Buying without an Agent — the Epilogue

This is not legal advice. For legal advice, contact an attorney.

Over the last year, I’ve posted several times on using an attorney — rather than a real estate agent — to purchase a home. As discussed in those posts, one of the biggest challenges in doing so is getting access to the properties that you may be interested in purchasing.

I am currently working with a couple looking to purchase their first home together. The did their homework — they searched the listings on the web and looked at numerous properties before deciding to make an offer. I asked them about their experience and if they had any difficulty. They told me that they actually looked at perhaps 10 homes (as opposed to the “drive-by”), and in only one instance did they have any trouble. In that case, they got the old “that’s not my job” reply from the listing agent when they called to schedule a viewing. In every other instance, the listing agent either met them at the property or, in several cases involving new listings, allowed my clients to attend a brokers’ opening (at my clients’ request).

So, if you’re thinking of going this route and saving some money in the process, it appears that listing agents are coming around to at least tolerating this approach. A 90% success rate seems pretty good. I guess the times, they really are a-changin’…

146 thoughts on “Buying without an Agent — the Epilogue

  1. I have met some of your clients at my Open Houses, Craig. Hopefully they have told you that I was very nice to them, and asked them to give you my best regards.

  2. Larry — Any interest in contributing substantively? Or is your argument so weak that all you’ve got are snarky comments? Looking forward to a meaningful reply…

    Ardell — This is the first I’ve heard about my clients at your open houses (although perhaps Marc knows about it — he handles most of our transactions). I’ll say, though, that I am not surprised at all that you have been nice to them. Outside of the Blogging World, I understand you are a real sweatheart… 🙂

  3. I have worked with quite a few borrowers (as a mortgage broker) who buy without an agent. I honestly hate it when my client’s don’t have a Realtor involved. The main reason is that it means more work for me. In addition, I often find the borrower want to lean on my for advice and insight that really should be coming from a Realtor. Since I don’t make 2.5 to 3 points per transaction, I kind of feel like I am getting ripped off. I also see many of these borrowers over paying for the property and finding themselves havnig a hard time dealing with other issues. The deals always close, but they ususally don’t wind up being the smoothest IMHO.

    Definitely not saying all Realtors are great, but even a half ass Realtor is better than none at all sometimes.

  4. I actually have never met a single client that only looked at 10 homes. I feel that looking at 10 homes is a disservice to a client… My clients usually purchase the home I think they are going to purchase, but there are times when they change their criteria entirely before they end up purchasing.

    Frankly, in this market, I think it’s unwise to use an attorney unless you are buying a friends piece of property and don’t need an agent. But, to each their own!

  5. Yay! Craig this is good news. All business models should be encouraged and promoted. From FSBO to full service. From DIY (do-it-yourself) buyers with an attorney to full service buyer representation.

    Business models that bring value to the consumer will survive and thrive.

    Thanks for the update.

  6. Craig, just so that we’re clear, I have one sister who’s an attorney, and another who’s a realtor. I’ve heard the debates about which is better, and who should be staying out of what. I’ve never heard before that cost is an advantage that the attorney has. If that fact gets out, this could catch on.

  7. Jeez, some writers here are so nervy in writing advertising pitches for their services and trying to get home buyers to by-pass Realtors and agents and hire them instead.

    God Bless Dustin and Anna Luther for letting these writers continue to carry on the way they do, even though it looks like they’re trying to run them out of business.

    I hope that these writers are offering the Luther’s some money for the ads that they keep writing on their site. By stealing their business, it’s like snatching food from their children’s mouths.

    Talk about biting the hand that feeds you. Yikes.

  8. Marlow,

    See Jillayne’s comment #8. Clearly you don’t “get” RCG and the benefits of free and transparent blogging.

    “All business models should be encouraged and promoted.”

    It is newsworthy that more and more listing agents are not looking at buyers as if they have two heads when they choose to represent themselves. But Craig should make it clear that by using his services, the buyer has elected to represent themselves for the most part, and are only hiring someone to do the administrative function that involves the contract and close of escrow.. But then some agents don’t do much more than that either.

    Craig isn’t going to stage or get involved in staging or plumbers or home inspections or do Open Houses or get involved in aany of the snafus we have to deal with and fix every day. Nor is he going to value the property, best I can tell.

    It’s not a lower price for the same service, it’s another option. Buyers representing themselves should be a choice the same as a person who chooses to complete and file their own tax return.

    It’s about choices and making sure those choices are well known and not hindered in any way. ALL of the industry should support the many and varied choices that are available and growing.

    RCG is a group blog…not a hand that feeds us. No writers…no blog. Craig is getting much better at not being a commercial. Just because he is the opposite of you does not make him a commercial for the opposite of you.

  9. Title firms and escrow offices close thousands of transactions across the country that have no agents involved. Especially the title companies. Should they not close FSBO’s? Are they biting the hand that feeds them/us? I don’t think that is the case. Sometimes escrow firms are asked by a client, friend or former customer whom to recommend to list their house because we work with a lot of different agents. The same thing can occur when a customer asks whom to recommend for obtaining financing because their existing relationship is not working.

  10. jillayne:

    I wish I could upcharge, but it really isn’t possible. Borrowers don’t have any clue how their decisions affect their financing and the extra work it may create, nor are they particularly apt to pay for the additional level of service. There simply is just too much noise in the market place about getting the lowest rate and fees. All you can do is make it work.

  11. Craig,
    How do you instruct your buyers to approach the Realtor listed properties? Are they up front about their intentions and disclose that they will be using you to represent them? Are they duplicitous and underhanded and attempt to gain access to the properties under false pretenses? As a listing agent I welcome buyers to come and see my home, that’s what my clients hire me to do. I’ve become adept over the years at discovering the motivations of would be buyers who are not being completely up front about their motives. If a buyer shows that tendency I will work to get to the bottom of the issue. I won’t take a buyer into my listing if I can’t determine they are qualified, ready and able. These houses are my clients’ homes, their sanctuary, and I won’t violate that with someone whom I feel is being less than forthright about their intentions. They could be thieves for all I know, I have seen it before.
    If your clients don’t want to use a Realtors to buy their home, that’s fine. If you feel the value is not there, great. I’m a bit of a do it yourselfer myself. Don’t call the agents, don’t ask for a free market analysis, and don’t go the web sites or use any of the innovative technologies or services that Realtors have developed for their customers. Have the guts to do it yourself. Many people do. It takes time, effort and persistence. For those who persevere there can be significant rewards. However, if you’re catching a free ride on the Realtor train at least have the decency to give the conductor his due. Subtly berating those who have developed the systems that you are none to subtly using in your advertisement here is a little underhanded and self serving. You’re happy to send your clients out to use up our billable hours. How about using up your own?
    What most people don’t realize is that there’s a whole world of real estate that occurs outside the bounds of the MLS. Those who succeed there earn their rewards in equity and unadvertised opportunities. I personally know many who do and have great respect for them. I am morally opposed to those who are too lazy to do the work themselves and instead are willing to use people under false pretences for their own gain to the detriment of those who put for the effort in good faith just to be betrayed in the end.

  12. Craig, as I’ve mentioned in the past, when I meet an unrepresented buyer at a property I’ll try to remember to disclose (I forgot once recently) their options of going through another agent or something like Redfin. The goal of the listing agent should be getting the property sold, not worrying about who shows the property.

    But I must admit I probably need to add the option of using an attorney. I’ve not done that in the past.

    That said, I recently came across a situation where the attorney (not you) used outdated forms, struck great portions of it, and then had a 3 page addendum. That would be a huge turn-off to a seller for that would practically require that they consult their own attorney.

    I’m not a big fan of the NWMLS forms, and do use some of my own addenda. But IMHO, any addendum should be rather simple to understand, because the chance of some random attorney writing a better contract is quite slight, and the chance of them messing up quite great. In multiple offer situations, an attorney doing that would probably doom his/her client to not even getting a response.

  13. Craig- When I read that it was an Epilogue I assumed that you had successfully purchased a vacation property in the Leavenworth area. I guess we can’t add your story to the 90% success rate yet can we?

    I’m not trying to be snarky, but buying in an unfamiliar area one might want a local representative. If real estate was just about the contract – you would want to pay for an expert in contracts. But real estate is about a lot more, isn’t it?

  14. I guess I’m like most agents who will do whatever it takes to get my listings sold for my Sellers at the best possible price with the least amount of drama, regardless of the Buyers issues, moral or otherwise. I’ve seen and been party to lots of these transactions.

    But there is SO MUCH that that the Buyer is unaware of behind the scenes. They are at HUGE risk of cutting off their nose to spite their face. That’s not to say there aren’t some great stories of people who have “saved a bundle” in commissions. But you never hear the other stories because no one wants to tell them. They don’t sell newspapers and they don’t inspire people to stick it to the man. If you are one of these Buyers you are embarrassed and humiliated at best, or still naive and unaware of your folly, at worst.

    see just ONE example in this animated graphic:

  15. Too funny, Jim! Can you make them talk faster … a little slow in my opinon :-). I’ve met these buyers many times. And Tim has closed their sales!

  16. Sure, Leann. I COULD make them talk faster, but parts are intentionally slow. I wanted the pauses to reflect the shocked disbelief that we sometimes feel when certain things come out of the mouths of Buyers who are trying to represent themselves.

  17. I agree with Jillayne’s comment #8 and also with Ardell’s remarks… but I disagree with Craig offering a self service commercial for himself. It is very easy to have the first lawyer link in this post go to WIKI or the BAR Assoc. but to self promote like that takes away from actually offering a biased, but not self fulfilling point that makes RCG great.

    Ardell is a poster child to prove this true. She writes great articles about important subjects… She doesn’t say I need business so if you want to buy a house, click her and have it link to her site! If a reader is interested, they know how to get in touch with her.

  18. Alright, I’ll chime in from Athens, GA. Down here, agents are tickled when a client comes without representation and doesn’t want any. Yeah, it might be a pain in the ass for the LA, but it also means double the commission, or at least more than one side if you cut your commission to “get the deal done.” Independent buyers are required to sign a “customer acknowledgement” exhibit that states they understand they are going it alone (i.e. The savvy realtor vs. the sometimes educated consumer). There is a very fine line an agent must walk since they are not supposed to be advising anyone but a client, and the unrepresented buyer is not a client and is often moderately clueless and depending on the LA to get them through the process. We have an old saying here that with a customer you can use your hands and feet, but with a client you can use your brain. Dollar signs aside, the best advice I can offer them is to work with another agent in my office. I gotta sleep at night, and I think of how I would want a family member treated in a situation like this. Still not sure how an unrepresented buyer can save money in a transaction (here in GA, anyway) by going it alone (a closing attorney charges around 450.00, and it is mandatory). I agree with a couple comments above, one of which questions the net savings if you have zero negotiating skills and minimal access to information. And with the number of foreclosures on the rise (here in GA anyway), an understanding of the market and specific neighborhoods are so critical. The potential losses are much greater than the savings a buyer could theoretically make if they are savvy enough to get the price down by having the listing agent to drop their commission rate. All IMHO.

  19. Craig,

    I think that it is great that there are homeowners willing and Counselors such as your self that promote not only the service, but the option in home purchase/sales covered in you post. Please keep up the great work as it serves to, in my thoughts only improve the real estate industry.

    Likewise, as I offer my service to the attorney base I have found that many of them are surprised at the level of service and most important, communication they receive from a company in the real estate industries. Many times it seems like it is something that “just is not done

  20. I’m having a hard time understanding the advanage of using an attorney over a Realtor. I’ve never heard of hiring an attorney to save money. They don’t have the ablility to show the properties you want to see, and they don’t have access to all the market information that is crucial to determine a fair market price. On top of that, from a buyer stand point, commisions are paid from the sellers proceeds. So unless an attorney can consistently save a buyer more than 3% below market value, you’re not saving. It sounds like an attorney provices less service and less market knowledge with no financial advantage.

  21. Craig. That sounds like something an attorney would say. Get the client and the other Realtor to do all the work so you can get the money. Buying a home is so much more than just writing up an offer. If someone wants to chase ambulances they should use an attorney – if they want to find a home they need to seek the guidance of a professional Realtor. In other words – don’t go to your mechanic if you are sick. Go to a doctor.

    Plus – I would not pay a Realtor or attorney the full commission if I was doing their job for them.

  22. According to earlier posts by Craig Blackmon on this blog (, what he does is lean on listing agents to reduce their commission. Upon reading his post, it looks like he interferes with the contract between a seller and a listing agent to try to get the listing agent to take less than they’ve contractually agreed upon with the seller.

    From Craig:

    “So, the buyer can structure the offer such that, if the listing agent cooperates, the selling price is reduced by 3% (or whatever percentage was to be shared with a buyer’s agent). The seller will presumably lean on the listing agent to reduce the commission, as everyone gets what they expected out of the transaction.”

    That’s his MO, to insert himself between a real estate agent and their client, apparently to skim money off the top of what is legitimately the listing agent’s earned and previously agreed-upon commission.

    Interesting business model.

  23. I am currerntly shopping out of state without a realtor for a second home in a trues buyers market (about 200 potential properties and all of 4 currently in escrow). I have arranged for more than 20 showings directly with listing agents, and not one has turned me down. In fact, most are very friendly and don’t say a word about it. A few try to turn me into one of their clients, but most don’t bother. I disclose up front the circumstances: cash buyer, no agent, using and paying for my own lawyer, seeking bargain on beautiful property.

    In the past, I have in fact written the “no more then 3% …” into my offers as a condition when I did not use an agent because I did not trust the seller’s agent. Yes, this requires the seller and broker to modify their previous agreement.

    But, now I am taking a different tack. I am out here lowballing the shorts off the occasional property. (Nothing accepted yet, but it will happen). I figure that either the agent will love my offer twice as much if they are double-ending (Ardell, but there’s that “realtor porn” again), or will otherwise cut the commission since I did not bring in the other mouth to feed. Either way, makes my offer “better”.

  24. PatentGuy, are you doing anything to check to see which sellers are able to cut their prices? You really need someone both desperate and able. Also, since you have an attorney, you should make sure that there isn’t anything in that state like Washington’s distressed property law, and if so, what you have to watch out for. In Washington it would be buying within 20 days of foreclosure, or other circumstances if you’re considering renting the property back to the owner. Anyway, you need to find that out so that when you do find a great buy it doesn’t turn into a bad lawsuit.

  25. Patentguy, also, is the lawyer actually drafting the offers, or did they just give you the forms? If the former, that’s going to get expensive. Hopefully it’s the latter, expense-wise, but if so, I’d at least have your attorney review on of your recent offers to make sure you’re doing things right.

  26. I love this blog! So much lawyer bashing!!

    Forgive the delay — I spent the weekend enjoying Bumbershoot and other fun things here in the NW. To respond to the various attacks above:

    1. Larry — some innovate lawyers (myself included) are working to carve out a niche practice by providing the legal services associated with the purchase or sale of a home, services otherwise provided by agents (in addition to many other services they provide) at greater cost and, in at least some instances, with less skill. My office currently charges a flat fee of $795 for our services. So, I blog in order to get this information out into the public consciousness. Speaking of getting the word out…

    2. I linked to my page in the first line because I actually had a client tell me he found me through RCG, but he had a hard time doing so. He had to wade through the comments to find my contact information. You will note that the blog author is identified only by a picture. I’ll admit, I blog to generate business, first and foremost. If I want to volunteer my time simply to make the world a better place, I’ll address issues more pressing than real estate (e.g., global warming, the Iraq War, the looming federal budget deficit, etc.). Since I do this to generate business, I want my potential clients to be able to find me as easily as possible.

    3. Ken – just an FYI, you may have some anger management issues. I think your response is a little over the top. I am not “too lazy to do the work” myself and I don’t “use people under false pretences” for my own gain. My services certainly are not “to the detriment of those who put forth the effort in good faith just to be betrayed in the end” — unless betrayal means getting less than a 6% commission. My clients are informed and knowlegable consumers (a great threat to your own business model) who choose to assume some of the work associated with buying or selling and who rely on attorney for the necessary legal services. I am up front and honest about my business model. It is agents and their die-hard, univision advocates who are the real threat to competition and an effective marketplace for real estate services. Speaking of up front and honest…

    4. Geordie — you bear a grudge quite well. First, the 90% success rate had nothing to do with buying property. Did you read the post? My client had a 90% success rate in VIEWING PROPERTIES. Was I that successful when shopping in the Leavenworth area? Better, actually — my rate was 100%. I got all the listing agents to show me all the cabins at which I was interested in looking. When I called your office — what, a year ago? — I said up front that I was unrepresented and would not use an agent but wanted someone to show me properties. The agent who spoke with me in that call did not fully appreciate this. Eventually — and with your help — we got on the same page, and she declined to open doors on my behalf, even though I offered to pay a flat or hourly wage for doing so. Some people do want an agent to educate them about the local market. But guess what — other people are willing to self-educate and save THOUSANDS OF DOLLARS in doing so. Good agents recognize this fact and recognize that I offer an excellent alternative to full service agents, thus increasing the vitality and efficiency of the real estate services marketplace. Finally…

    5. TampaRealtor — Attorneys just chase ambulances? Do me (and your clients, and society) a failure and educate yourself about lawyers before commenting on one of my posts. I’m proud to be a lawyer.

  27. Kary,

    All good questions and good advice. I am a lawyer myself, but not RE, and I am familiar with California RE laws (and caselaw) mostly through life experience, not professional experience. That being said, we are looking on Kauai, so even more so I am without qualifications to represent myself. But, I do realize this.

    “are you doing anything to check to see which sellers are able to cut their prices?”

    In addition to what Trulia/Zillow/Hawaiilife have to say, I check the Kauai assessor’s office for current assessment tax payment/ delinquency info. Because we are looking for new construction, prior sales info is not always useful. I use a pay service (Lexis) to get recorded prior sale, and mortgage, and other lien info. Again, not perfect. For example, I can see a recorded mortgage amount, but not what the current balance is; especially a guessing game with HELOCs. I assume everything is maxed until someone claims otherwise. Like most buyers these days, I check for NOD on the property.

    I have run into “short sale” even though this was not mentioned in the agent description. Annoying waste of time. Usually it goes like this: If you pay the asking price (several hundred thousand above what anyone would pay), then it is not a short sale. But, for the property to actually sell, different story. (Good topic for a post by one of your Realtor(R) types)

    Sometimes, there is nothing to do but wait for foreclosure. Then, you have the problem of the house being let go (a lack of constant maintenance in Kauai can destroy a place a lot faster than in the SF Bay area.) Just like California, owners/contractors may bail once they don’t get their wish price in time, and rent the place for a while (I can’t prove it, but I believe many collect rent while not making any tax or mortgage payments). I just steer clear of these situations.

    I start with frank email on all the material terms, price being first, financing contingency (none in my case), and inspection/CPR document contingency periods (agents expect ten days. But, I will take 30. That won’t be a deal breaker). If and when we get to a “OK” at that level, I will be using the local realtor purchase contract, with my pen and word processor to write it up. Once I am in escrow, then I will bring in the local counsel. I am capable enough to include a contingency sufficient to give the lawyer time after the fact, and still be able to back out of the deal, if that is the best thing to do.

    The distressed property laws in Hawaii are different, and I agree it would be big mistake to go without someone who really knows what they are doing. Agents are simply too expensive compared to the lawyer. There is some irony in this, since there are only a handful of quality, well-thought of lawyers on this Island, but every single relocated Haole is a real estate agent. I think the agents outnumber the mosquitoes. No supply and demand, everyone wants 3%. Many have not been paid much or at all over the last year (Hawaii is like Washington — way behind California on the bubble deflation, but it is just now starting to kick into high gear thanks to pitiful sales numbers).

    Also, agents are needy. No patience. Just want to close a sale. “Come-on, just raise your price to get it done.” (Arrgh).

    I am spending a tremendous amount of time in this endeavor, and part of me regrets not biting the bullet and working with an agent. However, I am genetically programmed to try and do everything myself (although I have given up on household repairs because of plain lack of talent to even drive a nail in wood). I still do my own taxes even though my hourly rate is much higher than that of a tax prep person. And, I admit, I am enjoying the shopping process. I get to go back in a few weeks to check out 20 different properties. Being a cash buyer in this kind of market is a bit intoxifying, even though it is equally frustrating.

    Sorry for the long post. Caught me right after my morning Starbucks …

    Craig – you got to have a thick skin. From what I can tell, good agents are happy to one-side a deal with someone who is using (and paying for) legal counsel instead of bringing along some 3%er who will do even less. But, maybe we should wait for my “Epilogue” 🙂

  28. Patentguy–I didn’t realize you were looking at new construction. Have you considered resale? I think you might get better deals there, and if you’re looking at condos you’re more likely to end up with a stable development. I have no idea what Hawaii is like, but I doubt a failed condo project is any prettier there than here in WA (and there was a thread on that a while back either here or in P-I land).

    Also, you probably already know this, but Hawaiian real estate law is different than the rest of the U.S. I only had to deal with it once or twice in 20 years, and I don’t remember the differences, but they were substantial.

  29. Oh, a really bad source, but I remember a story on 60 Minutes about 20-25 years ago about failed residential communities in another state–maybe Colorado. Anyway, their law wasn’t anything like WA’s law either. So ask your local attorney about that (things like liens for utility services, etc.)

  30. Kary,

    I need to be more careful with my terms. “New construction” to me means that the residence is either newly remodeled/built OR recently enough (since 2000). For the most part, we are looking at SFRs by local builders. Ideal is where the current owner paid for all of the work circa 2003-07, but cannot or does not want to make the float anymore, and is forced to sell at steep loss (but nevertheless can afford the steep loss without short sale!). Not looking at any new developer projects, because of my concerns that are having financial problems. A few are BR; some are not (yet), but there are the signs, such as lack of progress on infrastructure, lot sales, and inability or unwillingness to lower lot prices in order to keep the project moving.

    Yes, Hawaii RE laws are different. They have gone through many such boom/busts in the past, so in a way they are better equipped, at least from a judicial process pov (so I am told). There is already a great tension between developers and residents on Kauai. It’s a beautiful place that gets less beautiful with each new project (nothing new there). And, if developers make all manner of promises to the local community in exchange for planning commission approval, then go belly up before making good on said promises, the next developer starts out with a serious credibility problem.

    For example, one of the floundering developments (IMO) got approval based on all of these rich folks being “gentlemen farmers” and the lots come with mandatory farm and/or ag use covenants and restrictions. Of course, you can contract out your farming or cattle ranching obligations, but what were they thinking! Someone’s going to plunk down $3M for 10 acres of tea plants in order to get a decent view lot???

    So, yep, that’s a lot to consider and takes lots of time. I appreciate advice on this blog (I always take it for what it is worth).

  31. Craig- No grudge on this end. I am just trying to open the doors to let more sunlight in and add transparency to the discussion.

    I see a lot of people hurt in transactions where they aren’t represented as well as they could be.

    Best of luck to you in your cabin search.

  32. I’m a qualified and active house shopper. I have been visiting this blog for months to get tons of vital information generously shared by a bunch of knowledgeable and articulate people in the real estate business.

    For some reason, this particular thread is unusually laden with posts that assume that buyers who try to educate themselves and who want cost/service options are, well, stupid. Or, if not stupid, our real intention is to steal directly from listed houses or indirectly from listing agents.

  33. denismurf — I think the answer, at least in part, is that your approach (and mine) poses a direct threat to a very lucrative business model. I’m sure Leanne may chime in with a recitation of the dozens (if not hundreds) of hours an agent invests in each and every transaction. Regardless, the hard fact is that an agent stands to make a tidy sum when he or she closes just one transaction. Multiple transactions will equal a very, very tidy sum. Given this fact, agents will go out of their way to “protect their turf,” which includes convincing people that it is madness — MADNESS — to buy or sell without using an agent.

  34. Denismurf/Craig

    I say this as a non-interested third party (lender) and as someone who is quite critical of real estate agents. I really don’t care if my clients use an agent or not as long as it isn’t creating more work for me that I am not being compensated for.

    However, what I often see is that many consumers are so busy trying to save the 2 or 3% agent commission that they don’t see the 10% that it may be costing them. In my experience, the penny pinching consumers wind up over paying for their homes, buying money pit properties, or walking into other traps. Many THINK they know what they are doing, but the reality is that there is no way you can know what a great agent knows unless you are an agent and in the market everyday. The unfortunate fact is that often times many don;t even know they are screwing themselves. Ignorance is bliss I guess.

    Lord knows we could do without probably 80% of the agents in the field, but those top 20% agents are worth every penny. Instead of trying to save the 2 or 3%, you should be working harder to find the top 20% agents because they often will save you a helluva a lot more than their commission.

    What consumers fail to see is that buying a home is the largest and most complex financial transaction of their lives. It deals with a lot of money, risk, legal issues and the like. While saving money is important, it should not be the prime driver your decision making in this type of transaction.

    Most lawyers are smart enough to represent themselves to save money. however, I am sure most will tell you that an attorney that represents themselves has a fool for a client. It is all about the big picture…

  35. Russ- This is my point exactly. I know that Craig thinks I am only trying to protect my turf, but I truly see people screwing themselves over on a regular basis. In most FSBO cases I hear about anecdotally one party makes out like a bandit and the other gets taken advantage of. I guess that’s good if you’re the bandit. I think that every consumer should work to educate themselves about the market. Consumers aren’t stupid to look at all their options, but sometimes it’s wise to remember that cost and value are not the same.

  36. Russ and Geordie — I think we all agree that nobody should attempt to buy or sell without some sort of professional assistance. My point is — and has always been — that it does not necessarily need to be a real estate agent. And Geordie, I can assure you that none of my clients have ever been “srewed over” simply because they did not use an agent.

  37. Craig, I’m generally on your side on this debate, but I really have to question how you’d know whether your client has been screwed over on price?

    I tend to view the agent and attorney as being something that works together. The attorney checks to make sure the agent isn’t making any big mistakes in the contract. If the buyer goes without an attorney, then they rely exclusively on the agent for the paperwork. But if the buyer goes without an agent, and only an attorney, I think they’re relying solely on themselves to determine value. I just don’t see the attorney playing that role.

  38. Leanne — in comments on my previous posts that address this topic, you have done just that (see #17). Besides, getting beaten about the head and neck with an I-Hate-Lawyers stick (see #s 10, 25, and 26 above) makes me cranky.

  39. Kary — I did not interpret Geordie’s “screwed over” comment as relating to price. I had a more general interpretation. Even if it relates to price, however, our clients still do fine. When we last calculated it (June of last year, I believe) we had handled $36m worth of deals. My associate Marc works about 5-8 transactions per month and has a very good sense of the market. Plus, he is an outstanding negotiator. We certainly have some insight into value, notwithstanding the fact that we’ve never taken the 3 credit “Real Estate Valuation” class at our local community college…

  40. What tools do you have to determine what properties are selling for in any given area? I think it would be tough/impossible without something equivalent to MLS access. Also, without actually going to the property it would be impossible.

    Just this afternoon I was dealing with a bankruptcy attorney I know, and what a certain property was worth. Even though it was a currently listed property, and had sold twice in the past three years (the latest without an agent after a remodel), I told him I had no basis to value it without actually seeing the property.

  41. Kary — we rely on input from our clients, certainly. We are not appraisers, by any stretch. However, we have experience that we share with our clients. Plus, we rely on our clients to be informed consumers. The clients who were the basis of this post compiled a half dozen comps using MLS data available on the web (RedFin, I believe — they provide more than most).

    We don’t make any representations that our opinions or input is the “truth” — but then again, there is no “true” value to any property. That determination is subjective. If the clients love the house, then it has greater value to them than to someone else, notwithstanding any opinion about the “market price.”

    Ultimately, I am confident that our clients are sufficiently educated — by us, if not before they hire us — to have a reasonable opinion about value. They do not get “screwed over” in that or any other regard. For example, our clients do not “negotiate” as indicated by the link in no. 17 above.

  42. Like I said, ignorance is bliss. Often consumers will rave about the deal they got not using a Realtor because they simply don’t know any better. Just because the consumer is happy doesn’t mean things turned out for the better or they got a great deal.

    Honestly, we probably wouldn’t be having these conversations if it weren’t so easy to be Realtor. Most consumers balk at paying the commission because they know Realtors took the 3 hour course online. People have a hard time seeing those kind of dollar signs when their Aunt is a Realtor part-time while being a hair dresser as well. Doesn’t look good for the profession.

  43. Some states, like Texas, are non-disclosure states, meaning that the sold price of a property dint’ disclosed outside the MLS. So buyers who don’t use agents have no access to real data. They may think that the tax record or Zillow give them good research, but they are mistaken. This alone is a great reason to use a REALTOR.

  44. Craig, I keep forgetting that Redfin allows people to search solds. It’s too bad Trulia doesn’t (that I know of anyway), because I think it has a better search engine that would make some searches easier. Neither though is close to what the NWMLS Locator system can do, but that mainly just means it would take more time using the consumer systems.

    Sam, that Texas system sounds odd. What’s the justification for keeping the price secret? Is there an excise tax on the sale? If so I’d think the public would have a right to know.

  45. Craig, I have never bashed attorneys or you. When I talk about anything, such as the number of hours good agents put into transactions, it isn’t bashing your model, it’s just a discussion of another choice for consumers, and is a response into the conversation, which pretty much is what we all are doing.

    I didn’t comment on this post at all about hours, so your comment was out of context for this particular post, and yes, I’m a little cranky too :-).

    What I am saying really goes to everyone here … we’ve got a lot of negativity in our marketplace this year, and the last thing we need is constant put-downs towards each other. There is room for ALL of our fee models & styles in this and any other market, and I think we do better to rise above our personal biases towards particular people or models of competition and try to keep our discussions less biting towards the individual.

    No matter what your views, in the long run, we are all in the same business, working with consumers.

  46. Craig, when I was looking for your email address I reviewed a portion of your website. I’d say it has a rather anti-agent bias. You might want to change that to be more neutral, and also to perhaps update it. For example, the idea of trying FSBO in this market is really rather poor advice compared to say 14 months ago.

    I don’t think many agents would object at all to their client being represented by an attorney. If anything, if the attorney is good, they should welcome it–fewer liability concerns! I certainly would never try to dissuade a client from using an attorney, and I’d suggest that you as an attorney shouldn’t be dissuading a client from using an agent.

  47. Kary, are you serious? Several major problems with your comment. In fact, I think my response will make an excellent post. If I remember I’ll alert you specifically when I author it.

  48. Kary,

    Sale prices are kind of like phone numbers. In most states you can pay an extra fee to have an “unlisted number” and a “non-disclosed sale price”. It is not everyone’s right to know what someone pays for their house. It’s personal. It’s private. It’s “public info” unless a buyer takes extra steps to make it “private info” and sometimes a small added cost. Most people don’t know this and maybe not every State has this option, but many do. How much do you pay to NOT be in the phone book. How much do you pay to NOT have the easy access records show your sale price.

    The transfer/excise tax or tax stamps or real estate taxes (depending on the state) continue to be public info, and so hiding the sale price often becomes a moot point. In CA you can back into the price paid by annual taxes due. In tax stamp States the Deed recorded is public, so you can just count the stamps on the Deed to get to price paid. So you can make it harder, but not impossible, to figure out price paid.

  49. Kary,

    If a lawyer brings an offer on your listing, does the lawyer get the “co-op” buyer fee automatically? Does the buyer?

    You say: “I don’t think many agents would object at all to their client being represented by an attorney.”

    It’s not the attorney entering the room that is at issue. It’s half the commission leaving the room that’s the issue. Where do you stand on that?

  50. Kary,

    Just saw this example of non-disclosure of sale price over on Zillow blog:

    “McEnroe sold the property in December of 2007 to record producer Ric Wake for an undisclosed amount (it was listed for $6.5 million).”

  51. Craig, I don’t know which comment you thought wasn’t serious. That going FSBO in this market isn’t the best idea compared to 14 months ago, or that agents wouldn’t typically object to their clients being represented by attorneys.

  52. Ardell, half the commission doesn’t leave the table just because an attorney brings the offer. Clearly the attorney doesn’t get it, because they are not an agent, and not part of the MLS which results in the sharing of the commission. Also clearly the buyer doesn’t get it. Whether the seller gets a break is another matter, but nothing is automatic.

  53. Kary,

    You know that Craig means attorney instead of agent and the BAF/Co-op being moved to the buyer side. Why are you acting like attorney in the room here is separate from the fee issue? You support Craig in the room, as long as the seller and the seller’s agent keep the buyer agent fee?

  54. Ardell, I sort of doubt that’s what Craig means, but we’ll see.

    I don’t view buyers or sellers having an attorney as being a bad thing, and in fact, with the right attorney (or wrong agent) it’s a good thing. And I think there are people that can do it alone without an agent representing them. I just don’t see that having an attorney, however, is a substitute for having an agent for all people. It would depend on what the buyer or seller needed assistance with.

  55. Re FSBO: Speaking as a potential Craig client, I think the post was on buying, not selling. I’m not always sure what people mean by “in this market” (e.g. #6); but my experience over the last few months is that, perhaps because properties are staying on the mkt longer, sellers’ agents are usually wiling to show me a place. I’m up-front about what I’m doing; I’ve seen 4 and been blown off once. In a really tight mkt with properties being snapped up in a few days I’d be more inclined to use a buyer’s agent; if I were a seller in this mkt I’d use a seller’s agent.

    What MLS pricing information is not accessible via the online services?

    Most of the agents I meet are nice people doing really hard jobs. There are problems with how real estate works, but that’s not a reflection on individual agents.

  56. Colin, there were two uses of the term “in this market” in this thread, and I made one of them. I can’t comment on the other one, but I meant exactly what you said–that a seller should be more inclined to use an agent due to the market conditions. I’m seeing a lot fewer FSBOs this year compared to last, and the ones I notice tend to convert to listed fairly quickly. I assume that they are getting little or no traffic through the house (other than perhaps agents trying to get the listing), and thus get discouraged.

    As to what pricing information is not available, I mentioned above that I forgot that Redfin offers sold information. It’s still a rather crude search tool compared to NWMLS’s Locator system, but a buyer could get similar results, but it would take much more time. But time might not be that important.

    I’m not sure that any of the consumer systems give price history, but again, I’m not that familiar with the consumer sites.

    On that topic (my not being familiar), the only site I’ve noticed that has a decent search tool for bedrooms and baths is Trulia. If you go past the initial search, you can actually search for just 3 bedrooms, or just 4 bedrooms, or just 3 or 4 bedrooms. The others typically use 2+, 3+, etc. Similar for bathrooms, where as far as I know, none of the search sites have restrictions that would allow you to search for 1 3/4 bath units, at best it’s 1.5 bath. Again you could probably get to the same results (because I assume they show 1 3/4 in the results), but it would take more time.

  57. Kary — as for FSBO in this market: Less equity means less cash to pay an agent. If you’ve got a good house in a good neighborhood and you educate yourself on steps to take to prepare your house for sale (and you take those steps), and if you’re willing to be patient, and if you’ve done some homework and arrived at a reasonable price that is acceptable to you, they YES! this is a good time to go FSBO. Admittedly, it is a tougher row to hoe than 14 months ago, but any grownup should be able to at least take a shot at FSBO. If that doesn’t work, then you can always go with the backup plan: forking over 6% of the gross proceeds to promote the sale.

    As for the “are you serious?” comment: it was aimed at your assertion that I should be “neutral” and my role in a typical transaction. I will explain further in a future post.

  58. Craig, I’d argue you’d be better off with a discount broker, such as Redfin or the super-discount brokers. That way you get on the MLS.

    As to the neutral comment, I was talking about your website, not your role in any particular transaction. Explain what you can do as an attorney alone and as an attorney working with an agent.

  59. Craig,

    I think you should combine your model with a cheap mls service for maximum benefit to your clients. Say a Craig + MLS4U. I think that would increase the chances of a home being seen and in the mls. Just an example. I think that would be better advice than Craig + no MLS exposure at all. Maybe you do that already. Most FSBOs are willing to pay a buyer agent, so it only costs them a little more to gain maximum exposure.

    So yes, “trying” FSBO could be optimal for many, especially with decreasing equity positions. But adding the MLS component would be more of a best effort in that regard.

    I’m thinking buyers would benefit from an agent flat fee package similar to the seller MLS4U package. An agent who will come to your final choice and make sure you see what they see. An agent who will come to the inspection and make sure you hear what they hear. I’ve had a few people ask me to come to their final two choices as a consultant for $500. I’ve had a seller want me to come and just give him my full $02 for $500 and be able to call me back if and when the need arises.

    It seems there is a need and desire for agent consulting services to complement some of the too stripped down options. Seems the consumer can build a package of services at much less cost by combining a few of them. You might want to show your clients a few options to complement your service that leave them better represented all the way around, both at the house, in the mls, and during contract to close.

    Three $1,000 services, for most price ranges, might give them everything they need at a much reduced cost.

  60. Thanks Kary: Redfin provides at least some price history, though once you go back more than a few years it’s not clear how to interpret it, as prices have risen so much — nonetheless it’s interesting to see how often a property has changed hands. On search, none of the commercial sites has gotten it down yet, but if you are focusing on a few neighborhoods it’s not too much hassle using an imperfect search, plus tracking properties a little outside my preferred parameters has been educational. Right now Redfin does the best job for me of quickly getting to the relevant data and pictures.

    Re options it’s good to have folks like Craig as well as the discount brokers. I’d rather pay cash on the barrel for a specified service than leave it for the eventual commission. Partly this is because I want to keep the option of not buying, and I’d feel crappy having a buyer’s agent do lots of work and then not making a commission-generating purchase. I like Ardell’s consulting idea: there are moments when you really want a focused conversation with an expert.

  61. Colin,

    That’s the part agents don’t understand. Some people don’t want to look at houses with agents, because it makes them feel obligated to buying something some day. Most people only want to commit to buying IF it feels like the right thing to do at the time, and they want the option to rent at the end of it. When they go around with an agent, they feel like they are in advance agreeing to buy something.

    I like the idea of someone hiring me to look at their final choice or choices to help them focus on the things an agent sees that buyers sometimes do not. In fact there should be “Second RE” LOL RE is one of the only industries that does not grant the consumer the option of getting a second opinion before making a huge commitment.

  62. Ardell, do you think we could start a whole new business based on second opinions? It could be a fee for service model that had a paid amount for what would be pretty much the same as a BPO (broker price opinion) similar to what some government contracts require, etc. Basically a fee for viewing a property, providing a CMA, and any other notes from a physical walk through.

    On the other hand, E&O insurance would likely not cover such a model and it would or could be fraught with lots of legal liability.

    Craig? Your take?

  63. Reba — an interesting idea. However, I think you will have a difficult time convincing people they need to hire two separate agents. As for potential liability, I don’t think there would be any exposure beyond that of the “regular”/first agent, if that. You could limit your exposure by having the client sign a fee agreement noting the scope of your representation/consultation.

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