Disclaimer: I work for a real estate brokerage (but I'm a software developer).
Real estate agents can help in a number of ways (chaossphere2112 outlines a number of them), but one of the easiest ways to think about it is that this is a very large, complex transaction that happens rarely. That means that, while you could learn all the ins and outs of:
- contracts (often regulated by the state)
- negotiation (in whatever kind of market you are in--one favoring buyers or sellers
- house value (both use and resale)
- what can be changed about a house easily (finishes) and what is hard (layout) and what is nearly impossible (location)
- neighborhood characteristics
- typical home uses for people in your shoes now and in two years and five years, which might impact your purchase
- the minutiae of a purchase (deadlines, appraisals, inspections, etc)
you might want to consider paying someone who does this as their job to help you out.
As for the 'pumping up the price' to get paid more, or 'making me hurry up' to get paid faster, there may be some agents that do this, but good ones are more concerned about the lifetime value of a consumer, which can easily run into mid five figures (if you move every 7 years starting at 28 and ending at 70, and buy the median house price (~200k) and use the same agent every time at 3% commission, that is 36k in commission).
It's dumb to burn a customer for a few hundred bucks when their LTV is ~40k (if you pay 210k for a house when it is really worth 200k, the agent earns 6300 instead of 6000).
> As for the 'pumping up the price' to get paid more, or 'making me hurry up' to get paid faster, there may be some agents that do this, but good ones are more concerned about the lifetime value of a consumer,...
Most people don't do anything like this, especially not in the same geographic region.
In any case, this only gives the realtor an incentive to make you feel like you got a good deal. For products where my experience in the objective (e.g. going to a restaurant) or where I have adequate skills to judge, this would be find. But the realtor in selling his skills as judging deals, among other things. He tells me "this is a great deal for this neighborhood".
The way the market works in Finland is that the seller almost always pays for a real estate agent, mainly to draft contracts, give tours of the property and so on. Negotiation is pretty simple typically, the buyer just makes an offer, I don't know what's more to it.
I can see that a real estate agent for the buyer gives value, but I wouldn't personally pay much for it. Not 3% at least, that seems like a huge waste of money to me.
There's a similar way to work without a real estate agent in the USA--you just hire a real estate lawyer who takes care of contracts and whatnot and you pay them a flat fee.
I'm always curious how other markets work (and aware that the USA is one of the few RE markets with buyer's agents). Is there an inspection period? Are most homes bought outright, or are loans taken out to purchase them? Does the seller's agent do any marketing (newspaper ads, open houses, etc)? What does the seller's agent usually get in terms of compensation (a percent of the sales price, a fixed fee)?
No. However, the seller is responsible for 'hidden problems' for five years after the sale. I would guess that most of these cases go to court, and are only for serious problems like mold.
> Are most homes bought outright, or are loans taken out to purchase them?
Loans are typically taken.
>Does the seller's agent do any marketing (newspaper ads, open houses, etc)?
Yes, the seller's agent typically does all the marketing. Mostly newspaper ads, online real estate listings and open houses.
>What does the seller's agent usually get in terms of compensation (a percent of the sales price, a fixed fee)?
It's usually a percent of the sales price, and around 2-4%. In recent years fixed feeds have become popular (€3-4k).
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The one thing that sucks most about the Finnish real estate market is the 'transaction tax'. It's 2%-4%, paid by the buyer (but first-time buyers are exempt), which means that moving often is discouraged.
Real estate agents can help in a number of ways (chaossphere2112 outlines a number of them), but one of the easiest ways to think about it is that this is a very large, complex transaction that happens rarely. That means that, while you could learn all the ins and outs of: - contracts (often regulated by the state) - negotiation (in whatever kind of market you are in--one favoring buyers or sellers - house value (both use and resale) - what can be changed about a house easily (finishes) and what is hard (layout) and what is nearly impossible (location) - neighborhood characteristics - typical home uses for people in your shoes now and in two years and five years, which might impact your purchase - the minutiae of a purchase (deadlines, appraisals, inspections, etc)
you might want to consider paying someone who does this as their job to help you out.
As for the 'pumping up the price' to get paid more, or 'making me hurry up' to get paid faster, there may be some agents that do this, but good ones are more concerned about the lifetime value of a consumer, which can easily run into mid five figures (if you move every 7 years starting at 28 and ending at 70, and buy the median house price (~200k) and use the same agent every time at 3% commission, that is 36k in commission).
It's dumb to burn a customer for a few hundred bucks when their LTV is ~40k (if you pay 210k for a house when it is really worth 200k, the agent earns 6300 instead of 6000).