How Not To Save On Realtor Commissions

How Not To Save On Realtor Commissions

What Buyers Dont Understand About Realtor Commissions

Nowadays everyone is looking for bargain basement deals on everything from groceries to homes. People try to sell their homes without a realtor. You have seen the For Sale By Owner signs that can be bought at Lowes or Home Depot. The owner is thinking he can get more for his home without paying commissions and buyers think the same when they drive by these houses with For Sale By Owner signs.

The drive by buyer thinks he will get a better deal while the owner/seller thinks he will get a better deal. Part of the seller/owners thinking is that without commission he can ask a little more for his house. And the prospective buyer thinks just the opposite. He thinks that without a realtor fees he can buy the house cheaper. The thought process generally widens the gap between the asking price and the offer! Once in awhile it actually works out well for both the seller and the buyer but not often.

The owner/seller exposes his house for sale to the few cars that happen to drive by never thinking about the tens of thousand of prospects that look on the internet and the thousands of real estate agents that search the Multiple Listing Service for homes. The owner thinks he may get lucky and sell his home to a neighbor or some other person that drives down his street. He is getting a drop in the bucket of the overall market of buyers.

The For Sale By Owner is subject to the whims of the few potential buyers who want to stop the car phone him or knock on his door. Major inconvenience.

In conclusion it is a myth to think that there is any savings at all not to mention the length of time it will take to complete a FSBO. Time is money right? I know a guy who had his home on the FSBO market for 23 months before he sold it! How much is 23 times the monthly payments and expenses? A whole lot more than 5 or 6 in commissions.

Now lets examine the thinking of a buyer who does not have a real estate agent representing him because he thinks he can save commission by only having to deal with the owner/sellers agent. Listen up. Here is what 90 of buyers and sellers do not understand. As most people know it is common for the seller to list his home for 4 to 6 commissions in total. Almost all buyers agents get 3 and the listing agent part is the commission that gets negotiated. Some listing realtors will discount their side down to 1 or 2 making the total 4 or 5. It used to be commonplace to list the house for 63 to each realtor but not in this market.

Okay here is what really happens most of the time. The buyer without an agent saves nothing because that total amt. of 4 or 5 or 6 ALL GETS PAID to the listing agent if there is no buyers agent. This is a great deal for the listing agent because he gets the full commission that would have gone to the buyers agent if there had been one.

So in this case you end up with no discount on the home purchase. But that is not the only thing you lose. You lose the experience and seasoned counsel of an agent not to mention the third person negotiating skills. The analogy here is: Would you represent yourself in a law suit? No you would hire a lawyer. Why would you represent yourself buying the largest purchase in your life?

. About the same with a discount broker. Expect discounted service and representation and an extremely limited marketing plan. However you will get what you pay for IF you select a seasoned professional real estate agent. I cant tell you how many times I have heard buyers and sellers say I should have hired a realtor. It was too much work and worry and I didnt save a penny!

Bill Remington www.billremington.com

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About the writer: Bill Remington is a seasoned realtor in the North Dallas suburbs. Presently President of Prosper Chamber of Commerce. Key markets are PlanoFriscoMcKinney and Prosper. Espert in short sales REOs and foreclosures. www.billremington.com