Negotiating commission without an agent

14 Replies

Today I submitted a verbal offer on a purchase for land in Hawaii. I contacted the listing agent directly and told him we're not currently working with an agent. I offered that the agent could either represent us as a "dual agent" or that we would represent ourselves without an agent. 

He preferred not to operate as a dual agent since we hadn't worked together. I understood and was happy with that, figuring that meant some savings on commission, too. However, after I submitted our offer and he presented it to the seller, he informed me the seller would still be responsible for the full commission. He said that, since I don't have an agent, he would be taking the full commission since "he'll be doing twice the work."

Can anyone help me out with how to approach making an offer without an agent? I have several people I could invite in on the deal to take the commission over letting this listing agent take double and he's literally offering me nothing. Up to this point, I've been marketing and hunting for a deal without an agent. My expectation is that this offers the seller savings and, indirectly, gives me the ability to offer a bit less.

This listing agent trying to take it all definitely hurt our offer. I specifically stated that our price was assuming "no buyer's commission" but that does not appear to have been communicated to the seller. In this cases, the seller has a counter-offer out to another buyer that they could of withdrawn since we basically offered list price. As it stands tonight, the seller is giving the other buyer priority at least until the counter expires.

Very little chance the agent is going to "waive" the buyer agent commission just because you don't have one - I don't know any agent would do that. If you try and bring another agent in now to represent you there may be a procuring cause issue. 

You might be a savvy experienced buyer but a lot of buyers are not. I get where that agent is coming from when he says he'll need to do "twice the work". It's pretty common. With that said, it can also be more work as an agent to deal with a knucklehead agent on the other side of any deal. All depends on the situation.

I generally write my listing contracts to include a discount if no other agent involved regardless of whether or not I represent the buyer. Numbers may vary but for example: "6% listing commission but will be reduced to 5% if no other agent involved in the transaction..."

I'd suggest you make an offer that suits you. Let the seller and the agent squabble over the commission. With a little luck the agent will agree to discount his fee if you are really close to a deal. 

This would be called a variable rate commission, commission varying based on offer. In my market, a variable rate commission needs to be part of the listing agreement, and disclosed in the MLS. If it is not, and it happens, the agent is subject to fines and possible revocation of their license.

You could as the buyer  ask for part of the commission to be paid to you at closing because you would be a principal to the transaction.

Originally posted by @Russell Brazil :

This would be called a variable rate commission, commission varying based on offer. In my market, a variable rate commission needs to be part of the listing agreement, and disclosed in the MLS. If it is not, and it happens, the agent is subject to fines and possible revocation of their license.

 I do disclose when used. 

@Paul Garcia   Not trying to be rude or short, but your offer really has nothing to do with the commission agreement between the broker and the seller.  The seller pays the commission to their broker, that broker agrees to share that commission with another brokerage who brings a buyer. That broker can agree to share half the commission, or none, or all - it's negotiable broker to broker.  Going after broker-represented properties without your own representation will most likely not save you any money at all, unless there is a clause in the agreement like what Ryan mentions above - and there's no way for you to know about those agreements before-hand because they are private between the seller and their broker and usually not advertised.

I've been on both sides of this - I totally understand how you want to save money on your purchase, and I totally understand how the agent would feel like he's going to be doing twice the work - he probably would end up doing twice the work because an unrepresented buyer is likely not going to know exactly how to get a deal done when there is representation on only 1 side - this is completely different than a FSBO where there is no agent on either side.

In these cases it makes sense (for me, at least) to be in the dual agent position (if allowed - there are a handful of states that prohibit dual agency).  The seller's agent is going to end up getting the deal done one way or another - and if that means having to sit down and help you get your side done, that's what he's going to do, because that's what he promised to do for his client.

Just ask for a rebate of part of the commission  to yourself as the buyer. They may not be willing to give you half but they may give you part of it.

@John Thedford Just ask for a rebate of part of the commission to yourself as the buyer. They may not be willing to give you half but they may give you part of it.

I don't know the Laws in Hawaii but the Listing Agent said that they were not comfortable with Dual Agency so since the Buyer would be coming in Unrepresented by the Listing Agent how are they suppose to "Rebate" part of the commission.  I know in FL we can rebate but not even sure that is Legal in Hawaii.  Just thinking out loud.  

@Blair Poelman Thank you for such an insightful response. 

Thanks to everyone for such awesome and quick replies. Bottom line is it doesn't effect my offer (much). Since the listing agent doesn't want to offer any discount I'll likely bring in an agent of my own.

I respect that the listing agent would have to do some extra work and needs to get paid for their time. The listing agent I'm working with has been upfront and honest about all of this. 

If the seller is forced to pay the full commission in my transaction either way, I am at a huge disadvantage if I don't have someone in the transaction looking out for my interests. The listing agent has no financial incentive to offer me dual agency, either. And, sure enough, he declined to do so.

I appreciate everyone's help. I know negotiating over realtor commissions becomes a very sensitive topic. I'll invite in an agent to represent me if we can't find a way to work in a rebate or other concession (unlikely).

This is one of the most common fallacies out there: "I'm not going to use a buyer's agent so I can get a better deal since the seller doesn't have to pay their commission". 

The commission being paid to the listing agent is specified in the listing agreement between the seller and the listing broker in advance. The seller pays the commission to the listing broker, and already agreed to it when they listed their property. It has nothing to do with the buyer.

When a property is listed on the MLS by the listing broker, part of that commission is offered to the selling agent (commonly referred to as the buyer's agent). The Buyer's agent commission is paid to the Buyer's Agent's broker by the Listing Broker - For the most part, it has nothing to do with the seller

If there is no buyer's agent/broker, then the listing agent keeps their (already agreed upon) commission. 

As noted above, some brokers do offer sellers a variable commission. For example, the listing agreement might state: We'll list your house for  a 6% commission, and offer 3% of that to a buyer's agent in the MLS listing. But if there is no buyer's agent, we'll only charge you 5%. This is not always the case, and is normally disclosed in the listing as variable commission.

Also as noted above by @John Thedford , since you are a principal in the transaction, the listing broker can (but almost certainly isn't going to offer to) legally credit a portion of their commission to you (only because you are a principal party to the transaction...otherwise, only licensees can receive a commission). But it's almost certainly too late for that now in your case, since you did not negotiate that as part of your offer. 

There is also the underlying concept that the listing broker/agent works for the seller and is contractually and ethically bound to act in their best interest and get them the highest possible price for their property. They aren't going to do anything to help an unrepresented buyer get a better deal on their customer's property. Making offers directly to the listing agent as an unrepresented buyer is a little bit like getting sued and saying, "Nah, I'm not going to hire an attorney. I'll just let the plantiff's attorney handle both sides of the case since it will save me some money" - it just doesn't add up in either case.

Generally, on an MLS-listed property, the services of a buyers agent don't cost you anything as the buyer, but can save you a ton of money and heartache (usually far more valuable that the commission they earn) by employing better pricing and negotiation strategies, and helping you navigate the  transaction: property analysis, offer terms, inspections, secondary negotiations and concessions (after inspection), appraisal and other contract contingencies, lender conditions, and closing.

Once you use the services of a great buyer's agent and understand the value of their expertise, there's very little reason to buy a property any other way. 

Paul. my 2 cents:: 

  1. Do not hire a buy-side agent. If you do that the listing agent will lose the incentive and you will very likely lose the property.  That assumes that you want to get the property. 
  2. Enter in to contract. 
  3. Come back to the agent and try to negotiate a credit using some kind of excuse. Usually, there are plenty of excuses because of inspection. You are buying the land, so it would be tricky, but I am sure you can find something. The agent will not be happy, but he will either press the owner or share with you out of his commission. That is if there is no other buyer with not agent offering him the full 6%. Still, worth trying. 
Originally posted by @Eileen Winfrey :

@John Thedford Just ask for a rebate of part of the commission to yourself as the buyer. They may not be willing to give you half but they may give you part of it.

I don't know the Laws in Hawaii but the Listing Agent said that they were not comfortable with Dual Agency so since the Buyer would be coming in Unrepresented by the Listing Agent how are they suppose to "Rebate" part of the commission.  I know in FL we can rebate but not even sure that is Legal in Hawaii.  Just thinking out loud.  

 IF they have transaction representation, selling agent can do the deal. Any agent can rebate part of their commission to a principal to the transaction. 

@John Thedford Are you sure?  I was always under the impression an agent can only credit their client, and not the individual they are not representing.  Buyers agent credit buyer, listing agent credit seller, but a listing agent could not credit buyer.

Originally posted by @Russell Brazil :

@John Thedford Are you sure?  I was always under the impression an agent can only credit their client, and not the individual they are not representing.  Buyers agent credit buyer, listing agent credit seller, but a listing agent could not credit buyer.

 Reasonably sure...because they are a principal to the transaction. However, the OP SHOULD consult someone in their state for best guidance. 

@Paul Garcia. I've tried your approach numerous times. It works sometimes, other times not. It's totally up to the selling agent/broker and seller too. For the times that the selling agent/broker did not want to, it came down to liability, potential conflict of interest, or negative experiences in the past where that agent/broker got burned in the past. I think you will need to get a buyers agent in this situation.

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