Not a good strategy, because if the listing agent is getting the whole 6%, they’ll actually work harder to make you pay the highest price for their Seller in effort to justify such a huge commission.
Dealing only with the Listing Agent or Builder, asking them to lower the price 3% which they would otherwise have had to share with or pay a Buyer’s Agent?
This generally causes the Listing Agent to catch an immediate attitude. Yes, you can possibly fight with them over the 3%, but you take your eye off the much bigger prize and that’s getting the home for much less by using a Buyer’s Agent. A lower price on the home using your own Buyer’s Agent could Dwarf the smaller amount obtained fighting with the Listing agent.
The Listing Agent/Seller’s Agent is just that, the Seller’s Agent.They watch out for the Seller’s interests in the purchase. For a buyer to believe they can get a better overall price by dealing directly with the Seller’s Agent is misconception and outdated strategy.
Also, what about when issues arise after they have your deposit? It’s then the Seller, the Seller’s Agent and the Seller’s Title Agent ALL against the buyer and that’s a pretty strong Trifecta to battle!
I'd say this is very dependant on the market. In markets like South Florida where there is often times an extreme arrogance with some of the listing agents, this strategy could be difficult and see some of the downfalls you mention above. However, in other markets this does work and it can benefit all parties.
In regards to "seller's agent is just that. They watch out for the seller's interest..." - that is not necessarily the case. Realtors are (supposed) to be held to a "transactional" standard where they represent both sides equally in the transaction. Now I know that is not always (or even usually) the case but, I have worked with listing agents that have displayed that integrity and truly were representing the transaction.
I myself have put deals together where I used this strategy and when a professional agent/broker can see that by crediting a point or three, the deal gets done. Trust me, agents/brokers are much more happy at the closing table than at the negotiating table (for the highest price).
So while this is a great topic for discussion, I would disagree with some of the generalities in the original post.
The problem, like always, is making these realtors submit offers the right way.
For the last 15 yrs, the majority of my advertising and loans have been in PBC, Broward and Dade, so I have my finger on the pulse of the S. FL market and have had to deal with many hundreds of S. FL realtors.
Rarely do I ever see buyer agents submit offers the way I have my realtor partners submit offers for my Pre-Approved buyer referrals.
Here I am, a Mortgage Broker, and I know how to do their job better than 80% of them...believe it or not! It's like pulling teeth to get them to submit and negotiate deals the right way and to structure the deals in a way that best benefits the borrower on the loan side.
They are so scared of requiring borrowers get "Legitimately" pre-approved in advance, by submitting ALL their income and asset docs. And even more scared to ask them to put up some Good Faith Money in an Attorney's escrow to obtain an Escrow Letter and not just this $1,000 garbage either!
I see so many realtors that are stuck in their "out dated" ways, cause buyers to lose deal after deal, after deal. But when you offer some No Brainer advice...OM Gosh, here comes the..."I've been selling real estate in Palm Beach going on 103 yrs, bla, bla, bla!
This is why when I get a lead from my advertisements or from online or a referral from a prior client, I do what I can to give what ever so called "buyer's agent" who is a friend of a friend's uncle, the boot! Then I bring in my Buyer Agents, who are schooled in how to do their job...by me!
You freaked me out with the beginning there. Glad you went where you went. The listing agent represents the SELLER. So yes, use a buyers agent if you’re trying to get a deal! The listing agent might make you think they’re judging for you but a buyers agent is there to represent you. That’s the whole point!
Sincerely, an agent.
If someone feels they can get a better deal by working with the Listing Agent only, negotiate your best deal, THEN ask for the listing agent to rebate 3% that would have otherwise gone to a buyer's agent.
Facts are, generally, not always, but generally, the myth of getting a better deal by not having a Buyer's Agent is a flawed strategy here in 2018.
As a Florida Mortgage Broker, I see this all the time and can usually reason with the buyers to use on of my buyer agents. However, there are always the "know-it-all" 2005 mindset buyers who because they "Think" they got a deal one time or because they have purchased a few houses in the past, refuse to listen to good advice and take off full speed running out on the iced over lake and....
Sometimes it works when the listing agent is competent and is looking to deal. In my experience they know the market value and will sometimes leave money on the table in order to get a deal done.
On other occasions I tried dealing with licensed agents who had no clue what they were doing and just threw some properties up on the MLS or on a private wholesale sheet. It took my buyer's agent and a genius title agent to close the deal because the original contracts were not written properly and a whole slew of other issues such as lack of communication.
It's hit or miss. There are a lot of bad agents out there who are better suited to making fries or cleaning toilets. You can try it on your own, but if you make a lot of deals in a fast market, sometimes you miss out on a deal and the market passes you by.
A few thoughts....Many builders actually have a policy to not negotiate price with a member of the general public, while they will negotiate with agents.
Also in terms of a resale and lowering the price to compensate for no buyer agent.....this is called a Variable Rate Commission. In every MLS I am a part of, a Variable Rate Commission must be agreed to in the listing agreement, and it must be disclosed in the MLS. If an agent partakes in this activity and has not disclosed it ahead of time, they can be subject to punishments by their MLS and board. I dont know if this is the case everywhere, but it is everywhere I do business which is across half a dozen states.
If I'm going to make an aggressively low offer, which one has the better chance of getting accepted - the one via a buyer's agent where the seller pays a 6% commission, or the one through the listing agent where they have the ability to credit some of that commission back to the seller in order to make the offer more palatable? Yes, a listing agent represents the seller, but they also have some personal incentive to get a deal put together. Plus, what is more appealing to a listing agent - their 3% LOC alone, or maybe 4% for getting a portion of both sides?
@Russell Brazil makes a good point about some markets having association rules on variable rate commissions - a good reminder that investors should try to learn the specific rules/practices in their market. I would add that those rules are in place to serve agents, rather than the buyers and sellers those agents represent.
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