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Buyer’s Broker

Home Mortgages and Home Buying Buyer’s Broker

  • Avatar orthodoc2018 
    Participant
    Status: Physician
    Posts: 80
    Joined: 07/18/2018

    In the process of purchasing a home. We worked with a realtor to show us houses one day and she showed my parents a house on my behalf once as well. We ended up finding a house through a friend and agreed on a price before it was listed so the seller isn’t going through their broker.

    My father is an attorney and will be taking care of the contract and closing. I already know which lender I’ll be applying to for a mortgage and am pre-approved with them.

    My question is whether we should retain our realtor as a buyer’s broker. What would we really need them to do? The seller isn’t willing to split the cost as they feel they have already discounted the price accordingly (they said they were prepared to list the house for 10-15k more than they’re selling to us for. If we were to pay for it ourselves it would be like 10k which seems not worth it.

    Thank you!!!

    #219755 Reply
    Avatar octopus85 
    Participant
    Status: Resident
    Posts: 245
    Joined: 08/13/2017

    No, the buyer’s agent will add no value at this point.

    #219776 Reply
    Liked by DCdoc, ACN, ENT Doc, Tim
    Avatar FamilyFirst 
    Participant
    Status: Student
    Posts: 21
    Joined: 05/19/2017

    In your situation, you likely do not need a buyer’s broker. However, just be sure that you didn’t sign anything with your broker saying that you would use them for buying a home with a term of x amount of months. There are some brokers who have you sign an agreement like that prior to or after showing a couple of houses.

    #219801 Reply
    Avatar orthodoc2018 
    Participant
    Status: Physician
    Posts: 80
    Joined: 07/18/2018

    Thanks for the replies.

    I already spoke to our realtor and she said we did not sign anything with her so it’s totally up to us if we feel we need/want her help.

    So what would be left?
    1. Inspection
    2. Finalizing mortgage – including appraisal?
    3. Closing

    Is that all?

    #219805 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3567
    Joined: 01/14/2017

    Talk to a local title company. They can get you a purchase contract from the local/state realtor society that outlines all those details. Have your father look it over.

    #219809 Reply
    Lordosis Lordosis 
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    Status: Physician
    Posts: 2138
    Joined: 02/11/2019

    I agree you can avoid realtor commissions here.  Most of the work they would have done you have done already. How hard is it to call an inspector.  Usually the bank handles the appraisal.   Between the title company and the lawyers you should be set.

    “Never let your sense of morals prevent you from doing what is right.”

    #219811 Reply
    Avatar CREGuy 
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    Status: Other Professional, Spouse
    Posts: 68
    Joined: 01/16/2018

    You have no legal obligation to use them moving forward or to compensate them.  On the flipside, you also engaged their services on multiple occasions, had them spend time looking for houses, showing you and your representatives houses that you were interested in looking at, etc.  Obviously you found the home you want to move forward with outside of those activities, but you should be cognizant that by not using them they’re not being compensated for the work that they have done for you to this point.  That is the reason that some agents will ask you to sign an agency agreement, because they don’t want to run around spending time and money helping you find a house only to have you happen to find something on your own and they receive no compensation.  Ultimately it’s up to you, and it sounds like the agent you were working with isn’t irritated, but as an opposing viewpoint of those who have chimed in so far, I think some nominal offer of compensation for services rendered so far would be a fair gesture.  Certainly nothing required, but understand that they certainly did provide you services that they haven’t been compensated for, even if they didn’t ultimately source the house for you.  Just food for thought…

    #219819 Reply
    Avatar Tim 
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    Status: Accountant
    Posts: 3317
    Joined: 09/18/2018

    Whatever donation you make would be appreciated.
    Non deductible, a flat amount from 0-3% is your range. Realistically, agents KNOW that they earn commission on finding the right house and closing it. Many deals fall through. You “matched” with another property. Many agents and many houses, that’s the algorithm. Realistically, you would be giving money away because you have it.

    #219830 Reply
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 728
    Joined: 06/18/2018

    Lol @creguy

    ” I think some nominal offer of compensation for services rendered so far would be a fair gesture.”

    Do you flip the car salesman a $100 after you take a test drive but buy something else, too.

    #219837 Reply
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 2138
    Joined: 02/11/2019

    That is the cost of doing business.  Some agents do not tolerate it and lock people in with contracts but if yours did not then good for you.  If you feel bad send a gift basket with “thanks for the help” on it.

    “Never let your sense of morals prevent you from doing what is right.”

    #219846 Reply
    Avatar CREGuy 
    Participant
    Status: Other Professional, Spouse
    Posts: 68
    Joined: 01/16/2018

    Lol @creguy

    ” I think some nominal offer of compensation for services rendered so far would be a fair gesture.”

    Do you flip the car salesman a $100 after you take a test drive but buy something else, too.

    Click to expand…

    Not at all the same situation.

     

    If the agent had simply emailed a couple of listings to the OP, that would be one thing.  OP engaging the agent to take them on a tour of multiple properties, and arranging for them to get OP’s parents through another house they were interested in is a bit more involved than that.  Ultimately OP happened to stumble into a situation where the house that they wanted to proceed with was through a friend of a friend.  Per the OP, this resulted in a significantly reduced price on the purchase.  Again, I’m not advocating that they pay them 3% of the purchase price out of their pocket, but hell even a small amount of compensation or even a gift card to a nice restaurant wouldn’t be outrageous.  OP clearly engaged their services even if they didn’t ultimately consummate the deal.  Perhaps I’m an outlier in this little forum where I have an appreciation for the value of others’ time and I don’t think it’s crazy to offer up nominal compensation for using a pretty significant amount of someone’s time (who OP obviously saw value in doing or they wouldn’t have engaged them).  Is there some sort of legal obligation?  Of course not.  Is it something OP has to do?  Nope.  Just offering a differing opinion, and I’m not surprised others here don’t agree… To each their own…

    #219847 Reply
    Avatar DCdoc 
    Participant
    Status: Physician
    Posts: 604
    Joined: 06/14/2016

    I agree with @creguy. You’re saving a bunch by having neither party represented by a realtor. I wouldn’t give them 3% (seems like it’s around a $500k property) but I would give them a gift. As a gift they wouldn’t owe taxes on it. The amount would depend on how long they spent showing me houses. $300-500 maybe. I could be an outlier too, but I wouldn’t want any bad blood. Maybe you’ll buy another house and ultimately use that realtor. If it’s a small community I wouldn’t want to be blacklisted. In the end you’re saving a lot of money getting a property priced lower than it otherwise would have been. I think a token of appreciation would be nice. It’s not required legally. I wouldn’t judge anyone negatively if they didn’t do it. But I personally would.

    #219889 Reply
    Liked by ENT Doc, Tim, CREGuy
    Avatar DCdoc 
    Participant
    Status: Physician
    Posts: 604
    Joined: 06/14/2016

    FWIW our realtor told us during the home search process that this happened to her and they gave her a $1000 pre paid gift card. I assume they went that route to avoid (hide?) taxes she would have owed on it.

    #219892 Reply
    Avatar CREGuy 
    Participant
    Status: Other Professional, Spouse
    Posts: 68
    Joined: 01/16/2018

    FWIW our realtor told us during the home search process that this happened to her and they gave her a $1000 pre paid gift card. I assume they went that route to avoid (hide?) taxes she would have owed on it.

    Click to expand…

    Could have been just to avoid having to give the broker their cut.

    #219894 Reply
    Avatar RollieStrummer 
    Participant
    Status: Physician
    Posts: 20
    Joined: 11/07/2018

    Lol @creguy

    ” I think some nominal offer of compensation for services rendered so far would be a fair gesture.”

    Do you flip the car salesman a $100 after you take a test drive but buy something else, too.

    Click to expand…

    Not at all the same situation.

     

    If the agent had simply emailed a couple of listings to the OP, that would be one thing.  OP engaging the agent to take them on a tour of multiple properties, and arranging for them to get OP’s parents through another house they were interested in is a bit more involved than that.  Ultimately OP happened to stumble into a situation where the house that they wanted to proceed with was through a friend of a friend.  Per the OP, this resulted in a significantly reduced price on the purchase.  Again, I’m not advocating that they pay them 3% of the purchase price out of their pocket, but hell even a small amount of compensation or even a gift card to a nice restaurant wouldn’t be outrageous.  OP clearly engaged their services even if they didn’t ultimately consummate the deal.  Perhaps I’m an outlier in this little forum where I have an appreciation for the value of others’ time and I don’t think it’s crazy to offer up nominal compensation for using a pretty significant amount of someone’s time (who OP obviously saw value in doing or they wouldn’t have engaged them).  Is there some sort of legal obligation?  Of course not.  Is it something OP has to do?  Nope.  Just offering a differing opinion, and I’m not surprised others here don’t agree… To each their own…

    Click to expand…

     

    I disagree here.  If the realtors want to put a value on their time, they certainly can, by introducing an hourly rate fee structure or a flat fee structure that includes a certain basket of services.  They don’t.  They hold on to the commission model.  One argument they make for commissions being so high is that sometimes their work results in no payment at all, such as in the OPs case.

    When I bought my house, I used a buyers agent.  I was an easy client by any definition.  I did a lot of the leg work, saw only a few houses and had an easy controversy free transaction.  If I calculate commission/hours spent with me, my realtor was earning well over $1000/hour, and I did not buy a very expensive house.  If someone else used her time and then didn’t buy, well, my commission more than made up for it.

    We are currently looking for a house, without a buyers agent.  My wife is a real estate attorney who also has an active real estate license.  Although she works on commercial projects for national firms, not residential, we are more than capable of handling a house purchase.  Every time we have looked at a house with a sellers agent there, even knowing my wife’s background, they still give us the pitch to become our buyers agent.  The pitch is the same, every time, from every realtor.  “My services are free.  In this state, the seller pays all the commissions.  It costs you nothing to use me.  Why wouldn’t you hire a buyers agent?”

    Realtors can’t market their services as free, protect a fee structure that results in outsized commissions compared to the time spent, and still expect something when their services are used in a way that does not result in a commission.

    The buyers agent gets nothing.  That is the cost of doing business.  I often get paid nothing for my work with uninsured ER patients.  I don’t expect non-paying ER patients to give me a gift card.  Part of choosing to work as a doctor means that I do fine at the end of the year, even if compensation for individual encounters is widely disparate.  Same rule applies to realtors.

     

     

    #219895 Reply

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