Question:
Hi folks, I am a first time homebuyer. The listing agent IS the owner. I am not using a sub-agent or a buyer’s broker, but an attorney. Okay, so much for the groundwork. First the ethical question: this is a 3-bdrm house (so says the prior owner, the county assessor and two agents who’ve recently viewed the home on their own). However just when she listed it, the owner/agent carpeted the basement, stuck a bed in a room and listed it as a 4-bdrm home, and of course "appreciated" the list price accordingly. Any suggestions on negotiating tactics? It would be good if the owner/agent admitted her "mistake" but I can’t count on that happening without some encouragement. I also don’t want to call her names because she might end negotiations and the truth is, if fairly priced – I’m not trying to steal it – if fairly priced I’d love to live there. Assuming I can get her to cop to the truth, is there a percentage figure I can use to show the difference between the values of a 3 vs. 4-bdrm home, so we can arrive at a correct _starting_ point? Next, I don’t know if she has to pay her firm the standard split (60/40) because it is her own property she is selling. Do brokerages generally "perk" their associates and allow them to list for free and/or to not have to bring in the brokerage’s normal commission? And a follow up question: Is it normal or considered ethical for the owner/agent to pay themselves a commission for selling their own property? IOW, can I assume that the price of the home is *retail plus commissions*, as it is in everyday agent-listed home sales? I assume she (over)priced the home with _at least_ a sub-agent’s commission (3%) factored in, if not that plus her own plus the brokerages’ commissions. No question I can (and will) ask for 3% off the list as I am representing myself (again, with the help of a real estate attorney). Can I ask for the other 3%? Why? Why not? Thanks for the help… I *do* appreciate it! Tim
Response:
The commission details are irrelevant. (Of course she gets a break from her employers- what company doesn’t do that?) Offer what you think is a fair price. Either she’ll take it or she won’t. I’d offer what the actual selling price of comps in the area was. Whatever local agency in your area keeps the deeds can tell you. Some are even computerized now, so you don’t have to waste a day going through the big books. I know, lotsa owners (even realtors) get their mind fixed on a certain price, and won’t go lower. There are 2 in the neighborhood next door that have been for sale for close to 2 years, which would sell in a week if they came down 10k. Make an offer, put a 30 or 60 day limit on it, and wait for her to come to you. Unless your area is hot, she needs you more than you need her. As to the basement bedroom- in many, if not most areas, unless it has an egress window, smoke alarms, etc, it doesn’t count as finished space. I’d ignore it in the pricing. Other than in a walkout basement, nobody but a rebellious teenager would voluntarily live in a basement, so a ‘cell’ bedroom really doesn’t add to value. No point rubbing her nose in it, just ignoe it. aem sends….
– Hide quoted text — Show quoted text -> Hi folks, > I am a first time homebuyer. The listing agent IS the owner. I am not > using a sub-agent or a buyer’s broker, but an attorney. > Okay, so much for the groundwork. First the ethical question: this is > a 3-bdrm house (so says the prior owner, the county assessor and two > agents who’ve recently viewed the home on their own). However just > when she listed it, the owner/agent carpeted the basement, stuck a bed > in a room and listed it as a 4-bdrm home, and of course "appreciated" > the list price accordingly. > Any suggestions on negotiating tactics? It would be good if the > owner/agent admitted her "mistake" but I can’t count on that happening > without some encouragement. I also don’t want to call her names > because she might end negotiations and the truth is, if fairly priced > – I’m not trying to steal it – if fairly priced I’d love to live > there. > Assuming I can get her to cop to the truth, is there a percentage > figure I can use to show the difference between the values of a 3 vs. > 4-bdrm home, so we can arrive at a correct _starting_ point? > Next, I don’t know if she has to pay her firm the standard split > (60/40) because it is her own property she is selling. Do brokerages > generally "perk" their associates and allow them to list for free > and/or to not have to bring in the brokerage’s normal commission? > And a follow up question: Is it normal or considered ethical for the > owner/agent to pay themselves a commission for selling their own > property? > IOW, can I assume that the price of the home is *retail plus > commissions*, as it is in everyday agent-listed home sales? I assume > she (over)priced the home with _at least_ a sub-agent’s commission > (3%) factored in, if not that plus her own plus the brokerages’ > commissions. > No question I can (and will) ask for 3% off the list as I am > representing myself (again, with the help of a real estate attorney). > Can I ask for the other 3%? Why? Why not? > Thanks for the help… I *do* appreciate it! > Tim
Response:
>Okay, so much for the groundwork. First the ethical question: this is >a 3-bdrm house (so says the prior owner, the county assessor and two >agents who’ve recently viewed the home on their own). However just >when she listed it, the owner/agent carpeted the basement, stuck a bed >in a room and listed it as a 4-bdrm home, and of course "appreciated" >the list price accordingly. >Any suggestions on negotiating tactics? It would be good if the >owner/agent admitted her "mistake"…
IMHO, *you* are the one who is making a *mistake* in assuming that, (1) any decision YOU make on what to offer, that is, what the house is worth to YOU, is in any way controlled by what SHE calls a certain room. You just offer the price you think is fair and see if she takes it. (2) you seem to think that you have to, and the she is required to, get her to ‘admit’ something because you are *right* and all these other people say so to. But what does that have to do with the price YOU would be willing to pay? If she has a delusion that causes her to over-value the house, then her house will not sell. OTOH, If she gives you the price you want (a 3-BR house with a part finished bsmt), what do you care what the delusion is? She could beleive that Jesus and Mary visit her bsmt every Friday, do you have to *prove* to her that is false, or do you just close at the price you wanted? (3) What is your evidence that she "appreciated" the price by a certain amount for this? Maybe she "appreciated" (really the wrong term) it by the fair price for a Basement Bedroom. You seem to be "assuming" unless there is more info you have not told us. Make sure you look at a few more houses before you get stuck on this one. If you found one just like it but without the basement room, and listed as a 3 BR, buy that instead if it makes you feel better to bid on a house with the "correct" number of bedrooms in the description. -v.
Response:
> The commission details are irrelevant. (Of course she gets a break from her > employers- what company doesn’t do that?) Offer what you think is a fair > price. Either she’ll take it or she won’t. I’d offer what the actual > selling price of comps in the area was.
Exactly. When I’ve bought, I’ve always used a buyer’s agent to get the comps for me and help me shop in general. If you’re looking to buy, you should have some awareness of comparable properties. (snip) >I know, lotsa owners (even > realtors) get their mind fixed on a certain price, and won’t go lower. There > are 2 in the neighborhood next door that have been for sale for close to 2 > years, which would sell in a week if they came down 10k.
A realtor friend says that many of the FSBO houses are like that. He says he talks to these people, they want more $$$ than the market will pay, the house doesn’t sell, then they call him and ask him to sell it at a lower, more reasonable price. > Make an offer, put > a 30 or 60 day limit on it, and wait for her to come to you. Unless your > area is hot, she needs you more than you need her.
Exactly. I’d probably make the offer much shorter in duration, like a few days. If the seller won’t sell for a reasonable price, the seller gets stuck with the place. If the seller’s already bought or is negotiating on another place, then the seller will be under much pressure to sell the old place–most people can’t handle two mortgage payments per month on two houses. > As to the basement bedroom- in many, if not most areas, unless it has an > egress window, smoke alarms, etc, it doesn’t count as finished space. I’d > ignore it in the pricing. Other than in a walkout basement, nobody but a > rebellious teenager would voluntarily live in a basement, so a ‘cell’ > bedroom really doesn’t add to value. No point rubbing her nose in it, just > ignoe it.
To the OP: Just offer what seems reasonable to you. The comps should be a guide. Don’t worry about a commission or any of that stuff. If you’re going to worry over all this commission stuff and other details you can’t control and let yourself get distracted from whether to buy the place or not, maybe that’s an indication you’re not ready to buy? And/or you should shop some more? The first time we shopped, we shopped all over the region, wasted a lot of time etc., then decided we just weren’t ready. Then we came back a few months later and found a place within a few months–the market hadn’t changed, we just were more mentally/emotionally to buy. Years later, when we bought a bigger place, we made an offer on one of the first places we saw, and offered full price–we were ready to buy. (We were outbid, but quickly found another place and bought that.) No regrets. Anyway, my point is that if you’re worrying over a lot of details, instead of just going ahead and making an offer, maybe you’re not really ready to buy yet? If you’re not ready to buy now, that’s OK. There’s no shortage of housing and everybody sells their place eventually, so when you’re ready to buy, you’ll find something that works for you. I’ve sold a few things (never real estate), and I noticed that folks with many detailed questions often weren’t really ready to buy (whether they knew it or not) and didn’t buy. The people who really were ready to buy tended to move decisively, not ask many questions.
Response:
there is no formula to evaluate a homes "worth" (though appraisers try to do this) just offer a price keeping in mind comparable prices in the area, sure i’d knock off at least 3% if you are not using a buying agent as i think it has a large effect on the price
– Hide quoted text — Show quoted text -> Hi folks, > I am a first time homebuyer. The listing agent IS the owner. I am not > using a sub-agent or a buyer’s broker, but an attorney. > Okay, so much for the groundwork. First the ethical question: this is > a 3-bdrm house (so says the prior owner, the county assessor and two > agents who’ve recently viewed the home on their own). However just > when she listed it, the owner/agent carpeted the basement, stuck a bed > in a room and listed it as a 4-bdrm home, and of course "appreciated" > the list price accordingly. > Any suggestions on negotiating tactics? It would be good if the > owner/agent admitted her "mistake" but I can’t count on that happening > without some encouragement. I also don’t want to call her names > because she might end negotiations and the truth is, if fairly priced > – I’m not trying to steal it – if fairly priced I’d love to live > there. > Assuming I can get her to cop to the truth, is there a percentage > figure I can use to show the difference between the values of a 3 vs. > 4-bdrm home, so we can arrive at a correct _starting_ point? > Next, I don’t know if she has to pay her firm the standard split > (60/40) because it is her own property she is selling. Do brokerages > generally "perk" their associates and allow them to list for free > and/or to not have to bring in the brokerage’s normal commission? > And a follow up question: Is it normal or considered ethical for the > owner/agent to pay themselves a commission for selling their own > property? > IOW, can I assume that the price of the home is *retail plus > commissions*, as it is in everyday agent-listed home sales? I assume > she (over)priced the home with _at least_ a sub-agent’s commission > (3%) factored in, if not that plus her own plus the brokerages’ > commissions. > No question I can (and will) ask for 3% off the list as I am > representing myself (again, with the help of a real estate attorney). > Can I ask for the other 3%? Why? Why not? > Thanks for the help… I *do* appreciate it! > Tim
Response:
Like most professional home building general contractors, most real estate agents have very little in the way of ethics, morals, or integrity. Walk away now or you’ll be sorry. Even if you get the price you want, you’ll find all kinds of crap wrong with the house later and you will be sorry. The way you are carrying on, it will be obvious to her how badly you want the place and she will squeeze you dry. If you must, low ball her big time, then if she declines, Walk away! Those of you who fool yourselves with this "I have a buyers agent" crap should be extra careful. Sure, they work for you, uh-huh you go ahead and believe it. They don’t work for themselves do they? They don’t care about money, I mean they’re working to get YOU the best deal remember? Oh yeah, uh huh. To all you ethical builders and real estate agents, please don’t flame me I’m sure you exist somewhere. Who you should flame would be the despicable behavior of your colleagues. I live in a neighborhood with lots of new construction, where each of my neighbors and across the street used different builders and we all pretty much agree on the poor behavior of ALL of them and the real estate agents in this city. I’ve met very few people who I work with that have been satisfied with their builders or their agents. Not just here either but where we moved from. I’ve bought and sold a couple houses, and am 0 for 3 on good agents and 0-1 on good builder. Most builders and agents just suck. Now just to be fair, this town has no building codes. Could you imagine the field day a builder, shady already, would have building here? It’s giving the robber the keys to the store, then leaving the door unlocked and the money out anyway. Throw in a crooked real estate agent and ignorant buyer get ready to bend over. Yes I know, buyer beware. I take responsibility for my own ignorance and putting my trust in a builder and real estate agent to begin with. live and learn, I’ll never do that again!
– Hide quoted text — Show quoted text -> Hi folks, > I am a first time homebuyer. The listing agent IS the owner. I am not > using a sub-agent or a buyer’s broker, but an attorney. > Okay, so much for the groundwork. First the ethical question: this is > a 3-bdrm house (so says the prior owner, the county assessor and two > agents who’ve recently viewed the home on their own). However just > when she listed it, the owner/agent carpeted the basement, stuck a bed > in a room and listed it as a 4-bdrm home, and of course "appreciated" > the list price accordingly. > Any suggestions on negotiating tactics? It would be good if the > owner/agent admitted her "mistake" but I can’t count on that happening > without some encouragement. I also don’t want to call her names > because she might end negotiations and the truth is, if fairly priced > – I’m not trying to steal it – if fairly priced I’d love to live > there. > Assuming I can get her to cop to the truth, is there a percentage > figure I can use to show the difference between the values of a 3 vs. > 4-bdrm home, so we can arrive at a correct _starting_ point? > Next, I don’t know if she has to pay her firm the standard split > (60/40) because it is her own property she is selling. Do brokerages > generally "perk" their associates and allow them to list for free > and/or to not have to bring in the brokerage’s normal commission? > And a follow up question: Is it normal or considered ethical for the > owner/agent to pay themselves a commission for selling their own > property? > IOW, can I assume that the price of the home is *retail plus > commissions*, as it is in everyday agent-listed home sales? I assume > she (over)priced the home with _at least_ a sub-agent’s commission > (3%) factored in, if not that plus her own plus the brokerages’ > commissions. > No question I can (and will) ask for 3% off the list as I am > representing myself (again, with the help of a real estate attorney). > Can I ask for the other 3%? Why? Why not? > Thanks for the help… I *do* appreciate it! > Tim
Response:
>for exampe I just bought a house for $350K, the sellers were VERY firm at >their asking price of $370K which i thought was reasonable for the house >looking at other comps (they had rejected reasonably lower offers) but no >buyer had accepted the price yet. For whatever reason they wanted to net a >certain amount from the home (assuming a straight 6% commision) Their >realtor was actually flexible on commsion depending on the sale type (if >this isn’t the case then wether you have a buying agent or not of course >doesn’t matter) i was able to end up buying the home for $350K without my >own agent knowing that they would save some on the commision on a sale that >otherwise would not have been possible if i didn’t know about some of these >factoids…. win-win for both of us
If the sellers were VERY firm on getting $370K, then how did you buy it for $350K? 6% commission is $22K. I am sure they didn’t waive their whole commission. Please explain. Dimitri
Response:
for exampe I just bought a house for $350K, the sellers were VERY firm at their asking price of $370K which i thought was reasonable for the house looking at other comps (they had rejected reasonably lower offers) but no buyer had accepted the price yet. For whatever reason they wanted to net a certain amount from the home (assuming a straight 6% commision) Their realtor was actually flexible on commsion depending on the sale type (if this isn’t the case then wether you have a buying agent or not of course doesn’t matter) i was able to end up buying the home for $350K without my own agent knowing that they would save some on the commision on a sale that otherwise would not have been possible if i didn’t know about some of these factoids…. win-win for both of us
– Hide quoted text — Show quoted text ->It is relevent if you want to pay less money than what you think the house >is worth to you and still get an accepted offer > You’re missing the point, son. That *you* want to get the house for > ‘less than it is worth’ is not binding on ‘them’. If you can buy a > certain house for $400k, what is it to you whether one, two or three > people on the other side split the $400k. It is still $400k to you. > Would you only be willing to pay less if they didn’t have a mortgage > to pay off? Would *you* be willing to pay more if they needed 110% of > market value to pay off their home eq loans? THEIR costs ARE > irrelevant to what the house is worth to you. > -v.
Response:
>>for exampe I just bought a house for $350K, the sellers were VERY firm at >their asking price of $370K… <snip> … For whatever reason they wanted to net a >certain amount from the home (assuming a straight 6% commision) >If the sellers were VERY firm on getting $370K, then how did you buy it >for $350K? 6% commission is $22K. I am sure they didn’t waive their whole >commission. Please explain.
Good Q. Actually, I think he’s been conned by negotiating rhetoric. 1st, even under his view, they were NOT actually firm on the price, they were supposedly firm on the NET. Actually, that is a dumb way to sell. If the broker is really ‘flexible’ on their commission, if it is a $370k house, why should the seller give all the ’savings’ to the buyer? Why not net MORE by having the broker be ‘flexible’ for buyers without an agent, and keeping the price up? The answer is, of course, that it is NOT really a $370k house, it is more like a $350k house. Or it would have sold for $370. In this case, SOMEBODY (whether the broker, or the seller) gave enough that the seller could afford to sell. Sometimes they can’t. I had occasion to be high bidder on a distressed property (not an actual auction) on a pre-foreclosure workout. The most I would pay was less than what was owed (total to about 4 different outfits). We were able to negotiate 3 out of 4 down to where the sale would work if everybody ‘gave’ proportionally. But the last would not budge. So we walked away, and the property went to foreclosure instead. And I’d assume the stubborn one got nothing as they were not 1st in line. The bottom line is that owner-occupied residential real estate is often not amenable to pricing to a mathematical certainty. Appraisers can easily differ by 5 to 10 percent on the same house at the same time. So I guess there is little harm in Noah thinking he got a $370k house for $350k because he didn’t use a broker, and the seller thanking god that they finally found someone to take it off their hands for what they owed. regards, -v.
Response:
>It is relevent if you want to pay less money than what you think the house >is worth to you and still get an accepted offer
You’re missing the point, son. That *you* want to get the house for ‘less than it is worth’ is not binding on ‘them’. If you can buy a certain house for $400k, what is it to you whether one, two or three people on the other side split the $400k. It is still $400k to you. Would you only be willing to pay less if they didn’t have a mortgage to pay off? Would *you* be willing to pay more if they needed 110% of market value to pay off their home eq loans? THEIR costs ARE irrelevant to what the house is worth to you. -v.
Response:
> Yes. Who gets the commission is not relevant to your deal. The house > will cost you $400k whether you have a buyer’s broker or not. It is a > $400k house, so if you want it, pay $400k. The commission is not > relevant.
It is relevent if you want to pay less money than what you think the house is worth to you and still get an accepted offer > (It is also quite common for a broker to ’sell their own’ without > anyone to split the commission with; the only reason a split is even > offered is to get other brokers to bring their customers to the > listing broker’s inventory; since there is no other broker here, there > is nobody for them to split with.) > Quit fooling with how much someone else gets paid. Your price is > $400k and THEY can split it up any way they want.
actually it was very important determination in the home i bought – Hide quoted text — Show quoted text -> -v.
Response:
– Hide quoted text — Show quoted text – >However, the commission details become elevant in certain cases (not >in this case). Here is what I am going thru’ as a buyer without a >buyer’s agent: >Selling price 400,000 >Listing agency commission (6%) 24,000 >Seller gets 376,000 >Seller will do the deal ta this price. But, since I don’t have a >buyer’s agent, I want to offer 3% less: >Selling price(3% less) 378,000 >Listing agent commision (6%) 22,680 >Seller gets 355,320 >Seller will _not_ do the deal at this price. >Any thoughts on how to proceed?
Yes. Who gets the commission is not relevant to your deal. The house will cost you $400k whether you have a buyer’s broker or not. It is a $400k house, so if you want it, pay $400k. The commission is not relevant. (It is also quite common for a broker to ’sell their own’ without anyone to split the commission with; the only reason a split is even offered is to get other brokers to bring their customers to the listing broker’s inventory; since there is no other broker here, there is nobody for them to split with.) Quit fooling with how much someone else gets paid. Your price is $400k and THEY can split it up any way they want. -v.
Response:
- Hide quoted text — Show quoted text – > The commission details are irrelevant. (Of course she gets a break from her > employers- what company doesn’t do that?) Offer what you think is a fair <snip> > aem sends…. > Hi folks, <snip> > IOW, can I assume that the price of the home is *retail plus > commissions*, as it is in everyday agent-listed home sales? I assume > she (over)priced the home with _at least_ a sub-agent’s commission > (3%) factored in, if not that plus her own plus the brokerages’ > commissions. > No question I can (and will) ask for 3% off the list as I am > representing myself (again, with the help of a real estate attorney). > Can I ask for the other 3%? Why? Why not?
However, the commission details become elevant in certain cases (not in this case). Here is what I am going thru’ as a buyer without a buyer’s agent: Selling price 400,000 Listing agency commission (6%) 24,000 Seller gets 376,000 Seller will do the deal ta this price. But, since I don’t have a buyer’s agent, I want to offer 3% less: Selling price(3% less) 378,000 Listing agent commision (6%) 22,680 Seller gets 355,320 Seller will _not_ do the deal at this price. Remember, the seller has already signed a contract with the listing agency to pay it 6% commission no matter what the selling price is. The listing agency refuses to credit 3% back to the buyer who doesn’t have a buyer’s agent! If they did, I’d offer 400,000, knowing that I will get 12,000 back from the listing agency and the deal will be done. But then, the listing agency will get to keep only 12,000 (which is their fair commission) and they don’t seem to want to do that. They’d probably rather wait for some sucker to walk in who will sign on a dual agency agreement! I bet they are not even telling the seller all this detail. Any thoughts on how to proceed? – EN
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