Made an offer without agent, seller's agent wants to be my agent

Buying & Selling Real Estate
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Made an offer without agent, seller's agent wants to be my agent

Michael Kim
San Francisco, CA · Member since 2016 · 4 posts · 2 votes

Like the subject says, I made a cash offer on a SFH home to the seller's agent. She just sent me an e-mail saying that she wants me to sign something that says she will be representing me as a buyer's agent as well, effectively becoming a dual agent. She's tried hard to get me to increase my price as much as possible, which tells me that she's working as a seller's agent.

First question: Is it a good idea to ask her I don't want her to be my agent? I'd rather her not represent me so I can figure out how to purchase properties on my own, and I made the offer on my own and would like to review the contract with a real estate lawyer. It feels a bit disingenuous for her to act as my agent and then tell me that I need to increase my offer to match the seller's asking price.

Second question: Do I have any leverage in this case? Otherwise, will she just become my agent by default?

Third question: If she becomes my agent, is there anything extra I have to pay in terms of fees? I'm aware of the standard 3% commission for each buyer agent and seller agent, and I know if she becomes my agent then she will basically get the whole 6%. And if she doesn't become my agent, she will have control to keep or rebate the 6% commission as she sees fit.

Sorry for all the questions!

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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y

When I offer solo (which is all the time) I state I will remain un-represented unless the offer is countered.

If the offer is countered, I state I will obtain my own agent or I that the LA will only charge the seller 3% because there is no other agent to split the commission with like usual.  

The net to the seller just increased 3%.

I always offer 3% less solo than I would represented.  My offers are countered less because the LA will get both sides if not countered and they know that.  

Having an agent represent you is NOT free.  

No way would I accept the LA as my agent.  She has a fiduciary relationship with the seller and is working for them.   I'd go solo and earn the savings (if you are experienced) or obtain your own quality agent from a different brokerage @Michael Kim.

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  • Christine Kankowski
    Real Estate Broker · Temecula, CA · Member since 2014 · 994 posts · 783 votes
    10y

    In California, the listing agreement default is that the seller pays the commission negotiated.  If another agent comes into the mix, the agent agrees to split the commission with that agent.  the DEFAULT in the contract is that if there is no other agent, this agent gets the full amount. 

    Therefore, in most cases, it is of no benefit to NOT use the agent who is listing the contract, over doingit yourself.   the seller would have to pay the full 6% (or whatever commission was negotiated. If you use the agent, they need to do their due diligence to represent you as well as the seller.

    If she doesn't represent you, she just represents the seller, but still gets the full amount.

    If you prefer not to use her, then don't, but chances are the NET to the seller is the sale.  

    1Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y

    Hi @Michael Kim,

    This is what the paperwork looks like when you buy a property with a listing agent, without your own agent.

    On paper, the listing agent is a "dual agent," but you've already figured out that this really means that you don't "truly" have anyone representing your agent.

    As you've also figured out, listing agent also gets a double paycheck. The total real estate agent commissions were negotiated when the listing agreement was signed. You weren't a party to those negotiations. If you think the listing agent doesn't have the highest level of integrity, that means she has an incentive to make you happy and get this deal together so she gets that double paycheck. 

    1Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    10y

    When I offer solo (which is all the time) I state I will remain un-represented unless the offer is countered.

    If the offer is countered, I state I will obtain my own agent or I that the LA will only charge the seller 3% because there is no other agent to split the commission with like usual.  

    The net to the seller just increased 3%.

    I always offer 3% less solo than I would represented.  My offers are countered less because the LA will get both sides if not countered and they know that.  

    Having an agent represent you is NOT free.  

    No way would I accept the LA as my agent.  She has a fiduciary relationship with the seller and is working for them.   I'd go solo and earn the savings (if you are experienced) or obtain your own quality agent from a different brokerage @Michael Kim.

    6Reply
  • Catherine German
    Realtor · Sequim WA & Port Angeles, WA · Member since 2016 · 164 posts · 78 votes
    10y

    I don't like the idea of a dual agency. It happened to me once and it was the biggest mistake of my life. I just wanted to dump the property and the market was horrible at the time so I went along with it. My boyfriend is an attorney and he said the whole practice is a joke because the dual agent is no one's agent, you may as well just do the negotiations yourself. No one will have your back in a dual agent scenario.

    1Reply
  • Michael Kim
    OP
    San Francisco, CA · Member since 2016 · 4 posts · 2 votes
    10y

    Thanks everyone. The seller has countered, but I'm sticking firm with my initial offer. Should I retain an agent at this point?

    0Reply
  • Jenifer Levini
    Attorney · Santa Cruz, CA · Member since 2015 · 345 posts · 358 votes
    10y

    HI @Michael Kim, I'm a real estate attorney here in the bay area. I work with buyers, sellers & investors who have decided not to work with real estate agents. I can help you with this transaction for a lot less money than the extra 3%!!!!

    The reason people believe that the 6% is standard is because on the CAR (California Association of Realtors) form for purchase offers  that is the default check box. Not surprisingly this form was written by realtors for realtors. You do not have to use this form. You do not have to pay the extra 3%. You do not have to be represented by an agent. And you especially do not have to be represented by an agent with a conflict of interest!! 

    It's fine to be represented by a lawyer, and pay the lawyer separately instead of the buyer paying the agent. This is a legal transaction and it actually makes more sense to work with someone who knows the ins and outs of the law. The 3% that you save can be used to lower the price since the buyer wont have to pay two agents.

    I'm not going to write more here because it just generates hate mail from agents. If you want to talk about how this works please PM me and I'll give you the details.

    5Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    You have to review the types of agency allowed in your state where you are buying the property.

    There is dual agency where both the buyer and seller are presented by the same broker/agent. There is designated agency where the broker can designate someone in the firm to be the buyers agent and have a different person be the sellers agent.

    There is also where a broker/agent could select they are representing the seller but not the buyer and only performing ministerial acts for the buyer. That means fill in offer price and go through a checklist etc. If buyer asked the listing broker/agent how low would the seller go or offer price strategy etc. that is getting into a client relationship and is not a customer role. The role of a customer the broker/agent should be performing ministerial type acts.

    The amount of commission the seller pays the listing brokerage is a contract between the seller and the brokerage. Usually a listing brokerage agreement might say with the seller that commission is XX percent and of that XX percent will be split with a buyers broker if there is one.   

    With attorneys just like brokers/agent there are good ones and bad ones. The good ones keep a contract fair and balanced. Some that go overboard with protection language for a buyer can scare off a seller from even dealing with them at all. If this is a hot property you do not want to push the envelope too much. If you have legal questions those are for an attorney anyways.

    No legal advice given.

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  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    10y

    I wouldn't have tried to dual agent myself. I would have asked you to sign an agency disclosure that you were aware that I was the sellers agent. Some agents like Dual agency and do well at it, I prefer to represent one side (personal choice).

    If someone comes in and makes an offer on my listing without an agent then they make an offer and I present it. It does not change the nature of my relationship with the seller. Me and the seller may come to an agreement to change the compensation (or not), however our relationship is already in a contract before your purchase offer comes in (with or without an agent). 

    You are welcome (and I recommend if you have not done many deals) to have representation, however the "Listing contract" that the seller signed with the agent is separate from the "Purchase and sale contract" that you are putting in on the property. 

    Saying that people change it is like saying that you do not want the seller to pay the markup on the new counter tops they put in and you want some of that out of the equation.  The seller may very well go to the contractor and try and get a better price to make margins work, but the contractor is under no obligation to do so. Would I go make an adjustment? Depends on many factors.

    Good luck and best wishes on whatever you decide to do!

    DISCLOSURE: Just the mindless ramblings of some dolt on the internet, They are only valid in my own head and best be ignored by most sane people. In no way are they legal advice. Also information is based off the other coast so may or may not be valid.

    2Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    IMO, NEVER allow dual agency.  As the Seller's agent will get extra consideration in favor of the Seller, you've lost all negotiation opportunities!  I've actually see illegal activities and had to threaten legal action against the agent and his broker.

    2Reply
  • Art M.
    Chicago, IL · Member since 2015 · 414 posts · 94 votes
    10y

    Doesn't the seller only have to pay the agent if they have an exclusive right to sell listing agreement? If they have any other agreement, can't you just go directly to the seller and buy the house from them without an agent representing either party (possibly for a lower price now that the seller doesn't have to pay commission)?

    0Reply
  • Account Closed
    Real Estate Agent · Rocklin, CA · Member since 2014 · 166 posts · 71 votes
    10y

    If you're in a competitive market, like Sacramento, you could potentially lose the deal if you ask her not to represent you.

    I have seen a lot of unethical activity go on with agents. They receive multiple offers on properties and tend to accept the ones where they represent both the buyer and seller... they make 6% of the sales price versus 3%. It may seem unfair but it's reality. 

    If you decline her representing you, you risk losing the deal... just FYI. 

    @Michael Kim

    0Reply
  • Gordon CuffePro Member
    Investor · Roseville, CA · Member since 2009 · 1k+ posts · 583 votes
    10y

    @Michael Kimmy vote is to not use an agent. Your doing all the work. You are probably offering below asking price so if the listing agent wants the transaction to close they will lower their commision to the seller . There are other properties out there and ways to find off market properties to buy. 

    0Reply
  • Derek Jones
    Real Estate Agent · Sacramento, CA · Member since 2015 · 338 posts · 135 votes
    10y

    Hi Michael,

    Like others have stated if you don't have a buyers agent write it up then it goes to dual agency. It might be too late to have another agent represent you in the deal.  If you want your own agent or representation you could always rescind your offer and have another agent write it up for you.  Dual agency is an interesting topic as some states do not allow it yet others like California do. If it is your first deal you might want to get your own representation.

    0Reply
  • Joe Bertolino
    Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes
    10y

    My 02 cents with no legal advice given... CA is a different animal than most of the country.  Currently,  buyers don't have a whole lot of leverage.  If it's a good deal,  you have even less leverage.  While the dual agent won't be fighting very hard to get you the best deal... They will be hand holding on both sides and they don't like to do that for free... and I don't blame them.    Typically the guy that doesn't want agent representation is a signal that it won't be a smooth transaction and he will be challenging to deal with,  they will get beat up after the inspection, etc.  You will be near the bottom of the pile if they have other offers,  even as a cash buyer.     

    Their goal is to close the transaction as quickly and painlessly as possible,  the    Likelihood of that happens goes up if another agent or RE attorney is involved.  I don't like dual agents either,  so I will place the offer through someone in their office who you know the listing agent is friendly with.  

    My advice is to work with an agent or if you really seek control,  become an agent.  

    3Reply
  • Michael Kim
    OP
    San Francisco, CA · Member since 2016 · 4 posts · 2 votes
    10y

    Thanks everyone for the advice! I responded saying that I don't feel comfortable signing her as my agent and will continue to represent myself unless the seller counters, after which I will seek an agent of my own choosing. If we are able to close while I continue to represent myself, then the seller's agent can keep the whole commission. 

    This is for an out-of-state investment property, btw. California is a bit crazy in terms of investment properties, and I'm primarily looking for cash flow. Thank you to everyone who responded and reached out, everyone's response was fascinating to read.

    1Reply
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    10y

    @Michael Kim, I have an interesting story for you.  I once put in an offer directly to the listing agent.  I was aware of that.  There was a lot of interest in the property and I understood that several offers had been made as I was told as much and saw several people look at the property after I left it.  The listing agent actually came to me and told me the buyer liked my terms the best even though there were higher offers, but that it was a little low.  I upped the price $2,000 and got accepted the same day.  I do not know if there is any thing that prohibits an agent from telling a prospective buyer that other offers were made and what part of the offer needed to be improved.  If it got the seller more money then I would imagine they can.  I am pretty confident that I was given better treatment because the listing agent would get both halves of the commission if I was the accepted offer.  Maybe the other brokers or agents can chime in and tell us if there are any ethical violations in an agent telling enough details about other offers to get someone to make a better offer.  Do they need to get permission from the seller to do that?  Why not do it if they get more money for the seller and more commission for them at the same time?

    2Reply
  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    10y

    Hi @Jerry W.,

    Good question, I remember I was reading about it recently and found the article:

    http://realtormag.realtor.org/law-and-ethics/ethic...

    In other words, terms of offers can be disclosed to competing buyers or their agents by sellers or seller’s representatives unless there are laws or confidentiality agreements that specifically prohibit that disclosure.

    Keep in mind this is for the National, and subsets may have more stringent obligations.

    1Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    10y

    But, then of course, telling you there are other offers when there aren't any is simply lying and unethical. 

    I'm sure Jerry is well aware of what he can and can't say to a listing agent, most newbies won't and they can easily put their foot in their mouth.

    As Jerry mentioned getting the full commission is a motivating factor for the listing agent, but is that necessary if there isn't a lot of activity? Probably not, so my advice is to have your own buyer's agent since it won't cost you any more. You'r paying pretty much the same thing and getting less representation and you're losing some safeguards as to an agent's duty and their liability. So, I suggest new investors get their own agent, you can hire one at any time so long as you don't sign that dual agency consent. :)  

    0Reply
  • Dawn BrenengenBusiness Member
    Moderator
    Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Michael Kim The agent will get both sides of the commission whether they are a dual agent or not.  If you don't sign the agreement, then they are simply the seller's agent, and you are unrepresented.  

    Some agents don't know this, though.  They think that if the buyer is unrepresented, they HAVE to represent both sides.  You might just want to have a conversation with her and explain that you don't wish to have representation, and that you understand how commission works.

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