Why use a Buying Agent?

21 Replies

My wife and I are ready to purchase our 1st rental property.

We've found the right listing and now we're questioning weather we should work directly with the selling agent or partner with another as our buying agent.

@Steve Dullinger

I’d suggest working with a buyers agent because the listing agent has a fiduciary duty to their seller and will only be useful for writing up paperwork. I’d suggest finding an agent that can get you the best terms/price and negotiate on your behalf. In most cases their services are also paid for by the seller. (There’s an argument of whether this is right or not but nonetheless, it’s just how it is most of the time)

When I am listing a property and an unrepresented buyer wants to make an offer, I absolutely love that.   Just had one a few weeks ago.  That buyer got no home inspection contingency or appraisal contingency.  Unrepresented buuers will typically put themselves in bad positions if the listing agent knows what they are doing.

You want a buyer's agent to represent you in the sale and have no bias or contractual attachment to the seller.  In a residential sale, the seller pays the buyer's agents commission.  You have everything to gain in using a buyer's agent and nothing to lose. 

Originally posted by @Steve Dullinger :

@Frank Wong

Thanks Frank. I guess I'm being a bit naive in thinking the Selling Agent would be up front and honest with us. Thanks for the info.

Some will some won't but you can't take a chance to find out.  Expensive lesson. 

Originally posted by @Steve Dullinger :

@Frank Wong

Thanks Frank. I guess I'm being a bit naive in thinking the Selling Agent would be up front and honest with us. Thanks for the info.

 They can be upfront and honest while still exploiting your inexperience. Their job is to represent the person who hired them to the best of their ability. That doesnt make them dishonest, they are though working for their clients best interests and against yours.

@Steve Dullinger

Honestly, every RE agent in the world is going to tell you that you are too "inexperienced" to negotiate real estate. Of course they will say that :).

I haven't dealt with any agents that are "great negotiators" or anything.

I may just not have worked with top agents to be fair.

Based on my purchases, buying agents are mostly good for knowing an area and doing paperwork. Knowing an area can be big if you aren't from around there.

I know top agents can do more, but again, just my experience.

Unfortunately, from working with multiple agents, my experience is they have one goal.

It's not you or your money.

It's closing a deal.

Most recently, I was locked in a tough, back and forth negotiation for a high priced property.

I was ready to keep the negotiation going, but my buyers agent was just checked out at that point. They were tired of the back and forth, and they were pressuring me to take the counter offer even though it didnt fit my numbers.

We are talking about a 400k property here...a lot of money but the agent just wanted the deal done.

If I was able to negotiate directly with the listing agent or buyer even, I felt it would've gone a much different way.

Again, this is just from my short years of experience, Im sure many agents on BP are different.

@Steve Dullinger

You're better off hiring your own representative to fully ensure that your best interests are protected.

YOU don't pay the agent, the seller does, so why wouldn't you have your own?

Dual agency is messy. ;)

Good luck Steve!

Right now sellers are paying the buyers agent commissions, which might change pending the outcome of some significant litigation, so if it’s free to you, it doesn’t hurt if you have a decent agent.

Agents can do a lot of work for you, just make sure you are using them appropriately. They should help you find deals, take care of all the details in a transaction, handle paperwork, negotiations and etc. If you’re doing all this yourself, you aren’t leveraging your team and it will be harder to scale.

As far as negotiations, not all agents are great negotiators. However, they give the benefit of stand-off. The other party doesn’t have the ability to negotiate directly with the decision maker which is a very important aspect of protection for you in a negotiation. If you want negotiations to go in a certain direction, you just need to direct your agent that way. And if you’ve done your due diligence and found a great agent, then you will have a great negotiator anyway.

I personally recommend dealing directly with the selling agent if you're comfortable doing so to purposely create a conflict of interest.  I did this for years prior to getting licensed and closed many deals where I was the lower bidder (sometimes much lower!). 

This is dependent on your negotiation skills too.  They have no fiduciary duty to you as the buyer since they represent the seller.  Buying real estate is no more challenging than buying a car if you educate yourself on the process. 

I've never understood why agents are allowed to collect both sides of a deal and still say they're keeping the sellers best interest in mind.  I'm a full time accredited investor and do not make my living as an agent.  I say this because I have a different mindset than most agents.  I'm not "hungry" for my next commission.  

Furthermore.......buying a house is not free.  I always thought this was a ridiculous claim. The more you pay for a property, the more your agent makes - both agents are profiting from the price the buyer pays.  Some agents have no incentive to negotiate you a lower price.  

@Steve Dullinger You’re probably not going to save money by cutting out the buyers agent. You would think maybe you would, but you’re better off having a knowledgeable professional on your side. Negotiations are going to be easier with two realtors involved.

If you know the area well enough to know pricing, comfortable with disclosures, contracts, costs, etc., know your rights and are good at negotiations, working with listing agent is fine if they allow it.  I'm an agent now, but I would run into many listing agents who would not work directly with buyers, and would refer you to another agent in their office rather than work with buyers, themselves.  As a listing agent, I will work with buyers directly, but it's required that I make clear I'm representing the seller and working in their best interest, and it's more complicated because lines can get crossed too easily, especially where a buyer shares information they shouldn't.  If a couple is talking right in front of me as I'm writing it up and one states to the other, I don't care if we pay $20,000 more, but we're buying this house, or shows me their pre-approval letter for $50K higher than they are offering, then I'm passing that information onto my seller as that's my job.  A buyer's agent can keep that information to themselves.  

Matt, Just curious about what you mean by this: purposely create a conflict of interest?  How is it creating a conflict of interest to work through listing agent?  And how would you get lower deals accepted by doing so?  I'm assuming by "selling agent" you mean "listing agent."     

Originally posted by @Matt Altrich :

I personally recommend dealing directly with the selling agent if you're comfortable doing so to purposely create a conflict of interest.  I did this for years prior to getting licensed and closed many deals where I was the lower bidder (sometimes much lower!). 

Lynn, 

I could write a novella on this topic.  In my opinion, it is challenging to act as a fiduciary when you are earning a commission from both parties in the transaction. 

I will also note it depends how you structure your offer and how well you negotiate. This strategy may not work well for all individuals or in all markets/market conditions.  People in this group tend to be a little more savvy with their finances.  I have personally saved a ton with this strategy but I also love negotiating. 

Shoot me a PM and we can discuss offline.  I was simply providing the author of the post another strategy to consider.  I put my clients first even if I don't benefit.  I've also recommended some clients to do FSBO.  

Originally posted by @Lynn M.:

Matt, Just curious about what you mean by this: purposely create a conflict of interest?  How is it creating a conflict of interest to work through listing agent?  And how would you get lower deals accepted by doing so?  I'm assuming by "selling agent" you mean "listing agent."     

Originally posted by @Matt Altrich:

I personally recommend dealing directly with the selling agent if you're comfortable doing so to purposely create a conflict of interest.  I did this for years prior to getting licensed and closed many deals where I was the lower bidder (sometimes much lower!). 

@Steve Dullinger as an agent the listing agent would love that but honestly its not in your best interest

Think of it this way, If that agent represents the seller and you who are they really working for?

And think of it this way if you use a buying agent what does it really cost you? Maybe the funding fee $200-$500?

but a buying agent does not get commission by you, the seller pays the commission. So what’s your loss the $200-$500 fee?