Home Buyers Can Save a Bundle on Commissions

Few consumers understand how Realtors are paid and especially why they charge so much. In Minnesota, Realtors don’t even need a high school education to get a real estate license and the 60+ hours of required licensing training is all about how to pass the simple exam. Yet most consumers pay them far more than they would pay an attorney to do the same job? Why?

Hire me to help you buy your next house and let me show you how to save most of the buy-side commission. Think 2.7% savings – on a $300,000 house that works out to be $8,100 (less my fees). Or if you’re buying a 5 million dollar house, I might save you well over $125,000. Hiring me will likely save you many thousands of dollars. And you have a real estate attorney drafting your agreement, not a Realtor.

80 – 90% of home buyers find the house they want to buy through their own searches without a Realtor. So if you find your own house, what do you need a Realtor for? Many real estate licensees spend most of their time trying to “hog” deals (where they represent both the buyer and seller and get a double fee). They actually have a huge financial interest in manipulating your best interests. Most agents who claim to be “buyer’s agents” are nothing of the sort. As soon as they show you a listing from their own brokerage firm (any listing from their firm), they and their broker become a dual agent and are legally prohibited from negotiating on your behalf. In other words, “your” Realtor can’t really help you other than to try and draft your purchase agreement per your instructions. They are extremely limited in the advice that they can give you. If you must use a Realtor, use a small firm that is unlikely to see a dual agency situation and hire the broker/owner (they don’t have to split their fees with their agents). Then negotiate a flat fee and big rebate credit from the commission they collect.

Realtors are only allowed to draft purchase agreements when it is ancillary to the real job they are doing. Realtors can help you draft a purchase agreement only if they are providing other important brokerage services to you – like helping you find and negotiate a transaction. They are not lawyers. Not even close. I’ve even heard Realtors tell clients that they pretty much serve as a lawyer. Nothing could be further from the truth.

Wouldn’t you rather have an attorney drafting your purchase agreement? I only represent consumers and I only handle residential real estate. Plus, I’m a Real Property Law Specialist, certified by the Minnesota State Bar Association. I’ve also sat on the Bar Association’s forms committee for many years. I also hold a real estate broker’s license.

What if I credited the buyer brokerage commission to you? What if the only fees you paid for were my legal fees? I’m willing to do that. However, you have to be willing to do some of the house searching yourself. Meet with me and I’ll show you how.

I owned a title company for nearly 20 years and saw thousands of transactions and to this day I still can’t see the value proposition for paying a Realtor to help you buy a house. I saw many transactions that had poorly drafted purchase agreements that were at best voidable and by sheer luck got closed. So why do people pay so much? Unfortunately, there is a massive misinformation campaign to make you think that you need to have a buyer’s broker. In fact, many Realtors go so far as to tell buyers not to worry about the cost because it won’t cost them anything. That’s a lie. And it is told over and over again every day. Just because you don’t see the money coming out of your pocket doesn’t mean they aren’t taking your money.

Realtors have set up an extraordinarily complex fee structure in order to make buyers think that it costs them nothing to work with a Realtor. Consider how difficult they make it for you to negotiate their fee. As a buyer, you pay the seller the purchase price of the home. From those proceeds, the seller then pays their listing broker who then shares their commission with your broker. If you want to negotiate a lower fee, the only way to do is it by having your buyer broker pay you a “rebate.” It doesn’t need to be this complicated.

What do Realtors do? I can tell you what they shouldn’t be doing… They shouldn’t be giving you lending advice – that’s what mortgage officers do. They shouldn’t be appraising houses – that’s what appraisers do. They shouldn’t be inspecting houses – that’s what home inspectors do. They shouldn’t be giving you legal advice – that’s what attorneys do. They shouldn’t be recommending title companies – few of them understand what a title company does and most Realtors have such cozy relationships with title companies that it interferes with the neutrality of the title and closing services. They shouldn’t be attending closing – any advice that you might need at closing likely falls under the category of legal advice and it is illegal for them to give you legal advice. Again, why would you pay them so much when they do so little?

I can only work with a few buyers at a time, so please call me to see if I am available. I love helping consumers save money on real estate commissions and I love educating consumers on the real estate process. Give me a call 612-284-9000 or email me: dougmiller@attorneyre.com.