Buyer Representative Agreement?

[MizTEcK]

our family is looking to invest some money into realestate and such, today there was this agent who met up with us and talked about we signing a Buyer Representative Agreement with 21 century realestate agency.

From initial overview it seems that it bounds us to this agency and they would be responsible for helping us locate and find the best deal for real estate that meets our requirements, but I was also wondering if we decided to buy a property without getting the agency involved, would we still need to pay them commission?

if anyone whos more familiar with this practice would kindly provide further insight it would be greatly appreciated

[fiscal-rick]

From my limited knowledge (my sibling is a real estate agent) it goes like this:

You sign with the agent to represent you for a period of time (say three months) if you do not buy a peice of property in that three months you can then part ways (maybe find another agent) in this case you may want/have to pay the agent a nominal fee (depending on how much time they spent with you)

Say you purchase a peice of property, your agent negotiates for you on your behalf and with your direction to get the best price possible. after the deal closes the seller pays his agent a commission (usually 5.5 to 6 %) the sellers agent then pays your agent half of the commission. (2.5 to 3 %).

So, if you buy, you pay the agent nothing. as a buyer it is good to have an agent that way the party your dealing with and their agent, dont milk you like a cow. a real estate agent representing you, does just that, they will tell you what the property sold for for the past 20 years, and the property next door, and the one across the street, and what appointments the property has/soesnt have that affect the price. Interview a few agents, and think to yourself, who looks like they have a good head on their shoulders and will really get the best deal for me?

Now some sellers do not get an agent because they do not want to pay the 6 % commission, however, usually they still have to discreetly agree to pay buyers agents 3% in order to get them to bring their clients over to see the property. and they dont really have all the info the agents have and can get hosed. so, basically if your a buyer the agent fees come out of the sellers final price (not your pocket) and if yoru a seller, you will wait a long time to sell your house and get less for it.. so its worthwile to have an agent working for you and marketing the property.

[MizTEcK]

thanks for the info, so there's absolutely no fees for the buyer (in this case us) for signing with an agent?

what if we buy a house during the period of the agreement without getting the agent involved (say private dealings), are they also entitled to have the sellers pay them a premium?

[fiscal-rick]

you could go and get yourself an agent, and negotiate with a seller on a price, and then say to the seller: " hey listen - my agents commission that you will pay him (lets say 3% and its a 200k property = 6K) I will buy the property from you and and then you wont have to pay the commission if we split it" that would be 3k for you off the price of the house and 3k for the seller.

However, that is called negotiating in bad faith. You also will have to prepare the contract yourself, set the closing date, and all the other stuff... the agents do this full-time for a living, and they work for you.

So yes you can maybe (if you convince the seller) buy a property without the agent you have signed with, and save the seller money, and maybe yourself. but you have a moral dilemma, and a values and ethics things to deal with. Also, you have the personal response of the agent. Say my sibling was your agent. you would wake up one morning and your car would have brake fluid poured all over it. (clear liquid but wait a few hours and see the results) and a few months later, more brake fluid.... or something similar. . . the whole bad faith thing rubs people the wrong way sometimes.

[fiscal-rick]

lol, I may have misread your question,

what if your dealing with an agent and you see a property that says "private sale NO AGENTS"

in that case you contact the seller WITH your agent and say "I have prefessional representation, are you seriously interested in selling your property"

at that point they may say "yes bring your agent along"

and your agent will negotiate for you and get paid by the seller.

see for us Redflaggers FSBO (for sale by owner) is appealing as we save a buck or two. however, its proven that FSBO sales (in housing) get 12-14 % less and take 8-9% longer to sell. Small amounts but:

weigh that against a 5.5-6% commission?

[lapopal]

You see a sign like that, I would steer clear, sounds like the owner is a tight ass and chances are over priced their home anyways.

[MizTEcK]

ah, thanks for the help =P