Glendale Real Estate Advice
Time for Thursday Thoughts where I answer the questions that DIGGS clients ask. Today we address getting to the next house, how buyers agents get paid and one client’s creative idea on how to compete in this crazy market!
Our first question was from Jennifer C. “I saw the house of my dreams and I want to buy it, but all of my money is tied up in the equity in my house. How can I buy it?”
Sadly, Jennifer, you probably can’t. The home you want has multiple offers and the seller is unlikely to pick an offer “contingent on the sale of a home”. If you think it is time to upgrade the best bet is to either find a way to get a down payment without selling the home (bank of Mom and Dad, maybe?) or sell it now, at peak prices. We are happy to help you figure out all your options so you can make an informed choice.
Our second question comes from Nick C. – a first-time buyer, asks, “How do buyer’s agents get paid?”
Wow, what a sensible question, Nick! The good news is that you do not pay anything to have your own dedicated representative, the money comes from the home seller! When a homeowner decides to sell they sign a contract with a real estate broker and agrees to pay a certain commission. That broker then agrees to offer a portion of that commission to the broker who represents the winning buyer.
The other awesome thing to know is that no one gets paid a dime until you successfully close escrow on the home of your choice.
John Z has a really creative idea to compete against all these other buyers. He plans to get his real estate license and then use the commission offered to the buyer agent to increase his offer to the seller.
John, you get high marks for creativity and willingness to work to get a great deal. However, I want to point out a few things you may not have considered.
The information you receive as part of your licensing course will not teach you how to negotiate, use contracts and paperwork to properly protect or how to solve problems. Any missteps can cost you time (which is money) and money (which is also money). In addition, you will need to pay for the coursework, the licensing fees and split the commission with your broker.
I am guessing there will be less commission available to give to the seller than you think. And, in most cases, it will do little to make up the difference in most sales price negotiations. I’ve been in thousands of negotiations in my nearly 30 years. The top offer is often top by quite a bit.
Bottomline- the time and money spent to execute this plan may do little to change your negotiation power and will stop your ability to take advantage of deals that could be happening now. Only you can know if that is a decent risk for you to take.