Homebuying Questions

[HisMajestyBOB]

Why would the seller a) pay for your agent and b) not add it to the sale price? 

It is part of the closing costs. Most sellers want to sell their property so...

And I don't get "add it to the sale price" as if sellers are not out to sell their property for as much as they can anyway. So what? Now they are going to really really really want to sell it for more instead of really really wanting to?

Ok but it IS added to the sale price. You ARE paying for it.

It's being paid.

The houses that I'm looking at are in the $150,000 - $200,000 range. Two of the houses I'm interested in are $169,000 & $149,000. They set those prices because that's what they think someone will pay. I wouldn't offer more than $150,000 for the first and $140,000 for the second as a first offer because that's what I think they're worth based on the state of the houses, the areas where they are, and other houses in their general vicinity.

Those prices look crazy low to me. Here, you'd have to move several counties out from DC to get that, or get a real dump / tiny place.

[merithyn]

We're talking about small towns near a small city in central Illinois. Prices aren't DC-level there, and never will be.

[Admiral Yi]

The iron-clad laws of supply and demand stand aside for no man.

[Malthus]

Why would the seller a) pay for your agent and b) not add it to the sale price? 

It is part of the closing costs. Most sellers want to sell their property so...

And I don't get "add it to the sale price" as if sellers are not out to sell their property for as much as they can anyway. So what? Now they are going to really really really want to sell it for more instead of really really wanting to?

Ok but it IS added to the sale price. You ARE paying for it.

It's being paid.

The houses that I'm looking at are in the $150,000 - $200,000 range. Two of the houses I'm interested in are $169,000 & $149,000. They set those prices because that's what they think someone will pay. I wouldn't offer more than $150,000 for the first and $140,000 for the second as a first offer because that's what I think they're worth based on the state of the houses, the areas where they are, and other houses in their general vicinity.

Yes, that 6% is expected to be paid by the sellers, but it's not part of the negotiation usually. If they want to sell to me at the price that I offer, they agree to that price for the house as well as the 6% cost of my realtor and the cost of their realtor.

Say the second house accepts the offer. Now I'm getting a mortgage for $140,000 minus my down payment (say $10,000). The seller is getting $140,000 minus realtor fees of $8,400 plus whatever they agreed to with their realtor (say 4% or $5,600). So they walk away with $126,000 minus whatever they still owe on the house. (There are a lot of other fees on both sides, but in general, that's the basics.)

All of this is known. None of it is a surprise. It's the system we buy and sell houses under.

My gods, a house for $140k.

Our real estate prices here in Toronto truly are insane, and it gets worse every year. I was beaten in auctions by more than that, and that was fifteen years ago.

[katmai]

Toronto>Illinoise

[garbon]

So weird to see estate agents talked about as a valued professional

I assume they are different in North America.

I've never bought so have nothing of value to offer, but one thing I know from friends and family is always insist on a full survey

Yeah, I definitely noticed coming over an ingrained derision towards estate/letting agents that simply doesn't seem to exist in the US.  You get some who simply seem to be principled in avoiding any agent costs (the For Sale By Owner type), and some letting agents(property management companies to us) can have a bad reputation individually...but not on such a wide scale.

In New York, there are brokers to rent many apartments and they are entirely worthy of derision.

[Barrister]

Toronto>Illinoise

Having been to both places...disagree.

[Tamas]

I get it why it would be advantageous to have an agent help with the buying side of things, however based on my personal experience with estate agents as a renter, I have come to experience the incredibly minimal effort they put even to representing their client's (the landlord's) interest, let alone doing any actual work they don't absolutely have to. As a general rule they are scum, and I would be hard pressed to increase my sale price by 5-6% just to have a half-absent SOB copy-paste their standard contract I could just download as a PDF myself.

[katmai]

Toronto>Illinoise

Having been to both places...disagree.

well no one cares what lips think so.

[Valmy]

I get it why it would be advantageous to have an agent help with the buying side of things, however based on my personal experience with estate agents as a renter, I have come to experience the incredibly minimal effort they put even to representing their client's (the landlord's) interest, let alone doing any actual work they don't absolutely have to. As a general rule they are scum, and I would be hard pressed to increase my sale price by 5-6% just to have a half-absent SOB copy-paste their standard contract I could just download as a PDF myself.

Well mine saved my ass when I sold my house. She basically performed a miracle.

But, as I have said repeatedly, a good one is solid gold but the majority of them are bad.

[grumbler]

I get it why it would be advantageous to have an agent help with the buying side of things, however based on my personal experience with estate agents as a renter, I have come to experience the incredibly minimal effort they put even to representing their client's (the landlord's) interest, let alone doing any actual work they don't absolutely have to. As a general rule they are scum, and I would be hard pressed to increase my sale price by 5-6% just to have a half-absent SOB copy-paste their standard contract I could just download as a PDF myself.

Are you quite sure that you understand what you are talking about?  Are you positive that the 6% commission paid by the seller isn't going to be paid by them whether their own agent provides the buyer, or another agent (chosen by the buyer) provides the buyer?

I am willing to defer to your superior knowledge, given that I have only purchased three homes in the US and none within the last 15 years, but, back when I was buying and selling homes, the commission was 6% total no matter how many agents were involved.

I have done the "write your own contract" bit on two houses, and that saved a few hundred in legal fees, but that had nothing to do with the 6% commission (and closing still costs the same).  Are you sure that US buyers and sellers really avoid a 5-6% commission just by downloading a pdf?  And is that 5-6% on top of the agent's fee, or instead of, or what?

[Tamas]

Whatever. Doing the paperwork is great but I still would not trust them blindly. If they are getting a % of the sale price their financial incentive is to have you pay out as much as you can, not to cut you a good deal.

[Sheilbh]

Yeah and I think this is in part the cultural difference. I may be wrong - people who've bought in the UK like RH might have a different take. But I'd want to keep the estate agent's involvement to the lowest amount possible because I just don't trust them

I'd far rather spend the money on a good conveyancing solicitor, who'll be doing all the searches etc. I have heard there's real value there - not least because I know someone who had a bad solicitor and as well as constantly having to chase for information, later found out the solicitor had sent loads of documents to the wrong address (most London postcodes are sort of geographic N, NW, SW, SE etc - but there's no NE because that's Newcastle so the solicitor sent draft contracts, reports etc to some random Geordie )

[Grey Fox]

There's fundamental misconception at work here.

In NA, they are not estate agent, they are realtors.

[crazy canuck]

There's fundamental misconception at work here.

In NA, they are not estate agent, they are realtors.

Same thing really - Real Estate Agent = realtor