This might rub some people the wrong way. but in my short home buying history, the realtors i have worked with have provided paper work and a way to get into the house for viewing. other than that i found the house through friends texting me or riding around or Zillow. The homes I am looking at get a lot of attention (400k homes in need of minor work in highly sought after areas). The homes I'm looking for get multiple offers. Is it wrong to ask my realtor to drop her commission to 2% from 3%. I am already waiving inspections and sacrificing things on my part. why cant the realtor take 8000 in commission instead of 12000? I minimize the realtors work by driving by the houses before hand to make sure I like the area. we have not looked at a house with the realtor yet.
My offer would be $4000 stronger if the realtor takes 2% is my argument. Its not 1990 where 3 percent was a fair wage. 3 % on a 4-500k house is insane for paperwork, especially when i find the homes online or driving around and I'm waiving inspection and putting down 20%. End rant. but can i get some pros thoughts on this?
have flipped one house successfully and own 2 college rentals for experience level reference. Thanks!
If buyer agent compensation (which is set by the seller) is the thing losing you deals, you're looking at the wrong deals.
Why should your agent take a pay decrease just because you want to pursue properties you cant make a competitive offer on?
You say "its only 1%" but its not. It's 1% of the purchase price, it's 30% of their pay. Would you take a 30% pay cut to work for someone who (from the tone of this post) doesn't value or respect you?
I’ve never heard of a deal breaker because of 1%. Here are your options, by it yourself and have no agent represent you, then you will be $12,000 stronger!
or put your money where your mouth is and fork over the $4000, I don’t think this would break you.
EXACT reason I never use a realtor, all they do is cost the buyer and seller money. 99% of them do not have any knowledge of the property and never even been there.
So, stop looking for deals on MLS, thats not where they are anyway, I have done about 500 using a realtor for maybe 10 . Get to your local RE meeting and join all the social media sites for your area
Listing agents negotiate the commission when they get the listing. They specify in their contract how much they will share with an agent who brings a buyer. Your agent taking a lower commission does not automatically send that money back to the seller. If you signed a buyers representation agreement, then you can obviously negotiate how much they get. I personally take what the seller gives me as long as it’s over my brokers minimum and I will not require my buyers to make up the difference. Be ready to go through some agents until you find someone willing to do this. Most of the good ones are not going to give you what the seller is offering them for compensation. They might be more willing if you’re offering them equity in the deal in exchange.
My opinion is that the buyer's broker earns their commission in negotiating..especially if you are in a multiple offer situation. You need to find a good one that gets you the deals and saves you money! Look for investor friendly agents on this platform or social media.
A good agent is worth every penny, especially if you will be using them over time on multiple deals. The right ones will go out of there way for you and become an important part of your business. You never know what comes up that an agent can handle for you, especially out of state. If you're worried about a few bucks then don't use a buyers agent, go direct to seller's. This is a relationship business, don't ever burn a bridge if you don't have to.
I’ve never heard of a deal breaker because of 1%. Here are your options, by it yourself and have no agent represent you, then you will be $12,000 stronger!
or put your money where your mouth is and fork over the $4000, I don’t think this would break you.
My thought exactly! 1% isn’t a deal breaker, so the realtor shouldn’t loose a deal over that. 4000 isn’t a big deal, so the realtor who isn’t coughing up 20 % and isn’t taking a huge chance waiving inspection would definitely be willing to go from 12000 to 8000 commission on a 400000 house. I see your point, Thanks for your insight.
Most of ours are 2.5% but I get what you're saying. Wait until you don’t have an agent at all and are told it doesnt matter because the collusive and exclusive listing agreement has the seller paying either way.
The big reason you won't get a reduction from a BA is because you need to pay for all the other 'buyers' that wasted their time.
Theyll also say how they have to check with and split it with their broker, but the real reason is to compensate them for all the other failed offers / time wasters that likely have nothing to do with your transaction.
Most of ours are 2.5% but I get what you're saying. Wait until you don’t have an agent at all and are told it doesnt matter because the collusive and exclusive listing agreement has the seller paying either way.
The big reason you won't get a reduction from a BA is because you need to pay for all the other 'buyers' that wasted their time. Theyll also say how they hwve to check with and split it with their broker, but the real reason is to compensate them for all the failed BA deals.
A good agent should be 100% worth that 1%. Either they will save you more than 1% through negotiation or they provide value in other ways. I personally would never ask an agent to lower commission. If you agent comes across a home run deal that hasn't hit the market yet do you think they will send it to you who asks them to take lower commission or the person who gladly pays their full commission and sends them a thank you note when they complete a deal together? If your agent isn't sending you deals this is probably why. Now that my agent knows that I am serious about expanding my portfolio and can make him money he sends me deals all the time.
A huge strategy that you're missing out on is to contact the selling agent yourself. A script would sound something like:
"I found this property on Zillow and would like to make an offer, but I'm not represented by an agent. I can let you write the offer for me and collect both side of the commission, how does that sound?"
This may not work depending on the state you are in, or the relationship of the selling party and their agent, however, that usually provides a huge incentive to the selling agent to sell the property to you. Even if they don't allow for a transactional relationship in your state, they will always find a friend of theirs to represent you.
However, I do believe that a knowledgeable agent is worth their weight in gold. Try delegating more work to them and treating them like an actual team member. If they don't do their job, there are plenty of agents who will work tirelessly to sell you a property.
This might rub some people the wrong way. but in my short home buying history, the realtors i have worked with have provided paper work and a way to get into the house for viewing. other than that i found the house through friends texting me or riding around or Zillow. The homes I am looking at get a lot of attention (400k homes in need of minor work in highly sought after areas). The homes I'm looking for get multiple offers. Is it wrong to ask my realtor to drop her commission to 2% from 3%. I am already waiving inspections and sacrificing things on my part. why cant the realtor take 8000 in commission instead of 12000? I minimize the realtors work by driving by the houses before hand to make sure I like the area. we have not looked at a house with the realtor yet.
My offer would be $4000 stronger if the realtor takes 2% is my argument. Its not 1990 where 3 percent was a fair wage. 3 % on a 4-500k house is insane for paperwork, especially when i find the homes online or driving around and I'm waiving inspection and putting down 20%. End rant. but can i get some pros thoughts on this?
have flipped one house successfully and own 2 college rentals for experience level reference. Thanks!
Free market. You offer to pay what you want. Realtor can accept or chose not to work with you.
If buyer agent compensation (which is set by the seller) is the thing losing you deals, you're looking at the wrong deals.
Why should your agent take a pay decrease just because you want to pursue properties you cant make a competitive offer on?
You say "its only 1%" but its not. It's 1% of the purchase price, it's 30% of their pay. Would you take a 30% pay cut to work for someone who (from the tone of this post) doesn't value or respect you?
A. The seller is paying the buyers commission. It’s not coming out of your pocket.
The sellers agent who lets say is getting 7% is going to charge them 7% whether your buyer agent gets 1% point less.
B. How many offers have you made through a broker that you did not win? Say 5
How many offers through a broker did you get? Say 1
Did you pay them for the 4 offers you didn’t win?
C. Our last deal we bought I paid our buyer agent $20,000 commission that I didn’t need to do. Because he is part of my “Team”. List $1.4mm got down to $900k, negotiated down to $800k. Deal instead of taking 1 month to close took 5 months. He brought the deal home. So what that is just one deal? Before that he brought me a deal that after development added $760k appraised value on just the land, which helped on the development loan. Didn’t have to bring hardly any cash to the deal.
I love my buyer agent.
Same success with my other local agent.
Same success with our other agent in Belize.
Same success with our seller agent. As we were selling lots in our subdivision and he kept making the sales happen.
Common thread is they are part of our team.
Find an agent you enjoy working with. Even if you find the property have them approach the sellers agent. They will love you. They get a commission that someone else’s is paying. Realize they don’t get all of the commission.
As a buyer, you aren't paying the commission-it comes out of the seller's pocket in most places. While I've bought a few houses, I've only sold one and in that case the selling agent got a higher commission than the buyer's agent for obvious reasons as they have more costs.
Why not negotiate seller concessions? It's such a lazy way to get more cash in hand, I would understand if you are doing all the leg work. But if you have a good realtor who works hard to get you a good deal you're going to turn them off.
As other have said, the seller sets the commission total and commission split between buyer and seller agents. Are you suggesting that you would ask the seller to give a lower split to your agent and give you the difference in a lower sales price? I'm not sure why any seller would do that since it doesn't affect their bottom line and might make buyers' agents less likely to want to show their property.
An alternative would be to ask your agent to leave you a credit in escrow so that part of the commission comes to you. I've seen some agents do that.
This might rub some people the wrong way. but in my short home buying history, the realtors i have worked with have provided paper work and a way to get into the house for viewing. other than that i found the house through friends texting me or riding around or Zillow. The homes I am looking at get a lot of attention (400k homes in need of minor work in highly sought after areas). The homes I'm looking for get multiple offers. Is it wrong to ask my realtor to drop her commission to 2% from 3%. I am already waiving inspections and sacrificing things on my part. why cant the realtor take 8000 in commission instead of 12000? I minimize the realtors work by driving by the houses before hand to make sure I like the area. we have not looked at a house with the realtor yet.
My offer would be $4000 stronger if the realtor takes 2% is my argument. Its not 1990 where 3 percent was a fair wage. 3 % on a 4-500k house is insane for paperwork, especially when i find the homes online or driving around and I'm waiving inspection and putting down 20%. End rant. but can i get some pros thoughts on this?
have flipped one house successfully and own 2 college rentals for experience level reference. Thanks!
Sorry, I don't know how to answer your question. In over 25 years and more houses than I can count, I have never used an agent to buy a property.
A. The seller is paying the buyers commission. It’s not coming out of your pocket.
The sellers agent who lets say is getting 7% is going to charge them 7% whether your buyer agent gets 1% point less.
B. How many offers have you made through a broker that you did not win? Say 5
How many offers through a broker did you get? Say 1
Did you pay them for the 4 offers you didn’t win?
C. Our last deal we bought I paid our buyer agent $20,000 commission that I didn’t need to do. Because he is part of my “Team”. List $1.4mm got down to $900k, negotiated down to $800k. Deal instead of taking 1 month to close took 5 months. He brought the deal home. So what that is just one deal? Before that he brought me a deal that after development added $760k appraised value on just the land, which helped on the development loan. Didn’t have to bring hardly any cash to the deal.
I love my buyer agent.
Same success with my other local agent.
Same success with our other agent in Belize.
Same success with our seller agent. As we were selling lots in our subdivision and he kept making the sales happen.
Common thread is they are part of our team.
Find an agent you enjoy working with. Even if you find the property have them approach the sellers agent. They will love you. They get a commission that someone else’s is paying. Realize they don’t get all of the commission.
Good stuff! I think i just need to find an agent that actually works and brings me the houses and details without me having to ask. My agent in Georgia I would pay damn near 10% to keep him. He adds more value than any realtor i have ever met in my local community.
If buyer agent compensation (which is set by the seller) is the thing losing you deals, you're looking at the wrong deals.
Why should your agent take a pay decrease just because you want to pursue properties you cant make a competitive offer on?
You say "its only 1%" but its not. It's 1% of the purchase price, it's 30% of their pay. Would you take a 30% pay cut to work for someone who (from the tone of this post) doesn't value or respect you?
30 percent of 0 is nothing if you cant do anything to make the offer stronger except for ask your buyer to waive inspection. if you know the bulk of offers are going to be within 10-20 K of each other, you have to get creative in a way that not only benefits the realtor, but also the buyer.
If a realtors only fighting strategy is to tell their buyer to pay way over asking, is that a realtor you want on your side? or do you want the one who will make your offer stronger by writing in the contract that they will only take 2 % in an effort to save the seller money. (obviously the seller pays this). If i was a seller and offers were equal. I take the one that the buying agent isn't getting 3 percent to send a DocuSign and open a door.
My out of state realtor deserves 10% for showing videos, ligning up inspections, finding me off market deals, literally doing his job to the fullest.
My local deserves 1-2% It comes down to working with your client. It will be obvious in a year when the ones who don't know how to win deals are scrounging for deals.
The approach I've always taken here is I just offer whatever I can offer, and leave the rest in my agents hands.
I trust the agents that I work with to do what I hire them to do and that is build a relationship with the listing agent, do some strong negotiating, be persistent, and be creative. If part of their process results in them offering to cut their commission to get the deal done at my price, I'll take it. But I don't proactively ask them to take a pay cut.
You wouldn't walk into a Burger King and ask the clerk to sell you a burger for 30% off and take that 30% discount out of their pay check, would you?
If you are offering continuous work to the realtor and this is discussed ahead of time, there is nothing inherently wrong with requesting this. If you are already in the process of hiring the realtor and start asking for a discount after it has already been agreed upon, that's a different story.
I'm a broker and OF COURSE everything in life is a negotiation.
And frankly, I'm not a fan of agents who just push paperwork but if you're questioning your agents worth you're obviously not getting the value you deserve from your agent.
HOWEVER, I would NEVER drop my commission straight out of the gate. You know why? Because sometimes things happen in a deal. Sometimes there's a problem and after a hard fought negotiation the buyer and the seller are apart by just a couple of thousand dollars. Or the seller is refusing to make a repair that turns out to be necessary on a 4 point inspection and won't budge on giving a concession because I already beat him up too much on price when making the original contract. And guess what? It's at that point that I have to say "OK, I'll reduce my commission to get this over the line." If I gave you a discount at the beginning, it gives me less leverage to get you out of trouble later on. And it has absolutely happened in deals that I've done.
Furthermore, as a buyers agent, we get screwed like nobody else. Listing agents in my market are almost always paying themselves more commission. If they're offering a buyers agent 2.5%, most likely they got a full 6% commission and are keeping 3.5% for themselves. Then on top of that, they bill out all their transaction and admin fees that their broker charges out to the buyers agent. Sometimes this is as little as $150 but some can be as much as $800 on every deal.
I had a deal I worked my tail off on last year for a beach condo in a crazy market in Indian Rocks Beach. Everything that went on the market had multiple offers, all cash, selling well above list price. I made offers on literally 20 units, made 40 trips from Tampa out to Indian Rocks (which is over an hour each way for me). When I finally got the deal in contract, the listing agent was only paying out 2.25%. Plus they were charging me a $750 transaction fee. So let's look at gross commission on this $600,000 deal. $15,000 in gross commission - 750 = $14,250 which doesn't seem too bad. BUT it gets worse from there. At the time I was with my old Brokerage which let me keep 85% of my commission, which is $12,112.50. So you're thinking, 12 grand, not bad huh? Gets worse. My broker had instituted a minimum transaction fee of $500 per year. Since this was my first deal of the year, they took an additional $500 out of the deal, now we're down to $11,600. Because I had known about this transaction fee and decided I didn't want to be with my brokerage anymore and also wanted to focus on property management, I had recently got my brokers license and filed to start my own brokerage. Now it takes time for that paperwork to go through and this deal should have long been done by the time my new company opened, but of course closing got delayed two weeks. And two days before closing, my brokers license transferred over to my new company. Any my old broker decided he was due $3,000 for "closing out my deal" even though all paperwork had been finished already INCLUDING commission disbursements. So on this particular deal I walked away with $8,600 after spending easily 2 months of full time work on this one deal.
Now that is an EXTREME example. There have been other deals of course where someone called me out of the blue and I sold them a house the same day and everything went smoothly. But I've also had a deal (you can search for my post where I tell the story) where it took me 6 years to close a listing due to estate issues and executors dying, short sale scams, etc. I made $6,000 on that deal. How would you like to spend 6 years on a project and make 6 grand.
The point isn't to complain about any of this, the point is that there is far more work to this job (especially when done correctly) than what you see on a closing statement. IF you don't feel you're getting the value you want out of your realtor, find a new realtor. And if you want your agent to cut commission straight out the gate, make sure you negotiate that BEFORE making your offer through them. Just know that if an agent let's you talk them out of their money that quickly, they probably aren't going to do a very good job fighting for you when the time comes.
When it comes to Real Estate, a 1% difference in fee might not seem like much and typically isn't considered a deal breaker. So if you want to save some money, you can always just buy the property yourself and save $12,000. Alternatively, you could put your money where your mouth is and fork over the $4000 for an agent's services - I'm sure that wouldn't break you either! It all depends on how invested you want to be in the Real Estate process. Ultimately, it's up to you to make the best decision for your needs. Good luck!
