Dealing only with the Listing Agent in hopes of getting a better deal?

Question

Not a good strategy, because if the listing agent is getting the whole 6%, they'll actually work harder to make you pay the highest price for their Seller in effort to justify such a large commission.

Dealing only with the Listing Agent and asking them to lower the because they would have had to share it with a Buyer's Agent.

This causes the Listing Agent to catch an immediate attitude! Yes, you can possibly fight with them over the 3%, but you take your eye off the much bigger prize and that's getting the home for much less by using a Buyer's Agent! A lower price on the home that using your own Buyer's Agent could Dwarf the smaller amount obtained fighting with the Listing agent.

The Listing Agent/Seller's Agent is just that, the Seller's Agent. They watch out for the Seller's interests in the purchase. For a buyer to believe they can get a better overall price by dealing directly with the Seller's Agent is misconception. Also, what about when issues arise after they have your deposit? It's then the Seller, the Seller's Agent and the Seller's Title Agent ALL against the buyer! That's a pretty strong Trifecta/ team to battle should any issues arise!

Account Closed · Answer

I agree with Bill Gulley and of course my post of this subject. 9 times out of 10, borrowers think they will get a better deal dealing with the listing agent, but in reality they don't.

Best way for a buyer to purchase is to team up with a realtor who offers Realtor Rebate.  This way the buyer can work the listing agent and seller down to their bottom dollar AND also receive a Buyer's Agent Credit to pay closing costs too, the best of both worlds!

Example: on a 500k sales price there are thousands of very experienced, knowledgeable realtors who would offer a Realtor Rebate to the buyer of up to $10,000 to $11,000 to pay for closing costs, rate reduction and many other things or for sales price reduction.

Todd Plambeck · Answer

Account Closed I agree with you that working with the listing agent in hopes of getting a better deal is probably faulty logic.  The primary benefit I see is building a relationship with the listing agent for the next deal and the one after that.

A large number of investors call up agents and ask them for any deals that they may come across that fit their criteria.  I imagine the person that actually just put a check in their pocket is going to be on top of that list, especially if I am ensuring they are getting both sides of the commission.  Asking them to take a smaller commission or take note for their commission is going to get you on the top of the do not call list.

Mark Ferguson · Answer

@Justin Tahilramani I don't know of any agents that will cut their commission to increase the net to the bank especially for an investor. Submitting his contracts is easy, but the HUD process is not after a bid is accepted.

I can't imagine an REO or HUD agent cutting their commission without a buyer asking and I am both.

Justin Tahilramani · Answer

@Mark  Ferguson I have had it happen twice - both times I had the high bid and got the house.  In both cases the agent has reduced their commission by about 1%.  They still ended up doing well because they got both sides of the commission.  Im surprised that you have not seen this in your area. I guess I will consider myself lucky.

Justin Tahilramani · Answer

I would disagree when it comes to purchasing foreclosures.  I usually place offers through the listing agent.  Many time the agents cut their commission without me asking simply to increase the NET to the bank.  This is especially true when it comes to HUD...

Bill Gulley · Answer

The issue, especially for new buyers, is that the listing agent gets into or becomes a transactional agent/broker, a dual agent.  Depending on state law, the agent can not serve two masters under agency law, they may represent the seller with limitations or, the agency relationship may change only to facilitate the transaction.

There is a duty to inform the principal, the seller. No advice is given by a transactional agent.

Everything a buyer says or any information gained on or from the buyer can be and if relevant to the transaction should be transmitted to the seller. New investors that don't think before they speak can shoot themselves in the foot.

This is why it's not a good idea for new investors going to battle on their own, everything is stacked against them, no advice, no information gained by the agent is disclosed except as to written disclosures required, no information about the seller has to be given (most given by a listing agent will be marketing related) and everything about you is disclosed to the seller. When you know as much as an agent is required to know, when you fully understand the role of a dual agent and what agents are required to do, then you can approach a listing agent would be my advice.

I would also say that having earnest money deposits at a listing broker's account is not really that big of a deal, even in the seller's broker's account (buyer's agent is the selling agency) funds must be released, this aspect is the same regardless of who holds funds in escrow. If your thinking is there is an issue you can make an offer stipulating funds to be held by the settlement agent (but you'll have thee same release of funds issues regardless who holds funds).  :)