Do I need a buyer's agent for house buying?

In My Humble Opinion
41

You can do that if you wish.

An earnest money payment is intended to show the seller that the buyer is serious enough to risk a good chunk of money.

If the buyer pulls out for no reason, it is typical that the seller will retain the earnest money deposit as compensation for the hassle (he might have turned down a better offer and now it’s too late). But if both parties agree, some or all of the earnest money may be returned. If they don’t agree, the only way the buyer can get any back is to sue and go to court; the agent holding the money cannot disburse to any party without proper legal authority.

As I mentioned upthread, you can contract with an agent to pay them any way you both can agree upon. It doesn’t have to be a percentage of the sale price.

If you feel the agent is incompetent or unethical, you can file a complaint with the state licensing board or file a suit in court.

Several posters seem to feel that an agent will be highly concerned about a few dollars in commission he may gain or lose by not negotiating in their interests. I think this is more in the realm of paranoia than reality.

First, as an agent, I’m not going to risk my license or a fine just to gain a few measly dollars. Hard to believe, but ethics are important to some people, more important than small amounts of money.

Recently I was working on bringing a buyer & seller together on a $100,000 property. The highest bid was $90,000 and the asking price had been negotiated down to $99,000. My commission was going to be about $3,000 if the deal went through, and zero if it didn’t. I was able to bring them together for $95,000. I received $150 less than what I had hoped. Do you seriously think that would have been enough to persuade me to act unethically?

42

Wait - they volunteered to cut the cost? Before negotiations? Do you know the listing history of the house? The neighborhood? The local market?
When we bought here we saved a lot of money because our buyer’s agent told us that the sellers had put the house on the market, took it off for renovations, and then put it on again - but it showed up with high DOM. That gives one negotiating strength.
One other advantage of a buyer’s agent - it is far easier to negotiate with someone not invested in the process that much. There is also some relationship between the two agents.
I used one even when I moved in-town and knew the seller. Though there were some special circumstances and we did some negotiating around the town pool. But we were still friends at the end of it.

43

Ain’t that the truth. In fact, I’d argue that’s the least of what mine did, given I was able to find plenty of places I wanted to look at and was more than willing to give the thumbs up or down. I’m all for doing it yourself, but my agent was critical in the home buying process, even post-sale. Just the depth of her network and trusted contractors was worth it.

44

Maybe I’m not understanding the example, but it looks to me like you got about $2850 for making the deal, compared to zero if you didn’t, so I don’t know what the $150 has to do with anything.

And I don’t see why the fact that you are as honest as the day is long doesn’t mean that others aren’t. And I know for a fact that I was screwed by a realtor supposedly working for me, and I know for a fact that very respectable banks, phone companies, etc. chisel people out of much less than $150 in stupid fees thousands of times a day, so I don’t understand why you think it couldn’t happen.

That aside, thanks for the other info in your response.

45

I’m saying that the slight difference in what I made compared to the overall commission, or compared to what I might have made at a higher price isn’t enough to cause me to even think about violating any trust or ethics. You can’t buy my license for $150.

Sure, I’d like to have a higher sale price if I am being paid a percentage, but it’s not something I constantly compute in my head during negotiations, and if I represent the buyer, my role is to reduce the price even at the expense of my own income.

One of the cardinal rules of agency is “Thou shalt not put your personal interests ahead of thy client’s.”

46

Yes, I had a very good buyer’s agent. We were looking for vacation property a few hours away, so we couldn’t do enough research on our own, and we were not committed to buying, so signing a contract was pretty low risk for us.

Diane was great. The Boss and Diane educated us about the market, gave us a large list for drive-bys, showed us a nice selection of properties, and helped us a lot. We were experienced buyers, but things do come up when you’re doing things long distance.

However, all agents make money when a house sells; that’s the business model.

Do a ton of research, listen to your parents, and always, always, be willing to walk away.

47

UPDATE UPDATE UPDATE
I just closed on the house today, and I am satisfied.

Shortly after my last post, the seller lowered the asking price from $259K to $250K. I was going to offer more than $250K, so I was more than willing to offer $250K. I’m pretty certain that the previous offer was for more than that.

When I talked to the seller’s agent about me not having an agent, she said that she would then be a dual agent representing both sides in the deal. She could not disclose any confidential information about the seller’s intentions to me, and vice versa. If there were any disputes about her impartiality, her boss would be brought in to deal with it. And she told me that the seller would be saving $2500 by me not having an agent.

So I made an initial offer of $245K. I was willing to go with $250K, but the RE agent suggested asking for money from the seller to help with closing costs. The seller rejected that and held at $250K, so I accepted that. The formal appraisal came in at $255K, so I was pleased that my offer was accepted.

So I think this worked out for me. I always had a feeling that the owners had a similar set of housing wants that I did. The master bath only has a shower, which is fine by me. I rarely take baths. The second full bath has a one piece shower/tub, which pleases me. I absolutely hate tile in a shower, since the grout is a nightmare to clean and mildew always appears where the caulk inevitably fails. They put in Corian counter tops in the kitchen, rather than the showy granite, and lots of extra under cabinet lights and ceiling spots. The living room has front and rear speaker wires for the TV run through the walls or ceiling, so they are not seen. Also the wires to the wall mounted TV are run up the wall, so as to not be seen.

And today at closing, the wife of the seller was complaining that he rarely runs the air conditioning. She was appalled that he had the thermostat set at 78 degrees. I said that mine is set at 79. He goes, “see, he gets it.” The only difference that we have is that I want a gas stove, and they have an electric despite gas coming into the house.

Now I don’t suggest this for everyone. I felt very comfortable with the RE agent, the situation of the seller, the fact that they were first owners, and the number of other possibilities open for me. If it fell through, I would have had options, so I was not desperate. The sellers were not scam artists trying to flip a house for a quick profit. They had just outgrown their place and were looking to move on.

So as of 8 hours into my house owning experience, I think this worked out for me.

48

As a Realtor, I agree with everything you said except the “saving $2500” part. In my state, at least, it would not have cost you anything to have a buyer’s agent, nor would the seller pay any more if you had. Or at least that’s common practice as I know it.

49

If the seller saved $2500, then presumably the agent’s firm knocked 1% off the commission since they were getting both sides of the deal. The OP didn’t see any of that savings, but he did get the house for $9K less than originally contemplated, so it sounds like a good deal all the way around.