The rules for residential real estate agent commissions changed in 2024 after the National Association of Realtors (NAR) settled a class action lawsuit.
Before the Settlement
It used to be that a home seller agreed to pay a commission to a real estate agent to sell a home, and the seller’s agent advertised on the home listing that they were willing to share their commission (typically 50:50) with any agent who brought a buyer. The commission rate was usually 6% of the home’s price (5% in some expensive areas).
If a buyer didn’t use an agent, the listing agent wouldn’t share anything. This created an incentive for buyers to use an agent in the same way as credit card rewards created an incentive to use credit cards. When the price was the same whether you used an agent, you might as well use one and get whatever little benefits that may exist.
After the Settlement
The class action settlement required that a buyer and the buyer’s agent sign a written agreement to establish the commission upfront before touring a home. The agreement typically says that the buyer is obligated to pay the commission unless another party covers it. As a result, most sellers lower the seller’s agent’s commission to 3% and anticipate that a buyer will ask for another 3% to cover the commission to the buyer’s agent.
It’s business as usual on the surface. The seller still builds an expected 6% commission into the price. The seller’s agent still receives 3% and the buyer’s agent still gets another 3%. Some consumer advocates were hoping that the NAR settlement would change the landscape in residential real estate and lower commissions. That hasn’t happened for the most part. Redfin reported that the average buyer’s agent commission has risen slightly since the new NAR rules went into effect.
Real estate agents don’t lower their commissions to compete for business from buyers because most buyers don’t choose an agent by price. Buying a home is a big decision, and most buyers want a “good” agent or the “best” agent. The industry sows FUD to make buyers suspect that only unknowledgeable or inexperienced agents are willing to discount their commission, and that not using a “good” agent or the “best” agent will only cost them in other ways more than the difference in commissions.
However, the incentive for a buyer to use an agent is weakened after the rules changed. If a buyer doesn’t use an agent, the buyer can offer a lower price and still make it appealing to the seller.
I did just that. I bought a home without an agent, from out of state, over a video walkthrough by FaceTime. I paid less and still beat competing offers.
Agent’s Roles for the Buyer
Before you consider going alone without a buyer’s agent when you buy a home next time, you should understand the roles of a buyer’s agent and be prepared to fill those roles in another way.
Personal Shopper
A buyer’s agent acts as a personal shopper for the buyer, especially when the buyer isn’t familiar with the area. When I bought my first home with an agent before the Internet age, I didn’t know which homes were for sale. Only agents had access to listings. She drove me in the back of her Mercedes from one house to another.
The Internet replaced this role. When I worked with an agent before the NAR settlement, the agent never brought to my attention any listing I didn’t already know from my saved searches on Zillow and Redfin. Instead, I pointed out to her which listings I was interested in and asked her to set up showings.
Education
A buyer’s agent educates a buyer on the legal terminology in the buying process. What’s an offer? What’s a counteroffer? What’s earnest money, and when does it become non-refundable? Which contingencies do you need in a contract, and what happens when the deadline passes? Who pays for what title insurance? What’s an ALTA settlement statement, and how do you read it?
You must educate yourself on these things when you don’t use a buyer’s agent. They’re not that difficult to learn. AI can help.
Resource Recommendations
Real estate agents have contacts for everything. If you need a loan, they refer you to a loan officer or a mortgage broker to get you approved. After you go under contract, they call in an inspector. If the home needs repairs, they have contractor contacts for estimates or to perform the repairs before you move in.
These resources are only referrals. The agent doesn’t cover the cost. You still have to pay each service provider. Keep in mind that an agent’s referrals are optimized for responsiveness, not quality or price. If a picky inspector finds a lot of problems with a home and scares off buyers, that inspector won’t get repeat referrals next time. Time is of the essence in a real estate transaction. The goal of an agent is to keep the deal moving toward closing without delay.
When you go without an agent, you should gather these resources yourself ahead of time. You can find service providers on Google Reviews. Line up contacts to call when you need a loan, an inspection, insurance, a repair estimate, and so on.
Opinion for Quality and Value
Buyers often ask their agent whether a home they’re interested in is “good” or how much their offer price should be. They want their agent to help them avoid a bad purchase or overpaying.
It’s wishful thinking. The best you can hope for is that an agent won’t push you to buy or overpay. It’s against an agent’s economic interest to stop you when you’re already inclined to buy a home, because they only get paid when you move forward. The higher your offer price, the more likely the seller will accept it. It doesn’t matter to the agent which house you buy or how much you pay, as long as you buy one, the sooner the better.
You must make your own judgement. Hire an appraiser to assess a home’s fair value when you’re seriously considering making an offer. Lenders order an appraisal for their own protection when you apply for a loan. Nothing stops you from appraising the property before making an offer. The opinion from a trained, neutral third-party appraiser is much more reliable than the opinion from an agent with a conflict of interest.
An appraiser I used charges $400 for a “desktop appraisal.” The appraiser finds recent comparable sales in the area and adjusts for various factors to calculate an appraised value. It doesn’t require a site visit, and the seller won’t know that you did an appraisal. The price for an appraisal is small potatoes when it guides you to how much you should offer for the property. When you save 3% from a buyer’s agent’s commission, you can afford to pay for a pre-offer appraisal.
Negotiator
Many agents say they’ll help you negotiate the best deal. That’s dubious. Bargaining hard to risk losing a deal is bad for business.
When I made an offer through an agent at one time, the seller countered it by another $30,000. My buyer’s agent said the seller’s counteroffer was “a really generous offer and an excellent value for the home.” She cited market trends, how the property was extremely well cared for, and said that the yard was a big bonus. When I decided to back off for other reasons, the seller came back with an offer that was $25,000 below my original offer.
Going with the agent’s recommendation would’ve cost me $55,000 right there. An agent’s incentive lies in moving toward a transaction, not away from it. It’s wishful thinking to count on an agent to negotiate a good deal for you.
Door Opener
You can go to open houses without an agent. If a listed home doesn’t hold an open house, you need someone to open the door and let you tour the home. A buyer’s agent performs this role. They have apps for requesting a showing time and receiving a code for the key box.
You’ll have to go through the seller’s agent when you don’t use a buyer’s agent. Industry practice doesn’t allow a buyer to tour a home unaccompanied. The seller’s agent can’t just give you a code and let you into the home alone. The agent has to go there him- or herself or send someone from the office.
Sellers’ agents don’t like the additional work because they perceive unrepresented buyers as unserious tire kickers. Tire kickers with a buyer’s agent at least only waste their own agent’s time. You’ll need to convince the seller’s agent that showing the home to you is worth their time and effort. Understanding the roles of a buyer’s agent for the seller and the seller’s agent will help you do that.
Agent’s Roles for the Seller
Why did sellers’ agents share their commission with a buyer’s agent before the NAR settlement? Why do sellers still agree to pay a commission to a buyer’s agent after the NAR settlement when they’re not required to do so?
A buyer’s agent helps the seller sell their home. That’s why the seller is paying a commission.
Qualify Buyers
Buyers’ agents only work with qualified buyers. If a buyer doesn’t qualify to buy a $1 million home, there’s no point for the agent to show $1 million homes to the buyer. When I worked with an agent before, the first order of business was sending me to her lender contact to size me up with a mortgage pre-approval. Sellers know that every buyer a buyer’s agent brings to the home is at least in the realm of buying it.
When you don’t use a buyer’s agent, you must show the seller’s agent that you’re qualified. Obtain a loan pre-approval or proof of funds up front. Offer to send it when you first contact the seller’s agent. The seller’s agent wants to sell the home and earn the commission. They’ll be more motivated when they see you’re a qualified buyer.
Persuade Buyers
The offer-and-counteroffer example I mentioned above illustrates that a buyer’s agent plays an important role in persuading the buyer to purchase the home. A buyer may be skeptical if the same justifications come from the seller’s agent, but they’re more trusting when they hear good things about the home from their own agent, who they think is on their side.
Both the seller’s agent and the buyer’s agent are helping the seller sell the home. Paying a commission to a buyer’s agent is like the seller planting a mole by the buyer’s side. The buyer’s agent is officially the Selling Agent in industry lingo. Let that sink in: a buyer’s agent is the Selling Agent for the seller.
When you don’t use a buyer’s agent, you need to show the seller’s agent that you don’t need much persuasion. You can know so much about a home these days without setting foot in it. Show that you’ve done your homework, you’re ready to make an offer, and seeing the home is only the last step.
Offer to use the seller’s agent to process paperwork if you decide to make an offer. Many agents give sellers a discount if they do both sides of the transaction. A typical arrangement in my area is that the seller pays a 3% commission to list the home, with another 3% reserved for the buyer’s agent. If the listing agent represents both the buyer and the seller, the seller pays 4% instead of a total of 6%. The prospect of earning another 1% motivates the seller’s agent to show the home to you.
Putting Everything in Action
My wife and I wanted to buy a home. We drove around based on current and past home listings to get familiar with the area. We went to open houses.
We narrowed it down to a few specific neighborhoods and floor plans — how large, how many stories, and which rooms we want on the main floor. We set up custom searches with filters on Redfin to notify us of new listings in a hand-drawn area on the map. I established contact with an appraiser and an inspector in advance.
When Redfin emailed us new listings, we checked the website of the local MLS, which had more detailed information than Redfin. The MLS website gave a breakdown by each floor, for example:
- Floor 1: 1,534 sq. ft.
- Floor 2: 1,014 sq. ft.
- Total: 2,548 sq. ft.
- Lot Size: 0.17 Acres
- 3 Total Bedrooms
- Floor 1: 1
- Floor 2: 2
- 3 Total Bathrooms
- Floor 1: 2 Full
- Floor 2: 1 Full
- Other Rooms:
- Floor 1: 1 Living Room; 1 Kitchen; 1 Laundry Room;
- Floor 2: 1 Family Room;
These data points, Google Maps, and the listing photos gave us a good idea of what the listed home was like. We didn’t bother asking to see a home unless it met all our specific requirements. If a home checked all the boxes, we looked up the county’s property tax assessment value using the APN from Redfin. The property tax assessment value served as a sanity check in case the listing price was wildly inflated.
It took some time for a home that met all our criteria to come on the market. It was listed on a Monday morning while we were traveling out of state. I sent this text message to the seller’s agent right away:
Hi [name], I’m interested in your listing at [address]. The photos look great. We’ve been to that neighborhood. We’re pretty sure we’ll make an offer if everything checks out. The only thing is we’re out of town until Sunday. Can we schedule a showing for next Monday? We’re not working with an agent. We can send proof of funds.
The agent replied and offered to do a video showing over FaceTime on Tuesday morning. The video walkthrough confirmed that the home had everything we were looking for. I texted the appraiser and ordered a desktop appraisal.
The appraisal came back at a value higher than the listing price, but it was still lower than the county’s assessed value for property tax. The market price in my area is typically higher than the county’s assessment. I knew that the listing price was intentionally set low to attract more interest and encourage bidding.
I downloaded the real estate purchase contract form from my state Division of Real Estate’s website. I made an offer at the appraised value, with a stipulation that the seller would credit 2% of the purchase price to the buyer at closing. This made it easily comparable to other offers that would ask for 3% to cover a buyer’s agent’s commission. I attached proof of funds.
My formally written offer, which was above the listing price right out of the gate, with full terms and proof of funds, indicated to the seller that I was a serious buyer and I knew the value of the home. The seller also received several competing offers. The prospect of earning a 4% commission instead of 3% motivated the seller’s agent to advocate on my behalf. The seller accepted my offer on Friday after a round of “best and final offers.” It took only four days from listing to contract, before we returned from our travel and physically toured the home. We couldn’t have pulled it off if we weren’t well prepared.
Here’s how my offer came down against the next highest bid (I indexed the purchase price to $500,000 to make the math easier):
| Competition | Me | Difference | |
|---|---|---|---|
| Purchase Price (A) | $500,000 | $505,000 | +$5,000 |
| Commission to Seller’s Agent (B) | $15,000 (3%) | $20,200 (4%) | +$5,200 |
| Commission to Buyer’s Agent (C) | $15,000 (3%) | $0 | -$15,000 |
| Credit to Buyer at Closing (D) | $0 | $10,100 (2%) | +$10,100 |
| Net Proceeds to Seller (A – B – C – D) | $470,000 | $474,700 | +$4,700 |
| Cost of pre-offer appraisal (E) | $0 | $400 | +$400 |
| All-in cost to Buyer (A – D + E) | $500,000 | $495,300 | -$4,700 |
The competing buyer and their agent lost because they were weighed down by the 3% commission to the buyer’s agent. With a 3% headroom to play with, my offer basically split it three ways among the seller, the seller’s agent, and me. The seller received $4,700 more in net proceeds. The seller’s agent earned $5,200 more in commissions. I paid $4,700 less. Win-win-win.
If the seller didn’t receive competing offers, I wouldn’t have offered the extra 1% to the seller, and I would’ve saved even more.
I sent in my inspector after we went under contract. The inspection report came back without major issues. We closed on the purchase.
***
The real estate industry class action settlement created opportunities for prepared buyers to purchase a home without a buyer’s agent. The seller, the seller’s agent, and the buyer all benefit when there’s one less mouth to feed.
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Carlos Parada says
You point out all the possible negatives of using a buyer’s agent in your piece. In your transaction, everything you shared went to plan without a surprises or setbacks.
The reality is that a transaction without unforseen challenges is not as common as a buyer would like it to be. That is the moment when you most need the assistance of a buyer’s agent.
The commission-chasing agent is quite common. However, those with experience and integrity are easy to find. Those agents usually earn their commission in advice, counsel, time savings and yes- money savings to their client. Those agents can be found when interviewing representatives–seek a single agent who acts as your advocate, your fiduciary, and you will receive the kind of service I am describing. The peace of mind, the service a Buyer’s agent gives the consumer can be tremendous.
Tell the full story in the future please. Buying a home, not a house, is more than just saving 3% on the purchase price.
Harry Sit says
Substitute everything you wrote with an experienced investment manager. “Everyone makes money in a bull market. The bear market is the moment you need an experience investment manager who can see it coming and move your investment to safety. Those investment managers earn their fee in advice, counsel, time savings, and better investment returns. Investing is more than just saving 1% on the management fee.” No doubt buyers want those things you wrote. Whether an agent can deliver is a different question. At least we have data for investment managers. Counterfactuals are difficult to come by for real estate agents. No one knows what would’ve happened if a different agent or no agent had been used. All we’re left with is wishful thinking.
BN says
Counterpoint : Out of our 4 house buying transactions, the only time we overpaid was when we used an agent and trusted the comps provided (this was pre zillow/redfin and she hid some of the comps in the same neighborhood).
Even if things go south, the agent is just going to point fingers at others like appraisers/attorneys/other agent etc.
Vasile says
Let me guess, you are a “realtor” aka the abominable leech, aren’t you?
Elkay says
Great case study! Thanks for sharing all the details of a possible new way of buying a place.
Steve says
Thank you for the post.
Do you have any thoughts about a recommended post-NAR settlement process for home sellers?
Harry Sit says
I only write about things I have firsthand experience of. Otherwise it’s too imaginary and superficial. I haven’t sold any home after the NAR settlement. Flat-rate MLS listing and FSBO exist. I’m inclined to explore those options when I’m ready to sell.
Dan says
hard to imagine a more negative value “profession” than real estate agents. even worse than “financial advisors”
Dan says
Harry this is a great piece, one of your very best, and should be required reading for all homebuyers. Bravo.
John says
Great case study Harry! I am also looking for a single family home, but am a FTE. My question is – what is your best estimate of how much time you spent preparing in order to execute within the short window that you did? I am trying to get a better grasp of the opportunity cost of time spent doing it the way you did (which is what I would prefer) versus outsourcing it to a buyer’s agent. Thanks again!
Harry Sit says
I would break down the tasks into a 2×2 matrix between “time consuming” and “can outsource effectively.” Some tasks are time consuming but they can’t be outsourced effectively. You’ll have to spend the time regardless. Some tasks can be outsourced effectively but they’re not time consuming anyway. You may find that very little falls into both “time consuming” and “can outsource effectively.”
We spent most of the time in clarifying our preferences. We don’t believe this can be outsourced effectively. We’re the ones who will live in the place day in and day out for a long time. We can’t adopt an agent’s preferences as ours. Once we were clear on what we wanted, lining up finances, setting up searches on Zillow or Redfin, and finding an appraiser and an inspector didn’t take much time. Screening new listings required our time, but we would have to do it anyway whether it was Redfin sending us listings or an agent sending us listings.
JCI says
I am also disappointed commissions have not come down. We bought a house last year just as the NAR changes were rolling out. As a buyer, I was forced to sign a buyer’s agent form that prevented me from working with any other agents for a set period of time (3 months IIRC) and set the commission to 3% min. So if the seller decided to pay less than 3%, I would have to pay the difference. On the house we offered to buy, the seller paid 3% and it was a quick close. Same as you, nothing major in the inspection. I suppose the 3% can be thought of as insurance? If there were repairs, I don’t have the time or resources to organize and oversee repairs. Agent would have guided some of that. Additionally, since this was an OOS purchase, we don’t know what is customary for the seller to cover or how far to push negotiations. So our agent did provide some advice. Sure most or this can be googled, but you don’t know what you don’t know. Just as with finances (and most things for that matter), it comes down to personality and whether or not you have the interest and want to do the work yourself or just outsource to a ‘pro’. Buyer’s agent commission amounted to about 11k for this purchase.
Harry Sit says
There lies the challenge in counterfactuals. If repairs were needed, the agent could refer you to some contractors, but would they oversee the repairs? Would the repairs be done at a quality level or cost better than what would happen if you didn’t have an agent? Did the agent help you push the seller to cover more than the seller would otherwise? Is that additional amount more than the $11k commission? You hope the answers are all “yes” but no one really knows, because there’s no way to repeat the experience.
SUSAN says
Wow, thank you so much for sharing your experience. I am dumbfounded that the home buying/selling process has not advanced in favor of the consumer after so much information is on-line.
This is such a helpful article. I have gotten much food for thought from many of your articles. Thanks for writing them! Happy 2026!
Space Doc says
Great post. All of the negatives of real estate agents you mention, I have experienced. When I bought my current house I felt like I was working for the agent. I found the house, I overpaid by about $30k, her appraiser was fast and missed several important things that had to be fixed later, the seller was selling it himself and she ended up helping him out quite a bit and became chummy with the seller. My impression of real estate agents is that they add little value to a transaction, at a high expense. I think I may follow your model for my next property. Even if it’s a challenge to get done, I don’t think I’d do any worse than doing it with an agent!
Chris says
Great article, hopefully it helps move the needle on the current situation.
One question though – how did you know what the competing offers were? In my limited experience, they don’t want you to know what the other offers are because that just lets you slightly overbid, making it effectively a 2nd price auction (like eBay). Was the seller’s agent just very nice to give you this info? Or do some states have a requirement for all bids to be disclosed?
Harry Sit says
I used an escalation clause. The next highest bid triggers the escalation.
Chris says
Escalation clause, I love it. This is how home sales should run. Just like eBay.
Alex Hartman says
I want to respond to this article because it raises important points, but in several places, it oversimplifies how agency, incentives, and fiduciary duty actually work in real transactions. Some conclusions are drawn from personal experience and assumptions that don’t consistently hold up across markets or under agency law. What follows isn’t a rebuttal of intent, but a clarification of how representation really functions.
1. “Before the Settlement… sellers paid 6% and shared it 50/50”
This is a simplified version of history. Commissions were always negotiable, varied by market, and were not uniformly 6%. More importantly, cooperation between agents wasn’t a “perk” for buyers—it was a mechanism to maximize exposure, competition, and ultimately the seller’s net.
2. “If a buyer didn’t use an agent, the listing agent wouldn’t share anything”
True mechanically, but misleading economically. The buyer wasn’t “getting free services”; the buyer was represented in a system designed to extract the highest price and best terms for the seller through competition. Removing representation doesn’t magically reallocate incentives, it changes risk distribution.
3. “Using an agent was like credit card rewards, why not use one?”
This analogy fails. Credit card rewards are consumer incentives with no fiduciary duty attached. A buyer’s agent has legal, ethical, and reputational obligations. Reducing representation to a rebate analogy strips away accountability, advocacy, and risk management.
4. “After the settlement, sellers lower to 3% and buyers ask for 3%”
This assumes sellers and markets behave uniformly. In reality, seller concessions vary widely based on leverage, inventory, urgency, and demand. The settlement changed how compensation is disclosed, not the underlying economics of negotiation.
5. “Commissions didn’t fall, Redfin says buyer agent commissions rose”
That statistic alone proves the opposite of your thesis. If buyers are still choosing representation even when it’s explicit, it suggests perceived value, not inertia. Markets don’t pay more for things they don’t believe work.
6. “Buyers don’t choose agents by price, they choose ‘good’ agents”
Correct, and this undermines your argument. Buyers are signaling that expertise, protection, and judgment matter more than short-term savings. That’s not irrational behavior; it’s risk management in a high-stakes transaction.
7. “The incentive to use an agent is weakened”
Only if you assume price is the sole variable. It isn’t. Certainty, deal structure, timing, contingencies, appraisal risk, inspection leverage, and post-contract problem-solving routinely outweigh nominal price differences.
8. “If a buyer doesn’t use an agent, they can offer less and still win”
This is the most flawed claim in the article.
A competent listing agent has a fiduciary duty to the seller—not to maximize convenience or commission splits. A strong offer is evaluated on net proceeds, certainty, and risk, not whether another agent is involved. A buyer going direct does not automatically become more attractive.
9. “I did just that, I bought without an agent and won”
This is anecdotal evidence, not a model. Exceptional outcomes do not define typical outcomes. You were experienced, prepared, analytical, and comfortable with risk. Presenting this as broadly repeatable advice is survivorship bias.
10. “The Internet replaced the buyer agent as a personal shopper”
Listings ≠ analysis. Zillow shows inventory; it doesn’t interpret pricing strategy, detect red flags, contextualize comps, or explain why two identical homes trade differently. Information access is not expertise.
11. “Education isn’t that hard, AI can help”
Knowing terminology is not the same as understanding consequences. AI doesn’t attend inspections, navigate appraisal disputes, handle failed financing, or absorb liability when something goes wrong. Education without accountability is incomplete.
12. “Agent referrals prioritize speed over quality”
This is an assumption, not a rule. Long-term agents survive on reputation, not rushed closings. Poor inspectors, lenders, or attorneys destroy repeat business. The incentive structure you describe applies to short-term or low-integrity actors, not professionals.
13. “Agents won’t stop you from overpaying, it’s against their interest”
This confuses short-term commission thinking with long-term business reality. A buyer who regrets a purchase is a lost referral source, a reputation risk, and often a legal or ethical liability. The best agents actively prevent bad deals, even at the cost of delay.
14. “Appraisers are neutral; agents are conflicted”
Appraisers value property after a price is established and use backward-looking data. Agents operate in real-time markets and assess strategy, competition, and behavioral dynamics. These roles are complementary, not interchangeable.
15. “Negotiation is dubious, agents just want deals done”
This assumes negotiation only means price. In practice, leverage often shows up in inspection credits, appraisal protections, occupancy terms, timelines, and risk allocation. Price is just one lever, and often not the most important one.
16. “Door opening is a nuisance for seller agents”
Showing homes to unrepresented buyers increases risk, liability, and time cost. Listing agents are not obligated to prioritize buyers who add complexity without added protection or clarity.
17. “Buyer agents help sellers, like a mole”
This framing is misleading. Buyer agents facilitate qualified demand, reduce noise, manage expectations, and prevent failed contracts. That’s not manipulation, it’s market efficiency.
18. “The seller’s agent earned more, the seller netted more, I paid less”
In your specific transaction, under specific conditions, with competing offers, yes. That does not generalize. In many markets, unrepresented buyers lose leverage, overpay, or accept unfavorable terms they don’t recognize until later.
19. “One less mouth to feed = win-win-win”
This assumes representation is a cost center rather than a risk-management function. Eliminating airbags saves money too, until the accident.
Bottom Line:
This article repeatedly mistakes individual success for universal truth. Skilled, prepared buyers can succeed without representation, but that doesn’t mean representation lacks value, nor that agents are structurally misaligned with their clients. In most real transactions, the buyer’s agent exists not to inflate price, but to manage risk, judgment, and long-term outcomes that aren’t visible on a spreadsheet.
Vasile says
You are PRECISELY the reason why I want to stay away from the leeches improperly called “buyer’s agent”.
KD says
Harry, thank you for sharing your experience. Excellent article!
For people who are educated, detail oriented (can read a real estate contract) and buy and sell homes (rentals and residence) with some frequency, what you laid out is well understood.
For people who are not as prepared, for whom buying a home is a major milestone (affordability crowd or lifetime owners of a single property), having an agent for a few percent of the deal is worth it for a once in a lifetime transaction.
Ironically, we sold multiple properties without an agent. But bought our home with an agent (who was a close friend) since we were dealing with flippers.
In the end, nothing beats having the experience of buying and selling, ability to read contracts before signing, familiarity with the local area, and specific real estate process of the state.
That lowers the risk profile considerably.
Harry Sit says
Was this post shared on LinkedIn or something? So basically everything I wrote is true, except it isn’t universal. I’m only reporting my lived experience on the ground. I never said that any part is universal. What is? All the benefits you wrote of a buyer’s agent exist in theory. We all want an agent who will accept a lower commission just because we ask nicely, find us the hidden gem, maximize our economical benefits even at the cost of their own, and hold us back when we’re too eager to over pay, in the same way we all want a Warren Buffett as our investment manager. The sad reality is that we don’t get something just because we want it. How all those theoretical benefits manifest in the real world is a “your mileage may vary” situation. I’m only pointing out a path that some people didn’t know exists or are too afraid to explore.
Derek McQuarrie says
Alex Hartmann, your point-by-point rebuttal is a description of the model buyer’s agent, but to your point;
“This is anecdotal evidence, not a model. Exceptional outcomes do not define typical outcomes.”
Describing all the things agents are “supposed” to do, doesn’t mean most of them are – exceptional descriptions do not define typical agents.
Carlos says
Thanks for the rebuttal I did not have the time nor energy to write
I have been a real estate investor for 30 years and a licensed Broker on 3 states for 26 yrs. This settlement changed zero in how I do business
If an inexperienced buyer follows the advice in the post; remember these words “buyer beware”. Because the machine hasn’t changed
As rappers used to say, “ don’t hate the player, hate the game. It won’t change”. The stakes are too high
Vasile says
Re: “This settlement changed zero in how I do business”:
Yeah, because this is a “profession” of leaches and parasites, and monopolies.
I will celebrate BIG time when this 6% leach to sellers’ and buyers’ wallets, will finally disappear! Yes, it is an ABOMINATION which should disappear from the face of this Earth. The value added is ZERO.
I would better trade in stock market, than pay leeches like you.
Phillip says
I used a similar process 20 years ago buying our house. One big difference was that we were driving around looking at houses and not buying remotely. So when we saw a house we liked with a For Sale sign out front, I would knock on the door and introduce myself to the Seller as an interested buyer. No one turned me away but most didn’t let me in and see the house at that moment which was fine. All I wanted to communicate was that I will be contacting their agent and I need them to let me in for a viewing. I told the seller to call their agent to contact me as I’m a serious buyer. Sellers are happy to do this and they have the power to fire the seller agent if they don’t do their job and arrange for me to see the house. Once the seller’s agent was ready to close, of course they try for the full 6% but I told them I had a friend who just got his real estate license and would do the buyer side work for $1k just to get the experience (partially true … didn’t know if he’s do it for $1k but did know he would do it for much less than 3%). So the deal was 3%+$1k to the seller agent to become a dual agent. This is a good deal for him as when I sold my home to buy this one, I negotiated 2% commission to my agent to sell my home (and upon closing, the buyer of my home got a rebate of 1% of the buyer commission off their price … so in essence, the actual going rate for buyer and seller commissions was 2% each). And I told him I would tell the seller this was the deal I was offering him (sellers were a nice couple similar to us so we bonded quite well). Seller agent probably got the vibe that if he didn’t act quick and accept the deal that me and the seller would start to figure out a way to cut him out completely. Seller agent was quick to move and was quite accommodating after that. It may not work all the time but if there is a reasonable buyer and seller, having both parties work together to cut out realtor greed on both sides enable us consumers some wins.
Dan says
cut agents out entirely. zero value add.
Vasile says
Couldn’t agree more with Dan’s reply!
Dunmovin says
Wow! Harry, you triggered a “hot button.”
After a personal career being involved in various aspects of negotiation including large and small real estate deals…I offer some elementary thoughts to consider for personal home buying/selling:
Consider buying from a senior that wants to cash out. Look for seller financing since that seller may not need all the funds for another place, etc. Where can a seller “park” funds for a decent return especially when rates are moving south? Hold the paper. Seller should offer a below market rate loan but with a large down payment (may need those funds for the new homestead). Buyers should look in those states that have Anti-Deficiency laws that protect owner occupied homeowners from personal liability if things go south…use to include around 13 states including California…the Depression brought out those laws.
On the other hand, buyers want to pay as little down in order to ascertain/cover what may be a problem that appears after the close (Why? may be cheaper “to walk on the loan” since no liability. And if no personal liability, how can ones credit be impacted?) and if the problems don’t appear, pay later more against the loan, refinance, cash it out, etc.
Problem property to sell? Sell to a real estate agent who “knows what they don’t know.” No back to back deals. After all, all you want to do is unload the property (with appropriate disclosures and disclaimers)!
How to negotiate the unknowns? If “you” don’t know how to do that then…
On and on…bottomline…if “your” agent is not conversant with the concepts embedded above you have the wrong agent and/or you are probably not up to speed either. Everyone needs competent knowledge/advice!
To a successful new year for everyone!
Monica says
Harry, love this post. I’ve been considering doing this myself. The one area I get caught on is drafting the Purchase and Sale. The forms themselves appear to be standard in most states and are copyright by the state realty firms. It sounds like you paid 1% for the seller agent’s P&S. I feel like that’s reasonable on some properties and not others. Do you know of a service that will draft a P&S for a buyer?
Harry Sit says
Some flat fee MLS listing companies for sellers also offer flat fee services for buyers. One such company charges $2,000 to submit offers and counteroffers but they only operate in my state. Search for flat fee MLS listing services in your state and see what they offer for buyers.
Keith says
I created a business model in real estate that added tangible value to my buyer and seller transactions by reducing commissions before the nar settlement. We offer commission rebates of up to 67% of what we receive to buyers, along with reduced commissions to sellers. All this while still offering full service and data driven analysis of properties. It’s been very successful and enjoyable for both myself and my clients, we hit $1 billion in sales last year, and we’ve done it all very quietly.
You make a lot of good points in your article. And some of what you point out is what drove me to create our current business model that continues to work post settlement.
Frank says
My issue is the industry standard 6%. Fees should be negotiated by amounts, not by a percentage that has no relation to the work involved. In this example the traditional fee would be $30K. If the home were a million-dollar home, the fee would be $60K. So is selling/buying a million dollar home 2x the work of selling a half million-dollar home??? Rarely is this true. This is similar to Financial Planners who charge %AUM, where again difficulty has no relation to total assets. No justification, “It’s the way we have always done it.” The transaction work is the same regardless of the price for a vast majority of homes. The only thing that changes is marketing, and in a hot market – effortless. Arguably, the realtor does have to do some work in a slow market, in which case, maybe the negotiated fee should be a little higher. Similar to other professionals we hire, modify the fee to reflect the talent of the professional and the difficulty of the work. We don’t pay our tax accountant a fee based on AUM…..