Why do home buyers use real estate agents?

[disneysteve]

Originally Posted by syracusa

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.

I didn't really get that to be your point. The title of the thread is "Why do home buyers use real estate agents?" and your OP said this:

Originally Posted by syracusa

Why do home buyers even USE real estate agents? I could see some usefulness in having a real estate agent for sellers ...but for buyers? Why? I honestly believe they contribute NOTHING of value to helping someone find the right house for them; or so little that it is intangible...let alone worth the gargantuan commissions they charge.

That's why many of us have responded as we did, trying to explain why, as buyers, we used a real estate agent. Whether or not the commission is worth it to the seller is a different discussion. I can tell you in our case, the house we bought had been under contract 2 previous times and both deals had fallen through. The husband had already moved out of state due to a job change and they were anxious to sell. I imagine that they were quite happy to have our agent show up with a qualified buyer that resulted in a successful sale, even though it cost them some money for the commission.

[Brokemofo]

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.

Why, I can contact my Father in Law (Realtor) and he can let me into the home.

People list their homes, so they don't have to meet strangers by themselves in their home. They wouuld much rather let a Realtor risk their safety. This is just one reason.

[syracusa]

Originally Posted by disneysteve

I didn't really get that to be your point. The title of the thread is "Why do home buyers use real estate agents?" and your OP said this:
That's why many of us have responded as we did, trying to explain why, as buyers, we used a real estate agent. Whether or not the commission is worth it to the seller is a different discussion.

The title was mirroring the point I was trying to make: that indeed, the commission is not worth the reasons presented, on either side. Moreover, if this commission is imposed on the party that did not even choose to use the service (someone said that it makes sense for buyers to use a REA bc it is free for them!!!) then you can recognize the absurdity of the whole thing.

It did help to read the arguments, though, because before this, I was afraid I had really been missing something serious that I just did not know about. The justifications I read for the monopolistic existence of these abusive RE agencies just confirmed what I had suspected in the first place: that a certain mindset/culture of real estate agency "crucial usefulness" is in place and people simply do not want to break out of this mindset because they are stuck in it, psychologically. They prefer to pay high commissions for what most people in this world would consider frivolous/imaginary reasons: the lack of "safety" in meeting a prospective buyer/seller (take a gun with you if you're really so afraid), the supposed "emotionality" of the buyer who ostensibly does not know what is good for him/her and needs to rely on a REA to open his/her eyes, the lack of time to print out some maps and drive in said place, the need to have someone open a "lock box" when buyer/seller could simply deal with each other after work hours, etc.

But thank you everyone for your answers.

[syracusa]

Originally Posted by 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.

I did suggested we do this; but this is where someone like us, who would otherwise choose this rational path, gets caught in a system where everyone else chooses to do things differently and uses an agent. If all buyers use an agent (because they rely on the unwritten rule that I, as a seller, will agree to pay half of his/her agents's commission) - then who will I sell the house to?

We thought about doing the SBO thing only and using just such websites but the vast majority of people here go through agents; so you, as a seller, ends up NOT HAVING A CHOICE but to deal with the prospective buyers' agents, like it or not.

So it is not that simple to just say "I will not accept you if you come with an agent" because they all come with agents anyway. And when you have a stake in seeing your house sold (which any seller does), you're just caught in the system.

[LuxLiving]

Even if the buyer comes with an agent, you can still negotiate who pays what.

You don't pay their agent, per se, as in it's an added fee on top of the Listing agent's fee. Where I live the buyer's agent SPLITS the already agreed upon listing realtor's fee.

[syracusa]

Originally Posted by markusk

In this down market, an agent is a must for sellers. Not so critical for buyers, but I am using one now myself.

Even though I see the absurdity of the system and would normally refuse to feed into it further, it is clear that we cannot afford to "do it our way" in this market. So I recently told my husband that maybe we should break down and just get a full REA, like everyone esle, not just the discount broker we have right now.

He said: "well, when the neighbours, who have an identical place for sale, will sell theirs with the help of their top notch agent, then I will consider getting one. Until then - No."

I had to agree.

[disneysteve]

Originally Posted by syracusa

the need to have someone open a "lock box" when buyer/seller could simply deal with each other after work hours, etc.

Sometimes there is a lock-box because the owner no longer lives in the home. My mother sold her house in Pennsylvania last year. She moved to New Jersey in June 2006 and the house didn't sell until March 2007. During those 9 months, real estate agents went in and out of the house showing it to potential buyers. My mother couldn't have gone there every time somebody wanted to see the place.

As for the safety issue, it isn't just the buyer who needs protection. The seller does also. My mom is 77 years old. She couldn't have strangers coming in with her there by herself. Would you suggest she only show the house to potential buyers with a shotgun in her hands? How welcoming that would be.

[syracusa]

Originally Posted by LuxLiving

Even if the buyer comes with an agent, you can still negotiate who pays what.

You don't pay their agent, per se, as in it's an added fee on top of the Listing agent's fee. Where I live the buyer's agent SPLITS the already agreed upon listing realtor's fee.

I think it varies by region but I will have to look into it to clarify what we can do. In this buyer's market though, it's definitely not cake.
The bottom line is that if we sell for about what we are asking right now, we will still end up paying quite a bit of realtor fees. And we would anyway, at any price. There's no escaping it.

[syracusa]

Originally Posted by disneysteve

Sometimes there is a lock-box because the owner no longer lives in the home. My mother sold her house in Pennsylvania last year. She moved to New Jersey in June 2006 and the house didn't sell until March 2007. During those 9 months, real estate agents went in and out of the house showing it to potential buyers. My mother couldn't have gone there every time somebody wanted to see the place.

As for the safety issue, it isn't just the buyer who needs protection. The seller does also. My mom is 77 years old. She couldn't have strangers coming in with her there by herself. Would you suggest she only show the house to potential buyers with a shotgun in her hands? How welcoming that would be.

DisneySteve,

I think these are exceptions where REA-s could make sense. I am talking about a market where virtually NO ONE makes a move or takes a breath without a REA. This I see as absurd.

[cptacek]

Originally Posted by syracusa

We thought about doing the SBO thing only and using just such websites but the vast majority of people here go through agents; so you, as a seller, ends up NOT HAVING A CHOICE but to deal with the prospective buyers' agents, like it or not.

So it is not that simple to just say "I will not accept you if you come with an agent" because they all come with agents anyway. And when you have a stake in seeing your house sold (which any seller does), you're just caught in the system.

If you are this incensed about having to work with a buyer's agent, then if you actually do sell to someone who has an agent, you are a hypocrite.

If you want to sell to someone who does not have an agent, then do that. It might take longer. You might not get what you want out of it. Some people, maybe most people, won't come to see your house. But, when you finally do sell it to someone, you will have stuck to your guns and not paid for an agent. That is the choice that you have to make.

[Gruntina]

Originally Posted by syracusa

DisneySteve,

I think these are exceptions where REA-s could make sense. I am talking about a market where virtually NO ONE makes a move or takes a breath without a REA. This I see as absurd.

Syracusa,

I learn a lot from your comments and they do make me think along with all the others and what they had which were also very good as I never went through the home buying process and wouldn't even know where to begin with questioning.

But I cannot help to think that you are enjoying "milking it to us" with all your responses because you go into further scenarios of your question that was not in the original question just to keep going on how Your opinion just cannot accept American ways of thinking rather than with genuine attempts trying to either understand or hear what others have to share and be open minded with the possibility that we all can learn something new even if not everyone agree on everything.

While you ask good questions but how you describe action that you do not agree with downplaying terms such as "kindergarten style,"(one of the many examples).. now that is low.

[Snave]

Originally Posted by syracusa

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

Then refuse my offer! Again, it is your right not to accept. Put your house on the market "for sale by owner" and "no agents allowed." It is your right - who am I to not agree. I just won't buy.

[disneysteve]

Originally Posted by Snave

Then refuse my offer! Again, it is your right not to accept. Put your house on the market "for sale by owner" and "no agents allowed." It is your right - who am I to not agree. I just won't buy.

In the seller's market that existed a few years ago, this would have worked just fine. I heard many, many stories of people who sold their home while they were on the front lawn hammering in the For Sale sign. Somebody driving by saw them and stopped and made an offer. Some people didn't even get to the point of putting out a sign. They just mentioned at work or at church that they were planning to sell and somebody made an offer. It was crazy.

Today, however, it is a much different market in much of the country. If I was selling my house today, I'd want every potential buyer I could get. As I said, it took my mother 9 months to sell her house with an agent and the market has gotten considerably worse since then.

[LuxLiving]

Ahhh, the lovely buyer's agent...it was one of them that brought an offer on FIL's house!

[maat55]

Agents are nothing more than middlemen/or women. Buying and selling a house is no different than buying or selling an car. You check under the hood yourself or use an inspector. Only you write up a more involved contract.

The real racket is in the title search and processing. You can thank lawyers for the screwed up system we have today. 3,000 and up to close a house, it's BULLCRAP.

[Seeker]

As a buyer, with knowing that a seller is refusing to allow any my agent entry into their home, I'd be wondering what that seller is intending to hide.... In my opinion it would me much easier to enter into a bad deal without finding a reputable buyers agent to help me navigate this MAJOR purchase.

As a seller, knowing that buyers will have an easier time in finding your "for sale" home with an agent, I'd not want to discount that possibility either.

I am not in the business of sellign/buying homes and do not have the time or inclination to navigate the legal/title aspects of that major purchase that a house represents; so I would not do this process any other way. The professionals can handle it; that's what they are paid for. I do not absolve myself of all responsibility... just the parts that I do not fully trust myself to do properly with the laws and disclosures that need to take place.

I would expect the agent to deal directly with the other agent; and me or DH to make the decisions with regard to offers -- and this is BOTH as either a buyer or a seller. I am willing to pay that price when I sell my current home, and yes of the buyer's agent as well (knowing that my home might not have even sold without his/her/their efforts).

[Brokemofo]

Let's get this straight people. The seller doesn't pay the agent selling the home. The seller pays the listing Broker/agent. The llisting broker/agent pays the selling agent.

[Seeker]

Originally Posted by Brokemofo

Let's get this straight people. The seller doesn't pay the agent selling the home. The seller pays the listing Broker/agent. The llisting broker/agent pays the selling agent.

The seller pays his agent, and the buyers agent usually gets 50% of that. Does not everything come from the seller home?

[Brokemofo]

Originally Posted by Seeker

The seller pays his agent, and the buyers agent usually gets 50% of that. Does not everything come from the seller home?

Semantics I guess. Technically, the seller is paying a Broker to list and sell his home. The fees paid by the seller are usually split 2 to 4 ways between the agent/agents and broker/brokers. The buyers agent gets what ever the buyers agent broker agrees to pay his agent which is not going to be 50%.

[markusk]

20 years ago, I'm sure someone asked, "Why do we have to pay someone a commission to buy stocks and mutual funds?" I wonder how the typical investor responded then vs now. I wonder how VAnguard was reguarded when it was a small up start of a company, with their fancy indexing and low commissions. I'm guessing they were ridiculed and shunned by the investment community at large. I wonder if they were even called "unAmerican?"

I think the main difference between buying/selling a mutual fund vs a house is that the latter is rather a rare event. I mean, for the typical person, how often do we buy/sell a home? In the past, it was very rare, perhaps (I am only guessing) 2-3 in a life time? Now a days, it is still rare but more frequenct than our parents' generation. I am in my 40's and I've sold/bought 2 homes, and about to buy a third, God willing. But my vast experience of 2 were all within the last 5 years of my life.

Since buying/selling a home is such a rare event, most of us are inexperienced and find it easier to rely on a middle man. This will change with time as people move more frequently and try to save some money by cutting out the middle wo/man and their 6% commission. Thus the discount broker/FSBO were born, and currently ridiculed and barely tolerated by realtors. Don't be surprised when realtors refuse to bring their clients to homes with FSBO signs. This is one of the reasons the Fed was investigating the Association of Realtors for monopolistic practices.

Due to the recent run up on prices and the seller's market that just ended, the ranks of realtors, I think, are swelled with inexperienced/incompetent realtors. I am glad that the market has turned, not only because I am trying to buy a house now, but also because the down market will "thin the ranks," if you will, of the realtors, so that the recent-part-time-inexperienced ones who NEVER experienced a buyers' market will quit leaving only the competant/veteran/professional realtors.

I have nothing against realtors (or brokers or financial advisors). Again, as with any profession, there are bad apples that ruin it for others. Do your homework when hiring an agent because, under certain circumstances, they can really help you out.