Why do you still need an agent to buy a home?

[Steve Horrillo]

Yes but you never got to see the For Sale By Owners also on the market.
Right? If you'd had signed a buyer's agreement you could have seen it
all.

I honestly don't think "For Sale By Owners" represent more than 10% of the
what is the buyer's agreement you are referring to? Actually pay money to
an agent to find you a home?

I receive a list of about 50-75 new FSBO's a day just for my county, and
these are only the one's that the service is able to harvest from local
newspapers and website's. That doesn't even count the one's that only use
flyers and yard signs.

A buyer's agreement means that in the allotted time, say 3 months, any home
you buy the agent gets, say 3%. Even if it's a For Sale By Owner or even if
you find it. Without a contract the Agent has no commitment from you so if
you find one who's more committed to you than you are committed to her/him
consider yourself fortunate. Without a contract the FSBO can be an agent's
worst nightmare. Ask any experienced agent who handles buyers and they will
tell you stories of heartbreak. How they drove someone around for months
only to have them buy on their own. Or how they searched for properties only
to have the buyer go around them and make a deal directly with the listing
agent. Some accept it as the cost of business. Other's refuse to show homes
at all and refer them off. While other's come to distrust and even inwardly
despise the very people they are "hired" to help. I use quotes around the
word hired because without a contract, depending on the State, you haven't
really hired anyone. They are still legally obligated to the seller.

Furthermore, if you think that when you buy a house listed in the MLS that
it is the only seller who is paying the commission you are believing some
Buyer's Agent's sales pitch. It may be true from a legal / contractual
standpoint, but in practice it is the buyer that pays the cost. But just
common sense should tell you that the seller has already adjusted his price
upward to compensate for the commission. In fact statistically on the
average you the buyer is paying 6-21% more for the same type of house
(depending on who's stats you believe and when the study was done).

If you're being pitched by an Agent who wants to sell your house you will be
told they will fetch you over the 6% they charge. If you are buying a home
you will be told that it's the seller who's paying the commission. Both are
technically telling the truth. But look on the bright side. When it's time
to sell the home you paid over 6% for, if you hire a Realtor to sell, it
will be your turn to get 6-21% more. If you really want to get bent over,
buy through the MLS then try to sell it on your own. Of course I'm speaking
of averages. There's always going to be a percentage of people who will beat
the odds, or at least think they can. That's the lure of the FSBO. That's
what keeps ad services, online FSBO sites, classifieds, flat rate, discount
brokers, and gambling casinos in business.

[Steve Horrillo]

Signing an agreement with a broker is totally foolish. Remember that if
you find a FSBO on your own, you have a bargaining position that you
don't have with a broker. If its a hot property you're going to pay
market or close anyway. But if the seller doesn't have to pay the
broker,and you are ready to buy, cash-in-hand, you can get a piece of
that 4-6% overhead yourself. It costs money for every month the seller
doesn't sell without a broker for advertising, carrying costs, etc, so
if you can buy quickly you can get a bargain.
Unless of course you're willing to pay $50K for a glorified chauffer.

You show your colors with that last line. The one's who don't hire realtors
are the one's with "issues" about them, are the kind that think they're so
smart they can beat the system, aren't really motivated, or don't have a
life/job and have too much time on their hands. Anyone who is thinking
clearly would never try it themselves. If you had a bad experience with an
Agent then learn how to shop for an Agent. If you've never used one you have
no business making any judgments.

[Steve Horrillo]

Split
the savings in commission down the middle. If, say, an agent's commission
would normally be $10,000, offer it to a buyer for $5000 less than what
you
would otherwise demand. I did this in 1998, and it worked fine.

The listing agent should already have a contract with the seller for 6%. Why
would the Agent settle for half? Keep in mind it's the buyer's agent that
does most of the work leading up to the closing. Unless the house was
grossly over priced and they weren't getting any action. Chances are you WAY
overpaid for that house.

Warmest regards,

Steve Horrillo, Realtor / CEO / C.Ht.
http://BrokerAgenTraining.com (Advanced Training for Real Estate
Professionals)
http://over100percent.com (See How to Earn Over 100 Percent at EXIT Realty)
http::/HipFSBO.com (Find a FSBO Friendly Real Estate Professional)

[Steve Horrillo]

Post by Steve Horrillo
The listing agent should already have a contract with the seller for 6%.
Why
would the Agent settle for half? Keep in mind it's the buyer's agent
that
does most of the work leading up to the closing. Unless the house was
grossly over priced and they weren't getting any action. Chances are you
WAY
overpaid for that house.

I guess I didn't make it clear what happened. No agents were involved. I
priced the house about what I believed it would realistically bring, lets
say $175,000. Then I said to the potential buyer: "If I sold this house
through an agent, you would have to pay $175,000, and I would end up with
$165,000 after paying a $10,000 commission. I will sell it to you for
$170,000." So the buyer and I each ended up with $5000 more than we would
have otherwise.

How many buyers did you show your house to before you sold it? If your home
is shown to, say 3 qualified people in a month versus 30, don't you think
you could have gotten someone to pay you a lot more than you did? If you
were getting showings with minimal advertising at 175k, I guarantee you
could have gotten at least 199-225k if you had Global exposure.

How many potential buyers walked through your home before you sold? Out of
that number how many did you feel were serious and had the capacity to buy?
How could you tell? Did you ask for a Source of Funds / Pre-qualification
Letter? What length of time did you have it "on the market?"

[Steve Horrillo]

On average 82% of FSBOs fail to sell. If the FSBO gets into escrow,
they
take about three times longer to do so, they are four times less
likely

to

close and six times more likely to suffer litigation. Of those who
close
escrow, their net proceeds will average 5 to 12% less and about 90%

would

not do it again.

Where exactly did you get those statistics?

Steve, I think these are national numbers, I don't think they hold true,
or
quite so true, in California where you and I are. I can't support them,
but
I have seen them, or numbers like these, before.
As you are well aware, the decision to go it alone with a FSBO is highly
dependent on the market for success. Here in California, I think that
FSBOs
have greater success than many other places, a large part of that is
because
escrow does more here than in other states. I know that I had to do more
on
my purchase and my sale because I went it alone, but I was able to work
well
with escrow on both transactions. The escrows in both said that I was
among
the better customers they worked with, most people simply are not well
suited to deal with this sort of stuff. Certainly many are, but there is
no
denying that many aren't.
This discussion started off as a look at using a Buyer's Agent, the fact
that we are discussing the pitfalls of selling shows how much confusion
there can be.

I'm in South Florida not CA. But the situations seem to be similar. From
what I've seen, there's no way I'd wouldn't use the MLS to sell my home. My
best friend, a Realtor of 20 years sold her home with a yard sign and was so
proud she got her asking price in two weeks. Fact is, she asked too low.
Within two weeks after she sold an identical townhouse sold on the MLS for
20k higher! When I worked for Buy Owner I would sign up at least two
Realtors per month. It amazes me that even Realtors succumb to the ego trip
and greed factor of thinking they can do better selling it themselves.

Warmest regards,

Steve Horrillo, Realtor / C.Ht.
http://BrokerAgentTraining.com http://over100percent.com http://HipFSBO.com
http://eLOWn.com

[Steve Horrillo]

Steve, your statement "FSBO is not worth anything" is simply not true.
I sold through FSBO
and I am glad that I paid $350 instead of $4200 for an agent. I am
thinking of becoming a
broker myself. However, I am thinking it deeper as I am seeing signs of
"For Sale By Owner"
more and more. It is not just FSBO. People are just selling by
themselves by putting up a sign.

It's just common sense. If the minimal exposure from a sign gets you "X"
dollars. More exposure will get you more $. Step back from your personal
prejudices and motives and think about it rationally. Or become a broker and
you'll get to experience for youself what I'm telling you. I've been there
myself.

[Steve Horrillo]

People
are so paranoid of scams and rip-offs that they'd rather pay the Re-max
guys because at least they know they're legit.

Legit? In practice FEE/MAX is one of the worst because they stay out of the
Broker's business as long as they pay the franchise fee. And the Broker
stays out of the Agent's way as long as they pay for their office space.

You don't have a clue. Do you?

[Steve Horrillo]

In practice the buyer's

agent will feel morally obligated to the buyer even though they are
legally
obligated to the seller.

If this is true, it is certainly unlike any business relationship I have
encountered. If it is true, how do you suppose the seller feels about it?
Car salesman to customer in sales room: Sir, I am morally obligated to
you,
even though I am legally obligated to my boss.

Don, you can't compare buying a home to buying a car. When an agent takes on
a buyer, no matter what type of agency is involved, the agent becomes the
"procuring cause" of the potential transaction. If it weren't for the buyer
choosing them, the agent would have no claim on their cut of the commission.
With that comes a psychological sense of obligation. "You picked ME over a
thousand other agents." What makes it all so confusing is that lawmakers try
to legislate morality, they try to scientifically reduce the potential for
abuse. Some people follow G-d's law, other's follow man's law. They
sometimes come into conflict. That's why Realtors and almost every
professional is taught that, "when in doubt follow the Golden Rule." "Do
unto other's as you would have them do unto to you."

To put it in a blunt way, if the seller is an opportunistic prick with a
prick for listing agent, you need to protect the buyer. If the buyer is
looking for an unfair edge you try to protect the seller. It's not something
that can be defined in a written law. I know in my heart who's the predator
and who's the prey. Usually both parties are neither. But when I do see an
imbalance I will subtly try even up the odds. Sue me. Fire me. Take away my
license. Whatever turns you on. But I'll follow the Golden Rule no matter
what the consequences. I don't work for money, my broker, the buyer, the
seller, the Government etc. I work for G-d. Because I have to live with
myself, that's Who I ultimately must answer to. If you're an atheist then
answer to your conscience. FTW.

Warmest regards,

Steve Horrillo, Realtor / C.Ht.
http://BrokerAgentTraining.com http://over100percent.com http://HipFSBO.com
http://eLOWn.com