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October 08, 2008
WBUR/NPR debate: Do buyer agents really help consumers save money?
Having already posted one comment to WBUR's heated discussion about "what caused the housing crisis and how to fix it," I was content to watch the debate unfold yesterday until several posts began spreading misinformation about the role of buyer agents and whether they help clients save money.
First, there is some truth that the current two-sided real estate commission does not align buyer agent compensation with performance. That's why some in the industry offer rebates and others are calling for commissions to be divorced. If that single reform comes out of this crisis, conflicts of interest would be reduced, competitive options would increase, and consumers would save billions of dollars as argued in these blog posts written two to three years ago:
$60 Billion question: How do consumers uncouple real estate commissions?
10 Mega-tends push real estate commissions to a tipping point
Contrary to assertions on WBUR's blog, some REAL buyer agents, not
counterfeit buyer agents or "designated agents," actually do save their
clients money by (1) rebating some or all of the buyer agency fee built
into sales prices, and (2) by helping their clients shop wisely, time
the market, and negotiating aggressively on their behalf. For tangible
evidence, see Wall Street Journal article on the 100% commission
rebate offered by The Real Estate Cafe, our menu of fees & rebates, and map of client savings
totaling over $1 million during a twelve month period.
At least one other buyer agent in Chicago has helped clients save more than $1 million during a twelve month period and there are probably others. More importantly, new referral sites like http://www.ProOffer.com and conversations like this could bring performance based compensation into the real estate industry. My guess is that millions of real estate consumers, both home buyers and sellers, would agree that reform is long overdue!
What's your opinion? Do buyer agents really help consumers save money?
Bill Wendel | 08:21 AM in Change Agents, Commission Reform, Defensive Homebuying, Dual Agency Detective, Inside The Real Estate Cafe, Real Estate Bubble, RECALL: Real Estate Consumer Alliance, Savings & Rebates, Timing the market | Permalink
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In my opinion, no way. Buyer agents are just one mroe hand in the cookie jar, one more mediator pushing for the deal and a paycheck.
After becoming wise to the fact that buyer agents are nothing more than another mouth to feed and a hurdle to direct communication in negotiations, my husband and I dropped our buyer agent. Now we deal directly with the listing agent. I see no downside. I search for my own listings. I do my own due diligence. I search public records myself. I hire my own inspector. I hire an attorney to review the documents and to represent me at the closing. This method costs less than a buyer's agent, provides me more control over my own deal AND it motivates the listing agent to push the seller into a better price.
The Internet has made buyer's agents irrelevant.
Posted by: msprompt | Oct 8, 2008 4:11:32 PM
Good real estate agent really helps customers to save money and to provide the best for them.Like our dealings in Arlington Real Estate..
Posted by: Shane | Oct 11, 2008 3:29:25 AM
MSPrompt,
What makes you think that because you are dealing directly with the listing agent, it motivates the listing agent to get the seller to agree to a better price for you? If I was representing a seller and a buyer that was not represented by an agent would not entice me to have my seller drop their price. A listing agent will represent their seller regardless if they are dealing with an agent or a buyer directly. So your statement has no relevance!
Posted by: Tony Sena | Oct 30, 2008 12:28:37 AM
The problem with the real estate industry isn't commission-based agents. Consumers have plenty of choices whether they are buying or selling. Despite all the choices, most consumers choose the traditional route. Like it or not, that's the reality.
The problem is the range in quality of buyer agents. First, there are buyer agents and exclusive buyer agents. Big difference.
When home buyers choose hard-working, educated exclusive buyer agents with integrity, they not only save money, but they make wise decisions throughout the entire home-buying process.
Posted by: Rich Rosa | Nov 2, 2008 9:24:25 PM
Buyers not only can save but qualify easier using "transferable seller financing"
Posted by: Dataminer | Dec 15, 2008 11:14:36 AM
We are doing our best :)
Gave back more than $300,000 in cash refunds to our buyers this year in Boston!
Posted by: A. Longo | Dec 23, 2008 12:07:42 AM
Very impressive and glad to see real estate rebates are delivering substantial savings to consumers. Our "do-it-yourself" home buyers made The Real Estate Cafe look very good, too. As a group, they saved more than $1 million for the second time in three years!
Posted by: Bill Wendel | Dec 29, 2008 9:57:54 AM
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