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#AskBP 091: Should I Use the Listing Agent or My Own Buyer’s Agent When Making Offers?

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Should I Use the Listing Agent or My Own Buyer's Agent When Making Offers?

On today’s #AskBP Podcast, Mindy Jensen talks about the pros and cons of using the listing agent to view the property and write up the offer, vs getting your own representation by using a buyer’s agent.

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Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on Forbes.com, Entrepreneur.com, FoxNews.com, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather, and How to Invest in Real Estate, which he wrote alongside Joshua Dorkin. A life-long adventurer, Brandon (along with Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.

    Drew Cifrodelli
    Replied about 4 years ago
    Hi Mindy, You did a great job of representing the Pros and Cons! I read that on a nationwide average, only 1% of listing agents sell their own listings. As a Realtor myself, I can tell you that it’s very hard to double end a deal, because their is a conflict of interest. In New Jersey we are not allowed to represent either party, so we are working for ourselves, but at the same time, we cannot help bring the deal together either. That’s the law. We are supposed to be parrots. We are supposed to echo whatever the buyer and seller say without any filter. We are not allowed to coach either side. We cannot talk about buyer or seller motivation to the other party, unless we are given permission. Most of our negotiating tools are taken out of our tool box. Pocket listings are considered unethical in our industry for two reasons, 1) Cooperation with other agents is a requirement in the code of ethics. 2) Sellers are not going to get market value for their property, if the house is sold before it hits the market. I would be cautious about doing business with unethical agents. Wholesalers are not held to ethical standards and do not have to represent the best interest of the owner, so you might want to use a wholesaler to get properties before they hit the market. Thanks, Drew
    Mindy Jensen BiggerPockets Community Manager from Longmont, CO
    Replied about 4 years ago
    Thanks for watching, Drew. I am licensed in Colorado, and I really wish it was a national thing, rather than a state thing. As it stands right now, there are 50 different versions of real estate law, and what is legal in one state is not in another, yada yada. In CO, you are allowed to represent both sides of the deal. It is called being a Transaction Broker. You are not allowed to give advice to either side, and must disclose everything that is said to both sides of the deal. You bring up ethics, and in CO, real estate agents are not required to follow the code of ethics. Only Realtors are required to follow the code of ethics. There are still rules to follow. And in CO, pocket listings are only allowed if the seller directs it. Some sellers don’t want people traipsing through their home – which astounds me. The more people who see your property, the more chance you have for an offer.
    Drew Cifrodelli
    Replied about 4 years ago
    Hi Mindy, Would you be kind enough to elaborate on the things that a buyers agent can do for Investors that would add value. I hear a lot of talk about how Realtors are not investor friendly, so I’d like to get your opinion on what would make a Realtor investor friendly. I have a theory that Investors are asking Realtors for things that are unethical or illegal in an effort to make their spreads work. I’m not sure the Investors realize their asking Realtors to break the law or violate the code of ethics, so maybe you can help me (us Realtors) increase our value legitimately. Thanks, Drew
    Darren Sager Realtor from Summit, NJ
    Replied about 4 years ago
    Drew, you should read this great Blog Article from Brandon Turner. It will should answer all your questions: https://www.biggerpockets.com/renewsblog/2013/08/24/real-estate-agents-working-with-investors/
    Earl Allen Boek Rental Property Investor from Redding, CA
    Replied about 4 years ago
    That’s just it. There is NO conflict of interest when you represent both parties. Ethics dictate, if there is, you just can’t represent both. Period. I was always happy to allow the listing agent to act on my behalf when purchasing, after interviewing them and getting assurances that my position would be represented at least as well as the seller. Getting both ends of the commission sometimes makes a big difference in the motivation level of the agent to get the deal done. It can be worth every dime paid. Note” even with a active license, I would never use mine to represent my own deals. Arms length transactions kept me out of trouble. There are brokers out there that would not hear of it. Later they are called Plaintiffs and Defendants.
    Darren Sager Realtor from Summit, NJ
    Replied about 4 years ago
    If an agent is making both sides of a deal where there are multiple offers and pushing “your offer” more so than another offer then that agent has broken their fiduciary responsibility with their original client when they took the listing. They should excuse themselves from the transaction and let their broker (who’s ultimately responsible for their actions and hopefully has some ethics) present the offers to the seller. As an agent who monitors the MLS religiously for opportunities I see it all the time. A potential good deal comes onto the market and suddenly the deal is under contract an hour later or they’re “taking back up offers only”. That or the agent won’t return your calls so you can see the place. There are so many unscrupulous agents out there its not funny in my opinion. Still, I don’t think it’s right to promote unethical behavior, especially here on BP. You should get the deal if your offer is the best, regardless of representation by either a buyer’s agent or through dual agency. Unfortunately we know (especially after watching this video) that this is not always the case. There are agents that are simply motivated by making the sale and completely disregard their fiduciary responsibility. They may not ever be letting the seller know that they’d get both ends of the deal when presenting the offers. It’s an unfortunate part of life and we all know it happens elsewhere. But I don’t think promoting palm greasing a realtor through dual agency is good education that gives you an inside track on getting the deal done.
    Mindy Jensen BiggerPockets Community Manager from Longmont, CO
    Replied about 4 years ago
    Darren, it was not my intention to promote palm greasing, although after I read your comment, I watched the video again and that may be how that part of it is construed. Thank you for pointing that out. What I was trying to say is that, while the agent is required by law to present ALL offers received, an agent who is getting both sides of a deal may have more incentive to promote your offer over any other offers. This is actually a big problem in my home state of CO. Our market is so hot, that agents are putting signs in the yard with “Coming Soon” stickers. The property hits the MLS, but instead of an Active status, it is Pending from the beginning. They are being reprimanded by the Real Estate Commission unless they can prove that the seller directed them to promote the property this way. I did mention that having the strongest deal is the best way to get the property under contract. I’m sorry for the impression of misleading.
    Christopher Moran from Pueblo, Colorado
    Replied about 4 years ago
    Unfortunately, I’ve found that “promoting palm greasing a realtor through dual agency” absolutely “gives you an inside track on getting the deal done”. So many times I would spot a great deal, but it would go under contract the same day it showed up on MLS. Then, I started calling listing agents directly and using them, and magically, I started getting deals and no longer was getting swooped all the time. So, on really good deals, I stick with what works, and use the listing agent to purchase. On marginal deals, or deals that have been on the market a while, it is fine to use your own buyer’s agent.
    Daniel Montes from Brooklyn, New York
    Replied about 4 years ago
    Good advice Mindy Jensen.