There is a common misconception that if you do not use a Realtor or a
real estate agent to buy or sell property in California, you can save money.
This could not be further from the truth.
As a buyer of property in California, the commission that your real
estate agent receives is paid by the seller of the property.
Therefore, for all of the work he or she performs in ensuring that the
proper forms are all used and completed correctly (and in California
there are a huge number of forms used in real estate transactions) and
for all of his or her advice and assistance, you pay nothing.
There is thus no reason to attempt to purchase property without an
agent. And if you think you know what forms need to be used,
think again. The forms used by most agents are constantly
changing and only agents who keep up with these changes know what forms
have been added in recent months.
There is also no reason to allow the seller's agent act as your agent
as well. For an agent to act as the agent to both the buyer and
the seller often puts him in an unwinnable situation. If there is
something wrong with the property, he must disclose it But how
hard will he look for things that can spoil the sale if he is losing
both sides of a commission and if he has loyalties to both the buyer
and the seller of the property? A good agent will disclose
everything. But why would you want to put one agent in that
situation when you can obtain your own independent agent to advise you,
and still not have to pay him a dime since he receives his commission
out of escrow from the seller's proceeds? The answer is, get your
As the seller of property in California you will likely pay on average,
a 6% commission, split in half between your agent and the buyer's agent
on a home, and a 10% commission, on average, split between your agent
and the buyer's agent on land. Here is where the real temptation
to a seller lies.
In the effort to save up to half of the commission (since you will
still likely have to pay the buyer's agent half of the normal
commission), the frugal seller will try to avoid every cost he or she
can. They will not use an escrow agent. They will not get a
title report. They will even try to avoid buying title
insurance. And if they manage to talk the buyer into buying the
property without an agent as well in return for a discount in the
price, you have the situation of the blind leading the blind.
As a real estate lawyer (as well as a Realtor), it is no wonder that this is
the type of client who calls or comes in for a consultation to our law
firm complaining that they sold their property but were never paid, or
that they bought property and took out a huge loan and never received
clear title, or that their loan is not the type of loan that they
They thought they were getting.
The situations even get worse. Not only do such buyers or
sellers not get what they thought they would get out of the
transaction, they normally get a bonus. They get sued as well by
the other party. And if any of the normal purchase and sale forms
are used for the transaction, the form likely provides that the person
who prevails in the lawsuit is entitled to his or her attorney's fees
and costs. In a complicated real estate transaction where none of
the normal formalities were followed, those attorney's fees and costs
can easily run into the tens of thousands of dollars.
The choice is simple. If you want to save money in a real estate
transaction, and sleep well at night, use a Realtor. If you want
to run the risk of losing your property and paying an attorney to
defend you in a lawsuit, go it alone.
Source by Sebastian Gibson