need mortgage home buying tips and advice

[peace123]

So I spoke to two real estate agents. One my mortgage broker recommended and one what I found online.

Spoke to both and I like the one I found and spoke. Pls read below and which one has lower rate?


The  first told me I will pay him 6% commission fee for the condo apartment I am selling and No fee to buy the new home.
The one I found online told me and it is in their website that , to list and sell the condo,they would charge $3K commission and 2.5% buyer's agent fee and no fee to buy the new home.
My condo I am selling is priced between $140K to $180K based on current market value and what nearby condos are sold on zillow,redfin etc.

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[Lurker]

they would charge $3K commission and 2.5% buyer's agent fee and no fee to buy the new home.
My condo I am selling is priced between $240K to $280K based on current market value and what nearby condos are sold on zillow,redfin etc.

It's pretty much the same price. That 2.5% buyer's premium is going to be calculated into the buyer's final offer. Your best bet would be to ask the other agent if they'd take 2.5% for each deal.

[peace123]

It's pretty much the same price. That 2.5% buyer's premium is going to be calculated into the buyer's final offer. Your best bet would be to ask the other agent if they'd take 2.5% for each deal.

can you explainwhat you mean by "Your best bet would be to ask the other agent if they'd take 2.5% for each deal."? The first agent told me  he would charge me 6% to sell the condo,  but no fee to act as my buyer's agent when buying the new home. I think that 6% fee is all included.
The 2nd agent told me, he would charge me $3k commission plus 2.5%  fee to sell , and same no fee act as my buyer's agent  when buying the new home.
So all agents charge fees to sell but no fee when hiring them as buyer's agent? My condo I am selling is priced $140k to $170K.
I don't know how much the home I am buying will be but estimated to be around $240 to $270. I am selling my condo and use money towards the new home.
Thanks

[Lurker]

can you explainwhat you mean by "Your best bet would be to ask the other agent if they'd take 2.5% for each deal."? The first agent told me  he would charge me 6% to sell the condo,  but no fee to act as my buyer's agent when buying the new home. I think that 6% fee is all included.
The 2nd agent told me, he would charge me $3k commission plus 2.5%  fee to sell , and same no fee act as my buyer's agent  when buying the new home.
So all agents charge fees to sell but no fee when hiring them as buyer's agent? My condo I am selling is priced $140k to $170K.
I don't know how much the home I am buying will be but estimated to be around $240 to $270. I am selling my condo and use money towards the new home.
Thanks

Based on these numbers, the agent you found online will likely cost you less (roughly 7k if you end up covering the buyer's premium vs roughly 9.5k with a straight 6% commission). However, there's a discrepancy  in the value of your condo between your 2 posts of about 100k, so I'm not sure which numbers to work with.

(The following is very basic. People will have plenty to add and/or argue with.)

In each deal, the agents for the buyer and the seller split a commission, which is usually 6% of the sale price. This commission is paid by the seller, and comes out of the funds from the sale once it closes. Essentially, an agent makes 3% representing a client for a purchase or a sale. When they tell you they won't charge anything for the purchase, that's not because they are doing it for free. They are just getting paid by someone else.

If an agent is willing to take a smaller commission on a purchase, that savings can be used to lower the purchase price. For example, if the list price is $100k, that .5% is $500. Your agent can ask the seller to lower the price by that amount without losing any money, since it is coming out of the agent's commission.

Sometimes, an agent will be willing to agree to a smaller commission on 2 deals because he'll end up making more money (two commissions are greater than one commission). Most of them won't offer it to you unless they really want your business, but may agree to a small discount if asked.

[peace123]

Based on these numbers, the agent you found online will likely cost you less (roughly 7k if you end up covering the buyer's premium vs roughly 9.5k with a straight 6% commission). However, there's a discrepancy  in the value of your condo between your 2 posts of about 100k, so I'm not sure which numbers to work with.

(The following is very basic. People will have plenty to add and/or argue with.)

In each deal, the agents for the buyer and the seller split a commission, which is usually 6% of the sale price. This commission is paid by the seller, and comes out of the funds from the sale once it closes. Essentially, an agent makes 3% representing a client for a purchase or a sale. When they tell you they won't charge anything for the purchase, that's not because they are doing it for free. They are just getting paid by someone else.

If an agent is willing to take a smaller commission on a purchase, that savings can be used to lower the purchase price. For example, if the list price is $100k, that .5% is $500. Your agent can ask the seller to lower the price by that amount without losing any money, since it is coming out of the agent's commission.

Sometimes, an agent will be willing to agree to a smaller commission on 2 deals because he'll end up making more money (two commissions are greater than one commission). Most of them won't offer it to you unless they really want your business, but may agree to a small discount if asked.

My mistake, the condo I am SELLING is priced between $140k to $170K. The estimated cost of the new home I am BUYING will be $240K to $270K.
You think the real estate agent I found online will be cheaper? He will make money for also being my buyer's agent on the new home we are purchasing right because he will get commission from the seller ? If that's the case, I can negotiate total over all fees? How much and how? Bases on my first conversation on phone with him, he told me he would charge $3k commission fee plus 2.5% buyer's agent fee to SELL  the condo we have but No fee from me for being my buyer's agent. Thanks

[Lurker]

My mistake, the condo I am SELLING is priced between $140k to $170K. The estimated cost of the new home I am BUYING will be $240K to $270K.
You think the real estate agent I found online will be cheaper? He will make money for also being my buyer's agent on the new home we are purchasing right because he will get commission from the seller ? If that's the case, I can negotiate total over all fees? How much and how? Bases on my first conversation on phone with him, he told me he would charge $3k commission fee plus 2.5% buyer's agent fee to SELL  the condo we have but No fee from me for being my buyer's agent. Thanks

If he's taking the $3k as his commission, and is using the 2.5% buyer's premium to pay the buyer's agent, that should be less than 6% of the sale price.

Re negotiating commissions.... I don't have tactics or magic words for you. IME, simply ask. Others may have better ideas.

ETA: you should probably clarify and ask how the buyer's agent of your condo sale is getting paid. Don't want any surprises at closing.

[Yehudaa]

@peace123 as at least 3 people have said, buyers never pay their buying agent directly. Buyers' agents get paid by taking half of the typical 5-6% seller's agent's commission which comes from the seller. So take the buyer's agent out of the picture because you can choose whoever you want and they'll all be a $0 cost to you.

For your decision on a seller's agent, if I'm understanding correctly you're deciding between paying a guy 6% or paying Clever $3k+2.5% (the 2.5% being the portion that they pass on to the agent representing the buyer of your condo, which they cant offer you a discount on because they need to pay that to the buyer's agent).

If you sell for $150k, the 6% guy will cost you $9,000 and the $3k+2.5% company will cost you $6,750. Relative to buying/selling a house, this $2,250 difference is small change and personally I'd go with whichever agent you trust more and have more confidence in, even if it costs you $2,250 more. That's a small investment for the benefit of having someone knowledgeable/trustworthy.

Obviously if you sell for more or less than 150k the numbers will be a bit different but this is the basic idea. If you sell for 170k your 6% will be $10,200 and 3k+2.5% will be $7,250, so a difference of $2950 at most. Again, that's relatively small change in this transaction. Go with the guy you trust, especially if you don't want to put in time to learn all about the process.

ETA: if you're looking to get the best service possible and have an agent who's willing to go the extra mile for you I'm not sure if nickel and diming them over every half-percent is in your best interest. A half a percent off is gonna save you $700- 850 here. If you were taking about a half percent on a million dollar home then maybe, but selling a $140-170k home I wouldn't negotiate hard for another .5% or even 1%. I'm sure others might not agree but that's my feeling.

[yungermanchik]

this $2,250 difference is small change

I'm no expert but I know of 2 people who used all available assets to buy a house, 1 couldn't afford a mover and ran himself ragged moving himself and the other had a tiny apartment-sized dining room set until they saved up for a new one. $2,250 would go a long way for either of these expenses.

[Lurker]

I'm no expert but I know of 2 people who used all available assets to buy a house, 1 couldn't afford a mover and ran himself ragged moving himself and the other had a tiny apartment-sized dining room set until they saved up for a new one. $2,250 would go a long way for either of these expenses.

Belongs in the Fuzzy Math - Frum Expenses thread...

[Yehudaa]

I'm no expert but I know of 2 people who used all available assets to buy a house, 1 couldn't afford a mover and ran himself ragged moving himself and the other had a tiny apartment-sized dining room set until they saved up for a new one. $2,250 would go a long way for either of these expenses.

Fair enough. Maybe my point should've been more that IMHO spending $2,250 to get a good agent is just a good investment. I think you might lose a lot more than a couple thousand dollars if the sales/marketing/showings/negotiation is not executed well. There's a reason why there are agents that work for cheap for these companies and they don't have their own work at full market rates.

Personally I've just seen some pretty awful things from bad agents and I'd stay away. You'll never know how much money you're leaving on the table if you go with the cheaper agent,  but do pay for a good one.

[peace123]

If he's taking the $3k as his commission, and is using the 2.5% buyer's premium to pay the buyer's agent, that should be less than 6% of the sale price.

Re negotiating commissions.... I don't have tactics or magic words for you. IME, simply ask. Others may have better ideas.

ETA: you should probably clarify and ask how the buyer's agent of your condo sale is getting paid. Don't want any surprises at closing.

Pls explain what the following means. How is he certain that 2.5% is exact fee for buyer's agent?
I sent this email to him:

 Nice speaking with you on phone .  Can you clarify how the buyer’s agent of my condo sale is getting paid? I want to make sure there is no surprise at closing . Will you consider smaller commission , discount on  the purchase as this is 2 deals ? I can use the savings  to lower the purchase price .  Thanks

His response:

Again,

>> Clever’s seller commission = $3000
>> 2.5% to buyers agent = $4250
>> Total commission = $7250
This refers only to commission and does not factor in any other closing costs associated with selling (attorney fees, tax escrow, title fees, etc)

$3000 is our smallest sell side commission offered. You could offer 2% to the buyers agent, as reducing that commission from 2.5% to 2% could save you an additional $850. You set the commission offered to a buyers agent, I don’t, as it’s your money. You can offer $1 as commission to a buyers agent. I wouldn’t recommend it, as buyers agents may not show your listing unless a competitive commission is offered.

I would be more than happy to discuss commissions, my services or any other questions you have either in person, over the phone again or via Zoom.

[Lurker]

I sent this email to him:
 Nice speaking with you on phone .  Can you clarify how the buyer’s agent of my condo sale is getting paid? I want to make sure there is no surprise at closing . Will you consider smaller commission , discount on  the purchase as this is 2 deals ? I can use the savings  to lower the purchase price .  Thanks

His response:
This refers only to commission and does not factor in any other closing costs associated with selling (attorney fees, tax escrow, title fees, etc)

$3000 is our smallest sell side commission offered. You could offer 2% to the buyers agent, as reducing that commission from 2.5% to 2% could save you an additional $850. You set the commission offered to a buyers agent, I don’t, as it’s your money. You can offer $1 as commission to a buyers agent. I wouldn’t recommend it, as buyers agents may not show your listing unless a competitive commission is offered.

I would be more than happy to discuss commissions, my services or any other questions you have either in person, over the phone again or via Zoom.

$3k + 2.5% is a good deal for a sale between $140-170k, IMO. The more important thing, as mentioned numerous times in this thread, is the confidence in your agent to do a good job getting it sold for as much as possible.

The only other place to save on commissions would be to see if they'd take a little less from your purchase to have the purchase price lowered a bit, but that can be negotiated after you find a place you like.

[peace123]

$3k + 2.5% is a good deal for a sale between $140-170k, IMO. The more important thing, as mentioned numerous times in this thread, is the confidence in your agent to do a good job getting it sold for as much as possible.

The only other place to save on commissions would be to see if they'd take a little less from your purchase to have the purchase price lowered a bit, but that can be negotiated after you find a place you like.

what does he mean by  ("You could offer 2% to the buyers agent, as reducing that commission from 2.5% to 2% could save you an additional $850. You set the commission offered to a buyers agent, I don’t, as it’s your money. You can offer $1 as commission to a buyers agent. I wouldn’t recommend it, as buyers agents may not show your listing unless a competitive commission is offered."

I would be more than happy to discuss commissions, my services or any other questions you have either in person, over the phone again or via Zoom.)

On negotiating commission fees, Is he talking about him as the buyer's agent for our new home  or  the other agent= the buyer's agent for the condo apartment I am selling?  I assume he is paid both ways . Thanks.


I have to ask the buyer's agent for my condo sale about fees he will charge? what if he said more then the 2.5% my sellers agent told me?

[Lurker]

what does he mean by  "You could offer 2% to the buyers agent, as reducing that commission from 2.5% to 2% could save you an additional $850. You set the commission offered to a buyers agent, I don’t, as it’s your money. You can offer $1 as commission to a buyers agent. I wouldn’t recommend it, as buyers agents may not show your listing unless a competitive commission is offered."

I would be more than happy to discuss commissions, my services or any other questions you have either in person, over the phone again or via Zoom.


I have to ask the buyer's agent for my condo sale about fees he will charge? what if he said more then the 2.5% my sellers agent told me?

You are selling your condo. You get to set whatever terms you'd like, and people can choose to agree to those terms or not. You can say that you're not offering any commission to the buyer's agent. The issue with that is that you may not have any agents showing your condo to their clients, because there's nothing in it for them (no commission). The standard commission to buyer's agents is 3%, but it is common for them to take 2.5%, or even 2%. However, keep in mind that the smaller the commission is to that agent, the less motivated they'll be to convince their clients to see or buy your property.

ETA: keep in mind that your purchase of your new place is tied to the sale of this one. The faster you sell the condo, the faster you can close on the new townhouse. Smaller commissions may cause your property to stay on the market for longer.

[Yehudaa]

You can say that you're not offering any commission to the buyer's agent. The issue with that is that you may not have any agents showing your condo to their clients, because there's nothing in it for them (no commission). The standard commission to buyer's agents is 3%, but it is common for them to take 2.5%, or even 2%. However, keep in mind that the smaller the commission is to that agent, the less motivated they'll be to convince their clients to see or buy your property.

To add to that, in some markets it's not uncommon for sellers to offer MORE than the going rate for the buyers' agent as putting a higher buyers commission likely translates to more agents bringing their buyers to see your place if they're gonna make a bigger commission on your place than they would showing their buyer the place down the block.

On the topic of spending more on things like this, I recently heard an interview with a very successful CEO who was asked why he spends a lot on certain parts of his business. I liked the way he worded his answer- he said "I'm a greedy person, but I try to choose choose long-term greed over short-term greed. Sometimes long-term greed requires spending more on certain things in the short term."

I'm not saying that you have to offer more than market for your buyers agent commission, but to me offering any less than market is choosing short-term greed. You might save $2k on commissions but sell your condo for $10k less.

[yungermanchik]

Fair enough. Maybe my point should've been more that IMHO spending $2,250 to get a good agent is just a good investment. I think you might lose a lot more than a couple thousand dollars if the sales/marketing/showings/negotiation is not executed well. There's a reason why there are agents that work for cheap for these companies and they don't have their own work at full market rates.

Personally I've just seen some pretty awful things from bad agents and I'd stay away. You'll never know how much money you're leaving on the table if you go with the cheaper agent,  but do pay for a good one.

Yes, obviously if the one that charges more manages to get you closer to $170k and the one who charges less gets you closer to $140k your saving are wiped away. I was just commenting that for someone who's in this situation sometimes "small change" makes a big difference.

[peace123]

You are selling your condo. You get to set whatever terms you'd like, and people can choose to agree to those terms or not. You can say that you're not offering any commission to the buyer's agent. The issue with that is that you may not have any agents showing your condo to their clients, because there's nothing in it for them (no commission). The standard commission to buyer's agents is 3%, but it is common for them to take 2.5%, or even 2%. However, keep in mind that the smaller the commission is to that agent, the less motivated they'll be to convince their clients to see or buy your property.

ETA: keep in mind that your purchase of your new place is tied to the sale of this one. The faster you sell the condo, the faster you can close on the new townhouse. Smaller commissions may cause your property to stay on the market for longer.

In your earlier reply, you mentioned asking the real estate agent to  to lower his commission fee becos he will make money as the agent of the seller of my condo apartment and agent of the new home I am buying. Are you talking about the commission  discount on new home i am buying or the condo apartment  I am selling? I understood your point  about paying the 2.5% fee to my condo buyer's agent on top of the $3K my seller agent would charge me. What about the new home and commission on that becos he will make commission money from the seller of the new home right? I asked him that but I did not understand his reply which was this one,               "You could offer 2% to the buyers agent, as reducing that commission from 2.5% to 2% could save you an additional $850. You set the commission offered to a buyers agent, I don’t, as it’s your money. You can offer $1 as commission to a buyers agent. I wouldn’t recommend it, as buyers agents may not show your listing unless a competitive commission is offered."

I would be more than happy to discuss commissions, my services or any other questions you have either in person, over the phone again or via Zoom".

[Lurker]

In your earlier reply, you mentioned asking the real estate agent to  to lower his commission fee becos he will make money as the agent of the seller of my condo apartment and agent of the new home I am buying. Are you talking about the commission  discount on new home i am buying or the condo apartment  I am selling? I understood your point  about paying the 2.5% fee to my condo buyer's agent on top of the $3K my seller agent would charge me. What about the new home and commission on that becos he will make commission money from the seller of the new home right? I asked him that but I did not understand his reply which was this one,               "You could offer 2% to the buyers agent, as reducing that commission from 2.5% to 2% could save you an additional $850. You set the commission offered to a buyers agent, I don’t, as it’s your money. You can offer $1 as commission to a buyers agent. I wouldn’t recommend it, as buyers agents may not show your listing unless a competitive commission is offered."

I would be more than happy to discuss commissions, my services or any other questions you have either in person, over the phone again or via Zoom".

I was referring to his commission on the townhouse you plan on purchasing.

The commission on the home you are selling seems to be pretty much set: $3k flat to your agent, plus 2.5% to the buyer's agent. Your agent was trying to say that you could offer less than 2.5% to the buyer's agent, even as low as $1, but he "wouldn’t recommend it, as buyers agents may not show your listing unless a competitive commission is offered." If there's nothing in it for them, why would they take their clients to see your condo? Commission keeps them motivated. It's how they earn their living.

The commission your agent takes on the home you purchase isn't set by you. It's set by the seller of that home. However, you are able to ask your agent to take a smaller commission to lower the seller's costs of selling the home, and ask the seller to lower the sales price by the same amount your agent agrees to give up in commission.

I need to clarify something here. You CAN try to get your agent to take a smaller commission. That doesn't mean you SHOULD. As others have pointed out, the agent can end up saving you much more than the $1-3k you may save by asking him to reduce your commission. It's worth going with the agent you feel will best represent your interests over the agent who will give take less money but not 100% of his/her effort.

[Yehudaa]

The commission your agent takes on the home you purchase isn't set by you. It's set by the seller of that home. However, you are able to ask your agent to take a smaller commission to lower the seller's costs of selling the home, and ask the seller to lower the sales price by the same amount your agent agrees to give up in commission.

I've also seen newer or more desperate agents offer to give the buyer some of the 2.5% that they get from the seller, which accomplishes the same thing without getting the seller involved. Essentially your agent "pays you" half a percent or 1 percent to use him.

Though as you said, these are things that you CAN ask for, not necessarily that you SHOULD ask for.

[peace123]

I spoke to a real estate agent to help sell the condo apartment I am living at and then purchase of the new home. He told me he will have to get a photographer  to come with him and told me the earliest he can get a photographer is next Monday.  He told me he will in the meantime email me listing of the homes in the area I am looking to purchase. My condo apartment where I live with my wife and child  is full of lots of things so I wonder how the photographing will work?  When you have a family and a child you have so many things so the pictures they are taking to use in the listing may not look nice to potential buyers right? Do you guys think I can have my condo apartment sold to buyers without clearing things out and empty?  Also I have to sell this first to be able to afford the new home. And the Preapproval expires in 90 days from 2 days ago. Will I be able to sell this and purchase new home within 3 months? Things like very challenging and tough!