The art of negotiating

Just bought a home in the Acton area. Negotiated a 50% return of my agent's commission on the purchase. We only brought him to a handful of pre-selected homes we had previously viewed, and were seriously considering.

There is no need for a full-commission agent. Do some work yourself and get some of your hard-earned money back. Don't be fooled into thinking the seller paid this commission.

I negotiated a 3% commission with a real estate agent when we put our house on the market. I told him that I didn't expect him to hold open houses all the time or to do a ton of advertising. It took a few months to sell, but I don't think that had anything to do with the lower commission. This was in 2005 just as the market was peaking (and we missed the peak). We reduced the price once (by $50,000). People who wanted to live in our neighborhood came to see it with their agents and eventually we got a decent offer.

Yes, definitely negotiate. Especially during down times.

I have always used an agent when I buy and sell. It helps to have someone doing the bulk of the legwork and admin stuff and other details. I've seen people try to sell their homes on their own. I find that it is not worth the hassle just to save a few bucks. My time is too valuable.

And with this slowdown, I pay the most 3%. Most agents will be insulted by 3%, but considering everything else, I think it is fair.

We tend not to use brokers if we can avoid it either on the buying or selling side, mostly because my wife and I have quite a lot of experience in real estate, and also as an attorney, there's not much I haven't seen before in the buying and selling process anyway. In this day and age, a reasonably intelligent person with good research skills, patience, and good negotiation skills can get by without a realtor in my opinion - but I can see the need for first time buyers or people who don't really know what they are looking for.

Honestly, I've had mixed luck when dealing with realtors. There are a few very good ones who I can honestly say earn their paychecks and I personally would use them if I was in a pinch and needed to move quickly. Unfortunately, there are a LOT of lousy realtors out there who don't add much value to either the buying or selling process, nevermind justifying the multiple thousands they take home in commissions. Fortunately, those types get weeded out pretty quickly in a slow market like this for the most part.

If you are going to use a realtor, I definitely recommend haggling for their services. First of all, you've got absolutely nothing to lose, and second, it's good experience for when it comes time to haggle over the ultimate price of the property itself. I have to say, both the buying and selling processes can be greatly enhanced by the work of a good realtor. But holy cow, a bad realtor can really muck up the works and leave a sour taste in your mouth for years to come.

I also suggest that sellers carefully review and negotiate the other terms of the listing contract. For example, these contracts often provide that the realtor is entitled to the commission when they produce a "ready and willing buyer" regardless of whether the closing actually occurs.

I agree with J.P. that there are very good Realtors out there, and we do bring value to the transaction. And for the record, a lousy attorney can 'muck' up a transaction just as well. :)

That being said, there are some buyers and sellers out there that feel they are skilled (and maybe rightfully so), however I'd bet that after 900+ personally closed transactions, I may have a bit more experience - just a guess.

A slow market like this is when you Need a professional that can give you objective and factual advice.

And think about this: If an agent can't negotiate his/her own commission (which is their own $), just think what they might do when it comes time to negotiating Your money... It is best to be focused on your bottom line and not just the lowest commission. Some of us are indeed worth it.

Gerry-
Just a question, but please explain your rationale in 'needing' a professional like yourself in a slow market? Did you say the same thing during the peak? I'd be willing to bet that you said the same thing then.
Please tell me, as well as the other readers that may like to know, what it is exactly you DO- as I can get a competitive market analysis-on my own, view neighborhoods-on my own, look at recent sales-on my own, and find fair market value of a house-on my own, as well as look up a home's information, on my own.
I also can ask for a seller's disclosure form, on my own, get a plot plan and town information on my own, get a home inspected, on my own, and shuffle papers- on my own. I also can answer calls, make calls and fax and fed ex, call my lawyer, call my lender, etc.

I'm curious to know what I'd get for giving you 2.5% of my money?

I've negotiated every commission I've paid. And some real estate agents are worth it, for some properties, which is why I have paid commission.

But I'm with JP - speaking with my lawyer hat on, the actual offer paperwork the agent does is utterly simple. What a good agent offers is sales ability, not the ability to fill out the standard GBREB contract. (Or on the buyers side, the due diligence knowledge)

Han Solo - nicely put. In my opinion, and from my experience, the majority of realtors are worthless. Most of them would put a prospective buyer in a house on the MA Pike just to get a sale. A good realtor (have not found one yet) is worth using, but not at 6%.
I have located every home that I have been interested in. It seems absurd that I do most of the work and then pay the realtor 6% just for showing up and writing an offer.
It is also very tiring to hear brokers screech, "it's a great time to buy!" Yes, times for buyers are better, but the prices are still way out of line.

Han Solo,
You sure can do all of those things on your own. I do have to ask; do you know better than to accept or put an offer on a first unit on a new condo conversion with an FHA loan? Have you had experience in having deals fall apart a week before closing and have had the professional contacts to pull in and make it happen. I bet not. There is more to it than just information gathering and appointment setting. Especially in a tumultuous or fast-paced market.

There will always be people that think they can do it on their own, some can and some can't, but that doesn't mean we don't work hard to earn our commission.
It's actually cheaper for many people to hire a broker because their time is more valuable doing other things.

Did you bring in a buyer who will pay more than your commission cost? Did I make and keep more of the home sale because of your higher commission charge?

Or, are you "worth it" because you help me handle the paperwork flow easier?

Both are important but I will only pay more if you can validate the first questions. Otherwise you are a glorified admin.

Dina-
You're obviously a RE...keep spinning and telling yourself that you're needed.
First of all, I wouldn't buy a condo- it's an apartment, no value at all. Second of all, I'm not going to get an FHA loan. Thirdly, I wouldn't buy the first of ANYTHING. Lastly, if a deal falls apart, I'll go buy another house...there IS a log jam of single family's in the nice towns on the market.

Hey Han Solo - What exactly do you do for a living -I'd love to know. I'm guessing it's not much because you have WAY too much time on your hands given the number of vitriolic postings on here.

Han Solo-
Yes, you can do all of that on your own, and probably be relatively successful as long as you are familiar with the location, keep up with the market, follow the changes in the lending industry, stay on top of current marketing trends and such. Also, be sure to hire a competent real estate attorney as well (unless you are one).

Not everyone has the time required to do so - and do it effectively. Sure you can check Zillow and see what a house probably isn't worth. You can check Trulia's stats and find incomplete information. You can study Banker & Tradesman, etc. You can field calls and emails from work, correct? You can take the day off to let the bank appraiser in to the property, and I'm sure you have the data to support your price when the appraiser (or review appraiser) challenges the value (assuming you are selling).

But what if you are moving to my area? Do you know the intricacies of the neighborhoods? Do you know the dynamics of the single family market vs. the condo market? Which has the potential for more 'downside'? What exactly did the interior of the 'comp' you are using look like inside (more specifically - what is NOT in the photos online)?

So Han Solo, I wish you the best - especially in the event you ever need to move out of state. Apparently I will be finishing my crossword puzzle while I try to figure out how to fill out a standard form. Boy is this Easy money. :)

Gerry-
20-30 something's who have internet and do their homework do NOT need Realtors. It's just something that you guys will have to come to terms with.

We are also savvy enough to know that Zillow is meaningless. I have no interest in buying apartments, er I mean condos.
And YES!, I can take days off- I have a job that allows me to take vacation days lol. Easy money for me is getting a pay check that's the same every 2 weeks no matter how much (or how little) work I actually do.
I am willing to bet that the majority of people in my age group feel the same way as I do. It makes me laugh at how much you guys have to prove your worth to people like me.

I'm sure you were telling people all of these things during the peak huh? BUY BUY BUY!

But let me ask, for my 2.5% are you going to drive me around for a while in your Ford Taurus while you show me houses that I have zero interest in?

I think you're watching a little too much HGTV.

If a buyer OR seller can't figure out on their own how to not waste a LOT of money, than they should be renters.

As someone who just handled a lot purchase on my own (non-Realtor) and who purchased it from a for-sale-by-owner seller, I can tell you having a real estate agent IS worth it. I had to wade through a lot of the headaches and hassles on my own, deal with a less than honest and completely unprepared seller (didn't even have a contract for us to write up once a price was finally agreed upon!).

Some would say, oh, just go find another piece of land or property, but this acreage was right next to my current home so I really didn't have that option.

Having dealt with real estate both with and without an agent, I can definitely tell you agents ARE WORTH IT! Much of what a Realtor does is after the property is found. And they can be great resources for who to use as a home inspector, various repair people, closing attorneys, etc. because they've weeded out the bad ones already. I've had agents stand firm for me at the closing table when an issue comes out or wasn't handled properly by either the seller or the seller's agent. On my own, those deals probably would have just completely fallen through. They've also had to go back and renegotiate price or having items repaired when a home inspection report comes back with numerous problems. It's worth the time, headache, frustration factor, etc. to pay that small percentage for their commission.

Han Solo-

You are right. YOU don't need a Realtor. I hope you feel the same way when you need to sell (assuming that you every buy anything) as you will be an expert at that as well, I'm sure.

Not everyone has the career, or should I say Job, that you do so many of my previous points are legitimate. And with the inevitable corporate downsizing, I'm sure you will survive any layoffs as you evidently have a fantastic work ethic. I'm sure that your boss (or bosses) don't notice. It must be nice to be in control of your career (oh wait, that's ME).

For the record, I don't watch HGTV at all. I spend that time doing actual research and educating myself so that I can continue to serve my clients best interests to the best of my ability.

I know that the industry is changing and evolving. But you obviously fail to see the complexities of buying real property (especially in Massachusetts). If it was only as easy as buying my iMac or iPhone (yes 3G) that would be great - but it's not. May The Force Be With You when it's time to move out of your parent's house (just a guess). Time to go wax my Taurus. ;)

Gerry-
Please tell me why you get so worked up over a blog? It's funny. I have a job, sold a home without a realtor, and am presently buying one, sans realtor. It's really not that difficult. Can you believe it? I did it alone!!!!!!!

Educated young adults don't need you. I truly enjoy how you think that since I posted 3x today that I must not be good at my job or not work at all or live in my parent's basement- I'm home sick, and Jerry Springer sucked. Happy now?

Han Solo-
I am not 'worked up' as you say. I do, however, take offense at the broad-brush approach that you use. You may in fact not need me and I'm very much OK with that. However, many people out there do need me (read: Realtors) as we do provide value. Unfortunately not everyone out there is as smart as you are. In addition, I am not trying to prove to you my worth, but save someone that is not as highly skilled as yourself the aggravation of putting themselves into a bad real estate deal.

I also agree that (as in any profession) there are people that excel at what they do and there are others that don't.

Some of us actually still use financial advisors (even though there are stock charts everywhere).
Some of us actually still use lawyers (even though you can get the forms online).
Some of us actually still go to a mechanic (even though repair manuals are online).
Some of us actually still go to the doctor (instead of relying on WebMD).
And some of us are not smart enough to know that they don't know everything.

Just because I know how to bleed my brake lines on my car should I be telling everyone to do it? Just think of the potential of doing that wrong. "How could someone do it wrong? I Can Do It. Everyone else should be able to." And because I can do basic repairs on my car, I guess that means that mechanics will be obsolete soon. (I'd hazard a guess that I'll be in this profession longer than you'll be in yours).

I never said you were not good at your job (whatever that may be) as I have no evidence, but made judgement as to your work ethic based upon Your comment in your post ("...or how little I work.")

I am also sorry that I stooped to your level and remarked about living with your parents (although I never mentioned the basement... Interesting). I thought after the Taurus and HGTV comments that you could take a little as well as give. Apparently I was wrong.

Han Solo, you are free not to use my services. I am also free to not take you on as a client. There are many good people out there that I must help. Best of luck on your purchase. Hopefully you bought directly through the owner. ;)