[om3n]

I'm a software engineer, and I started my career at a well known mortgage company in Detroit. Views are my own, BTW.

I bought a house a couple years after I started working there, and I wanted the full home-purchaser experience. I used my company's services for everything, and as an employee they hooked me up with a real estate agent (among other things).

I was honestly appalled at what little my real estate agent did for me through the whole process. I had what seemed like simple requirements: I wanted to live west of the city, I wanted at least 1 acre, and an outbuilding. The outbuilding is what threw off the search tool the agent was using to find houses for me; he rarely found good ones in my price range that had outbuildings.

I ended up finding the house I purchased. I'm honestly not sure what he did at all.

When it came time to sell my house, I did it by owner. It was super easy to do everything, including getting my home on the MLS with a service called Reozom, for a couple hundred bucks. I used several sources to come up with comps for pricing.

However, the purchasing agent who represented the buyers of my home was an absolute MONSTER to me; extremely rude in nearly every email or phone call. I think she was so horrible because I was proving how absolutely unnecessary she was in the whole process. I sold the house for a little under asking price, plus I paid her a 2% commission instead of 3%, and of course not 6% as if she represented me as well. The funny thing- she didn't notice the 2% in the purchasing contract until after it was already signed.

What I've anecdotally learned is this: real estate agents don't provide enough useful benefit for me to use them, and can be hostile as their industry is increasingly proven to be built on little or nothing.

[Justin_K]

She was hostile because a real estate agent's approach is to black ball any for sale by owner listing, or any for sale by Redfin / Zillow, etc. Agents around my area always blackball these listings and will NOT tell buyers about these listings unless buyers specifically ask. This is nonsense and not in favor of buyers and is an attempt to bring failure to reform. Fortunately, more and more buyers are realizing they can do the research themselves online.

[scarface74]

Why wouldn’t they unless you agreed to pay the buyer’s agent commission? It’s how they make their living.

Edit: oops meant buyers agent - corrected.

[kbutler]

Realtors have a fiduciary responsibility to act in the interest of their principal, even when it is against the interest of the agent.

"This duty obligates a real estate broker to act at all times solely in the best interests of his principal to the exclusion of all other interests, including the broker’s own self-interest." https://www.nar.realtor/sites/default/files/handouts-and-bro...

[scarface74]

Yeah and people are completely honest when they swear to tell the truth in court too...

Good luck proving that the real estate agent just didn’t know about the house they didn’t show you.

[diggernet]

Please note: That is for a "real estate broker". Most buyers and sellers are dealing with a "real estate agent". Agent is a lower level license, for which that duty does not apply.

[kbutler]

That differences in fiduciary duty does not appear to be the case. For example

"Agents who represent clients under single agency owe a fiduciary responsibility to the client" https://www.thebalance.com/agency-relationships-in-real-esta...

[dragonwriter]

In California, at least, a real estate agent has both common law and statutory fiduciary and fiduciary-like duties.

[donavanm]

In practice, no. The broker != agent distinction is key here. And the insulation between actuons of the agent and responsibility of the broker. Additionally the standard paperwork (AFAICT) routinely has the principal waive the brokers duty of representation as well.

[josaka]

At least from the perspective of the legal profession, the scope of "fiduciary duties" of realtors seems relatively constrained. Buyer's and their agent's interests appear to be misaligned. I can't think of other examples of fiduciaries where, the more the principle pays, the more the agent is compensated, like on the buy side of a standard realtor agreement. Fixed fee or hourly comp. would eliminate the misalignment, but my sense is it's disfavored in the industry.

[Justin_K]

This is so meaningless I don't even know how to respond. Banks have the same responsibility and look how they've treated customers.

[TomMckenny]

In principle.

But do you have an example of that fiduciary responsibility being enforced to any real degree?

[ska]

You've corrected the buyer vs. seller agent thing, but I still can't make sense of this. The seller was always going to pay the buying agents commission (they hoped to negotiate a lower rate) - so why is that agent hostile to the sale and/or blackballing the listing? The only reason seems to be to protect the system they benefit from, at the expense of the buyers and sellers.

In such a situation the embedded interests (agents) may well be antagonistic to change, but it doesn't mean that change isn't globally a good idea....

[ska]

There was no sellers agent, why would that commission be paid? They did pay the buyers agent commission (albeit at a lower rate).

[kevstev]

I had a situation like that come up a few years ago, and it shocked me. I live in a condo building, I was looking to add a bedroom or two. The wife and I know what we want, and we came quite prepared with a list of units we wanted to see. One in particular, I thought would be very fitting. The agents kind of steered us away from it and showed us a few other units. None of those were quite the right fit, so I pushed the issue, and I was very direct and asked about the other. They both looked at each other and said "oh no, you won't like that one." I kind of tilted my head, but said alright fine and we went on our way- one of the agents was actually a neighbor in my building, so I didn't make an issue of it.

Something about the whole thing bothered me though, and a few months later, after a lack of success finding a new home, I went back and took a look at the listing. I found it, and noticed that I had found it through a zillow link. The lightbulb went off in my head- they didn't want to show it to me.

One thing to keep in mind in real estate transactions though- is that AGENTS REPRESENT THE SELLER. They do NOT have your interests in mind. The seller pays them, and at the end of the day their only motivation is to close the deal. Within limits established by law and regulations, they don't have to mention anything they know that may not help close the deal. Did this place get flooded by the last big storm? Do they happen to know that the plumbing isn't built right and you are going to have constant maintenance problems, or there is a mold problem in the attic? Maybe in a larger multifamily they know the insulation is crap and your heating/AC bills are going to be very high? They don't have to mention this unless you ask directly.

And quite frankly- don't trust a thing they say. If I am really interested in a place, like make an offer interested, I note down everything they say mentally that I can't really verify in a walkthrough. Then I follow up with "Hey Blondey McSalesy, We really loved unit 100 on 5 Some Street. The master bath was nice, and its really unique that the wall is tiled with marble from the North Pole! We really loved it when you told us the roof was made of unobtanium shingles and will last 2000 years. The furnace being a 2021 model made by Spacex, with such super high efficiency, that it will even spit out dollar bills from the vents in the winter, is a huge material factor for us. Based on the information you gave us and what we saw, we would like to make an offer. Let us know if we misunderstood anything!"

[will123195]

> AGENTS REPRESENT THE SELLER. They do NOT have your interests in mind.

Absolutely not true. Buyer's Agents represent the BUYER and have a legal obligation to act in the best interest of the Buyer.

> They don't have to mention this unless you ask directly.

Again, you are mistaken. The Seller and the Seller's Agent are required by law to disclose any known material latent defects in writing...or risk litigation after closing.

The reason I got my real estate license was to bypass the outrageous fees and my lack of trust of Realtors. But in doing so, I've come to realize that Realtors do bring a certain level of ethics to an industry which is extremely prone all types of shenanigans. I imagine without Realtors there would be a lot more litigation since the public is largely unaware of laws regarding disclosures, discrimination, kickbacks, etc.

[BrentOzar]

> plus I paid her a 2% commission instead of 3%, and of course not 6% as if she represented me as well.

I tried selling my home twice: first with the “normal” approach, using a real estate agent and paying everybody full commission. My agent just didn’t do enough to move the process along. After my contract with her expired, I bid her goodbye.

On attempt #2, I listed it myself (for sale by owner) but put in the listing notes, “FSBO, but the buyer’s agent will get 4% commission.” Agents kicked my door down bringing buyers in, and we sold it for full asking price in under a week.

[marpstar]

Thanks for sharing this. My first (and only) home purchase was a FSBO and I also did not have an agent. I didn't see what the point of it was from the buyer side. I'm hoping to sell soon and your 4% buyer agent commission technique is very intriguing.

I made contact with an agent last year in my search for a new home and she's since practically forgotten about me. Never sends me any homes that match my criteria. Looks like I'll be going alone, again.

[novaleaf]

awesome tactic. thank you for sharing.

in my life I did a "normal" buy, did a FSBO, and latest did a buy via Redfin.

I can see a place for buying agents, as they can/should do a lot of the legwork scoping out potential homes for their buyers. I did that myself when I did Redfin, which is what I wanted, but I can see how most people wouldn't have the time (basically house shopping was my fulltime job for 3 months)

I only did my FSBO sale at the peak of the last housing boom, so with that caveat in mind, I don't really see a place for normal selling agents.

[asdf333]

very nice. way to hack the system

[asciident]

I and almost everyone I know have had the exact same experience. Buyer agents seems to basically set you up on some auto-email service for a search filter (which you can do yourself on many real estate websites), and occasionally take you to see some homes. They use all sorts of fear tactics to keep themselves from getting cut, and everyone is starting to realize it.

I ended up buying a house via private sale (FSBO) and I had no agent, and everyone won BIG TIME. The closing costs, including the lawyer, title search, and court documents were $650. With an agent, the costs besides the home purchase would have been about $25,000. It's a prisoner's dilemma, where either of you has an agent, then both buyer and seller are worse off.

[dragonwriter]

> Buyer agents seems to basically set you up on some auto-email service for a search filter

There are better agents, but finding them is challenging.

[mreome]

If there is a challenge to finding a good agent, and a challenge to doing it yourself, doesn't the option that saves you a ton of money just make more sense?

[dragonwriter]

In some cases, yes, in some, no. It really depends on your situation, including what your opportunity cost for the marginal time commitment of doing it yourself is and if your transaction is special in a way which changes the expected value of an agent and/or the expected cost of doing it yourself, and if you've found solutions that put you in a better than average position with either of the two opposing challenges.

[rayiner]

I’ll offer the alternate viewpoint. My parents sold a house last year in northern Virginia. During the market peak it was around 60% above what they bought it for in 2002, but by 2018, objective market price was 25% above purchase price. My parents—having experienced the 1990-2000s housing boom—could not believe it should be on the market for less than 50% above. A good seller’s agent absolutely helped them come to a proper asking price and made the sale happen.

Most buyers and sellers are not completely rational about houses, because they’re not repeat players. There is a good argument that agents help the market stay liquid and facilitate transactions happening.

[DesiLurker]

I see many (likely realtors) defending the fees & the larger model. Here is some back of envelop math I once did to put it in perspective:

according to Bob Shiller (of case/shiller fame) it has historically taken about 30 years of work to own a house in steady markets. now on an average people move houses once every 7 years due to labor mobility/family/etc reasons. so roughly 4 housing buy/sell transactions in an average persons life. assuming 7% commisions (~9% if you include both buyer and seller plus origination as you are often both when you move). so essentially you end up with .93^4 or ~75%. which means you've worked 25% of your life for your realtor(s).

Now do you think the commissions are worth it? IM[NSH]O its total BS, at best their work is fixed commission especially in the booming & super expensive markets like sf bayarea.

[ralph84]

Math isn't correct because most of that 30 years of work is interest on the mortgage, which the realtor doesn't get a cut of.

[DesiLurker]

that is in addition to mortgage interest. one could argue that is justified because ultimately its the bank taking a risk on giving you a loan for the property. so they deserve a premium for that risk, how much premium is another question but the fact remains that they are one of the parties in the transaction.

My issue here is with these middleman who have nothing to do with property once the sale is made & exist to take a cut of the transaction because they have monopoly on the listing service. the calculation I've done only reflects the cut to the realtor simply because they've inserted themselves in the process.

just think about it, increasingly Americans dont have any other retirement saving besides equity in their homes. so its not a hyperbole to say that you've effectively sacrificed 25% of your retirement to these (really resisting the urge to name call) people.

[ralph84]

If you think the service isn't worth the cost that's fine, but it's nowhere near 25% of lifetime earnings. I'm 40 and have purchased three properties and sold one of them. The total commissions on all four of those transactions weren't even 25% of my earnings last year.

[DesiLurker]

Did you even read the calculation I did? please go back and read the comment and work it out yourself.

>>> I'm 40 and have purchased three properties and sold one of them...

well, based on what you said you are a real estate investor and are hardly representative of average joe. another way to think about it is the math is for the residential RE market as an aggregate and as an aggregate it takes a shelter buyer regular joe 30 years of earnings to fully own a house. if you have issues with that stat please take it up with Bob Shiller. the rest of math is self evident assuming 4 transactions throughout the lifetime 'on an aggregate'.

[dragonwriter]

> now on an average people move houses once every 7 years due to labor mobility/family/etc reasons. so roughly 4 housing buy/sell transactions in an average persons life.

You assume the aversge person owns a home at the beginning of, and throughout, their working today career. That has never been the case.

[TallGuyShort]

Very good point with the math. However with super expensive markets, doesn't their commission then match their increased cost of living to be working there?

[DesiLurker]

that can be used to justify almost any level of commission including fixed fee rate. ultimately its modulated by increase number of realtors coming into the market. the core amount of work needed to buy/sell a house is not that much and can be effectively segmented to specialized (low-cost) individuals like Redfin is trying to do. you could also argue that in hot markets like sf-bayarea homes sell themselves so the workload on realtors is not so much, which means they can sell more houses to make up for 'lost' commission like rest of america.

the problem is that even if a realtor wants to reduce his commission, he has no control over the other party and they'll want to have full 3%. this minimizes the incentive to disrupt the process though in super expensive markets it may still make sense.

[asdf333]

this is exactly correct. i used a redfin agent and felt like he was discriminated against by the seller agents at every turn.

[akvadrako]

Why would you pay an agent hired by another party anything at all? If the buyer wanted an agent, surely it's something they should cover.

[stjohnswarts]

That's why you get a buyer's agent who has fiduciary responsibility to -you-. They split the typical 6% between themselves and the seller's agent.

[chrisco255]

Former real estate agent, now software engineer. Doing a FSBO (for sale by owner) is as old as time. There's nothing wrong with this approach, but you are limiting your market (and you might therefore be selling at a lower price anyways) and it's highly dependent on your: patience, financial situation, free time, marketing skills, general sales skills, local housing market, tricky property situations, ability to assist buyers with locating financing, handling any objections or mortgage exceptions that come up (including zoning and inspections requirements), etc.

Buyer's agents deserve their 3% perhaps even more than listing agents and it's unfortunate you screwed this agent out of that. It's sort of like stiffing a server on a tip. Buyers are fickle, time consuming, and sometimes demanding. It can take many showings and offers to find a good fit for someone. Sometimes I would work with a client for weeks or months. Many clients would fall through and you'd get $0 for those clients. So you have to average out your earnings with the successes.

There's other things you have to do, too sometimes. Like once I had an FHA financed client and there were certain restrictions about the distance a well could be from the septic tank at the Federal level but they didn't match the requirements at the county level (which were looser). So I had to coordinate with local zoning and the FHA to get an exception for this loan. That was a bigger ordeal than I can explain here.

These online MLS listing services have been around since 2004-2005. They're nothing new. Are there crappy agents? Yeah. Just like any profession. But the profession itself is not going anywhere.

[Youden]

> and it's unfortunate you screwed this agent out of that.

This makes absolutely no sense to me. Why on earth would I be obligated to pay the buyer's agent? What has the agent done for me? When did I establish a relationship with this person and agree to pay them anything?

I would feel absolutely fine paying this person zero. If they want to get paid, they should take it up with the buyer because the buyer is the one who engaged their services.

Note: I am not American.

[chrisco255]

They brought you a buyer. The buyer pays for everything in both cases. If you sell your house for $100K - 3% it's the same as selling your house FSBO for $97K.

[gibybo]

He sold his as FSBO. It's highly unlikely the real estate agent brought the buyer since they hate FSBOs. It's much more likely the buyer found the house himself/herself.

[Gibbon1]

My experience with a buyers agent was no offense but they were pretty much worthless when selecting which houses to make offers on.

On the pro side the sellers agent was also worthless.

[jacquesm]

> Buyer's agents deserve their 3% perhaps even more than listing agents and it's unfortunate you screwed this agent out of that.

3% of the value of a house is hardly 'a tip', a common fee in Europe for selling a house is around 1.5 to 2%, a typical buyer will not use a realtor at all. Oh, and it is illegal here for a realtor to charge both the buyer and the seller because there is a clear conflict of interest there, you can only work for one party. The real estate market in North America is ridiculous.

[ethbro]

> Oh, and it is illegal here for a realtor to charge both the buyer and the seller because there is a clear conflict of interest there, you can only work for one party.

Technically, in the US, the buyer's agent is only working for the buyer. They're just paid by the seller (traditionally and stupidly).

[speedplane]

> in the US, the buyer's agent is only working for the buyer. They're just paid by the seller (traditionally and stupidly).

I just went through this process. While the buyer's agent ostensibly works for the buyer, their main incentive is to get you to close. It doesn't matter if it's a good deal, a bad deal, or whatever. They take 3% so if you overpay or underpay by 10% of the appropriate value of the house that's only +/- 0.3% to them. They are much more interested in closing the deal quickly and moving on to the next than making sure you get what you want.

[makeset]

Not to defend the system, the incentives are clearly not well-aligned, but I also just went through this process had an unexpectedly great experience with my buyer's agent, whom I found through a referral.

He was professional, ethical, and actually took his fiduciary duty seriously. He didn't claim to find listings that I wouldn't have myself, but guided my search a bit based on my criteria, gave candid feedback on them and what to look for, and bargained on the price with the seller harder than I would have, saving me more than his commission. When I discovered a potential issue with the property and had second thoughts pre-close, he didn't try to discourage me one bit from letting a done deal fall through, and was ready to support my decision. And he set up the many appointments with the seller's agents, handled the literal ream of closing paperwork, dotted the i's and crossed the t's, and made this whole convoluted process go smoothly. From my end, he more than deserved his commission he got out of the deal, and he will certainly have my future business buying or selling.

[speedplane]

Maybe I just got a bad buyer's broker (he was a reference from my mother, how could I refuse). My broker would refuse to CC me or BCC me on any communication with the seller's agent, or the co-op board, and when I asked him to forward this communication, he would remove timestamps and the underlying earlier threaded email messages.

It felt incredibly sketchy and unprofessional, but to this day I'm not sure if it was due to ineptitude, trying to provide cover for himself, or worse (maybe by deleting timestamps he could claim he responded faster than he did).

He also made a huge omission. He knew we wanted to renovate the apartment, but we did not get a copy of the alteration agreement until after we signed the contract. I didn't even know what an alteration agreement was, but it was something I felt a good buyer's broker should raise early if he/she knows you're planning a reno.

In the end, the deal did close, I think we got a fair price, but it came with many avoidable headaches and much unnecessary anxiety had our broker been more professional.

[ethbro]

We're talking gradations of responsibility, now.

In the same way a lawyer works for you, a buyer's agent works for the buyer.

Emphasis on works for. My understanding is they are under obligations to (a) attempt to realize your stated goals & (b) ensure everything is done properly on the paperwork side.

If you say "I want to pay $750,000 for a house that appraises for $450,000", I don't think they have an obligation to say "You should probably pay less / not buy that property."

As you've rightly noted, there is a conflict of interest (mostly with speed of deal, rather than price). But ultimately it's the buyer's responsibility to set the terms of the deal.

[stjohnswarts]

That's not true in a general sense at all. My agent actively dissuaded me from several houses and pointed out why they were a bad deal. In the end I ended up with a house that I found while driving around a neighborhood I liked. The BA helped me with all the paperwork and made sure I didn't have any issues with the purchase as well.

[mattmanser]

It's funny to watch American films and TV shows where everyone seems to be a realtor on the side, or getting a realtors licence.

[azhenley]

It isn't just on TV. A considerable portion of my friends on FB are or have been realtors.

[chrisco255]

Not that hard to get. A lot harder to make a career out of it.

[vsl]

This is partially untrue. A typical fee around here, in Europe, is 3%.

Having only a single realtor involved, for the seller, is true. I don’t doubt property search services are offered, but it’s not a default.

[jseliger]

Buyer's agents deserve their 3% perhaps even more than listing agents and it's unfortunate you screwed this agent out of that. It's sort of like stiffing a server on a tip

A tip might be $20, not $10,000. The two are nothing alike.

[brightball]

Yea, I find the fees for buyers agents to be entirely worth it just based on the time investment in showings with no promise of sale.

Listings themselves...not so much.

But fee wise, those are always negotiable.