Real Estate

You don't save anything as a buyer when going solo?

  • Last Updated:
  • Oct 27th, 2020 11:33 pm
Tags:
Newbie
Aug 3, 2005
67 posts
4 upvotes
hierophant wrote: If I'm understanding correctly, what you're saying is that that the fee between seller and their agent cannot be changed because it's already agreed upon via contract. However, what I think newuserid was trying to get at is that the SALE price of the house can be reduced by the fee of not having a buyer's agent (e.g. 2.5%) but didn't communicate this effectively ...or I could be completely off base.
You are exactly right. Some people (likely realtors) purposely emphasize that there is a contract in place already between the seller and seller agent regarding the commission. They hid the fact that the buyer could still save up to 2.5% (buyer agent commission) by means of a rebate. The "trick" is ask for a rebate.

For a 1m property, it is $20,000 for you with a 2% rebate and $5,000 for the seller agent with 0.5% leftover buyer commission. This $5000 might give you a small edge over other comparable offers in a hot market. Although it is difficult to decide the ideal % (e.g., buyer keep 1%, seller agent 1.5%), some buyers (not all) may want to explore this possibility which realtors certainly want to hide. Can I blame them? No.
Deal Addict
Feb 4, 2010
3865 posts
2661 upvotes
pmlast wrote: You are exactly right. Some people (likely realtors) purposely emphasize that there is a contract in place already between the seller and seller agent regarding the commission. They hid the fact that the buyer could still save up to 2.5% (buyer agent commission) by means of a rebate. The "trick" is ask for a rebate.
Yeah it seems like that was the case and it could have been easily clarified from the beginning rather than what transpired. Could have been an opportunity to inform newuserid on the correct wording rather than dismissing what he/she was trying to say and perhaps restore some faith in the profession?
Before responding to someone (online or offline) ask yourself: is it true? is it helpful? is it kind? is it necessary? This comes from an old Sufi adage that is so relevant today.
Deal Fanatic
User avatar
Sep 14, 2006
8639 posts
1341 upvotes
hierophant wrote: If I'm understanding correctly, what you're saying is that that the fee between seller and their agent cannot be changed because it's already agreed upon via contract. However, what I think newuserid was trying to get at is that the SALE price of the house can be reduced by the fee of not having a buyer's agent (e.g. 2.5%) but didn't communicate this effectively ...or I could be completely off base.

Edited because I accidentally quoted the wrong post.
In one of newuserid’s earlier posts, he/she mentioned that the buyer can instruct the lawyer to withhold the amount equal to the commission and that’s really what kicked off the debate. He/she then started to change the goal post and his later posts were more in line with what everyone else is saying or agreeing to.

Basically a hard No to telling your lawyer to withhold money contrary to what the sale agreement says but yes you can negotiate to have a lower purchase price to reflect the commissions saved from the buyer. However, in a seller’s market, that 12k commission is easily buried in a pile of bidders for the same property. It’ll work wonders if you’re in a buyer’s market like what we are seeing in condos.

Cheers
TEAM CANADA!!!!!!!!!!!
Deal Addict
Feb 4, 2010
3865 posts
2661 upvotes
bobbings wrote: In one of newuserid’s earlier posts, he/she mentioned that the buyer can instruct the lawyer to withhold the amount equal to the commission and that’s really what kicked off the debate. He/she then started to change the goal post and his later posts were more in line with what everyone else is saying or agreeing to.

Basically a hard No to telling your lawyer to withhold money contrary to what the sale agreement says but yes you can negotiate to have a lower purchase price to reflect the commissions saved from the buyer. However, in a seller’s market, that 12k commission is easily buried in a pile of bidders for the same property. It’ll work wonders if you’re in a buyer’s market like what we are seeing in condos.

Cheers
Thanks - in that case I definitely see why the conversation went on downward spiral.
Before responding to someone (online or offline) ask yourself: is it true? is it helpful? is it kind? is it necessary? This comes from an old Sufi adage that is so relevant today.
Sr. Member
Jan 5, 2020
542 posts
606 upvotes
bobbings wrote:
In one of newuserid’s earlier posts, he/she mentioned that the buyer can instruct the lawyer to withhold the amount equal to the commission and that’s really what kicked off the debate. He/she then started to change the goal post and his later posts were more in line with what everyone else is saying or agreeing to.

Basically a hard No to telling your lawyer to withhold money contrary to what the sale agreement says but yes you can negotiate to have a lower purchase price to reflect the commissions saved from the buyer. However, in a seller’s market, that 12k commission is easily buried in a pile of bidders for the same property. It’ll work wonders if you’re in a buyer’s market like what we are seeing in condos.

Cheers
I never said that the buyer should instruct their lawyer to go against the sales agreement...that would be illegal and no lawyer would do that. Not sure where you got that from.

If anything, the heated debate started as a result of the response of this realtor:
licenced wrote: No, I cannot. that would be giving you advice which places me in a fiduciary capacity that means, I would have entered into a master/servant relationship via implied agency.

If you wish to not use a Realtor, you should be versed enough to know what to do.
I just wanted to have a genuine discussion and learn about how a buyer can operate without a realtor.
But then a whole bunch of realtors started attacking and claiming that a buyer cannot do it alone.

Its funny that some of these realtors have no problem providing a detailed response on why you are wrong. But they dont want to share any information on how you can make it right.

This is why so many people have so little faith in the real estate profession.
Sr. Member
Jan 5, 2020
542 posts
606 upvotes
hierophant wrote: Yeah it seems like that was the case and it could have been easily clarified from the beginning rather than what transpired. Could have been an opportunity to inform newuserid on the correct wording rather than dismissing what he/she was trying to say and perhaps restore some faith in the profession?
I've moved on from this but I do appreciate you highlighting some of the issues.

I've learned that most realtors here don't care about sharing information. They are more concerned about promoting their business.
Newbie
Aug 3, 2005
67 posts
4 upvotes
Newuserid wrote: I've moved on from this but I do appreciate you highlighting some of the issues.

I've learned that most realtors here don't care about sharing information. They are more concerned about promoting their business.
I, and many buyers, come here to gather information and gain some insights. Clearly, this discussion served this purpose well. For realtors on this forum, either with a realtor signature or not, their hope is to create business opportunities directly at least.
Sr. Member
Jan 5, 2020
542 posts
606 upvotes
pmlast wrote: I, and many buyers, come here to gather information and gain some insights. Clearly, this discussion served this purpose well. For realtors on this forum, either with a realtor signature or not, their hope is to create business opportunities directly at least.
I get that a lot of realtors are here for business. I get that and there's nothing wrong with that.

But it was really frustrating to see a group of realtors hijacking this thread in order to steer the discussion away from the possibility of buying real estate without a realtor.

I would have much appreciated some actual advice from people in the industry. Or if they didn't want to share, don't contribute to the discussion.
Deal Addict
Mar 27, 2004
4625 posts
2271 upvotes
Toronto
in a slow market. small town. listing been on market for a while. sure this works.

in a hot market. multiple offers. no chance this works.

but let's go back to the original argument that all realtors make. who is representing your interest by going alone? the listing agent has fiduciary duty to the seller. are you not better off getting a buyer agent with experience and can get more info than what you see on housesigma to negotiate on your behalf and then give you a rebate?

you save 8000 but you may have also overpaid by 20k.
Full-time Realtor
Newbie
Aug 3, 2005
67 posts
4 upvotes
Newuserid wrote: I get that a lot of realtors are here for business. I get that and there's nothing wrong with that.

But it was really frustrating to see a group of realtors hijacking this thread in order to steer the discussion away from the possibility of buying real estate without a realtor.

I would have much appreciated some actual advice from people in the industry. Or if they didn't want to share, don't contribute to the discussion.
I completely understand your frustration and I was unhappy when several realtors attacked a consumer likely you who has common sense and also wanted to be educated. The truth is - the more consumers are educated, the less business they have. Of course, they will selectively withhold information and steer the discussion to benefit their business.

I live in one of the major city in Ontario (not Toronto). Yesterday, when I went to view the property with a split of 2.5% (me keep 1%, seller agent keep 1.5%), the seller agent almost begged me to make an offer. He basically said if our offer is good, they need not wait for other potential 9 buyers in the coming week. Market hot or not, a realtor will not say no to say $10,000 to 15,000 (money in their pocket not seller's) on top of their typical commission.
Member
Jan 16, 2008
312 posts
110 upvotes
Brampton
The only time I went to buy a house alone, end-up using the listing agent represent me also. I structure the offer $ so that all parties benefits. The (double-end) agent got more $, the seller got $ and I save $. And guess what, I use that agent to list my house for less% and save more $. I don't have any problem with using double-end agents, as along as everyone benefits, not necessary have to be equal. That's my 2c.
Deal Addict
User avatar
Feb 1, 2004
2171 posts
1595 upvotes
Mississauga
deepzerg wrote: this is not how it works.

you tell the seller agent to draft the offer, you tell them you'll give the seller agent 0.1% (depending on how generous you want to be) -- then add this as a clause in the offer:

In the "CO-OPERATING BROKERAGE- COMMISSION:" section, add "2.5% of sales price as per MLS minus 2.4% of sale price"
Add additional clause in the "Additional comments and/or disclosures by Co-operating Brokerage:" section, add "The co-operating commission is reduced for the benefit of the seller in this transaction."

source: me, saved commission. the secret is, the seller agent has fiduciary duty to present offer to seller. The seller agent also signs the document (Agreement of Purchase and Sale).


Note, this is better than cash back on commission (no HST for seller, and less transfer tax for buyer).
When doing this as a buyer in an offer, I assume you also reduced your offer by the 2.5%? If so, how was it highlighted to the seller that the 2.5% comes out of the commission (as opposed to the seller agent just presenting it like a lower offer)?
Member
Feb 15, 2018
294 posts
360 upvotes
Really hard to tell whether you will save by using a realtor or not using a realtor. A lot of factors at play like the market and your own negotiating skills. However, one thing realtors have which consumers do not have access to is historical price information and sales data for other homes in the neighbourhood. This information can be used to gauge whether you saved or overpaid. Realtors can see all historic listed prices and price changes for every property and even the number of days the properties where on sale - each time it was listed.

With all this information a realtor can tell how much the current owner paid and based on length of ownership can have a general idea of how much equity the person has in the house - allowing you to make a more reasonable offer. Given this background, I would say it is worth it to get all this info for no cost at all as your buyer's agent will get you all this free of charge. The seller does not save anything when you come unrepresented as the selling realtor just ends up pocketing double the commission.
Newbie
Jul 9, 2020
17 posts
9 upvotes
Never54321 wrote: I know someone that has done that Newuserid, and it did indeed save them money. It should be easier to buy without a realtor, but the system has been designed in favor of realtors.

Realtors should not be allowed to take a percentage of a home's value. It should simply be a flat rate. For the buyer, a flat rate + say $100 for every home showing would seem fair to me. The thing people need to realize is that realtors are not your friends. Both a buying and selling agent want the highest price possible transaction to go through. Even a buying agent that is seemingly "helping" their client get a lower price is ultimately very self serving. They will only do that to help them speed up a transaction. It's basically human nature. Unless your realtor is your brother, sister, or some other super close family member, you have to understand they are just a salesperson trying to close business. Yes it's in their interest to do a good job - for referrals and repeat business - but they are also going to try to close a deal for the highest $ value in the shortest amount of time. Be extremely cautious.
Many of them are even in this thread trying to convince us that we need them lmao.
Deal Addict
User avatar
May 6, 2010
2847 posts
274 upvotes
Markham
Does your agent have your best interest? Figures don't lie.

Assuming after extensive "free market evaluation", your house is listed for 1 million. Both agents are stand to make $25,000 if the house is sold at listed price.

For every extra $1,000 your honest hard working agent negotiated for you, she'll make a grand total of $25. She'll run the risk, for that extra $25, the deal with falls through and spend more time selling your house. The opposite is true. She only loses $25 if she can facilitate the deal by convincing you to lower the price by $1,000.

The situation is even worse with buying agent. For every $1000 that you save, he loses $25. For every $1,000 that you pay extra, he gets $25.

Still think agents have the clients' best interest?
oasis100 wrote: in a slow market. small town. listing been on market for a while. sure this works.

in a hot market. multiple offers. no chance this works.

but let's go back to the original argument that all realtors make. who is representing your interest by going alone? the listing agent has fiduciary duty to the seller. are you not better off getting a buyer agent with experience and can get more info than what you see on housesigma to negotiate on your behalf and then give you a rebate?

you save 8000 but you may have also overpaid by 20k.

Top