Buying a house, here's how to beat reatlors at their game.

[FishandFly]

I was going to post this as a response to the guy looking for his first home, but then I thought it was probably good info to offer everyone. Here it is..

If you were to purchase a $200,000 home, realtors typically get 6% of the purchase price of the home. This gets split evenly between the buying agent and the selling agent.

When we started looking for a home, we knew that we would likely end up wanting to see dozens of homes before we felt that we were getting a really good deal. The problem was that all the realtor is interested in is making a buck, which completely screws up your plan to be patient. Besides the fact that I found them to be little or no help whatsoever anyway. Heck, it’s only a 2 month correspondence course to become a realtor. Costs about $500.

I found one realtor who offered me 1% of the commission. (He would get 2% and I would get 1%) So, on a $200,000 house I would receive a check for $2,000. I thought that was great until another realtor returned a call to me and I said I had already found a realtor who offered me 1% so I wasn’t interested. Without batting an eye, he offered me 1.5% ($3,000). One hour later another realtor called and so it goes… He offered me 2%.

So out of a $200,000 purchase I would get $4,000 and he would get $2,000.

It worked perfectly and the day I closed I had a check for just under $5,000.


Do all of this over the phone, because if you sign with one you’re screwed.

My best advice is to just call 2 dozen local realtors after hours one night so that they’ll all call you back the next day.

Also.. Just to be clear, this process didn't involve deceiving anyone. I don't suggest you go out and have one realtor show you homes and then sign on with someone else behind his back. The way we did it was getting into multiple homes by having the seller's realtor open the door for us. They stand to make their own $7,000 out of the deal, so I don't think they mind.

 

[sstearns2]

It's not the best time to buy a house right now. I'd bet you could rent for a year anywhere in the country right now and come out ahead in some cases like the west coast, way ahead. Inventories are at or above record levels for much of the country. In San Diego, for instance, a year ago there were about 4000 house on the market, today there are 19,260 and that number grows every day. Most houses are only selling after multiple price reductions. All the interest only and negative amortization loans are going to adjust to much higher payments in the next year or two, pricing people out of their houses and they won't have the equity to refi. The party is over and it's going to be ugly.

Scott

 

[PA31Ho]

at this point i would like to buy, fix, sell... then maybe later down the line after i get some capital, possibly renting them out. i know people have been talking about this 'real estate bubble' ... but in my opinion, people are always moving and needing somewhere to live.

i'm talking about real doozies too... 50-60k homes. i'm looking at a few right now in new bern - might start up my first deal soon - we'll see.

 

[sstearns2]

People were moving and needed places to live in the early 90s too. Buy, fix, sell doesn't work too well when prices are going down.

Scott

 

[Full of LUV]

Great, except illegal in most states!

I was going to post this as a response to the guy looking for his first home, but then I thought it was probably good info to offer everyone. Here it is..

If you were to purchase a $200,000 home, realtors typically get 6% of the purchase price of the home. This gets split evenly between the buying agent and the selling agent.

When we started looking for a home, we knew that we would likely end up wanting to see dozens of homes before we felt that we were getting a really good deal. The problem was that all the realtor is interested in is making a buck, which completely screws up your plan to be patient. Besides the fact that I found them to be little or no help whatsoever anyway. Heck, it’s only a 2 month correspondence course to become a realtor. Costs about $500.

I found one realtor who offered me 1% of the commission. (He would get 2% and I would get 1%) So, on a $200,000 house I would receive a check for $2,000. I thought that was great until another realtor returned a call to me and I said I had already found a realtor who offered me 1% so I wasn’t interested. Without batting an eye, he offered me 1.5% ($3,000). One hour later another realtor called and so it goes… He offered me 2%.

So out of a $200,000 purchase I would get $4,000 and he would get $2,000.

It worked perfectly and the day I closed I had a check for just under $5,000.


Do all of this over the phone, because if you sign with one you’re screwed.

My best advice is to just call 2 dozen local realtors after hours one night so that they’ll all call you back the next day.

Also.. Just to be clear, this process didn't involve deceiving anyone. I don't suggest you go out and have one realtor show you homes and then sign on with someone else behind his back. The way we did it was getting into multiple homes by having the seller's realtor open the door for us. They stand to make their own $7,000 out of the deal, so I don't think they mind.

I love getting a piece of the real estate brokers action as well, but what you have descibed is clearly illegal in most states. You can use a third party under contract such as USAA etc who give kickbacks, but the best the agent should be able to do is reduce your % to the seller. For them to refund their half of the "sellers" commision directly to the buyer without disclosing it to the seller would be illegal.
Don't you think that the realators have thought of this kind of "race to the bottom" behavior before and had it outlawed in most legislatures. Two points since you seem to be kind of a novice:

1. The term Realator refers to a professional organization in which a real estate agent may choose to join. It involves many things, but most importantly a code of ethics that attempts to make a real estate agent a true professional rather than just an agent. This behavior would be clearly against the Realators stated professional ethics. All Realators are real estate agents, but not vice versa.

2. The best way to truly save on realestate tranaction costs is to find a FSBO property. Instead of worrying about the 1-3% kickbacks, you'll save the 6-7% and often they are priced a bit lower in general to attract attention.

Have a great day!

 

[PCL_128]

Beat the Realtors at their "game?" Translation: "I'll complain and whine when my company tries to cut my pay to make an extra buck, but I see no problem in trying to screw over the professional real estate agents." Typical American hyprocrisy. Realtors aren't playing a "game," they are earning a living by providing a valuable service.

 

[Max Powers]

realtors are so imcompetent its crazy. They mean well but listing agents don't really do anything uselful except put your house on the MLS. My dog could negotiate better than my last realtor she cost me a couple thousand in a market I knew little about.

 

[FishandFly]

I don't get you guys who think realtors deserve $13,200 on the sale of a $220k home. That is ridiculous.

I see it as being no different than shopping around for a new car. Surely you wouldn't consider it to be wrong to search for the dealer who would take less profit.

Car dealers have nearly the amount of educational requirements as realtors. I think realtors have one heck of a gig, but that doesn't mean that I need to sponsor their gig.

Also, that is incorrect that there is a law against this, although I'm sure the realtors have tried to get many passed.

 

[PCL_128]

I don't get you guys who think realtors deserve $13,200 on the sale of a $220k home. That is ridiculous.

What you don't realize is that that $13,200 could be the only sale for next few months that that Realtor could have. It's not like these guys are selling a dozen $200k+ houses a week. Very few Realtors make good money. The average agent only makes about $30k a year, with some earning far less than that. The successful agents that make six figures are few and far between.

 

[wheelsup]

. Heck, it’s only a 2 month correspondence course to become a realtor. Costs about $500.

I flew with a CA who did this. He got a check for $5800 at closing because he was his own agent.

i'm talking about real doozies too... 50-60k homes

$50-$60k homes only exist in markets that sustain those prices - ie low income places. There's a reason why prices around DCA are higher than CLT. Just because a home is $50k doesn't make it a 'steal' IMO. In fact, generally the best investment properties are going to be the most expensive (location location location), on the water, etc. but lack some interior finishes that one could easily do (IMO).