What's the point of having a real estate agent when buying a house?

[DrDel]

Before online MLS (www.mls.ca here in Canada) trying to find house listings when buying a house was tough without a real estate agent. Your non-real estate agent choices were basically the local news paper and driving around the area you liked. But now that there is MLS the average consumer can search for all kinds of houses.

Which makes me wonder why people use a real estate agent to buy a house.

Pros:
-----
- they can show you houses that are zero days on the market? (no, everyone and their mother has a login username/password into their "private" backdoor real estate listings)
- only they know the "inside information" about the house (no, see above)
- they have connections to show you all the houses on the market currently selling (no longer, the average user can use www.mls.ca )
- they are out to protect you and serve your interests (*cough* bullshit *cough* they are out for their own commission and a quick sell)
- they won't sell you a "lemon" house (no, they don't know crap about house inspections... and now that there are house inspectors around you can pay one $300 for a much more thorough house inspection than any real estate agent can do)
- a "buying" real estate agent is FREE (haha! that is almost as big of a scam belief as the diamond industry! YOU, the buyer, are the one PAYING for the commission in the list price)

Cons:
-----
- they take ~2.5% commission off the selling price which YOU are paying for
- they make you a less attractive buyer for the selling agent because the selling agent now has to split the commission in half


I was actually looking at a house which had multiple offers from other agents.. the selling agent IGNORED the multiple offers and wanted to sell to me because I didn't have an agent. So when the other offers would call her she wouldn't answer her cell phone and she would say she was "away for the weekend" while I gave her my offer. Even though my offer was a day later than the original offers.

Are there any real estate people in the forums? Having read all of this why would anyone want to have a real estate agent in this day and age when buying a house?

[SlyFrog]

Before online MLS (www.mls.ca here in Canada) trying to find house listings when buying a house was tough without a real estate agent. Your non-real estate agent choices were basically the local news paper and driving around the area you liked. But now that there is MLS the average consumer can search for all kinds of houses.

Which makes me wonder why people use a real estate agent to buy a house.

Pros:
-----
- they can show you houses that are zero days on the market? (no, everyone and their mother has a login username/password into their "private" backdoor real estate listings)
- only they know the "inside information" about the house (no, see above)
- they have connections to show you all the houses on the market currently selling (no longer, the average user can use www.mls.ca )
- they are out to protect you and serve your interests (*cough* bullshit *cough* they are out for their own commission and a quick sell)
- they won't sell you a "lemon" house (no, they don't know crap about house inspections... and now that there are house inspectors around you can pay one $300 for a much more thorough house inspection than any real estate agent can do)
- a "buying" real estate agent is FREE (haha! that is almost as big of a scam belief as the diamond industry! YOU, the buyer, are the one PAYING for the commission in the list price)

Cons:
-----
- they take ~2.5% commission off the selling price which YOU are paying for
- they make you a less attractive buyer for the selling agent because the selling agent now has to split the commission in half


I was actually looking at a house which had multiple offers from other agents.. the selling agent IGNORED the multiple offers and wanted to sell to me because I didn't have an agent. So when the other offers would call her she wouldn't answer her cell phone and she would say she was "away for the weekend" while I gave her my offer. Even though my offer was a day later than the original offers.

Are there any real estate people in the forums? Having read all of this why would anyone want to have a real estate agent in this day and age when buying a house?


Ideally, in the U.S., you make them do all the bitch work setting up title, loan stuff, etc. that you do not want to do.

That being said, I don't think they have as much value in buying a house as they do on the sell side.

[Nick Walter]

Buyer's agents are free for the purchaser, at least the way things are done around here, so there's no reason not to engage one to get the help they can provide. Once the seller lists with a real estate agency, the buyer's agent fee is locked into the deal by contract so no point trying to avoid it after the fact. If you don't have a buyer's agent, the money for the buyer's agent split of the deal just goes to the seller's agent instead.

My buyer's agent was great, but then she was an old friend of my wife so we might have gotten better then average treatment. She helped us locate suitable properties, she nagged the loan agent to get our loan approved when it got mired in red tape and excess process (very helpful) , and pointed out a lot of little things for us to include in our offer that we might not have thought of.

[JeffL]

The last two moves we've made we were lucky enough to have some great real estate agents helping us. And basically we let them do all of the work in sorting out which houses would appeal to us and which, even though they looked good on paper, would be a waste of time. In both cases we were moving to new cities, and they were very helpful in helping us understand benefits and drawbacks of certain areas in which we were looking, and things to look for (such as flood plains, etc.) The agent we used for our current house actually discovered a problem in the basement of one of the houses that we were looking at, and was an invaluable resource for all of the questions we had as we were looking. When we made the offer and it was accepted, he led us through all of the paperwork, etc. at closing (we also paid a couple of hundred bucks for a lawyer to read and approve the papers.)

We did have a very useless real estate agent when we bought our first house: she constantly took us to houses that, as soon as we walked in the door, we knew were wrong for us. We dropped her (be sure you don't sign long term commitment contracts with an agent) and ended up with one who led us to the perfect house within two weeks.

[ElGuapo]

When buying my first home, I hired an agent. When buying my second, I will not.

[Athryn]

When I bought my house, I was lucky and happened to find an agent that's lived and worked in the area forever. She was an older lady, about the same age as my parents, and man, she knew everybody.

She found us properties to look at that most people didn't know about, she knew all the right people to make a good deal, when I wanted to use my own title company (I worked for a financial company owned by it) she was totally cool with that and made it all work.

For me, it just really helped, and took the headaches out of it. For someone who is a good do-it-yourself-er, I could see flying solo, but you gotta know the whole process really well.

[Troy S Goodfellow]

For a long distance move, an agent is absolutely essential. You want someone who can line up houses to see whenever you fly in and who knows the local market.

We were so happy with ours that we've recommended her to other people, who've had equally pleasant experiences.

Troy

[Bad Neighbor]

I'm trying to buy a house now and I don't know enough about it to confidently do it without an agent. I'm trying to find one now because the seller's offer is $15k higher than the list price a year ago, and I've been paying him rent since then.

[Slainte Mhath]

Using an agent as a buyer is one of those "YMMV" situations. Some flat out suck, and are only in it to grab that 3% commision and move on. Some are fantastic, and will go the extra mile on things like contracts, paperwork, home inspection report deciphering and haggling with the sellers agent over price, transfer dates and other contractual odds and ends. I've had both types.

Honestly, it's probably worth having an agent as a buyer if you feel uncomfortable making offers yourself, negotiating terms of a contract, or asking for things to be included/excluded (like repairs needed or conditional terms).

In most cases, having a buyer's agent involved is not costing the seller any more than having only a seller's agent, as the commision is going to be 4-6% regardless, if only one agent is involved they keep it all, otherwise they split it. If a seller has no agent (for sale by owner), and a buyer does, the seller is not bound to give the buyer's agent a penny.

[dannimal]

Just like any other service provider type, there are good ones and bad ones. Just like any other service provider type, the primary function is to reduce the amount of crap you have to put up with.

When I bought my first house (~10 years ago), I don't remember how I found my agent. She was good at finding the type of house I wanted. Her most important function was recommending the home inspector (I'm not sure why OP figures that the realtor did the inspection, but that's basically unheard of here), who was fantastic and I re-used when I bought my second house and have recommended to friends. I definitely "needed" her as a first time home buyer.

When I sold the house, the realtor kind of fell in my lap. She was doing cold-calls (if I remember right, she was going door to door) asking if people were thinking of selling. She'd been the agent for the seller when I bought the house, and apparently was involved on one side or the other of like 70% of transactions in the area.

Anyway, she was less useful in locating the next house (mostly because her focus was the area we were leaving, and not where we were going), but she did find us the right one without an agonizing trial. Her main function was crap-shield on the sale side. Dealing with Open Houses (and being in the "network" that gets the keypad on the door so that showings can be done), fielding offers, and in one case issuing a beatdown on one agent who kept wanting to deal with my directly (calling me for questions, actually stopping by unannounced to try and show the house).

Once we had a good offer, she was no longer needed (but you can't really cut them out at that point). In fact, she switched into "make the sale" mode, trying to get me to make concessions (knock of $3k to replace the roof that was 4 years old...). Luckily for me, I was in no hurry to move so I could tell the buyer/her I wasn't going to budge.

At this point, depending on my availability, I wouldn't NEED an agent to buy a house. If I had time I could sort through listings on my own, and I have an inspector. But to sell one, just dealing with getting to the point where you have offers is worth it to me to have an agent.

[Midnight Son]

There's too many realtwhores. By not using one, you are helping the numbers get back to a sustainable level.

[barstein]

When buying my first home, I hired an agent. When buying my second, I will not.Here, here. Unless said agent is a good friend or a good friend of a good friend.

My first and perhaps last buying agent totally screwed me, and not in the sense that I might have preferred had circumstances been different (she was a former Vegas showgirl or something). Even her daughter played into the game, being the same age as my own and them being all cute together. The house was my first, and every single person I spoke with who had been through the process before wound up being completely useless, and I ended up buying a total lemon without realizing what was happening. Fortunately, my selling agent (two years later) was pretty damn good, albeit somewhat flaky with the education/communication, and somewhat cheap with the contractors (the painter ended up being an emotionally disturbed, angry presence that lingered far too long in our personal space, and got paint all over my stuff to boot). I was SO glad to get out of that house the way I did, when I did, and so I would never recommend selling on your own unless it's a dinky little condo or something.

But for the next house I buy (if that ever even happens, given what I had to trade in for moving north) I plan to go "commando" so to speak, unless a real professional comes to my attention or something. Pro in real estate that is, not in entertainment.

[Jojo]

If everything goes smoothly and to plan, and you know the area already, then you could probably manage without a buyer's agent. There's no money saving either way, since as others have pointed out, the seller pays 6% no matter what, and you pay no realtor fees.

The big if though, is the "if everything goes to plan". When I bought my current house, my realtor totally kicked ass. Aside from doing a bunch of organisational stuff for us (saving us time), she was super-helpful when things went a little pear-shaped just before closing. Essentially the seller's agent didn't disclose an issue with the house (a boundary issue, impossible to know about without spending thousands on a survey). We found out about this 2 days before closing. Our realtor went to bat for us, got her legal team involved, and scared the crap out of the seller's agent. We got a last-minute credit of a few thousand dollars, and the seller's agent was lucky not to get stuck with a lawsuit. My realtor was great, we would have had a harder time doing it without her, and I would not hesitate to hire one again. You just have to sort the wheat from the chaff.

[DrDel]

There's no money saving either way, since as others have pointed out, the seller pays 6% no matter what, and you pay no realtor fees.

How do you figure?

Say, for simplicity's sake, I buy a house for $1,000,000. I don't have an agent. The seller has an agent. Again, for simplicity's sake the real estate commission is 5%. If I had a buying agent that commission would be split between the two agents at 2.5% a piece.

Now, since I don't have an agent when buying the house the 5% commission that the selling agent would have pocketed is up for negotiation. SInce the selling agent would pocket all of it when he/she was only expecting to pocket 2.5%. You now have an additional $25,000 to take off the top of the $1million dollar home to negotiate with.

Now that you have negotiated with the real estate agent to take off (up to) $25,000 you can now negotiate with the seller of the house to take off some as well.

The $1million house is now selling for $950,000 to $970,000. (as an example)

How did you not save money? Things must be different in the States.

[Ryan A]

People who insist on buying a house without a realtor are the same kind of people who think they have to be an obnoxious asshole to get a good deal on a new car. There's probably a kernal of truth in there that originated in the 70's or 80's but is now out of touch with reality.

Selling a house without a realtor though, if you don't mind doing a bit of paperwork (no more complicated than doing your taxes) can result in significant savings.

[barstein]

People who insist on buying a house without a realtor are the same kind of people who think they have to be an obnoxious asshole to get a good deal on a new car. There's probably a kernal of truth in there that originated in the 70's or 80's but is now out of touch with reality.Well...yes perhaps I would agree that this is sometimes the case, but certainly not true across the board.

[Midnight Son]

People who insist on buying a house without a realtor are the same kind of people who think they have to be an obnoxious asshole to get a good deal on a new car. There's probably a kernal of truth in there that originated in the 70's or 80's but is now out of touch with reality.


Won't someone think of the realtwhores and used-car salesmen? You appear to be well meaning yet hopelessly naive.

[Robert Sharp]

I always make the other person pay the closing costs, whether I'm buying or selling, so they end up paying the agent anyway. I suppose I could shave a bit off the price the way Del is suggesting, but having someone else do the leg work is VERY nice for me.

[SlyFrog]

I think agents are a bit overpriced for expensive houses. I'm sorry, but the amount of work they do just does not increase that much between a $200K house and a $600K house, yet somehow it is worth an extra $24K per freaking house.

As well, one thing I think is being (mostly) missed in this thread is that you are paying for the agent, no matter if you are the buyer or seller. Put a different way, money doesn't appear and disappear. If you bring a buyer's agent to the party, you are losing out on the opportunity to knock the seller's price down by 2+%, because the seller isn't paying that fee.

[Nick Walter]

How do you figure?

Say, for simplicity's sake, I buy a house for $1,000,000. I don't have an agent. The seller has an agent. Again, for simplicity's sake the real estate commission is 5%. If I had a buying agent that commission would be split between the two agents at 2.5% a piece.

Now, since I don't have an agent when buying the house the 5% commission that the selling agent would have pocketed is up for negotiation.


Bzzt, wrong. Around here at least, the 5% commission is locked in stone in the contract the seller had to sign to list their house with real estate agency.

It's only avoidable when looking up For Sale By Owner houses that aren't listed through a real estate agency.