Consumer Homes.

Question:

Ok, so I’ve spent the last month driving around, looking at houses (new and used), and have decided to purchase a new house.  I never had a real-estate agent.  From what I’ve heard, whether you buy a new or used house, if I had an agent, he would get a commission (3%).  So the question is, should I find an agent that would split the commission with me and bring him onboard prior to buying the house?  Is this legal?  Will most real-estate agents do this if they haven’t had to do any work for you?  It seems silly to let the builder keep the money, and it also seems silly to bring in a real-estate agent just to give him the money…if anyone’s getting any of my money, it should be me, as I’ve done all the work. Any advice is appreciated.  BTW, I live in Orlando, FL. Shawn

Response:

I just purchased a new home down in Florida. When I found the home I wanted, I made a list of all the upgrades I wanted, added that to the price the builder wanted for the house and then made him an offer for the house (much lower than he wanted). We negotiated and settled on a total package price which turned out to be a hefty discount from his original price.     EVERYTHING IS NEGOTIABLE.    Make an offer. They can’t shoot you. Start low and let them work you up to a price that’s acceptable to you. Don’t be afraid to get up from the table and walk away. If you’re a serious buyer and your offer isn’t too ridiculous, the builder will sit you down again to talk. Good Luck. – Hide quoted text — Show quoted text – > Ok, so I’ve spent the last month driving around, looking at houses (new > and used), and have decided to purchase a new house.  I never had a > real-estate agent.  From what I’ve heard, whether you buy a new or used > house, if I had an agent, he would get a commission (3%).  So the question > is, should I find an agent that would split the commission with me and > bring him onboard prior to buying the house?  Is this legal?  Will most > real-estate agents do this if they haven’t had to do any work for you?  It > seems silly to let the builder keep the money, and it also seems silly to > bring in a real-estate agent just to give him the money…if anyone’s > getting any of my money, it should be me, as I’ve done all the work. > Any advice is appreciated.  BTW, I live in Orlando, FL. > Shawn

Response:

> Ok, so I’ve spent the last month driving around, looking at houses (new > and used), and have decided to purchase a new house.  I never had a > real-estate agent.  From what I’ve heard, whether you buy a new or used > house, if I had an agent, he would get a commission (3%).  So the question > is, should I find an agent that would split the commission with me and > bring him onboard prior to buying the house?  Is this legal?  Will most > real-estate agents do this if they haven’t had to do any work for you?  It > seems silly to let the builder keep the money, and it also seems silly to > bring in a real-estate agent just to give him the money…if anyone’s > getting any of my money, it should be me, as I’ve done all the work.

You can always work around the issue of commission by how the offer is worded. The listing is usually with a broker, who will get a cut out of every sale from the agents listed with the broker.  There is usually a split of the commision between the listing and the selling agents, and that info will appear on the MLS sheet. If you are close to a deal, you can always make an offer that would be dependant on the commission being dropped from 7 to 5%.  That would require the agent to see if they are willing to take a lowere commission to get the sale. A lot of agents will also offer some cash back to sellers out of their commission to get the sale. cheers, Phil — live life one day at a time, but always look to the future

Response:

> >Ok, so I’ve spent the last month driving around, looking at houses (new >and used), and have decided to purchase a new house.  I never had a >real-estate agent.  From what I’ve heard, whether you buy a new or used >house, if I had an agent, he would get a commission (3%).  So the question >is, should I find an agent that would split the commission with me and >bring him onboard prior to buying the house?  Is this legal? > What are you talking about?  You are not making too much sense – are > you buying the house directly from a builder/contractor? Is there an > on site sales representative (Realtor(tm) selling the houses?

I think he’s making perfect sense; he’s identified a possible inefficiency in the transaction and identified a way for him to profit from it. (Now, he might assume that the house price and features are truly fixed and non-negotiable, which it almost certainly isn’t, but assuming it were, he’s got a perfectly valid and well-reasoned question.) > I don’t think that splitting commissions is either legal or ethical in > most places, but still why get an agent at this point?

I don’t think it’s unethical anywhere; whether is legal and in accord with the local Realtor association is probably a local question. > Why do you think you should get any money?  Do you get any money when > you go to the market and buy groceries, or a department store and buy > an appliance?

I think the theory is that the builder was willing to pay a commission to the "agent who worked with the buyer". If the buyer didn’t avail himself of those "services", should the builder pocket the money, or should the consumer get some of it? The consumer did all the work; I don’t think the builder "deserves" all the rebate. My personal opinion would be that the builder would be willing to negotiate away some of that money earmarked as a commission payment for the agent in the course of normal negotiations. If he weren’t, then I’d have no incentive NOT to engage a true buyer’s agent, costing HIM 3% of the net even if I never got a lick of benefit from the agent. Clearly, the builder has every incentive to go along, and we both benefit by avoiding the Realtor-tax on the transaction. –Jim

Response:

Real estate commission rates vary around the country. I do think however that the principle idea stays the same…     When you list a house for sale with a real estate office, they charge a commission for doing this. Contractors often hire a real estate office to do the sales of their homes for them. This includes all advertising and listings in the MLS (Multiple Listing Service) and showing of the houses. Real estate commissions are charged to the seller of the house. In the NW they run 7%. Once this listing contract is signed between the real estate agent and the seller, the seller is committed to paying this commission no matter who buys the house. Now just because the contract says a certain rate shall be paid, does not mean that a deal can not be made for a change.     This is how the commission is split amongst the agents… If the total commission fee is 7%, this would be paid to the listing agent only if he was the one to find a buyer as well as listing the property. If the listing agent does not find the buyer, then the buyers agent splits the commission with the sellers (listing) agent for a total of 3.5% going to each agent.     Now getting to your question. You are the one that found the house you want to buy, and you did this without a buyers agent. You are basically making it so that the whole commission will go to the listing agent. This makes it much more probable that the agent might lower his commission because they do not have to split the money with another agent. Now you have to remember that the buyer does not pay the commission, the seller does. BUT if the listing agent will lower this fee, then the seller might lower the house price to match. Many deals are made or lost this way. You have to remember that you found the house, but the listing agent has already done most their work by the advertising that drew you to the house in the first place. On paper they can not split the commission with you, but deals can be made to lower the house price matching the lower commission. On paper this can be done many ways, from lowering the price, to adding these moneys to your down payment amount. I really doubt that you will find an agent that will come in just so that they will split their commission with you. If word of this ever reached the street, they would probably be brought before a board of realtors and they would probably loose their license.     The other thing you have to take into account is that the agents themselves do not get the entire commission unless they are the broker (owner) of the real estate firm. Most agents are on a split with the broker to help pay for office space, desk space, phones, advertising, MLS fees etc. Lets just say the total office part of the commission amounts to $1000. Most agents will be on a split around the 60/40 mark. This meaning that the agent would get 600 dollars, and the office (broker) would get 400 dollars. As you can see, the agent does not have a whole lot to play with and it takes a deal with more than one person to even get the commission lowered. You can try to negotiate a deal with the seller and his agent. The outcome will depend on how bad the seller wants you to buy the house. Hope this mumbo jumbo makes sense & will somehow help you out? FNO Toolman — FREE Online Help & Advice Covering A Wide Variety Of Subjects            PLUS Loads Of Great Family Fun! Check Us Out…                                   www-familynews-org             Your Connection To North American Family Life – Hide quoted text — Show quoted text – >Ok, so I’ve spent the last month driving around, looking at houses (new >and used), and have decided to purchase a new house.  I never had a >real-estate agent.  From what I’ve heard, whether you buy a new or used >house, if I had an agent, he would get a commission (3%).  So the question >is, should I find an agent that would split the commission with me and >bring him onboard prior to buying the house?  Is this legal?  Will most >real-estate agents do this if they haven’t had to do any work for you? It >seems silly to let the builder keep the money, and it also seems silly to >bring in a real-estate agent just to give him the money…if anyone’s >getting any of my money, it should be me, as I’ve done all the work. >Any advice is appreciated.  BTW, I live in Orlando, FL. >Shawn

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