San Diego Housing Bubble News and Analysis

What?

You have labelled your agent as another intermediary although this intermediary would most likely be your strongest ally. Additionally while you may infer that you will be saving 2-3% in commission in many cases this is not true. In many cases the result will be that the listing broker simply gets the CBB (the cooperating commission) so while you think you saved 2-3%, in reality you did not. Now the converse to the argument is that if the listing agent is going to represent both sides they will most likely fight hardest for your offer since they will make a good haul. You can even leverage them with that knowledge. So if you do submit the offer and agree to dual agency you can ask them what the CBB is that they will be getting. You can thus lower your offer by that amount perhaps. Another alternative is to submit the offer without representation and make it clear you are not being represented. Again, you can submit the offer 2-3% less then you would have with an agent and provide a letter explaining your stance.

As far as what the benefits are to having a buyers agent... I guess my advice would be to ask family or friends. I have found that convincing people of the need for a buyers agent is not worth the time. There are brokers (who give good personalized service) and who also offer cash rebates or credits of portions of the commission so that may be a good compromise as well. There are more detached organizations like redfin or zip that do the same but are not as personalized. My recommendation would be to talk to a few of each type, see what they can do for you, then decide.

SD Realtor

I fully agree with SDR; "In many cases the result will be that the listing broker simply gets the CBB (the cooperating commission) so while you think you saved 2-3%, in reality you did not. ".

Even for brand new house, if you don't have buyer agent, the listing agent will eat up buyer's 2~3%.

I would recommend, as a buyer, take an agent with you, negotiate a good split of the commission; As a seller, do your homework, get it listed while reserve 2~3% for buyer agent, and make it FSBO.

I agree with SDR also...

I have been watching the market that we bought in for about 1 year. In most cases I knew the houses for sale and sold better than our local agent. However our agent has provided more services then I thought we would get!!

Example the seller's listing agent on many occasions attempt to pull a fast one in which I think the listing agent was the master mind. 1. When we agreed on a price the listing agent said the terms for closing costs were not valid that we only agree to a price excluding closing costs. My agent wouldn't send over the purchase agreement until they agreed to pay closing costs. 2. The listing agent sent paper work that basically said the seller wasn't responsible for last year’s taxes....by the way this was a foreclosure...My agent shut that down right away…
My point is the listing agent would have screwed us had we decided to proceed without an agent.

When I bought my first house I did it without an agent. I checked the comps, knew the area, had a home inspection done, etc. But when it came to negotiate with the sellers agent, I told her I wanted a share of that 3% CBB which would have gone to a buyers agent, if I had one. She barked at me and argued, so I said "Fine, I'll bring an agent by tomorrow and you'll give the entire 3% to him/her".

The phone hadn't hit the reciever when she said "How about some gift certificates to Home Depot?" We agreed on a sliver below 2% since she was paying income taxes on her 6% commission. She made >4% on the sale, and came out ahead of where she'd be if I had an agent and she split the 6%. I got what I needed, and the deal went through without a hitch.

If you're confident in the value and the rest of the transaction, you CAN save that 2-3% but don't assume it's automatically going to be handed over to you. You have to haggle for it, sometimes fight for it. It obviously works better in a buyers market, but I think that's not an issue for 2008.

I bought my place without an agent and the seller didn't have one either. The escrow agent told us everything we needed to do and we did it on our own. I guess I was lucky.

A couple more questions ...

Does the seller's agent influence lender's decisions wrt REO's, if so, how much? Would be easier to "push through" a serious lowball offer (20% off listed price) by going without a buyer's agent, so that the seller's agent gets 6%? Assume that the REO has been on the market for so long that a reasonable case can be made that it won't move at the present price, but there are considerably higher-priced comps and "recent" (6-9 month old) closings in the neighborhood.

Suppose I got approved for a mortgage, submitted an offer letter, and it got accepted. I get an inspector and I'm satisfied with his results. Do I need to be concerned about any technical aspects beyond that (like drafting a contract, opening an escrow, transferring the title, etc.) by myself, or do I basically need to sign the papers I get from the seller's agent to finish the transaction?

Does the seller's agent influence lender's decisions wrt REO's, if so, how much?

esmith my answers are super speculative -

Do you mean the listing agent (when you said sellers agent?) I assume yes. The agent in my experience doesn't influence them much at all. The lenders reply on the BPO which is done by someone other then the listing agent and their own analysis for pricing and evaluations of offers that come in. For REO properties the listing agent does pretty much NOTHING. It is a sweet gig.

REO commissions vary. Alot of times they are a 4.5% split. The commission structure is dictated by the listing agreement between listing agent and bank. Indeed the LA may get more commission if you don't use an agent. Whether he will hold back other offers or give yours preferential treatment is speculative. If he holds back other offers and gets busted by his broker he will be gone. Also the lender may change the terms of the commission structure at their whim.

REO purchases include serious liability releases that the listing agent will make you sign. No matter how airtight your documentation is, theirs will be better. Thus you can most likely use the docs the listing agent gives you. Get lots of due diligence done on your own.

SD Realtor

SD R,
You obviously dont know any good REO brokers. It is a very difficult job and they do tons of work. REO brokers are also property managers. The deal with tons of offers and legalities that you and I dont have to. They need to have fairly large staffs to handle all the work.

I know several very good ones and they also have plenty of say over pricing. Check out the agents that are listing alot of REO's and you will find several very good ones that have decades of experience who are getting their properties sold. You will also find dozens of inexperienced REO agents who dont know what they are doing and have listings rotting on the shelves. Experience is everything in this business. The last few years were an anomaly and the business is returning to agents who actually understand how to get things done.

BTW, have you noticed how all the Help-u-notsell, Assist-to-notsell, iPaynone and the other discount houses are disappearing by the day. I havent received a piece of marketing from any discounters in over 4 months. That business model only works in the best of times. Keep at it, watch your expenses like a hawk and you'll be fine.