I want to act as my own real estate buyers agent to save on commission. What are the + and - of doing this?

Question

I'm thinking of getting an agent license for the sole purpose of representing myself as a buyers agent when I buy my home. I've read that the seller's agent traditionally gets a certain % commission, which is then split with the buyers agent. I feel like I've done the leg work that the agent would have done. I'm confident in my knowledge of the buying process, already know which areas I want to live in, past/current home prices, etc.

I understand that the seller pays the fees and most likely the fees are factored into the sales price. I would think that since I'm the buyers agent, I could either get the commission or have the sales price reduced instead.

Answer 1

I think you are missing some facts in your theory.

First, you MUST work for a broker in addition to having a license. That broker get a portion of the commission.

Second, your fee MUST be in the form of a commission, although you can apply the full commission (minus the brokers portion) towards the house. You pay normal income tax to the IRS and your state on the commission amount.

There are expenses involved with getting started, in addition to your license. Many brokers require a desk fee. Also, you need to join the real estate board and pay for access to the MLS.

Where I am you also need a cell phone that works like a wireless computer, to open the lock boxes.

Unless you are buying a multi-million dollar home the cost of obtaining the license and getting started are not likely to be less then your commission after you pay income tax.

Answer 2

You are right ... the Commission that is paid to BOTH Realtors (the Seller's Realtor AND the Buyer's Realtor); that
commission is paid from the Seller's proceeds.

However, BY LAW .... a Real Estate Commission can ONLY
be paid to a License Real Estate Broker. (The commission
checks are made payabe to a Company NOT a person) Then the Broker .... BY LAW can only pay a LICENSED Real
Estate agent.

So ... you would have to go through the time and the expense of getting your license. (You should check out what that would
be in your particular state) .... And in most Companies .... New Agents are assigned a Trainer .... and the Trainer and
the Broker will get a precentage of the Commission that you
make.

Do the math .... the Seller is ALREADY represented by a Agent. Therefore, the Seller has ALREADY committed to
paying their agent a certain amount. That amount is NOT
going to change for the Seller .... whether YOU have an Agent or NOT .... Thus, the Seller will NOT be charging YOU a LESSER amount just because you don't have a agent. Or,
if you ARE an agent yourself .... Then the Seller will pay
THEIR agent (as ALREADY agreed upon) and the Seller's
Broker .... Will pay YOUR Broker ....who would (in turn) pay
YOU! .... My point is .... The Seller fees are NOT reduced
because you are an agent .... So why would the Seller reduce
the price of the house .... just for THAT .... The Seller is paying for the "service" and "representation" of having the Realtor and the Broker "behind" him!

On the other hand .... you "may" be able to "save" money by
having an experienced agent ..... the main way that the
Buyer saves money is through negotiation of price and terms ... An experienced agent will walk through the house with you; evaluating the property from a professional stand-point. An experienced agent can access up-to-date comparables of recent sales in the area. An experienced
agent has negotiation skills and techniques that "might"
get you that optimum price.

You have to decide if it is (worth it to you) to get your license
for this ONE transaction. (Somebody said that you can not
represent yourself EVEN if you have your license .... THAT is NOT true in MY STATE .... So you would need to find that out for whatever state you are in)

In summary ... the Seller is PAYING the Seller's Broker "X"
amount NO MATTER who represents the Buyer. The Seller's
Broker will (in turn) pay the Seller's Agent a percentage ... And if there is ANOTHER Broker and Agent involved ... then
the Seller's Broker will share that commission with the Buyer's
Broker (the Buyer's Broker will pay the Buyer's Agent a precentage of that amount)

Also .... I forgot .... as a Agent .... You have Yearly, and
Monthly .... Board dues and Office fees that YOU MUST pay.
A complete real estate transaction can take several months
(From looking for the house to the closing table .... and to represent yourself .... YOU MUST be licensed to EVEN look at houses alone. So for several months ... You will need to first be licensed and then you would be paying this monthly fees ....Again YOU would have to do the math .... But I would say ... that unless you are planning on using your real estate license for "part-time" income .... I can't see it being worth it -versus- what it would cost you and "possibly" net you in the end!

I hope this has been helpful!

Answer 3

When people get their real estate license it gives them a license to sell homes and collect a commission. It does not give them any real knowledge about real estate.

If you were looking to hire a buyers agent I would recommend that you ask friends and relatives who they have used in the past and been happy with.

Since this would be your first transaction you would not fit the definition of the agent I would recommend to you.

If the transaction went very smooth you might wonder if you got the best price but that can end up being a minor part of the deal when you consider who paid what closing costs, what repairs were done, did you buy in a good neighborhood, and a hundred other things.

On the other hand if a problem develops, things can swing out of control quickly without a steady calm hand at the controls. I believe that one benefit an experienced agent can bring to a transaction is to help remove the harmful emotion from the deal when anger, greed, fear, or such rears up.

***************

I am not simply talking about emotions you have but also about your normal reaction when some seller stupidly tries to do something based on such an emotion. You want to always be aimed at your end benefit.

Answer 4

When you get a real estate license, you will quickly learn that you cannot represent yourself as your own agent. You have the choice of being a principal to the contract OR representing a principal to the contract. A selling agent cannot split a commission with someone who is not also a licensed agent.

Complicated ? Yes, it is. In most states, you would also have to have a broker's license, since fees are split between AGENCIES, and not between agents. Or, without a broker's license, you would have to sign on with an agency in order to gain any of the commission. Each agency is going to want ITS share of the full listing commission. Do you start to see your 'savings' disappearing here ?

It's not worth the effort for ONE purchase.

Answer 5

If you have not already signed a Listing Agreement, and an agent involves you with a Buyer, sure, you'll be able to negotiate the fee. The agent does not preserve the whole fee, they get side and their dealer will get side, and that agent normally drove that Buyer to a quantity of residences earlier than they signed an Offer, greater than you could think. Don't push them too tough, however once more, sure, you'll be able to negotiate the fee if you have not signed an contract already.

Answer 6

Positives: You are in full control of what happens with your real estate acquisition and you will get to save a little money perhaps.

Negatives: You will be rather inexperienced and may miss something that a more experienced real estate agent would have noticed.

My Opinion: Assuming you're a pretty smart guy/girl, I would say go for it. Despite the fact you might make a mistake or 2 along the way, it'll be fun and you'll learn a lot.

Answer 7

I think I see the train of thought here, but its not that simple.

First, how you can represent yourself in the transaction varies by area. I know Realtors in my town that will not even sell their own properties, they have someone in the office list it for them. It can be very complex when you are representing yourself in a transaction.

Next, you will have to pay to become licensed, pay your annual dues, pay to have the key card to access homes and pay for continuing education which is required to maintain your license. Although these fees vary by area, it could easily cost you $1,000 a year, every year.

Before you set out on this, talk to a principal broker in your area about how this would work.

Answer 8

For one purchase it may not be worth the trouble, but if you plan on starting to invest in several it could become worth it.
Do not forget to get your license it does cost a decent chunk of change to get started.