Real estate Question.

[Gratiot]

I know some one on here has to be a realtor, or stayed at a Holiday Inn once!

In the event that one is purchasing a listed house, without an agent, to whom does the buyer's commission go to or what becomes of it... seeing as their isn't one?

[Eupher]

I know some one on here has to be a realtor, or stayed at a Holiday Inn once!

In the event that one is purchasing a listed house, without an agent, to whom does the buyer's commission go to or what becomes of it... seeing as their isn't one?

debk's a realtor.

[IassaFTots]

debk's a realtor.

Yup.  Texacon too. 

[Lacarnut]

If you are buying a house from an individual, there would be no commission. If you are buying a house that is listed by a realtor, the commission would be borne by the seller in most cases.  

[Thor]

First mistake, buying without an agent.  Secondly, UNDER NO circumstances allow the listing agent to represent you, too. (It's done) Having your own agent doesn't cost you any extra money. The house is listed with a buyer's agent's commission already published and figured into the price. (MY EX was a Broker/ Agent. I learned a LOT from her dealings) If the selling agent brings in a buyer, they get both sides of the commission.(Which is why e may want to try and represent you, too) However, I view it as a potential conflict of interest. My EX  wound up having a few problems when she did those types of sales.  I'll let Deb weigh in on this, too.

[Texacon]

I know some one on here has to be a realtor, or stayed at a Holiday Inn once!

In the event that one is purchasing a listed house, without an agent, to whom does the buyer's commission go to or what becomes of it... seeing as their isn't one?

Commission is usually paid by the Seller.  If you want your own agent as a Buyer most agents will want you to sign a buyer's representation agreement.  If the Listing Agent chooses to not split commission with the the Buyer's agent most buyer's agent representations state the buyer is responsible for paying their agent.  That is not common but it does happen ... at least in Texas.  States are going to vary on the legals.

As to buying a home with no agents involved ... it can be done.  It's a lot more difficult but it can be done and there is no commission to worry with as you've already stated.  What I see most of the time in these instances is the buyer demanding the seller reduce the price by x% due to no commission needing to be paid.  What the parties involved fail to consider is THEY will be doing the work and a house is worth what a house is worth in any given market.

If I were selling my house FSBO (For Sale By Owner) and I had researched my market the price would be what it was after negotiation.  I would not be willing to negotiate based on a commission I wasn't going to pay.

Does that help?

KC

[Texacon]

I know some one on here has to be a realtor, or stayed at a Holiday Inn once!

In the event that one is purchasing a listed house, without an agent, to whom does the buyer's commission go to or what becomes of it... seeing as their isn't one?

Wait, I just re-read your post. 

If you are buying a home that is listed by another agent but you don't have one then sometimes you can get the listing agent to negotiate their commission.  It will depend on the market you are in.  Since the seller is the one paying the commission you can't ask the agent to negotiate their commission very easily.  It is a contract between the seller and the listing agent.

I do both sides of the transaction in my market about 90% of the time but I'm in a very specialized market in a very small area.  You would be very surprised to find out some of the things I've done to make a deal happen.

I have to be very fair to both sides due to the size of the community I'm in.  I resell most of the homes I sell and that says a lot about the type of service we provide.  I like getting handshakes and hugs from both sides of the deal at the closing table.

Sorry for any confusion in my above post.

KC

[debk]

I know some one on here has to be a realtor, or stayed at a Holiday Inn once!

In the event that one is purchasing a listed house, without an agent, to whom does the buyer's commission go to or what becomes of it... seeing as their isn't one?

Here in TN...when a homeowner lists their home with a Realtor - who becomes the Seller's agent (Listing Agent), the commission is negotiated between the homeowner and the Seller's agent. No one else AT THAT TIME.

When the Seller's agent lists the property in the MLS (multiple listing service), the commission to be paid to the agent representing the buyer - the Buyer's agent - is stated at the bottom of the listing. It is not available for the public to see (in TN - don't know about other states).

If a Seller's agent is the only agent involved in the sale of said property....the agent either remains the Seller's agent or becomes a Transaction Broker. (Personally, I remain the Seller's Agent only, to avoid conflict of interest.) In this case - whether the agent is Seller's Agent or Transaction Broker - the agent retains the entire commission that was negotiated between the homeowner and the agent, at the time of listing. (exceptions to follow)

If Seller's agent remains Seller's Agent thoroughout the entire process up until they leave the closing table...the agent may give advice during any contract negotiations ONLY to the Seller.

If the agent becomes the Transaction Broker, the agent cannot give any advice to either the Seller or the Buyer, from the time the agent takes an offer on the property to the homeowner up until the time they leave the closing table. The agent MUST remain neutral.

If only one Realtor is involved in the sale of a property, the only way the commission amount will change from the time of listing to the time of closing is IF the commission to be paid to the Seller's/Listing Agent is renegotiated between the Seller and the List/Seller's Agent. This may occur in a variety of situations. The price is reduced on the property to a price that the Seller must reduce the commission percentage of the listing price in order to pay off the debt on the property at time of closing. The List Agent will reduce the commission percentage in order to keep the listing as it is expiring. The agent, at the time of taking the listing will agree to a specific commission percentage if a Buyer's Agent is involved in the sale, but a lower percentage if the the List/Seller's Agent does the whole deal. ( I have done this many times.) The Seller's Agent/Transaction Broker agrees to a lower commission percentage in order to make the deal work. (there isn't an agent out there who hasn't agreed to do this to make a deal work - unless they have only sold a couple of houses) .

A Buyer's Agent REPRESENTS the buyer at all stages of the deal...from the first time a buyer looks at a property up until the time of everyone leaves the closing table. A contract is signed between the Buyer's Agent and the buyer. We ARE not allowed to charge a buyer for our services HERE...I don't know about other states.

A Buyer's Agent is paid a percentage of the List/Seller's Agent's commission that L/SA receivea from the Seller. The percentage amount is listed on the MLS sheet. A Buyer's Agent KNOWS how much (percentage) they will be paid at the time of closing from the time they pull the mls sheet on a property. Occasionally instead of a percentage, a specific dollar amount will be listed on the mls brief. This is usually only on a very low priced property. (I have one listed this way now - my seller is paying a specific dollar amount that will be paid regardless of selling price of the property)

(List price is the amount that the property is listed for in the mls. Sales/selling/sold/closed price is the amount that is actually paid by the buyer for the property)

The Buyer's Agent never, ever discusses the amount they will be paid, with the Seller of the property. (they shouldn't discuss it with the buyer either).

It is not uncommon for both Seller's Agent and Buyer's Agent to agree to a reduced commission in order to make a deal work. Should this happen - SA and BA discuss the reduction that each will take, then the SA goes to the Seller and tells Seller that he/she will take X dollars less in commission.

As a List/Seller's Agent, I've taken less than a Buyer's Agent to make a deal work, I've taken the same amount of reduction, and as a Buyer's Agent, I've also not taken any reduction and let the Seller's Agent take it all. Every sale is different in what it takes to make it work.

I've also been in situations where the commission isn't altered during negotiations of sales price, but does get altered during home inspection negotiations.

Except of one year, I have either been on the Professional Standards - Ethics and Arbitration committee or on the Grievance Committee (works like a Grand Jury does - hears the complaint, decides whether to send it to Professional Standards or to kick it to the curb), for the last 10 years. I've been on Grievance for the last 3 years, and just started my 4th last week. 

Commission arguments are frequently heard. Usually because the list agent does not double check their listings to make sure there aren't any mistakes, after it's entered into the mls. It is the list agent's responsibility to make sure that the info in the mls listing is correct...even if their assistant or secretary entered it. Any mistake falls directly on the agent. If the commission is higher than what the list agent wanted to pay (or their broker wants them to pay), an offer is written and accepted(most agents will send a dated computer printout of the listing along with the offer), and it gets to day before closing and the list agent gets the HUD statement and finds out they goofed on commission...it's oh well too bad, because Grievance will send it to PS -Arbitration and it will be ruled in the Buyer's Agent's favor.  My company highly recommends that we send a specific form along with the offer that covers commission, and is signed by both Seller's Agent and Buyer's Agent, in order to prevent any surprises.

Our Board of Realty also rules that the commission amount paid by Seller's Agent to Buyer's Agent is based upon the contracted Selling Price of the property, UNLESS otherwise negotiated between the Seller's Agent and the Buyer's Agent.  In other words...if anything else is included in the sales price....repairs, or more commonly closing costs for the buyer...that amount included is NOt reduced from the sales price to determine commission amount UNLESS both agents have negotiated it and agreed upon it PRIOR to the time of closing. And it must be documented.

It is important to understand .... if you, as a buyer, call up the List Agent and ask them to show you their property, and then decide you want your own Buyer's Agent, you can have one. It is YOUR choice. HOWEVER...if the List/Seller's Agent showed you the property first, the L/SA does NOT have to pay any of their commission to your Buyer's Agent -even if you have signed a Buyer's Agency contract with the Buyer's Agent. Most agents will accept a Buyer's Agent representation, if that's the only way they will get the offer. But...there are those who won't.

If you go to an Open House, it's pretty murky. If you are asked to "sign in", it is always best to say that you already have an agent, as the L/SA could technically say that they were your first contact with a property. Which they are, unless you went previously with another agent.

I personally believe, that if a buyer wants to make sure to have someone totally representing them and only them ...who is obligated by contract to be on their side... when purchasing a home, they should have a Buyer's Agent.

I have been a list agent for new construction(5.5yrs with the same builder/developer), and did both sides of most of the deals, but I stayed the Seller's Agent, I did not become the Transaction Broker. But new construction is different. It's usually sitting down at a table with the builder and negotiating what Buyer wants and Builder is willing to do, line by line on a construction contract.

Texacon is in a small, specialized market, and I think he told me he lives right there too. He has to walk a very fine line doing both sides and is obviously very good at it, because he gets the resells too. He's not going to do ANYTHING that could have even the slightest hint of being unethical under those circumstances  (not that HE would under any circumstances). But not all agents are ethical...that's why Realtors have had such a crappy reputation. We have become much better though, at "policing" our own. Real estate laws have become much better, and as a result, contracts have become much more specific and detailed. When I started back in early '97, the main part of a real estate contract was one sheet of legal paper, full front page, and half of back side. Now ours is 10 or 11 pages, single spaced, 8.5x11 on one side!

I've worked with some real jerks over the years, both in the same office and in doing deals. There are a couple, that I hope and pray, I never have a buyer that wants one of their houses... or they have a buyer that wants one of mine...because I never want to work with them again. There's one, that my investor client will NOT have anything to do with again, to the extent that she does not even want him to show any of her houses...which puts me in a very awkward position, but I have to follow her instructions as long as they are legal. Based on our experience with the agent, I doubt the agent would even tell a buyer, about one of our listings.   

I know this was a long explanation, but because the question involved commission,  it's one of those that needs a detailed one, to keep me out of trouble. 

[Gratiot]

Thanks for the answers everyone!  Much appreciated 

First mistake, buying without an agent.

With no offense intended, to the realtors on this board, whom I'm certain are outstanding in their professionalism and skill set.  Not all, well... most realtors I've encountered have not met that standard, and with the buying of a home I've found through my own research, I see little benefit of bringing one on board for the final paper work versus using a real estate attorney. 

[Thor]

Thanks for the answers everyone!  Much appreciated 

With no offense intended, to the realtors on this board, whom I'm certain are outstanding in their professionalism and skill set.  Not all, well... most realtors I've encountered have not met that standard, and with the buying of a home I've found through my own research, I see little benefit of bringing one on board for the final paper work versus using a real estate attorney. 

Big difference......

I'll defer to Deb or Texacon since they are active agents, but the attorney charges by the hour after the transaction (as far as I know). Were there a conflict to arise, it could get downright expensive. The Realtor will handle any of the post-purchase problems without an additional charge. Based on encounters expressed to me by my ex-wife, she has also run into real estate attorneys that didn't know real estate law very well. (She had dealt with a couple of real estate attorneys due to post-purchase problems brought up by the buyer in a few cases. I remember because I was usually the one she was bitching to about those problems.)

But, it's your call. A buyer's agent doesn't cost the buyer anything.

[debk]

Depends on where you live Gratiot....

My brother lives in the Chicago area, and they use real estate attorneys for negotiating the sale, home inspection etc, and closings.

We don't down here. If they are used at all, it's only for closings. We close at title companies, that have a lawyer or law firm that are brought in on unusual title problems, but that's about all they do. The title companies do everything pertaining to a closing these days.

Here, we real estate agents do everything to do with listing, selling and purchasing, up to reviewing some  closing documents.

Listing agreements are forms originated by our local Board of Realty. The other necessary documents are done by the TAR (TN Association of Realtors) which is part of the TN Dept of Commerce.   

We write the offers, present the offers, negotiate the offers, home inspection results, termite inspections, any appraisal issues....the whole nine yards. We use TAR contracts and any accompaning documents, so it's a "fill in the blanks with applicable information" but we agents are responsible for everything in them.

Having been my brother's sounding board and information source when he bought a new house in fall of 2009, we both learned a lot. They had been in their home in Chicago for about 8 years, and he was surprised at how the things had changed.

It turned out that his list agent on his home was also the selling agent for it. He called me when they got an offer two or three days after the house was listed. It was about $60K less than the list price. (let me also mention he had a HUGE amount of equity in this house! )

His agent told him to come down to the middle of the two prices and she thought the deal would work.

I told him to come down 10k and that the buyers would come up some, he could come down some more, and then the buyers would come to the middle. Instead, he listened to his wife....who had hired the agent. He went to the middle.

The buyers came up 5k. He was really pissed. He called me asking me what to do next. Being his older sister, by 15 years, and he's the one with an MBE from Northwestern...I took a wee bit too much delight in telling him "I told you so"...and I then told him ...he would end up in "their middle" and his agent was no longer working for him, but for herself.

I suggested that since his agent was getting paid 7% on the sales price of a $600,000 property, tell her to make up the difference. He did, the agent agreed, and they sold for $610,000 and the agent gave up a couple of thousand in commission, and it also ended up that she had to give up some more in the home inspection negotiations, based on my suggestion to him. She still made a shit ton of money for what little the agents do up there.

They had bids on 4 houses, before they ended up buying the 5th one. He listened to me on all of them, except for one. They were able to get out of that one when the home inspection came through, but they were out the money on the appraisal and home inspection. I think that was on the 3rd house. His wife was not happy with me at all....but in the end, things worked out.

Gratiot...my brother is an electrical engineer and researches the heck out of everything, and thought that with the exception of the move itself...the whole process would be a piece of cake. The whole mess put a pretty serious rift - temporarily - in a very secure marriage.

I'm not going to tell you what to do....I'm only cautioning you on the pitfalls that can occur. Buying a house is the biggest investment you will ever make in your lifetime - until the next house you purchase. As you have already noted, and Texacon and I have agreed, not all real estate agents are ethical. I could give you a list -not just one or two - of very successful ones in my area who, if caught, could lose their licenses in a heartbeat. 

Do you really want to purchase a home without your own representation? Only you can answer that.

Whatever you choose to do....happy shopping and I hope you find a house that when you walk in the front door - it tells you - " you need me, I need you, you will be happy living here". 

[vesta111]

Good grief, I had no idea all this was and is going on.

My story--

I went out looking with perhaps 3 realestate agents and one day a new one came along . All the agents I had gone house hunting with had upped what we were willing to pay by $10,000.  This new agent took me to a few homes within a few thousand dollars of my limit but as Hubby was out to sea, me with 4 kids needed to settle down in our own home. This was Norfork Va.

   The second day while riding out to look at a home I noticed his book of prospects had fallen on the floor and when I picked it up I saw a listing just on the market.  A 2 1/2 story home with a unusual thing for that area a full cellar.   Full attic 4 bedrooms 2 bath and under our price limit.

The Realtor had not seen this property as it was just on the market so we went to check it out.  Unbelievable the home was on block from the river with the zoo on the otherside.    Tree lined streets, Dogwoods in bloom in the back and the front had a huge porch with blooming Azaleas in front.

This home was 90 years old and walking in the front door the 12 foot ceilings and fireplace took my breath away. Most of the homes on this street had been built by the same man but generations had added and subtracked form the original.  So no tickie tackie boxes all in a row here.

I found out the seller lived down the street and he ---interviewed me-- strange I thought but I had never bought a home on my own before. He himself was a Realtor it turned out,, one of his conditions was I had to enroll my kids in a Parochial school up the street. I had worried about the public schools in Norfork so this was a relief.

I did nothing but agree with husbands power of attorney to buy the home.  The loan was approved by the Va. both city and whoever inspected it , made sure a termite guy had sprayed the foundation,  all I had to do now was show up at some law office and sign 25 papers and the home was mine.  Someone had arranged for my homeowners insurance and no closing costs or whatever points are.  They  found us a bank willing to make the loan.

When it came to sell the home a neighbor gave me an offer I could not refuse and again I just showed up and signed papers.

This house I bought here went mostly the same way, I did have to put down a small downpayment and we made sure we could afford it on one salary just in case .  The sellers or someone did everything to getting us insurence to paying closing costs. They also got us a lender that was willing to loan us the money.

All the rigamorall you realiters go throuh is amazing, I just have a difficult time understanding how people who bought way beyond their means, the banks that lent them money could have gotten in such a mess.

You Guys are amazing all the legal ins and outs you go through, and help folks like me to get into a home and not regret buying it.