San Diego Housing Bubble News and Analysis

The way things are going these days, I figured it was a better idea to find an agent who was worth 2.5% ... at least in my price range.

Temeculaguy has some good insight into this.

His basic philosophy was "why help somebody earn thousands for a couple hours of work".

That is certainly a valid point.

However, most deals I handle involve 100-200 hours of work and earn me less than than $10k. That is before backing out the cost of gas, supplies, and repairs (which often come out of my pocket).

Generally, unless an agent either offers limited service or has a second job (which implies limited service) there is not a great deal of extra cash to go around.

This does vary by agent, market, and client.

Most of the agents who hit it rich and offer big kickouts to buyers during the boom are in different line of work these days.

There are certainly exceptions though.

I guess that's my question. What is a "big" kickback? Is it normal to not get anything? I bought in 2002 and got $2500 back from my agent on a 450K house. I never asked her for it either. She just said that's what she does. Is that abnormal?

uneven your question is a tough one to answer because there is nothing that is normal. Commissions are not set by law. You can go to alot of online places and look at the commission structures that they have and maybe they work for you and maybe they do not.

There is no normal. What a realtor sees from a commission varies alot and is 100% determined by where he works. Many large brokerages take a good percentage of the commission so the leftovers the realtor gets makes it hard for them to give money to the client.

Smaller brokerages and independents, may not take a large percentage leaving the realtor more leeway to give a rebate. Many of the online places don't use realtors but just have people let you in the door to a home and pretty much you are on your own but they may give you a large rebate.

A somewhat reliable rule of thumb is that the rebate will vary with the work you expect to receive from the agent. Do you want comps? Do you want advice from the agent? Do you care what other homes in the same neighborhood sell for? Do you want to know if the agent sold or represented buyers in that neighborhood? Do you want help with inspectors and/or contractors? Do you want research or foreclosure information? What do you want from the agent? Some people want more and some want less. You can kind of set the parameters and talk about them with your agent and then come up with a sensible rebate amount.

There are alot of options out there for you with regards to rebates. If your previous agent gave you 2500 on a 450k deal then that was nice of her, specially without you asking for it.

Thanks SD R. That helps. Should I use an agent at all on a new home if I already have a house picked out?

Our agent split his commission down the middle with us and picked up the home warrantee as a gift.

Why? We didn't waste his time. He showed us one house and he wrote one offer for us ... which obviously turned into a closed sale.

Short sale annoyances aside, it was easy money for him and he did a great job getting us through a short escrow with minimal fuss. Everyone won this time.

uneven again that is up to you.

Rebates can be a little trickier with a new home. Most people think that an agent earns a coop commission for a new home. In reality what most developers do is award a referral to an agent who registers a buyer who buys a new home. However with that referral fee are tighter restrictions that the referral that goes to the agent must not be distributed to the buyer. So generally the rebate back to the buyer on a new home is done outside or after escrow. Expect to be 1099'd on that income. However it is still pretty nice money right? Are you gonna turn down 10k for instance if I tell you I have to 1099 you at the end of the year? Heck no.

Anyways you may ask what good is the agent if I already have a new home picked out... well that is a good question. Perhaps not much. However if you go to the sales office and say give me the new home for the sales price minus the referral fee it is quite unlikely they will. I guess maybe it depends on the development. If you have already have picked out a home, that is, if you already registered with the builder it is a moot point. Even if you bring an agent with you the sales office will go no sir, and turn the agent away.

The word kickback has such a negative connotation. There are different scenarios and people have different levels of sophistication and different needs. As a buyer, it almost always benefits you to use a realtor, especially one on his own turf, look for one that can tell you the square footage or model layouts off the top of their head and look for a good negotiator, not just a pretty one (my personal weakness).

For short sales you "need" one. For organic sales, you "should have" one. For an REO that you found yourself in your hood that you are familiar with, with multiple bids, they can be a handicap because their commission comes off your net offer, they can slow you down and about all they can do for you is the negotiation which doesn't really exist with banks, they aren't going to fix it or change it, they just look at the net offer. I spent a few thousand hours educating myself about r/e, I found the house myself, but in the end I still had a buddy in the biz proofread my stuff and take a look at my deal, I'm still paying him off in alcohol. I didn't get a kickback, I used the listing agent, had them write a fraction of the normal buyers comission and it sweetened my net offer. I did try to get one of the piggy realtors to handle my deal but the three that I trust and have had a drink with (a prerequisite for my business, sd, SD and urban) all work too far away from me, so I went it alone, but i don't reccomend it for most scenarios or most people.

redfin and other kickback realtors will not allow you to tour or make an offer on a short sale, they are just too much work. http://www.redfin.com/buy-a-home/short-s...

Buyer's agents are very helpful and essential for a first time buyer. For others, in a buyers market, if you feel the need for an agent, you are not ready to buy and you should do more homework. (I believe an agent, like any other human, puts his interests above a clients interest). Also, things work better, especially when buying REO, when you use the same agent (or an agent's close friend) as the seller's agent after you have done your homework . The empirical formula for getting really good REO deals seems to be Cash + listing agent with incentive!

My concerns with the quoted post by brsharma:

Buyer's market:
This is defined super locally and not nationally (as the news media would imply). For example, it is very hard to get an offer accepted on a property listed below $200k in a desirable area. That's because at those price points and in those areas, it is a seller's market.

Not ready to buy:
While lots of people are not ready to buy, the act of asking for, or getting free professional consultation, negotiation, and assistance does not seem to be an indicator of unreadiness.

A large percentage of my buyers (most of my business) are people looking for a more experienced view (I do this every day and they do it about twice in their lives) and for help in formulating strategy and reconciling wants and needs.

Others are just too busy to deal with it themselves. Lots of professionals need someone who will help them work their purchase around their schedule and keep them from getting screwed.

Self-interest above client interest:
This is totally accurate. That's why I don't recommend ever using the listing agent as your buyer agent as well. Double-ending is legal but presents an inherent conflict of interest. Short sales are the only real exception (both sides are negotiating with the bank). Do you really think the bank or the seller give a shit if the buyer pays 10 or 15 percent over the market value? LOTS of people pay too much by doing this. Further, once the agent's loyalty is split he really cant advocate for things like repairs or better inspections or disclosures.

Showing up with cash to a listing agent is the real estate equivalent of tattooing "sucker" on your forehead. It relies upon the honesty of a listing agent you have never met. Further it relies upon the idea that the agent will be honest with you and dishonest enough with their client to push you to the front of the list. There is basic gap in the logic here. I don't recommend it as a strategy.

Doing your homework:
This is always a good idea. However, I think that a professional advocate for buyers will be better dialed in at getting you the best information.

Thats not always true. Recently I was brought into a deal as a consultant where the buyer agent had written an offer with NO LOAN CONTINGENCIES. In other words, if the buyer lost his job or the appraisal came in low or the bank went out of business, the seller kept the buyer's ($10,000) deposit.

It really pays to ask for references.