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My husband and I own a home in Oakland and we are moving to Lamorinda soon. We are looking at homes priced around $1.5m. My husband recently read an article on buying a home without an agent and is now very interested to do so (we would hire an attorney to represent our legal interests in this case). With commissions to the buying agent at 3%, we could potentially save $45,000 by not having an agent.
We don't need many of the services that an agent can offer as we can find our own home, we can attend our own open houses, we don't need handholding, etc. Paying someone $45,000 simply to present our offer and negotiate the deal/paperwork seems ridiculous. Has anyone gone this route and how did it work out? Alternatively, are there any agents who work on a flat fee or who work for, say, a 1% commission (that's still $15,000 in our scenario)? We're open to paying an agent or attorney a reasonable fee, but would like to get away from the traditional compensation model. Any tips and advice would be greatly appreciated! Thank you!
Just as an aside, we are planning to use an agent to sell our home in Oakland. I can see the benefit of using an agent on the sell side of the transaction more than the other way around. East Bay Mom
The other major reason to use an agent is liability. There is so much more to say - and I'm sure other BPNers will do just that, lol but, long-story short: use an agent. If you're a retail home buyer/seller, not using an agent is penny-wise/pound-foolish
Your real task to to suss out a *good* agent with whom you click. Jessica
On the other hand, I felt a bit disappointed that our realtor couldn't give us more advice on good offer prices. The market, at least in Berkeley, has been going up, and it always seemed like a crap shoot in terms of what price to offer. There were often 5-12 bids on homes, some of which went for $130,000 over asking price (!!). There wasn't much our realtor could do for us on that front.
I suppose my advice is to use a realtor unless you've bought homes a number of times, are familiar with inspection process and local real estate, and willing to do a lot of research yourself. It is maddening that 6% of the home's price goes to realtor's. I loved our realtor, but still don't feel that she provided $18,000 worth of value--3% of the home price. That said, it's a huge investment, and I'm very glad to have had a steady advocate at my side during the process.
Best of luck. Erin
The buyer does NOT pay the buyer's agents commission (thus, you would not be paying your agent 45K to negotiate your paperwork, etc). 95% of the time, Buyer's commissions are paid by the Seller's agent. The way it generally works (of course, there may be exceptions) is a seller enters into a listing contract with a seller's broker. The listing contract will provide that upon a sale of the home, the seller's agent is entitled to 5-6% of the purchase price as a commission. However, the seller's agent is to split that commission with any buyer's agent. Sometimes the split is 50/50 and sometimes it differs (in the commercial context, a split of 2%/4% is typical). If the buyer does not have an agent, the seller's agent pockets the entire commission - -that is why many seller agents love unrepresented buyers, or will try to enter into a ''dual representation.''
Thus, I don't think it is correct that you would actually save 3% of the purchase price by opting to purchase without an agent.
The only time this might be the case is where you are buying a home directly from the seller (and there is no seling/listing agent). In such a case, the seller would see the buyer's commission as an additional expense (borne by the seller) and might be more flexibile on the purchase price for buyers that do not have agents. If you are interested in a home that is for sale with no listing agent, you can approach the seller and let them know you are unrepresented and would not be incurring a broker's commission. That might make you a more attractive buyer than the buyer who comes armed with a buyer's agent.
In any other situation, I don't see the benefit to a buyer in forgoing a buyer's agent. It does not save you or the seller any money. It does, however, benefit the seller's agent!
Finally, you generally do not need a real estate attorney to close a residential purchase (although it is common to use attorneys in New York). It might help to have an attorney walk you through the purchase agreement, but its not typical (at least in my opinion). KK
When you are purchasing a house and it is listed on the MLS, the commission of the transaction is already negotiated on the listing agreement with the listing agent. If you purchase the property without an agent, then the listing agent will be writing the offer for you and get both the listing and selling side of the commission. Even money that comes back to you from the transaction
From my experience, in the Lamorinda area, there are not many for sale by owner (FSBO's) properties. I also know friends that have bought FSBO's and they did not necessarily get a great deal with a seller that marked up the property to market value and tries to pocket the commission themselves.
I am currently working with a client looking in Lamorinda who is also a real estate broker that prefers to stay an arms length away from the transaction. I am able to help keep them focused on their criteria and not let their own emotions get too carried away in their purchase. I am also about to list their property and I worked out a compensation plan with them.
I am a lawyer and my husband is an experienced real estate investor and we have also tried to purchase without an agent at various times with no luck. We simply would prefer to do it ourselves because its easier then using a 3rd party, but the problem we have found is that without an agent, seller's generally wont consider our offer, even if it is the highest and best offer.
Most residential real estate sales use the forms produced by the California Association of Realtor's (CAR). Even though I can write as good a quality purchase contract as the CAR form and I write purchase contracts for my firm, I have found that the other side usually does not feel comfortable deviating from a form which looks at all different from what they have used in the past. In my experience, either the seller's agent requires us to use a CAR form or never consider our offer. Only licensed real estate brokers and agents can use the CAR form, not attorneys, so hiring an attorney who is not a broker will not help you get the CAR forms. Also, another problem you might face is getting entrance to a house to view it. Sure some properties have open houses as you mentioned, but other properties which you see on the MLS only allow viewing with a lock-box key or you may not be able to make it to the open house before offers are accepted. Only licensed real estate agents can get access to the lock box, so we have found that without an agent we can not get into the property before the deadline to submit an offer.
I have seen sales go through without agents where the parties already know each other and know the property, such as a tenant buying a house from a landlord or a sale of property between family members and friends.
If you have unlimited time to make the purchase, then you may want to try it on your own and see how it goes. If your in a time crunch, you may find the process of purchasing without an agent frustrating.
Good luck. Anon
Alternative idea: when you find a property you like, you could ask the selling agent to represent you as well in the transaction (then the agent gets double or the full 6%), and ask if she/he would be willing to work out a deal. ie. If the purchase price would have been $1,000,000. 3% would ahve been $30,000, 6% would be $60k. They could take the normal $30k, and then split the other $30k between agent, seller, buyer.
Or - you could find a way to directly solicit properties before they get to MLS.
For Selling You might consider trying to sell on Craigslist or other. My husband & I did for a condo we owned. We were willing to share the lack of agent fee with the buyer; I think it went 2/3 in favor of buyer; 1/3 in favor of seller. We wanted a quick sale. It was probably easier for us to set a FMV, because there were other similar units in the condo complex. May not always be feasible. We used Steve Kesten, www.barristerbroker.com. We did the majority of the transaction work, but he helped a lot on the paperwork side. Or there are organizations that will post your house on the MLS for a significantly smaller fee than 6% Redfin might have a deal for selling, too. Or check Ziprealty. agree teh transaction fees are out of wack with the value provided
My partner and I are getting ready to buy our first home. We are thinking of not using a buyer's agent but want to weigh out the +/- of doing it alone. We'd love feedback/suggestions from other first time buyers who purchased without an agent. Thanks! too risky???
And a good agent not only gives you access to homes at times when there aren't open houses, or at times that are convienent for you, but they protect your interests, help you negotiate the contract and in general take care of all of the legal, contractual and paperwork issues involved with buying a house. An agent can help you find financing that works for you since there are so many ways to finance a house (assuming you don't have a wad of cash to plunk down and buy it outright).
An agent can also help you with recommendations for services once you've purchased your place: plumbers, gardeners, handymen and the like. And a good agent is there after the fact to help with things that arise after you move in. Real Estate agents are (or should be) service-oriented, and not just out to make a buck.
You need to find an agent you're comfortable with, one who understands your wants, needs and limitations. You need to find someone who is willing to work with you and with whom you can be honest.
Not every agent out there is a sleaze ball who is going to push you into something you will feel buyer's remorse about. I can say that my husband isn't that way, and neither was the agent who helped us buy our first house before my husband changed careers.
Ultimately, if you don't use an agent you are at a disadvantage in the negotiation aspects, as well as seeing everything that is available, and are opening youself up to having the deal collapse and your deposit disappear because of any number of things that may go awry once escrow has begun.
My husband's website is www.joel-sells-homes.com and check out his testimonal page for other people's perspectives too.
Good luck and don't go it alone! Claire
Hi - We are considering selling our N Berkeley home in order to move into a larger home. Because it is such a financial reach for us to purchase a bigger house, we are considering a ''for sale by owner,'' and would have to move very quickly. We know this is risky, and have read the posts in this newsletter archive, but are wondering: what experiences with FSBO do any of you have, particularly recently given the fact that the market seems to be at a tipping point? Would you only do FSBO if you knew of very interested buyers, or are there ways to advertise and market your home to minimize big risks? Thank you for advice! Anonymous
While this may be shocking to hear, I think that anyone who wants to sell their home on their own should give it a try. But it isn't for everyone. Buying and selling a home can be one of the most stressful experiences a person can go through, even if you have an agent! If you are a great negotiator, willing to spend some time on the weekends to hold open houses, willing to take a bunch of phone calls throughout the day, and comfortable with strangers commenting on your house while you are there, you could be successful at selling your home.
My biggest suggestion in this changing market for people who are wanting to sell on their own is to retain a lawyer-not only to help with the obnoxious amounts of paperwork, but protect your interests in case of a lawsuit. For the past 8 years it has been easy for a house to sell- even a house under a freeway without any windows would sell for top dollar and in no time at all! In the past month alone houses have begun to fall out of contract more frequently and buyers are starting to make demands on the sellers. The contract is a legally binding document so if you don't retain a lawyer, make sure you understand the paperwork- there is a ton, especially in Berkeley! I REALLY can't emphasize this enough!
One aspect of my business is holding open houses for people who are selling on their own. This service is not intended to ultimately list your house; it is intended to bring you a qualified (meaning lender-approved) buyer...if you would like some more information about this, feel free to contact me. Just be sure to do your research. There are a lot of great books out there.
I hope this is helpful for you!
Best of luck! Krista Miller
We have decided to move to WA and will be selling our house
in East Oakland in early May. We are going to try and sell
it For Sale By Owner (FSBO). This is overwhelming to us so
I would like to solicit for some advice from those of you
who have been there and done that. The website lists a few
opinions but mostly from people who already had a buyer and
that is not us.
1. How did you handle the open house? Where you there? etc.
2. Did you get your house listed on a MLS list and how did you do it with without having an realtor?
3. How did you determine the selling price?
4. Did you have it set up to run credit checks on prospective buyers?
5. Did you purchse the forms from the Real Estate Board yourself or does the buyer have to go get these?
6. Did you select the Title company or did you let the buyer?
7. Did you have it inspected beforehand so that the paperwork was available for prospective buyers?
8. How do we set it up to accept offers? Do we get a fax machine, courier service, etc?
9. Where you scared the whole time that you would mess up on some part of the paperwork and the new buyers would come after you? If so, when does that go away?
Thanks so much for any help out there.
I have seen this issue on the Parents' web site from 2002, however the posts don't really address my question. We were wondering if anyone who has sold their house ''without a realtor'' could recommend their realtor that they consulted with. Also, what was their hourly fee or cost? The posts on the web site are from people who already had a buyer lined up. We don't have a buyer for our house; we are thinking of selling next year. Is it difficult to find a buyer on your own? Is there a way to post on the MLS without being a realtor? Is the MLS the best way to advertise? We'd like to do as much as we can on our own as we tend to do this with all other things if possible (install our own floor tiles, fix the sprinkler pipes ourselves, restain the cabinets ourselves, change out the light fixtures and do our own small electrical fixes, etc) Anon
I and my sisters will be selling a house that the renter is interested in buying. There was a post by Michele about buying such a house, and it appears she did use a realtor as a consultant to help to some degree. I would appreciate any advice/experiences on whether we should use a realtor or not, and if not, who can we use for help? Do people negotiate a smaller percentage fee for this kind of thing? This is a small house in West Marin, and I don't think the market is as hot there as it has been here. Susan
We bought a copy of the NOLO Press book, Buying and Selling a House in California, read the necessary chapters and used the forms included with the book. We figured out how to price our house by doing "comps" of selling prices in our neighborhood, and included a little padding should we need to hire a lawyer, or back out of the deal. We added language for the rent-back period as a separate, attached document. We hired a lawyer named John Hayes to look at the paperwork, which ended up taking about an hour of his time. The whole thing cost about $125.00 total--no staging, no open houses, no fees to a realtor (who you don't need if you already have an interested buyer), and the satisfaction of doing the transaction ourselves. The Nolo Press books are at most public libraries, and at the Nolo Press Store on Parker Street. Good luck! Claire
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