assuming u can get to the home owner yourself. what are the advantages of going through a broker and having the expense of his fees?

Little confused by your question. What does paying for cash have to do with whether or not a seller or a buyer uses a real estate agent? Also, are you talking about a fee-based buyer's agent, or a commission-based seller's agent?

Advantages of using an agent:
- legal contract drawn up and/or reviewed
- experience with house valuations (when you can negotiate, when you can't)
- someone to do the leg work for finding a house that suites your needs / arranging house viewings with owners

As a home buyer, you don't actually pay any commission or fees to this agent - the fees are deducted from the seller. However, if you are working without an agent you have the advantage of asking for some money off because "there are no comissions on your end to pay".

In all honesty though, you should DEFINITELY get an agent if you are buying a house - it's only worth doing it by yourself if you're selling AND you have alot of time to spare.

Agents have access to strong marketing resources and can handle all the legal stuff.

The main service a realtor provides is hooking up buyers and sellers. If those are already in place, there are more efficient and cheaper ways to complete the transaction. Get a RE lawyer involved, pay him a flat hourly rate and save 6% (or whatever ridiculous fee realtors charge in your area).

Also, a few days ago I put an offer on a house w/out using a realtor. It would be my primary residence and I wrote the contract so the normal buyer agent's fee goes to the seller.

The seller's agent was predictably difficult and told me how I couldn't put an offer in w/out an agent and there were too many liability issues to do so w/out an agent. Yeah, right.

It's a low offer so I don't need to give an extra 3% to an agent on the deal when I know what I want to buy and how much I want to pay for it.

Option period ends tomorrow. Fingers crossed.

I never understand why the norm is to pay the buyers agent a flat percent. It would be one thing if saving you money got them nothing, but it actually reduces their take. It seems like terribly misaligned incentives to me.

The "buyer's agent" you're talking about I think is a misnomer. There do actually exist legitimate buyer's agents who work fee-based, so they have no incentives to care about the price or even if a deal goes through at all - they just want to make their client happy.

+1

Maybe you are confusing a mortgage broker with a RE agent? Otherwise your post seems ******ed

-1

There are good non-fee-based (commission based) agents out there, OBV. And OBV they also want to make their client happy so that their reputation grows and they get referral and return business.

As with anything there are the good and the bad of the profession. Don't think that fee-based anything is always a better option, as the "bad" simply move slow to rack up hours and over-charge you.

I bought my house from a seller. Neither of us used an agent. We used lawyers (that you will need anyway) to do the legal stuff.

Care to explain why the OBV motivation of making "their client happy so that their reputation grows and they get referral and return business" doesn't similary apply to fee based compensation?

I didnt say it doesn't; because it does. I'm trying to point out that there are both good and bad agents working on both commission and fees. Some people tend to think that fee based = always better which isn't true

Ah sorry, I totaly misinterpreted your post.

No, my peoples wants to buy a home and go around the seller's agent so its just buyer and seller, apparently to be able to offer the sellers a lower price as they will not have any seller agent's fees.

Not possible. Seller has a contractual obligation.

possible. normally the seller has a contract for 6% (or whatever standard is in your area) sales commission reserved for agents involved and if there is not a buyer's agent, the seller's agent gets the entire thing.

write in your offer that the seller agent will get 3% and the other 3% reserved for the buyers agent would go to the seller. the seller's agent must present this offer and then would have to explain to the seller why they shouldnt amend their contract. it's in their best interest to accept the offer all other things being equal.

Haha. Don't disagree then say something entirely different. Lowering fees is entirely doable and very common on slow moving commercial property. Going around the seller's agent is still not possible.

youre right. I misread Professor Pains point above thinking he was referring to buyer's agent.

It seemed an honest mistake and a useful post.

Their incentives are always to sell as many houses as fast as possible - the best aren't the ones that understand the market the best and can really get you the best prices - the best are the ones pulling in the most money, which means the most clients and the fastest turn around. Regardless of true value, their incentive is to have you satisfied in a reasonable time frame.

If a house is going for $400k (buyer's commission 3% ~ 12k), a buyer agent can still rationally aim to get you the house for ~385k (a reduced commission of $450) because he/she believes your additional satisfaction and probability to refer / use again is worth the $450.

Again, the majority of their income will be dictated by their client base and speed at which they turn a house over - the additional percentages saved by being better negotiators will play a non-existent role.

Of course, this leads to the obvious question - "won't they convince me to simply buy the house at the asking price since that ends the negotiations much quicker?" Yes, yes they will, just as the seller agent will convince their client to sell at the lower price because it allows THEIR agent to end the negotiations quicker as well.

Check and Balance.

The best salespeople are usually never the most knowledgeable in any field.