Buying with no agent - Reasonable to ask for a reduction in closing costs?

[LovinPSDs]

So we're moving back to the Houston area here soon.  We're looking to settle down and buy a house again. (Been traveling for 1 yr full time).

Now, this will be our 4th house we've bought.  We're pretty spot on with what and where we want it, just need to 1. get moved back there (live in our camper so we'll be in the area with no rush to find housing) and 2. keep browsing until the right house shows up.

My best friend in the area is a custom home builder and agent who has offered to help us through the purchase, however he made the suggestion of him not actually being our agent and requesting a reduction the closing costs by 3% to help us save during the process.

Is this a real thing?  He would be there to assist in any questions we had, and has helped over friends buy free of charge in the past.  Apparently they don't want agents doing this and taking 0% commission so he suggested we pose as if we don't have an agent although he'll be there in the background. It would save 10-15k depending on the house, what do you guys think, will anyone bite?  I guess if they said no I'd rather my buddy get paid than the seller??

[ixtap]

It will depend on the market when you actually buy.

[ChpBstrd]

So is the idea is to trick the buyer into taking another 3% off the price, or to trick the seller's agent into splitting their commission with a buyer's agent which doesn't exist?

It could work, but I'm pretty sure actual money would have to be exchanged at closing. It would look suspiciously like the scheme you're actually planning if you said "just take the 3% off the purchase price and we'll comp our agent privately" because agent commissions are usually distributed as part of the closing process.

Also, if the seller's agent sells to someone without a buyer's agent, they usually get full commission, like 6%. If they sell to someone with a buyer's agent, the seller's agent and buyer's agent usually agree (in advance) to split the commission and get 3% each. From the homeowner's perspective, it's a 6% cost regardless of who it goes to. So this isn't a route to negotiate for a discount. Fast closing will matter more to the homeowner, who is paying taxes, interest, utilities, and insurance every month on a house they don't need, in addition to delaying their plans.

It could work if your best friend will accept the money and then hand it right back to you, minus the taxes they'll have to pay on the income. Your best friend might be incentivized to do this if they are starting out as an agent and want to establish a record for themselves. However, this would strictly be a handshake agreement so if your BF refused to return the money, there'd be no getting it back. All the closing documentation would say they earned it, and any written agreement between you two might be evidence of defrauding the seller's agent!

How much do you trust this friend? Of course, even if they refused to give you the money as planned, you'd have the same financial outcome as if the seller's agent got the entire 6%. Might as well do it and hope for the best, but be prepared to lose a friend if they are untrustworthy. A better handshake agreement might be to give them 1% for showing up at closing, and for them to give you 2% back.

[LovinPSDs]

Think of it this way....

400k house = seller closing cost of 24k (3% and 3%) means seller keep 376K (disregard ALL the other things happening)

why not...

Seller pays selling agent 12k (3% of original price, or whatever percent it works out to be) but they sell me the house for 388K.  Selling agent gets their cut, I get the house for less, seller gets the same amount of money.

This doesn't really seem that hard... 6% is not a law, it's negotiable.

I want to negotiate seller agent gets equal amount of OG sale and there is no buyer agent or buyer agent fee

I guess if the sellers answer is "No" i'll just ask them to pay more money to my friend instead of the seller agent.

[uniwelder]

This doesn't really seem that hard... 6% is not a law, it's negotiable.

Please reread ChpBstrd's answer--- its very thoroughly and clearly written out.  From what I understand, the seller would typically have already signed a contract with their agent to pay 6% commission.  Their agent is getting that money regardless of whether the buyer has their own agent or not.  If the buyer has an agent, that 6% gets split.  If buyer does not have an agent, they keep the whole amount. 

Have your friend act as your agent and 'gift' you a portion of the money back afterward.

[FIPurpose]

This doesn't really seem that hard... 6% is not a law, it's negotiable.

Please reread ChpBstrd's answer--- its very thoroughly and clearly written out.  From what I understand, the seller would typically have already signed a contract with their agent to pay 6% commission.  Their agent is getting that money regardless of whether the buyer has their own agent or not.  If the buyer has an agent, that 6% gets split.  If buyer does not have an agent, they keep the whole amount. 

Have your friend act as your agent and 'gift' you a portion of the money back afterward.

That's not how RE deals I've seen work. The seller's agent fee is in the contract, but the buyer agent fee is usually posted on the listing. So the buyer's fee would be negotiable, but not the seller's.

[uniwelder]

This doesn't really seem that hard... 6% is not a law, it's negotiable.

Please reread ChpBstrd's answer--- its very thoroughly and clearly written out.  From what I understand, the seller would typically have already signed a contract with their agent to pay 6% commission.  Their agent is getting that money regardless of whether the buyer has their own agent or not.  If the buyer has an agent, that 6% gets split.  If buyer does not have an agent, they keep the whole amount. 

Have your friend act as your agent and 'gift' you a portion of the money back afterward.

That's not how RE deals I've seen work. The seller's agent fee is in the contract, but the buyer agent fee is usually posted on the listing. So the buyer's fee would be negotiable, but not the seller's.

State specific then?  In Virginia, the 6% fee gets written directly in the seller's contract.

[GilesMM]

You can definitely do it and there is no reason for the seller or their agent to object - they both want the sale to occur.  Great friend!

[Omy]

This may be a regional thing. In my area, the listing agreement is already negotiated between the seller and their agent for x% (and they agree to give buyer's agent x-y%). If there's no buyer's agent, seller's agent gets x%. It might not seem fair that they keep the entire commission, but the seller's agent is now responsible for both sides of the transaction if there is no buyer's agent.

Asking for a reduction instead of paying a buyer's agent may work with a FSBO, but they are usually selling by themselves so they don't have to pay commissions and can keep the difference for themselves.

I'd recommend asking your friend if he would be your agent officially and rebate most of his commission to you at settlement. He would need to keep some to pay taxes and broker fees, but this approach is legal because all parties are aware of the arrangement...and you are then protected by having a buyer's agent who is officially advocating for you.

[iluvzbeach]

We did something similar several years back. The contract was written with our agent saying their commission was 0% and then we got what would have been their fee amount as a credit toward closing costs. This happened to be on a new build so we used some of that credit for upgrades, refrigerator & washer/dryer and the remainder as a credit that covered the rest of the closing expenses.

[LovinPSDs]

This doesn't really seem that hard... 6% is not a law, it's negotiable.

Please reread ChpBstrd's answer--- its very thoroughly and clearly written out.  From what I understand, the seller would typically have already signed a contract with their agent to pay 6% commission.  Their agent is getting that money regardless of whether the buyer has their own agent or not.  If the buyer has an agent, that 6% gets split.  If buyer does not have an agent, they keep the whole amount. 

Have your friend act as your agent and 'gift' you a portion of the money back afterward.

That's not how RE deals I've seen work. The seller's agent fee is in the contract, but the buyer agent fee is usually posted on the listing. So the buyer's fee would be negotiable, but not the seller's.

State specific then?  In Virginia, the 6% fee gets written directly in the seller's contract.

Can't contracts be modified anyway?  I mean isn't that the point of working with all the people at the table?

"Hi, I'd like to remove the buying agents comission and negotiate a slightly better price on the house"

Agent - "na, I don't think so"

Me - "Ok, I guess my friend will be my agent and he'll get the money instead... OR, you can get the same amount and your sellers can keep more (or same) in their pocket"

Just doesn't seem like a big deal to me.  No matter what, I'm not giving the selling agent 6%.  It's either 3% to them and 3% to my friend.. or just 3% to them (of original price).  If the selling agent had their clients best interest in mind wouldn't this be a win for everyone?

[Omy]

How are the sellers keeping more if you take the buyer's agent commission for yourself? If I were the listing agent and seller, I'd be concerned that you don't understand what's involved in being a buyer's agent...and that the sale might be at risk because of it.

It might work if you're their only offer, but you probably won't win in a competitive market.

[LovinPSDs]

Omy - Try and think just SLIGHTLY outside of the box… also my friend is really just trying to do something kind for us. Regardless of the commission he’s going to be helping us 100%.

How about instead of 12k in closing we negotiate 10k off… seller is now net +$2000. This doesn’t have to be that hard.

Also, the good news is we’re looking in an up and coming area with lots of new builds so well over 100 houses on the market within 10 miles.

[uniwelder]

OP, this isn't really about any us not thinking outside the box.  Our opinions make no difference whether the seller or their agent will go for it.  Those two people are the only ones that matter.  You could just call the agent selling whichever house you're interested in, then tell them you'd like to work without an agent of your own.  They'll either say yes or no, and their terms the terms would get discussed/negotiated during that call.  After that, they'll either meet you at the house to give a showing, or your realtor friend will need to act as your agent to do so. 

Edited to add-- what I'm reading online says that dual agency is not permitted in Texas.  I could be wrong as there's all sorts of conflicting info to be found online, and I would hope your realtor licensed friend should be aware.  If it is true, then you'll need your own agent anyway and I would choose someone that is more experienced than your friend to represent you.

[ChpBstrd]

This doesn't really seem that hard... 6% is not a law, it's negotiable.

Please reread ChpBstrd's answer--- its very thoroughly and clearly written out.  From what I understand, the seller would typically have already signed a contract with their agent to pay 6% commission.  Their agent is getting that money regardless of whether the buyer has their own agent or not.  If the buyer has an agent, that 6% gets split.  If buyer does not have an agent, they keep the whole amount. 

Have your friend act as your agent and 'gift' you a portion of the money back afterward.

That's not how RE deals I've seen work. The seller's agent fee is in the contract, but the buyer agent fee is usually posted on the listing. So the buyer's fee would be negotiable, but not the seller's.

State specific then?  In Virginia, the 6% fee gets written directly in the seller's contract.

I've sold 4 houses in my life and bought 4, and in my state (not TX) the practice is for the buyer's agent to contact the seller's agent and they sign an agreement to split the commission. Sometimes this happens after the buyers have found and looked at the house, which seems awkward. The buyer's agent has a separate agreement with the buyers that they won't cut the agent out of the deal at the last minute. But that's the way it was done and both parties always seemed eager to agree. If the buyers walk away, the agreement becomes null and void unless the buyer's agent has other buyers. When I've toured houses, the agent is always eager to ask if we are working with an agent.

I've also observed that buyers' agents don't really do much for their clients, so it will not be apparent to anyone if the friend is not doing much for the OP. I think the OP could get away with it IF the friend is onboard from the start, gets an agreement in writing, and is directly compensated through the closing process. Any deviation from this norm will be grounds for suspicion and could cause problems with the closing company. And again, the friend is then legally entitled to the money, and you are hoping they give it back to you as a gift!

[LovinPSDs]

All of this was my friends idea… he’s a custom home builder and a wonderful person who likes to help out his close friends so I guess I’ll gather additional guidance from him.

I asked him to be my agent, he said I’ll be your agent but only in the background, let’s get you a discount.

Was hoping to hear other people’s experiences

[MrGreen]

Everywhere I've been the commission for both the buyer and seller's agent are technically an agreement between the seller and their agent. The seller agrees to pay 5-6% to their agent and the buyers agent commission comes out of the seller's agent commission, typically half.

So asking for a reduction in price for foregoing a buyer's agent isn't automatic because it requires the seller's agent to reduce their commission, since both commissions are technically part of their agreement with the seller. Hypothetically, the seller's agent should have no problem doing this because it's not like they get the other half of that commission anyway if you do bring a buyer's agent. But for whatever reason some sellers agents dont want to do this. I assume it's because they're greedy and hold onto the hope that they might somehow score some extra dollars, or they might try to claim dual agency and represent you and the seller even though that's a conflict of interest.

It may create a small amount of extra work for the sellers agent though. We're about to close on a house where we came as unrepresented buyers and the seller's agent had to give us the contract forms because she's not allowed, as a Realtor, to accept anything than the most recent version of the form, which the public can't get because the Association of Realtors is a monopoly and wants all transactions to go through them so they can get their slice. However I know better and I had to get cross with the agent about it. As soon as she realized I knew what I was talking about and she couldn't pretend like it had to be that way because I didn't know any better her tone changed. Depending on what property you're buying and whether there's any competition may determine how hard you can push back against that BS if you encounter it.

[Greenstache]

Sure, not having an agent is a real thing.  We bought our current house without a buyer's agent (in the Before Times prior to Covid and the real estate price boom).  We'd been browsing online, had a full down payment in hand, and decided to go look at property that had come back on the market after a pending sale fell through.  The seller's agent turned out to be a well-known local realtor who knew my sister, although I'd never met him before.  After we looked around the property and outbuildings, my husband was sold. I asked the seller's agent right then (within an hour of meeting him) if we could negotiate a 3% discount for not having a buyer's agent involved, and he agreed that it could be done and took that idea back to the seller.

I had bought multiple properties prior to that, both personally and for work, so I was very familiar with the closing process and knew that I would be able to handle it.  I worked closely with the title agency (there were some intricacies due to the zoning of the property) and it worked out very well - we would absolutely do it again.  It was a relatively easy way to save tens of thousands of dollars (HCOL area).

[Omy]

Omy - Try and think just SLIGHTLY outside of the box… also my friend is really just trying to do something kind for us. Regardless of the commission he’s going to be helping us 100%.

How about instead of 12k in closing we negotiate 10k off… seller is now net +$2000. This doesn’t have to be that hard.

Also, the good news is we’re looking in an up and coming area with lots of new builds so well over 100 houses on the market within 10 miles.

I was referring to your first post where you wanted the entire buyer's agent commission (not some of it) for yourself. The sellers and their agent are likely taking more risk and doing more work if you are unrepresented.

If your friend is going to be with you "100% of the way", why wouldn't he want to be your agent of record and officially rebate his commission to you at time of settlement? This makes me think that he doesn't ACTUALLY want to do ALL of the work.

Here's some of the work a good buyer's agent does for their client:

1) Makes sure buyer is preapproved to purchase
2) Educates their buyer on the purchase process
3) Explains the contract they will be using (40+ pages in my area)
4) Is knowledgeable about jurisdictional differences
5) Shows houses (often a lot of them) and points out issues.
6) Reviews sellers' disclosures
7) Creates cmas for properties their buyer is interested in
8) Writes offers (sometimes a lot of them) and makes sure the buyer understands what they're committing to
9) Sets expectations to help buyer get the best possible deal
10) Works with listing agent to push the advantages of the buyer
11) Negotiates contract
12) Provides referrals for inspectors and contractors when asked
13) Attends inspections and negotiates inspection items
14) Negotiates appraisal issues
15) Works with attorneys to troubleshoot issues that come up
16) Makes sure final paperwork and settlement numbers are correct

And they do all of this for free until the day of settlement. If the transaction falls apart due to inspection or appraisal or cold feet, they start all over again showing more houses.

Just writing this all down makes me so glad I'm FIREd. I loved being a buyer's agent, but don't miss the stress!

[Car Jack]

There's all kinds of options.

We bought our house just as the seller was about to put it on the market.  They had written into their real estate contract that if we bought the house, they would get nothing.  We bought, they got nothing.

Another possible way out if everyone has time is for the seller to fire the real estate agent in writing.  Next, look at the contract signed.  Likely, it has a time period post firing that the seller would still have to pay a commission with a sale.  Wait that time plus one day and then do the deal.

Of course a negotiation could be attempted.  They may agree.  If they don't, you should have a plan going forward.