Buyer's too can save on commissions
I often hear the argument from buyers that they can save on the commission by working directly with the seller's agent. While giving up your advocate isn't necessarily in the buyer's best interest, the questions remains. Can a buyer save on commission?
Agents are wrong when they say you can't save money by buying a home directly through the listing agent. In many cases you can save at least 1/2 of 1% of the total purchase price. This is how that can happen. A seller lists their home. In the listing agreement the seller negotiates with their agent to offer a 1% commission reduction if the listing agent sells the home. As a buyer, you view that home and like it. You place an offer at what you are willing to pay -1%. The seller counters your offer at what they were willing to net plus full commission and fees. But wait, why full commission, why aren't they giving up the 1%? Oh, that's right, the seller put the 1% savings in the contract to save themselves 1%, not to give it to you, the buyer who had nothing to do with the original negotiation! Now what? Well if all goes well you negotiate and split the 1%. You each get 1/2%. The seller saved 1/2%. You gave up your representation and saved 1/2%. Maybe a couple of thousand dollars.
Oh but wait, I forgot, we haven't taken into account your opportunity costs. What is that you ask? That is all the opportunities you gave up using your time buying your home on your own rather then spending it in another more productive or enjoyable way. In this market it's not unfair to say my clients will look at 20 homes before deciding on one. That is 20 out of the 100 that may fit their needs. But why did they only look at 20 then? What about the other 80? Well after sitting down and speaking to my clients and viewing a few homes with them I get an idea of what they are looking for. Based on this information and knowing the homes I pre-view every day I can eliminate many of the homes on the market for one reason or another. Searching on your own you will have to pre-view your own homes. This will likely add a few weekends to your search over the course of a couple of months. Also add hours to your search in having to meet multiple Realtors all the time for individual showings. Once you have found a home add the redundancy of going over everything twice, once with your. . I mean the seller's agent and once with your attorney. After all you'll likely not entirely trust the Realtor you have chosen to work with knowing they don't have your best interests at heart. Now here's the really rough part. Take the late night at the office that you won't get overtime for. Since you don't have an advocate, you are coordinating your own closing, your lawyer, title company, mortgage company, appraiser, inspector, etc.. After all we can't trust the seller's agent to do all this, can you?
In today's world you can do everything on your own. You can invest your own money using E*Trade research. You can write up legal documents using an Office Depot CD. You can self diagnose their illness using WebMD. You can find your next home using Realtor.com. While there is an abundance of information out there, what you need is knowledge because information without understanding is useless.
We all know a few hours of research on the Internet can not replace years of experience, education, and knowledge of the market. For example, I have already spent 10 full days in conventions, seminars, and earning my Certified Distressed Property Expert (CDPE) designation this year. Add to that my 4 years of experience, the scores of closed transactions, and the 10-15 days of education I received every year for the last 3 years and you will see there is a lot to know in this ever changing industry.
So yes, a buyer can possibly save 1/2 of 1% going to the listing agent. The questions is, is it worth it to you? I know I value my clients time, I hope you do too.
Andres Garcia
Sales Associate, CDPE
RE/MAX Gold Coast Realty
56 Newark Street
Hoboken, NJ 07030
Direct: 201 795-5200 x340
Andres@MileSquareRealty.com
http://www.MileSquareRealty.com
Agents are wrong when they say you can't save money by buying a home directly through the listing agent. In many cases you can save at least 1/2 of 1% of the total purchase price. This is how that can happen. A seller lists their home. In the listing agreement the seller negotiates with their agent to offer a 1% commission reduction if the listing agent sells the home. As a buyer, you view that home and like it. You place an offer at what you are willing to pay -1%. The seller counters your offer at what they were willing to net plus full commission and fees. But wait, why full commission, why aren't they giving up the 1%? Oh, that's right, the seller put the 1% savings in the contract to save themselves 1%, not to give it to you, the buyer who had nothing to do with the original negotiation! Now what? Well if all goes well you negotiate and split the 1%. You each get 1/2%. The seller saved 1/2%. You gave up your representation and saved 1/2%. Maybe a couple of thousand dollars.
Oh but wait, I forgot, we haven't taken into account your opportunity costs. What is that you ask? That is all the opportunities you gave up using your time buying your home on your own rather then spending it in another more productive or enjoyable way. In this market it's not unfair to say my clients will look at 20 homes before deciding on one. That is 20 out of the 100 that may fit their needs. But why did they only look at 20 then? What about the other 80? Well after sitting down and speaking to my clients and viewing a few homes with them I get an idea of what they are looking for. Based on this information and knowing the homes I pre-view every day I can eliminate many of the homes on the market for one reason or another. Searching on your own you will have to pre-view your own homes. This will likely add a few weekends to your search over the course of a couple of months. Also add hours to your search in having to meet multiple Realtors all the time for individual showings. Once you have found a home add the redundancy of going over everything twice, once with your. . I mean the seller's agent and once with your attorney. After all you'll likely not entirely trust the Realtor you have chosen to work with knowing they don't have your best interests at heart. Now here's the really rough part. Take the late night at the office that you won't get overtime for. Since you don't have an advocate, you are coordinating your own closing, your lawyer, title company, mortgage company, appraiser, inspector, etc.. After all we can't trust the seller's agent to do all this, can you?
In today's world you can do everything on your own. You can invest your own money using E*Trade research. You can write up legal documents using an Office Depot CD. You can self diagnose their illness using WebMD. You can find your next home using Realtor.com. While there is an abundance of information out there, what you need is knowledge because information without understanding is useless.
We all know a few hours of research on the Internet can not replace years of experience, education, and knowledge of the market. For example, I have already spent 10 full days in conventions, seminars, and earning my Certified Distressed Property Expert (CDPE) designation this year. Add to that my 4 years of experience, the scores of closed transactions, and the 10-15 days of education I received every year for the last 3 years and you will see there is a lot to know in this ever changing industry.
So yes, a buyer can possibly save 1/2 of 1% going to the listing agent. The questions is, is it worth it to you? I know I value my clients time, I hope you do too.
Andres Garcia
Sales Associate, CDPE
RE/MAX Gold Coast Realty
56 Newark Street
Hoboken, NJ 07030
Direct: 201 795-5200 x340
Andres@MileSquareRealty.com
http://www.MileSquareRealty.com
Labels: Buyer rebate real estate commission, Buyer save on real estate commission, Hoboken Real Estate, Hudson County real estate, save commission placing offer through listing seller agent
