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Old    Meathead (meathead65)      Join Date: Sep 2006       01-22-2012, 10:18 AM Reply   
Pretty diverse knowledge base here, so I thought I'd run this by: what advantage, if any, would there be to a home buyer choosing not to use a buyer's agent when purchasing a home? We've had some folks tell us this is a smart way to go, but no one really seems to be able to tell me why.

I've only purchased one home, and that was a new construction unit. We did have a mortgage broker/agent who initially handled our mortgage and also represented us with the builder's selling agent. Everything went smoothly and trouble free, and I don't think it cost us any additional money.
Old    Jon (jon4pres)      Join Date: May 2004       01-22-2012, 11:09 AM Reply   
If the seller has an agent they are already going to have to pay the commission.

The only advantage that I could think of is if you use the sellers agent and the agent agrees to not make the seller pay as much commission and then you get some of that back in price. I have a feeling this is not very likely to happen.
Old    Adam Curtis (acurtis_ttu)      Join Date: May 2004       01-23-2012, 6:49 AM Reply   
For most residential real estate transactions, real estate agents are not needed IMO. Anytime you can remove excess expenses from the equation , both parties are better off. And in most of the country 4-6 % of the homes sales price is a pretty big chunk of change. BUT fully expect the seller's agent to get pised, lol. they will not want to do this ( no buyers agent)

Methead...if your broker/agent represented you in the transaction....he made some money ( no one works for free) and it did cost you...indirectly. Most new construction has a budget set up to pay realtor fees. Not using a realtor on new costrucion is a great way to get 3% off the hosue...ro paid towards clsoing costs.
Old    Tom (boardjnky4)      Join Date: Dec 2011       01-23-2012, 7:46 AM Reply   
Without a buyers agent, you should be able to negotiate a lower price for the house, by getting the commission rate bumped down.
Old    SamIngram            01-23-2012, 9:01 AM Reply   
My first day job is as an expert witness/appraiser. Having a broker represent you in a transaction has been deemed sufficient as "due diligence" in both state and federal court. When something goes wrong with your house purchase, the defendant's side will make you establish the fact that you performed your due diligence. Without doing so, you will have a lot less claim to any damages. Now I know what you thinking, what could go wrong? All sorts of stuff!

The seller's broker has a legal fiduciary duty to the SELLER, not the buyer, unless they are acting as a dual agent.

As a fiduciary, a real estate broker is held by law, to owe specific duties to his/her principal, in addition to duties or obligations set forth in a listing agreement, buyer representation agreement, or other contract of employment. These specific fiduciary duties include:

Loyalty
Obedience
Disclosure
Confidentiality
Reasonable Care and Diligence
Accounting

Loyalty

One of the most fundamental fiduciary duties an agent owes to the principal. The duty obligates a real estate broker to act at all times, solely in the best interests of the principal, excluding all other interests, including that of the broker.

Obedience

An agent is obligated to promptly and efficiently obey all lawful instructions of his/her principal that conform to the purpose of the agency relationship. However, the duty does not include an obligation to obey unlawful instructions, such as instructions to not market a property to minorities or to misrepresent the condition of a property.

Disclosure

An agent must disclose to the principal all known relevant and material information that pertains to the scope of the agency. The duty includes any facts affecting the value or desirability of the property, as well as any other relevant information pertaining to the transaction, such as the other party's bargaining position, the identity of all potential purchasers, information concerning the ability or willingness of the buyer to offer a higher price, any intent to subdivide or resell the property for a profit.

Confidentiality

An agent is obligated to safeguard his/her principal's lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal's bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property.

Reasonable Care and Diligence

An agent is obligated to use reasonable care and diligence when pursuing the principal's affairs. The standard of care expected of a buyer's or seller's real estate broker is that of a competent real estate professional. By reason of his/her license, a broker is considered to have skill and expertise in real estate matters superior to that of the average person.

Accounting

An agent is obligated to account for all money or property that belongs to his/her principal entrusted to that agent. The duty compels a real estate broker to safeguard any money, deeds, or other documents entrusted to them relative to their client's transactions of affairs.

Big deal right? You probably have the potential of saving 2-3% of the sales price if you don't get buyer's representation. But what happens when the deal goes south, who is your advocate? You don't have one. I have seen cases where the buyer literally buys a house that is falling apart, the inspector doesn't catch it, and the judge decides that the buyer didn't do their due diligence; therefore, the buyer, the new owner of the house falling down, lost everything. I have seen cases where a buyer fails to meet the contract requirements by thinking that the word "Days" in the contract means week days and not weekends, and loses their earnest money. I have seen cases where a buyer buys a house from a bank and later finds out the entire subdivision is involved in a class action lawsuit against the builder for not including a drainage plan in the original subdivision plan - many of the houses flood, all have major landscaping damages. I have seen cases where a buyer buys a house in the flight path of an airforce base and not know it...

Most states have something called a Real Estate Recovery Fund. They make licensed sales agents and brokers pay in to the fund. Google it and read when and where a recovery fund pays out, sales brokers rob people all the time!

Most Realtors, IMO, don't know what the heck they are doing, but some are true professionals. You don't act as your own surgeon, your own lawyer, your own what ever.... A professional Realtor can help you negotiate the purchase, be your advocate, walk you through a headache free process, etc... GET A REPRESENTATION! It rarely goes wrong, but when it does, it pays to have one.

BTW, for disclosure, I am a licensed real estate broker, licensed appraiser, licensed mortgage broker, and have a master's degree in real estate development, so I am biased...
Old    Paul (psudy)      Join Date: Dec 2003       01-23-2012, 9:43 AM Reply   
" I am a licensed real estate broker, licensed appraiser, licensed mortgage broker, and have a master's degree in real estate development, so I am biased"

yeah right.
Old    SamIngram            01-23-2012, 9:57 AM Reply   
Quote:
Originally Posted by psudy View Post
" I am a licensed real estate broker, licensed appraiser, licensed mortgage broker, and have a master's degree in real estate development, so I am biased"

yeah right.
What do you doubt?
Old    Paul (psudy)      Join Date: Dec 2003       01-23-2012, 10:01 AM Reply   
In Az?
Old    SamIngram            01-23-2012, 10:14 AM Reply   
Everything but for mortgage, which is out of IL. I own part of a commercial subdivision in IL and the partners thought it made sense to pay the $2,100 app fee and pay for my surety bond. I have only done three deals there though and will let it lapse when it comes up for renewal. Technically, I could get it in AZ too, by filing for reciprocity and paying the application fee.
Old    SamIngram            01-23-2012, 10:16 AM Reply   
and...
Old    Paul (psudy)      Join Date: Dec 2003       01-23-2012, 10:20 AM Reply   
I was curious, because I didn't find an Ingram here,

http://www.appraisal.state.az.us/

and couldn't find a Sam here,

http://www.nmlsconsumeraccess.org/Ho...20il&x=57&y=12
Old    SamIngram            01-23-2012, 10:26 AM Reply   
Duh... Sam Ingram is not my name, it is a username!

Last edited by SamIngram; 01-23-2012 at 10:30 AM.
Old    SamIngram            01-23-2012, 10:30 AM Reply   
and...
Old    Paul (psudy)      Join Date: Dec 2003       01-23-2012, 12:13 PM Reply   
fair enough. I assumed Ingram was your last name at least since you reference Ingram Construction on your profile.
Old    Meathead (meathead65)      Join Date: Sep 2006       01-23-2012, 2:09 PM Reply   
Thank you Sam.....a logical answer from someone proficient in the field.....exactly what I hoped to get. I'll be enlisting the services of an agent for the purchase, the potential pitfalls far outweigh the costs.
Old    SamIngram            01-23-2012, 2:25 PM Reply   
Quote:
Originally Posted by meathead65 View Post
Thank you Sam.....a logical answer from someone proficient in the field.....exactly what I hoped to get. I'll be enlisting the services of an agent for the purchase, the potential pitfalls far outweigh the costs.
Now just do yourself a favor, hire a Professional Agent, not one that sells real estate on the side. You should be able to figure out who is the professional; ask how many years they have been a Realtor, what their annual sales volume was last year and the year before, if they are a broker (probably an Associate Broker) and if not why?, ask if they have ever been disciplined by a State Real Estate Department or Commissioner, ask if they are primarily a listing broker, buyer's broker, both or neither.... basically just ask them a lot of questions, make it a job interview. I can't believe how many pick their Realtor by just meeting them somewhere on the street and going with them. You probably wouldn't pick a lawyer this way, yet your Realtor is legally acting as your attorney in many states and literally practices real estate law, again in many states.
Old    Jon (jon4pres)      Join Date: May 2004       01-23-2012, 5:22 PM Reply   
I bought 2 houses this year, one with realtors and one without. Neither was harder than the either. If you have a good title company in your town they will give you a contract and set up the closing.

You don't need a realtor and I actually prefer to talk to the owner of the house over a realtor. A long conversation with the owner can usually help you find out more than speaking to a realtor.
Old    SamIngram            01-23-2012, 5:42 PM Reply   
Quote:
Originally Posted by jon4pres View Post
I bought 2 houses this year, one with realtors and one without. Neither was harder than the either. If you have a good title company in your town they will give you a contract and set up the closing.

You don't need a realtor and I actually prefer to talk to the owner of the house over a realtor. A long conversation with the owner can usually help you find out more than speaking to a realtor.
You can still talk to the owner with a Realtor representing you, just ask, you should try to do this either way. As I previously noted, the owner has no fiduciary obligation to you, the way your Realtor would, and doesn't have to do anything associated with being a fiduciary agent. In most states, contractually, they only have to disclose things they deem relevant. As I previously noted, without an agent, your due diligence is greatly increased, as well as your liability is greatly increased. Also, you would not be eligible for a Recovery Fund claim in some scenarios, and you would not be covered by a buyer's broker Errors and Omissions (E&O) policy.

In a traditional successful transaction both transactions are very similar, in a case where something happens both are very different. How versed are you in real estate law? I know the Association of Realtors provides Realtors with same pretty good attorneys. Actually, here in AZ, they provide the services of the #1 rated real estate attorney for free.

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