Tuesday, April 18, 2006

When 6% is Too High

San Diego is one of those cities that is constantly near the top of cities with the largest increases in real-estate prices over the last 5 years. Unfortunately, I moved here likely near the top of the peak and as luck would have it, am looking to purchase our first piece of real-estate sometime in the near future. While as a buyer, I do not directly have to pay commission on the purchase of home; it indirectly effects the price of the home I am paying as the seller necessarily takes the commission into consideration when pricing his home. This is usually 6%.

Although we have a full-service realtor, my wife and I have been doing most of the legwork in looking for our house (by choice of course as I am not comfortable relying on someone else telling us what we may or may not like). Our realtor does drive us to look at homes, but usually, we generate the list of homes that are interesting to us. Since we do most of the work, why should our realtor get up to 3% of that 6% commission? An innovative company has come up with a solution that seems to be extremely beneficial for the consumer; namely, returning some of their commission to the buyer.

Not sure if I'll try it (yet) but definitely an interesting development in the world of real estate. Like Chuck D said in Black Steel in the Hour of Chaos... (BASS)How low can you go?!
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Anonymous Anonymous said...

Talk to your realtor! If you are doing all the legwork, you should get paid. Some realtors are willing to reduce their commission to make sure they get in on the deal. It is customary to stick w/ a realtor, but you don't have to. Smart realtors realize this and, when they run into a savvy client, they are usually willing to make a deal. However, you generally get what you pay for, so don't autmoatically go for the lowest bidder.

Our realtor had a system w/ kickbacks; you drive around by yourself, tell me what houses you want to see, call me, and I'll show them to you. I'll help you put together the deal. If you buy through me, when it closes, I'll give you 1%. In our case, rather than a 1% commission, our realtor paid to have our new carpet installed. Worked out great for both of us; it would have cost us more than the 1% commission kickback, but b/c our realtor had connections, she got a great deal. We recommended our realtor to our friends.

(Dude, you gotta take off comment moderation. Blogger commentors need the instant gratification of seeing their posts/flames straightaway.)

10:27 AM, April 21, 2006  

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