Why do home buyers use real estate agents?

[momof1in150]

Originally Posted by moneybags

I agree with all your points except this one. A realtor may encourage you to buy a house they are the listing agent on. I also think they may talk up a house just to make a sale.

Not Ethical. This is dual agency and it has to be disclosed. An RE agent is required to show you houses in your price range that they aren't the listing agent before they show you their listings.

[momof1in150]

Originally Posted by markusk

No insult intended.

Whether a realtor went to college or not does not make him/her a good/bad agent. I'm sure there are college educated agents who are incompetent and unethical and non-college educated agents who are excellent realtors with the best intentions for their clients. It's just an observation that there are no college requirements to get a realtor's license.

But you don't realize the amount of education goes into getting your license (in some states) and how many hours of continuing education in core and elective classes that you have to take to maintain your license. Then once you get your license the classes you have to take to get certain credentials and the classes you need to take to get the Realtor designation. I have taken enough classes for Real Estate to earn a second college degree. I have a degree in Business/Marketing which is as much of a help then a RE degree.

[disneysteve]

Originally Posted by safari

Perhaps, instead of a percentage of the sale price, the fee should be flat, since the work they do is the same whether I buy a a $300K house or a $1,000,000 house.

I think this makes sense. I say the same thing about tipping in restaurants. The server does the same amount of work to bring me the $30 steak as for the $10 pasta dish. Why should he get 3 times more for bringing the steak?

[Brokemofo]

Originally Posted by momof1in150

Not Ethical. This is dual agency and it has to be disclosed. An RE agent is required to show you houses in your price range that they aren't the listing agent before they show you their listings.

This is not true. A Realtor is not "required" to show any particular listings whether they are the llisting agent or not. The are required to show due diligence and a fudiciary obligation to all parties involved.

[JBL]

While I am willing to DIY most things, selling and buying real estate is not one of them. A good real estate broker is priceless. You just keep your house clean and the agent takes care of everything else. On the buying side, the real estate agent helps you see value, points out flaws and potential issues, can be very helpful in negotiations, etc.

I did try once to sell a condo myself without an agent. It was horrible. My phone was constantly ringing with people wanting to see the place who would then never show up, or would come with no agent and offer me incredibly low ball offers with unreasonable demands. A lot of people who were shopping without an agent's assistance obviously had no clue what they wanted and would waste time coming to see an apartment that did not meet their needs.

[syracusa]

Originally Posted by sweeps

Why do these strange practices exist? Because of a very powerful realtor lobby.

Exactly. This is what I thought. I talked to other people from regions of the world where buyers/sellers of homes always indicate in their ads - PLEASE, NO INTERMEDIARIES/AGENCIES INVOLVED!- and they agreed.

Originally Posted by momof1in150

Real Estate Agents know the current market. They have an unbiased opinion of the house. Home owners are too emotional when it comes to pricing/showing.

The reasons mentioned by the poster above are as flimsy as it gets. Could these agencies come up with a more hoccus-poccus justification than this? There's no better judge of what I want in a house than myself - end of story. REA do not know anything beyond what I, as a buyer, would need to know: which is, how I want the house to look like, what kind of features I look for in a house, and where it should be located.

We have bought two houses before like this, completely on our own, and we did perfectly fine. We looked on the Internet, at the area we were interested in, and that was that.
The problem is very few people question these practices and even if you would like to do things differently, you get caught in the system and the abusive practices in it, whether you want to pay a real estate agent or not. It is absolutely unacceptable that a seller who only chooses a discount broker should also have to pay half of the real estate commission of their buyer's agent. If the buyer wants an agent to take them by the hand, they should pay for his/her "so crucial" services themselves.
But I should not have to pay for half of their expense just because.

I am really hoping that this real estate market will mark the end of these useless agents. It is quite laughable.

[FrugalFish]

When we bought our house, we ended up having the worlds worst escrow. Thankfully we had the best agent available (I will always think so anyway after going through this process). She ran interference for us and made sure our best interests were taken care of. She knew the laws that we would not have known as buyers. It is a very long story and covers everything from the sellers removing items from the house they were not entitled to take, to the listing agent finding another interested buying party after our contract was already in effect- and creatively trying to get us to break the contract. Thank goodness our agent was on the ball. I can't even imagine how much of a nightmare it would have been without her help and guidance.

So beyond all the menial things that buyers agents do, a good one will protect their client's interest through rocky waters where not all sellers are good sellers.

[syracusa]

Originally Posted by Snave

syracusa,

And you wonder why some people get a little miffed at some of the things you write? Wow.

Anyway, we moved to Tennessee 5 years ago for work. We had no idea where we were going, what we were doing and had a weekend to find a home. We used an agent so that we could see multiple houses in one day. We did use the internet to locate some homes we wanted to see and she also used her knowledge toshow us other neighborhoods we didn't know about. Because we were with her, she was able to take us from home to home and set everything up. Had we not been with her, we would have had to call every agent and set up times, etc... That would have limited the number of homes we could possibly had seen. We ended up choosing a home that SHE found and we did not find on the internet. I am sure the seller was very happy that she brought a prospective buyer to their home who would not have originally looked at it.

Previous to this move, I owned a home in Ohio that the realtor knew was going to go on the market in a few weeks. Had I not used a realtor, how would I have known this. He called the people, I walked through it and we had a deal and the home never even hit the market.

Great! And if you bought my home, I would have to pay for your choice of using an agent...why?

[syracusa]

Originally Posted by Brokemofo

This is correct. The seller pays the brokers fees, not the buyer. Of course, I suppose a seller could ask a buyer to pay them, but who knows.

One of the biggest reasons one needs a agent to buy real estate is you pretty much want to go look at the home before offering on it don't you? Well, try to get into a home for sale without a real estate agent and see what happens especially if it has a lock box on the door.

How about contacting the seller yourself and setting up an appointment with him/her? Leave a note with your phone number in his mail boxs and inform the seller that you would like to get together and take a look at what he has to sell.

People all over the world do that and they make a point of keeping these agents out even though there are constant attempts by these agencies to monopolize the markets just like they did here.

[sweeps]

syracusa: I'm not saying an agent isn't useful. If you have tons of time on your hands and you have thick skin (it appears you do), then going without an agent would make sense, but for most people it doesn't.

My point was that payment arrangements are strange. I agree with safari and steve that the fee should be a flat fee. And the seller and the buyer should be paying for their own agents, if they choose to hire one at all.

[syracusa]

Originally Posted by markusk

I have to disagree with most of the folks here and have to agree with syracusa. I don't know how this present system evolved, but it is boardering on a scam.

All in all, it is a joke. The pro-arguments I have read here are beyond laughable. It only takes a bit of common sense to realize that if you want to purchase something and NOT pay lots of extra money just because, you simply get rid of the middle man. You go to the seller and negociate between the two of you. If someone is THAT limited as to not know WHAT they want in a house or where streets and locations are or how to look over a buyer/seller contract (that's what lawyers' fees are for!)...then sure, get an agent to take you by the hand. But how about not allowing such scamming practices in the system as to force me, the seller, to pay for your ignorance or lack of time to look for what yoy need?

If you don't have the time to look - PAY FOR YOUR OWN AGENT!

[momof1in150]

Originally Posted by syracusa

How about contacting the seller yourself and setting up an appointment with him/her? Leave a note with your phone number in his mail boxs and inform the seller that you would like to get together and take a look at what he has to sell.

People all over the world do that and they make a point of keeping these agents out even though there are constant attempts by these agencies to monopolize the markets just like they did here.

If they have signed a contract with a listing agent then they need to work with their agent to show their home. If they want to show their home on their own then they shouldn't hire an agent. You can't have it both ways.

[syracusa]

Originally Posted by sweeps

syracusa: I'm not saying an agent isn't useful. If you have tons of time on your hands and you have thick skin (it appears you do), then going without an agent would make sense, but for most people it doesn't.

My point was that payment arrangements are strange. I agree with safari and steve that the fee should be a flat fee. And the seller and the buyer should be paying for their own agents, if they choose to hire one at all.

Agree. Yes, I have thick skin, I would know what I am looking for, where I am looking, how to negociate, what I want, and how to navigate the contracts. The fact that most other people here cannot do these things on their own...well, that's OK. They should hire their own agent and I should not have to pay a dime for their choice.

[syracusa]

Originally Posted by momof1in150

If they have signed a contract with a listing agent then they need to work with their agent to show their home. If they want to show their home on their own then they shouldn't hire an agent. You can't have it both ways.

Exactly. It's called monopoly. And this is the very reason why both buyers and sellers should ultimately try to negociate amongst themselves and just get rid of these incredibly overpriced and fundamentally useless agencies.

Originally Posted by sweeps

People use an agent to buy a house, because it is free to them.

It shouldn't be.
If you're a seller and hired an agent - you should pay for ALL of his/her services and fees.
If you're a buyer and hired an agent - you should pay for ALL of his/her services and fees.

I think it's pretty easy. It works for many other people in many other countries. Why not here?

[simpleyme]

so do you really think a person selling a house that has to pay those fees would not include it in the price?

I bet you would be fun to deal with ,I have never bought with an agent but when I go to sell I may use an agent mainly to screen potential buyers,I do not care to show my properties to folks who just want a tour

does anyone know if agents can screen out the folks that have no money?

[sweeps]

Originally Posted by simpleyme

so do you really think a person selling a house that has to pay those fees would not include it in the price?

I think a seller definitely WANTS to recuperate those costs he's paying to a realtor, but realistically he can only sell for what the market can bear. The buyer couldn't care less whether the seller hired an agent and if so, what percentage the seller has agreed to pay in commission. The buyer is simply going to pay what he feels is fair market value.

[disneysteve]

syracusa - If you are sure you know exactly what you want and have the time and knowledge to fully evaluate potential homes on your own, that's terrific. Don't use an agent.

Many people, however, myself included, don't fit that description. When we bought our house, we were first-time home buyers. We didn't know the first thing about the process. I seriously doubt that we would have ended up with the home we got without the help of our agent. We both work full time. Neither of us had the time to search listings, make phone calls, schedule appointments, map out routes for viewings, etc. The agent took care of all of that for us. He gave us info about the neighborhoods, traffic patterns, local schools, etc. Lots of stuff that would have been very difficult to learn on our own without a great deal of effort. A good agent knows the area and is prepared to answer any questions you have not just about a particular house but about the area in general that can help a lot in making your purchase decision.

[syracusa]

Originally Posted by disneysteve

syracusa - If you are sure you know exactly what you want and have the time and knowledge to fully evaluate potential homes on your own, that's terrific. Don't use an agent.

Many people, however, myself included, don't fit that description. When we bought our house, we were first-time home buyers. We didn't know the first thing about the process. I seriously doubt that we would have ended up with the home we got without the help of our agent. We both work full time. Neither of us had the time to search listings, make phone calls, schedule appointments, map out routes for viewings, etc. The agent took care of all of that for us. He gave us info about the neighborhoods, traffic patterns, local schools, etc. Lots of stuff that would have been very difficult to learn on our own without a great deal of effort. A good agent knows the area and is prepared to answer any questions you have not just about a particular house but about the area in general that can help a lot in making your purchase decision.

I understand that very well. But this is a choice you made for yourself, that furthered your own interests, and the person you buy from should not have to pay anything that would go towards your REA's commission. That was my point.

However, on a side note, it is interesting to see the kind of luxuries that people in this country can still afford, even during a so-called "recession" - which is to get involved with middle men who cost them a lot - just because they do not think they have the time, disposition, knowledge, etc to decide what kind of house they are looking for and to do the search for themselves. People in other parts of the world work full-time jobs too and deal with quite heavy households, problems, complications and responsibilities; and yet, they cringe at the thought of paying such huge commissions to real estate agencies, so they learn to do the job for themselves when they get on the market to buy/sell. They simply have the guts to go to the buyer/seller and say "I am interested but please keep agents out". When everyone has that mindset, then the middle man is eliminated.

When you think about these commissions that REA end up with...how much time, work and moderation would it take for an average Joe to just save that kind of money for himself? Those are not pennies we are talking about, right?

I still think it is irrational behavior but I respect someone's choice to hire an agent. I just would like to NOT be forced to pay for their choice.

[sweeps]

syracusa, I don't understand the problem.

If you're selling, don't hire an agent and say you will not accept a buyer's agent.

If you're buying, don't hire an agent and say you want 3% deducted from the price of the house to compensate for you not bringing an agent to the deal.