emotion out of transactions and protect people from themselves.

DP

Overpaid as a factor of anti-competitive practices, and pointless for approximately 80% of homebuyers:

[The] three comparator markets [Australia, the Netherlands, and the United Kingdom], only about 5–20% of home buyers used buyer-brokers as compared to 87% in the United States. Moreover, those buyers who did employ buyer-brokers in the yardstick markets paid only about 1–2% in commissions versus the 2–3% paid by buyers in the United States"

https://casetext.com/case/moehrl-v-the-natl-assn-of-realtors


So yes, in a competitive market, there is a place for buyer agents at half the cost for about 1 in 5 buyers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Okay can someone who isn’t a realtor shill kind of weigh in on the best ways to leverage these new rules? I’m tired of absolute idiots becoming realtors just showing me a house I want to see, then maybe do some limpwristed, but most likely conspiratorial negotiations with a seller agent, and filling out a couple forms and charging a big percent. It’s a joke. I get realtors will continue to try their best to abuse the new rules so they can continue the grift, but how can we get around that? What hard and fast stipulations can a buyer or seller employ to mitigate the fckery these days?

The best way to leverage these new rules is to not use a buyer's agent. Ask the listing agent to show you the home. You should not have to pay extra or sign any agreements to pay compensation for this.

Here's how this will help buyers:

Buyer A uses a buyer's agent and owes them 2% commission. They offer $1M with a seller concession of 2% to go to the buyer's agent. So effectively, Buyer A is offering $980K (actually a little less because the seller has to pay taxes and commission on that extra 2%/$20K).

Buyer B is unrepresented. They offer $985K. No seller concessions.

So all else being equal, Buyer B just won the house while paying $15K less than the other offer. Both the buyer and seller are better off for not having a second greedy realtor trying to get cut in on the deal.

That's just the thing, however. It's extremely rare for "all else being equal" to be true with competing offers where the only consideration is a tiny differential in price offered. Also, in your example, Buyer B is overpaying for the house.

Are you saying that Buyer B should instead offer $980,001? Sure, if they knew what Buyer A was offering, but they don't. So isn't it the case then that every highest bid offer is "overpaying" if they are more than $1 over the next highest offer?

Also, why wouldn't "everything being equal" be true? Again, the "special sauce" that a buyers agent brings is, what exactly? If it's "waive contingencies", then why wouldn't the seller just go back to Buyer B and say "if you can keep your offer at the same level, but waive contingencies, we will accept? Sending that email is worth an extra $5k if I am the seller.

Say you have two offers like you outline, with a $5K difference. Things that could be different in them:

1) Contingencies, including home sale contingency
2) Settlement dates
3) Rent backs
4) Requests for closing credits (especially help w/ closing costs)
5) Financial strength of the buyer. I'm not taking an offer for 5K more if their financials are materially weaker
6) Requests for things to convey

Just to name a few off the top of my head.

You're acting like money is the only thing that makes offers different. It's not.

None of those have anything to do with whether a buyers agent is present or not. And all of them can be negotiated (with or without an agent), and even included in the seller requirements to all people offering. And the closing credit is EXACTLY the issue that an unrepresented buyer makes stronger, since they don't need that credit to pay their agent.

There you go again, being awfully sure and very wrong.

Closing cost credits take a variety of forms. Usually, they are literally to pay for things like title fees and taxes. Buyers request these things for cash flow reasons more than anything. Sometimes they'll even say "I'll pay you $10,000 more if you'll give me $10,000 in closing cost help." This has NOTHING TO DO WITH PAYING A BUYER AGENT.

Sure, people can negotiate these things themselves. But you're a case in point of people who don't understand these dynamics and how they affect and offer -- you're your worst enemy in negotiations, because you're so sure you know everything ... and you actually don't have a clue. This goes back to your simplistic "all things being equal" comment. There's no such thing. No two offers are going to be exactly alike except for the price.

Are agents overpaid? Yes, but that's a factor of the higher value of houses. Are buyer agents pointless? I know you think so, but your absurd thinking is so black and white. You are, simply, far too emotional about these things. And the entire reason for agency is to take emotion out of transactions and protect people from themselves.

NP. What are you talking about? Enough with these vague "you just don't know how things work." Finances are a zero sum game. Less money to the buyers agent means more money for buyers and/or sellers. It's not that hard.

[Anonymous]

Anonymous wrote:
Closing cost credits take a variety of forms. Usually, they are literally to pay for things like title fees and taxes. Buyers request these things for cash flow reasons more than anything. Sometimes they'll even say "I'll pay you $10,000 more if you'll give me $10,000 in closing cost help." This has NOTHING TO DO WITH PAYING A BUYER AGENT.

Sure, people can negotiate these things themselves. But you're a case in point of people who don't understand these dynamics and how they affect and offer -- you're your worst enemy in negotiations, because you're so sure you know everything ... and you actually don't have a clue. This goes back to your simplistic "all things being equal" comment. There's no such thing. No two offers are going to be exactly alike except for the price.

Come on, in your example, every seller would take a $1 million offer with a $10k credit like that and say "oh, that's a $990,000 offer", and then compare to the other offers which don't have any credits requested. So yes, you can absolutely do something very close to "all things being equal", and in fact that's what every seller does, implicitly, when they make a final judgment as to which offer to take. They put a valuation on the non-financial thing, and use that to make everything "apples to apples". Or, and I don't know everything here, but stay with me, they could say get a higher offer that comes with a quicker move out, and reply to that buyer "you had the best monetary offer, but we need another 2 weeks before we move out, if you can modify your offer with that date, we will accept"

Because I am pretty sure those types of things happen all the time right now, and people use them to make...all things be equal, so they can take the highest offer.

[Anonymous]

This is not going to end well. Many, many Buyers need representation but cannot pay up front.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Okay can someone who isn’t a realtor shill kind of weigh in on the best ways to leverage these new rules? I’m tired of absolute idiots becoming realtors just showing me a house I want to see, then maybe do some limpwristed, but most likely conspiratorial negotiations with a seller agent, and filling out a couple forms and charging a big percent. It’s a joke. I get realtors will continue to try their best to abuse the new rules so they can continue the grift, but how can we get around that? What hard and fast stipulations can a buyer or seller employ to mitigate the fckery these days?

I'm not a Realtor or an agent, and I think the point is that there's no "leveraging" these new rules. They will inherently put buyers at a disadvantage, no matter how you look at it. Yeah, I get that there are a lot of people who fancy themselves smart and capable of doing a transaction like this without representation, but in my mind it's akin to divorcing someone without your own lawyer.

I'm not sure where, exactly, you got this idea that there's some benefit to be "leveraged."

Potentially the seller benefits by paying reduced commission overall. But I don't see any inherent benefit to buyers. I see only downside risks.

The benefit to be leveraged is that it's now substantially easier to limit the amount of the pie going to agents, which means more for buyers and sellers. Seems reasonable to ask about the mechanics of limiting the agents' take and how to best capture any value lost by agents as a buyer.

It's not, though. There's zero evidence that that's true or likely to happen. If anything, it's made agent compensation even more opaque. At least under the prior arrangement, the numbers were there for all to see on the MLS.

DP

If the unethical agents in your industry weren't using this information to commission shop (according the trial evidence) then opaque would be fine.

[Anonymous]

Anonymous wrote:This is not going to end well. Many, many Buyers need representation but cannot pay up front.

No one "needs" representation by someone whose incentives are directly contrary to their interests. Or representation to do something that is easily done themselves. We're not talking about law or medicine or something...it's not that hard to offer someone money and other terms for something they want. Any difficult parts are handled by lawyers.

[Anonymous]

I think one of the big things that may result out of this is that it will lead to LESS verbal bidding wars.

When you had a buyers agent running interference, they would get on the phone with the sellers agent and talk through bid escalations. This was being done on the phone.

If I'm an unrepresented buyer with an escalation clause getting triggered or getting asked by sellers agent for "best and final" I am going to absolutely demand proof of the other offer. This is not being done with any consistency when there is a buyers agent.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:as an agent i just got such a buyer and it was great! buyer grossly overpaid and seller cut me additional commission. Buyer had no clue.

So you represented a buyer … who grossly overpaid? What exactly was their benefit in hiring you? You are bragging about getting inflated pay for not even helping your client.

Do you even realize you’re proving the point of why buyers don’t want to pay an agent.

Wow, reading comprehension is not your strength is it? OP is claiming to be a SELLER who took advantage of an unrepresented buyer.

lol I think reading comprehension is clearly not your strong suit

My response was quoting a PP who said “as an agent” and then referenced the “seller” giving them additional commission.

[Anonymous]

Anonymous wrote:I think one of the big things that may result out of this is that it will lead to LESS verbal bidding wars.

When you had a buyers agent running interference, they would get on the phone with the sellers agent and talk through bid escalations. This was being done on the phone.

If I'm an unrepresented buyer with an escalation clause getting triggered or getting asked by sellers agent for "best and final" I am going to absolutely demand proof of the other offer. This is not being done with any consistency when there is a buyers agent.

+100000

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Okay can someone who isn’t a realtor shill kind of weigh in on the best ways to leverage these new rules? I’m tired of absolute idiots becoming realtors just showing me a house I want to see, then maybe do some limpwristed, but most likely conspiratorial negotiations with a seller agent, and filling out a couple forms and charging a big percent. It’s a joke. I get realtors will continue to try their best to abuse the new rules so they can continue the grift, but how can we get around that? What hard and fast stipulations can a buyer or seller employ to mitigate the fckery these days?

The best way to leverage these new rules is to not use a buyer's agent. Ask the listing agent to show you the home. You should not have to pay extra or sign any agreements to pay compensation for this.

Here's how this will help buyers:

Buyer A uses a buyer's agent and owes them 2% commission. They offer $1M with a seller concession of 2% to go to the buyer's agent. So effectively, Buyer A is offering $980K (actually a little less because the seller has to pay taxes and commission on that extra 2%/$20K).

Buyer B is unrepresented. They offer $985K. No seller concessions.

So all else being equal, Buyer B just won the house while paying $15K less than the other offer. Both the buyer and seller are better off for not having a second greedy realtor trying to get cut in on the deal.

That's just the thing, however. It's extremely rare for "all else being equal" to be true with competing offers where the only consideration is a tiny differential in price offered. Also, in your example, Buyer B is overpaying for the house.

Are you saying that Buyer B should instead offer $980,001? Sure, if they knew what Buyer A was offering, but they don't. So isn't it the case then that every highest bid offer is "overpaying" if they are more than $1 over the next highest offer?

Also, why wouldn't "everything being equal" be true? Again, the "special sauce" that a buyers agent brings is, what exactly? If it's "waive contingencies", then why wouldn't the seller just go back to Buyer B and say "if you can keep your offer at the same level, but waive contingencies, we will accept? Sending that email is worth an extra $5k if I am the seller.

Say you have two offers like you outline, with a $5K difference. Things that could be different in them:

1) Contingencies, including home sale contingency
2) Settlement dates
3) Rent backs
4) Requests for closing credits (especially help w/ closing costs)
5) Financial strength of the buyer. I'm not taking an offer for 5K more if their financials are materially weaker
6) Requests for things to convey

Just to name a few off the top of my head.

You're acting like money is the only thing that makes offers different. It's not.

None of those have anything to do with whether a buyers agent is present or not. And all of them can be negotiated (with or without an agent), and even included in the seller requirements to all people offering. And the closing credit is EXACTLY the issue that an unrepresented buyer makes stronger, since they don't need that credit to pay their agent.

+1 Some of these terms such as rent backs and closing dates are typically communicated from the listing agent. Buyers don't just randomly include rent backs unless the listing agent says that the seller wants it. So now the listing agent can just share the seller's preferences directly with the buyer.

If the buyer is requesting things to convey, then that can go through the listing agent as well. Although it's a little odd for a buyer to request to keep the seller's possessions.

A home sale contingency weakens any offer. This has nothing to do with whether or not the buyer has their own realtor. The financial strength of the buyer doesn't change by using or not using a realtor.

Requesting closing credits is less money for the seller's bottom line, but also has nothing to do with using a realtor or not.

Now asking for seller's concessions to pay for the buyer's realtor REALLY weakens the buyer's offer.

So it's clearly a win for buyers to not use buyer's agents.