So, we finally found a house. Anyway's what I need to know is what the standard commision is for a "buyers agent?" We don't have an agent showing us houses. We went right to the selling agent direct. I do however have attorneys to review everything to make sure I don't get burned. I am in the process of submitting a written offer along with a "good faith" deposit. The seller is pretty firm on the price of the house, which is a good deal, but since I don't have an agent they have to pay a commision to, I figure I can negotiate that off the purchase price. So, does anyone know what type of commision a buyers agent gets on a sale? 3%, 5% ???
TIA
Do a google search on the question, you may find a lot of useful information along with your answer.
Dawn :)
I did, but I still can't find a commision percentage rate. It always just says "a percentage of the purchase price." I can't find a "norm" rate. :-/
You just didn't ask the question right....
From the Real Estate Journal (a part of the Wall Street Journal) Link (http://www.realestatejournal.com/buysell/agentsandbrokers/20040920-spors.html)
From Bankrate.com Link (http://www.bankrate.com/brm/news/real-estate/20040124a1.asp)
I could give you more examples, but my computer connection is too slow to wait for the pages to appear. Do a google search with this as your search criteria "standard commission rate for buyer's agent"
Good luck
Dawn
I don't know if it's standard across the country but in Arizona 3% to each realtor (buyer and seller) is pretty standard.
That's what I just found, uhm.. by asking the question right as Dawn posted it.
3% :D
That's a whole lotta money I save. I'm gonna give them two choices. Knock 3% off the price, or I'll go get an agent and you can give him the 3% and he'll try to low ball you even more than I am ;D ;) Hopefully they give me the 3 % off the purchase price. :D
it depends on what they worked out with their realtor. they might have to pay the full 6% to their realtor anyway. they sometimes treat it like they brought you to their seller. One option they have is that they can get rid of their agent if the agent doesn't want to accept half of the commission. Then you and the seller can go without agents on either side and save some money. There are pros and cons to going without an agent. So do your research. I've bought and sold 3 properties in the last 2 years. I'm not sure where you live, but most agents are down to 2% to the selling agent and 3% to the buying agent for bringing in the client. You can always go hire a realtor, tell them you know what property you want and ask for a cut of their %. Maybe not ethical, but I believe it is legal.
Hmm... I wonder what would be acceptable then. If 6% is the number and I come in at 3, then I kinda lose a bunch. Maybe I should ask for 6 and then if they get all mad and say that it's above normal rates, then I'll settle on 3 :-/
Thanks for the info guys. :)
what state are you in? There really is no "standard" in MO. My fiance does real estate part time, she receives 2.5% on most sales but it is typically dictated by the listing agent. Somtimes its 2.5 to buyers and 3.5 to sellers.. I have seen it as high as a 7% split (3-4). There are orginizations out there that charge a "flat" fee as well. If you are trying to avoid agent commissions stick with FSBO and ditch your agent as well. Most FSBO's wont work with you if you have an agent because a portion of thier proceeds will go to your agent. If you have any other questions regarding agents, financing (I run a mortgage company) or appraisals (my fiance's full time job is running her own appraisal company) dont hesitate to ask. I'd be glad to help in any way.
Congrats on the new home and good luck!!
Quote You can always go hire a realtor, tell them you know what property you want and ask for a cut of their %. Maybe not ethical, but I believe it is legal.
I believe its illegal for them to pass on any commission to you...they can reduce them but I believe they cannot "pay you a cut" there are documents in the closing package that state there are no "outside arrangements" made. I am not saying its never done, but by signing that document you have essentally commited fraud... Either work without agents or haggle for commissions to be reduced. Surely there is a hungry agent out there that would work cheap.
hmmm I had just scanned the post, now that I read the post again. (That'll teach me to read). Are you trying to get paid as the buyers agent for the purchase of your home? ??? Or get the price reduced? Price reduction of 3% would be a great offer for them to accept. The only person that benefits from the 6% is the agent involved...not you or the seller. All agents commissions are outlined in the contract, make a lower offer and see if they counter, remind them that if the agents is requesting all 6% (or whatever) that they need to reduce that and cut you the savings...if not all they are doing is lining the agents pockets.
Well you cannot get another "agent" at this time as you were shown the house by the selling agent so they(selling agent) are acting as both(buyer/seller) and you are now listed with the buying agent as being a customer of theirs. I think they can hold you as a customer for 90 days. Bad position to be in, they are legally obligated by their contract to get the highest price for the home for the seller they have no legal obligation to you. You should have you own buyer agent that is working in your best interest (lowest price) for real estate.
You can neogitiate fees with the agent to a great deal. I bought my house and the home was being sold furnished as the owners were moving into a retirement complex and only taking their bed. I arranged a deal with selling agent since her daughter was going to school to take the furniture in leiu of a commision, saved a few thusand that way.
Sorry, I missed all of this. More or less, I just want them to cut me a deal on the house and knock whatever % they would have to pay to my agent, if I had one, off the price of the house. For instance, if I had an agent, and his commision was $12K for example, then I want them to knock the $12K off the purchase price. I want to save the money that they would have to pay to my agent, if I had one. Instead of getting an agent, I brought on an attorney, who is only charging a flat fee.
QuoteWell you cannot get another "agent" at this time as you were shown the house by the selling agent so they(selling agent) are acting as both(buyer/seller) and you are now listed with the buying agent as being a customer of theirs. I think they can hold you as a customer for 90 days. Bad position to be in, they are legally obligated by their contract to get the highest price for the home for the seller they have no legal obligation to you. You should have you own buyer agent that is working in your best interest (lowest price) for real estate.
You can neogitiate fees with the agent to a great deal. I bought my house and the home was being sold furnished as the owners were moving into a retirement complex and only taking their bed. I arranged a deal with selling agent since her daughter was going to school to take the furniture in leiu of a commision, saved a few thusand that way.
I never signed anything. I just went to see the house, with a preapproval letter in hand. Other than that, I haven't submitted an offer or anything yet. That's why I'm trying to get enough information to put a solid offer on the table. My attorney will write up the offer, and I'll include a deposit for good faith if needed. I just don't know what to offer. My attornery is having a market analysis done of the house, and surrounding houses to see what the value of similar homes in the area are. This house is new construction and they've been sitting on it for nearly 4 months. I figure that I could come in where I start off on a postive note. I don't want to save $3-$4k on a house compared to the asking price. Buy low, sell high ;) :D
This is a quick synopsis of the home:
$325,000.00 is their asking price
Homes equiv. to this house fall in between $340-$360k
The house has been "finished" for nearly 4 months, and has not sold yet. We saw the house originally when it was just a frame and some studs, so nobody's jumped on it. The house is ready for move in minus appliances and lighting. That is still up to us based on their allowance standards. The house is new construction.
So, what I'm thinking is offering $320K and then asking for whatever commission they would have to pay to my agent, if I actually had one, be knocked off the price of the house upfront. So, if let's say a "buyers agent" gets 3% of the purhcase price, I want $320K minus the 3% to be my offer price. Then, I'll have my attorney put it in writing as a offer, and attach a $10K check for good faith.
I already have approval for a 10 year interest only loan on the house for the full amount from my bank. My attorney will be there from start to finish to handle all legalities to make sure I don't get screwed.
What do you think? Shoot for 3% ???
also, they've been asking $325K from day one, since it was just a foundation. So, they haven't come down at all since then.
3% with no agent commissions is a wash for them, they would be foolish not to take it... the only difference is the listing agent would loose 3% commission on the $9,750...roughly 292.50. If they wont deal on that they arent right in the head. Maybe start at 4-5% reduction and let them counter to 3%... I prefer just to give them a bottom line myself, thats just how I negotiate.
this is all assuming a 6% commission standard 3 to each side. even if they reduce 2.5% your saving $$. What is your lawyer's fee? will that be paid from the proceeds of the sale or by you privately. A little mathematical gymnastics and its a wash for them regardless.
tim
Quote3% with no agent commissions is a wash for them, they would be foolish not to take it... the only difference is the listing agent would loose 3% commission on the $9,750...roughly 292.50. If they wont deal on that they arent right in the head. Maybe start at 4-5% reduction and let them counter to 3%... I prefer just to give them a bottom line myself, thats just how I negotiate.
this is all assuming a 6% commission standard 3 to each side. even if they reduce 2.5% your saving $$. What is your lawyer's fee? will that be paid from the proceeds of the sale or by you privately. A little mathematical gymnastics and its a wash for them regardless.
tim
Actually, my attorney isn't costing me anything than a nice dinner and a few drinks. He's also the corporate attorney for the company I work for, and it's in the companies best interest to make sure that I don't get screwed because I'm an officer of the company. So, they always make sure whatever I do can't scare investors or be problematic for the company itself. My actions reflect on the company, even in my personal life.
Hmm... I may just ask for the 6% then. My position is to get as much equity out of the house upfront, because I only intend to keep it less then 10 years and build a custom home. That being said, since the economy is screwy anyways, I want to get as much upfront as I can. I'm only paying closing costs to buy the house. Everything else is in the loan. I'm not putting anything down twards the principle of the house. I'll use the banks money instead ;)
might as well swing for the fences!!! What kind of loan program are you doing? I have some pretty aggressive programs with no $$ down. I'd like to take a crack at your financing if your interested. What state are you in?
6.394 % 30 year, 10 year fixed interest only
Quote6.394 % 30 year, 10 year fixed interest only
This strategy will only work in a stable or rising housing market. If the market would become depressed due to ecomomic, social, or geographical changes, you could be left owing more for your home than what you have paid for it.
It's the same with people taking out home equity loans to invest in the market, while you may make 8, 10, or 14% in the market and pay from 5 - 6% on the loan, this only works as long as the market is rising (bull market). If the market falls (bear market) you could lose everything with this strategy and end up paying more than you're receiving.
Be careful.
Dawn
Dan, once someone with a realtor license showed you the house, he/she is entitled to the agent fee from the buyer's portion. Even if you get an agent now, the person who showed you the house is the one getting paid, not the one you find (in this case, the seller's agent). Be aware, since he/she is the seller's agent to begin with, he/she is only looking at the best interest of the seller, not you. Anyway, either way, you're still looking at an average 6% in the total price you paid (3% each; seller/buyer agent).
thats a good point dawn, but the only real negative to an I/O payment is if you make the I/O payment for over 2 years. The amount of principle paid in the first 2 years is minimal and even a decling market wouldnt matter. The numbers still wouldnt match up regardless of I/O payments if the area deteriotrates that much. Sounds like there is enough equity in the house already to sustain a substantial delcine in the market. As for using equity to invest... I dont like it and financial planners are not allowed by law to recommend it for just the reasons Dawn set forth. NOW, I always recommend to my refinance clients that are saving 6-700 per month to get with a financial planner to discuss a long term investment for retirement, most of the poeple I deal with that carry significant debt have no 401k or pension set up.
btw CC.... sounds like a good program! That is 0 down correct and I am assuming no PMI through a wholesale bank? if its not let me know, there are programs out there that are competitive to that loan. Even if you are in a state that I am not liscensed in I can help you get a fair deal.
let me know
What is the assessed value? What is the proposed tax rate/mill rate? Being a new home you'll have to find "comps", comparables to the property. Asking price is for people with FRS-Full retail syndrome. Find a comp., get the ASSESSED value of that property and offer %5-10 above the assessed value, unless they are asking less than assessed.
Being that you are not represented by a buying agent you have the upper hand. The selling agent is going to get the whole commision, anywhere from %3-7 of the sale price, depending on their office policies, ie C21, ReMax, etc.. Get the selling agent aside and say, "Hey look, you're getting the full commission on this one. Are there other offers? Here's my best offer." In writing, they are legally obligated to present your offer to the sellers. Then walk. Wait for a counter offer. Do NOT call them. It's a "buyers market" right now.
But, then again, if money is no object make an offer for full asking price.
Ah new houses totally different market. New construction houses can be sold by the builder directly (and most are) and their is no realtor involved as the "agent" works for the builder and is paid by them. The builder avoids the commission of a realtor and has people dedicated to selling just their homes. so there very likely is not 5-6% extra in the price.
Good starting point is 10% under asking price then negotiate top of the line appliances if you pay asking price.
I think a lot of realtors get rich as a result of all the misinformation out there.
a. If comparable houses are SELLING for 340-360k, why hasn't this one sold for 325k? Are comparable homes actaually being SOLD for those prices or are those the ASKING prices? Imagine paying 320k, finding out it is only assessed at 210k, but you have just paid 320k. The property taxes will now start to lean to the 320k mark. Don't take the realtors word for valuation/assessment value.
b. It doesn't matter who the selling agent is representing or how they are getting paid; the owner is paying for the property to sit. Either interest on a loan, property tax, or the mortgage loan itself. At this point they can't afford to sit too much longer, typically. Take advantage of that pressure.
c. Has the property been appraised? Hire an independent appraiser to asses the property. $400 tops, is not much to spend in what may save you tens of thousands. (That's a lot of track days :-) )
d. Don't fall in love with the house so much that you overlook being $$$ practical. Why has the house not sold, if it is as much of a deal as you think it is?