I am a real estate investor, short term rentals (Airbnb), and looking to acquire additional properties in the near term. I am considering asking the seller's agent to become a transaction broker on the deals I am considering to use as a purchase negotiating tool, e.g. offer less since seller does not have to pay a commission to the buyers agent. I know what I am looking for, doing my own homework to find the properties I want to potentially buy, and scheduling my own showings with the sellers agent working through the due diligence myself. Good idea or mistake?
I've done this many of times and it has worked for me. As long as you know what you're doing and have the right team in place besides the agent part then you should be fine. However, an buyers agent does help when negotiating and does save you a lot of time when you are doing multiple projects a month.
Hi Mike, there are pro's and con's of working direct with listing agent. Here is my perspective as a broker, active buyer, and active Airbnb investor.
- you know what you want, what to ask, where you want to buy, and the average buyer agents who are not pro Airbnb specialists just do not know how or what to ask as good as you do, they can sometimes get in the way, I get it
- you could potentially negotiate a reduction in sales price based upon the amount of the buyer agent commission,
- the listing agent could work harder to put the transacation together because they are hogging the entire commission,
- seller agents know the motivations of the sellers and you may be more successful uncovering motivation, or seller structuring it to work for both sides more effectively than buyer agent
- the closest distance between two points is a straight line, we usually get better results dealing direct as experienced buyers, unless you have a superstar buyer agent
- the listing agent commitment and fiduciary responsibility started with the seller, will they now all of sudden become truly nuetral as transaction broker?
- the listing agent has an even bigger commission in the deal if there is no buyer agent, so they may work extra hard to upsell the deal to you to make the deal work
- a takeaway may backfire, for example, 6% commission and you ask the seller to now work for 3% and credit the sales price, will they truly represent your best interests?
I play it by ear with each deal. If the buyer agent brings me the deal, I honor it, and then I have a direct conversation with the listing agent to get my pre-diligence questions answered. If I self-source a deal, I contact the listing agent directly to learn as much as I can about the property, activity on the listing, any pending offers expected, DOM, expenses, and seller motivations if possible. If I feel I have a solid listing agent that can work in my favor, then I will typically work direct with that agent as transaction broker.
I typically do not ask for the listing agent to give up income or commission. That is a takeaway. They are typically more motivated to work harder to make my "discounted" offer work, if they are getting both sides of the commission. I price that commission credit into my offer, and then some... I let the listing agent decide if they want to throw in their commission to make the deal work.
Asking them to reduce their pay can be a win-lose. Asking them to work hard to get my discounted offer price is a win-win. I get my price, they get a bigger commission. If they need to reduce their commission to make it work with the seller, I let that conversation come from the seller.
This is exactly why I got my real estate license. So I can act as my own agent. There are many great answers here as far as the pros and cons go. The main takeaway for me is this: you may be able to ask the listing agent to take only 3 percent rather than 5 to act as a transaction broker. But, for every one of you that is smart enough to know to ask that, there are 10 buyers who find things on Zillow and call the listing agent directly who would never know to ask to cut the commission. Knowing that, who do you think the listing agent will take on?
Rather than 6 percent*** 5 was a typo sorry
That's not to say it's not worth a try, you never know!