selecting Seller’s agent as buyer’s agent

[Ranjan]

Hi,

If you were to buy a home and enlist the seller’s agent as your “buyer’s agent, what are the merits and de-merits? Does the buyer loose the leverage of negotiating a good deal?

Your inputs would be helpful.

[sdrealtor]

Yes

[SD Realtor]

I would agree, the buyer does lose leverage. I have just deleted about 4 long paragraphs about why I don’t believe this is a good idea. I read them and deleted them. There is a good analogy someone told me and it is not coming to me because it is late. Your buyers agent should know what you want, and be 100% committed to your well being. Not someone you met at a sellers open house or someone you called because you saw the sign. Ask yourself this… You saw a home, now would that agent support you if you want to lowball the listing? Just my opinion.

SD Realtor

[exeunt]

ranjan, yaar:

i’ve been buying and selling residential RE for years. When I started, I used realtors. My first house, I bought with a buyers agent. Over the years, I came to realize that when buying a house, an agent really isn’t required at all. Frankly, I think the realtor dude who replied to you is being quite disingenuous. What guides buyers agents to particular homes to show are the seller-side incentives offered. The buyers agent will invariably guide you to those listings which offer a greater commission percentage to him/her. Realtors are not bound by any legal fiduciary duty to you. Indeed, when you begin to sign a boatload of paperwork to close on the deal, your so called buyers agent will pull out a bunch of stuff which he/she will ask you to sign that does nothing but protect them from being sued by you! You see, the whole business of realtors is to skim both sides, the buyer and seller, and make good.

OK…so much for my bias. Today, with various internet tools, you dont really need the services of a buyers agent. Here’s how I’ve done it the last couple of times (within the last 6 months, in Ventura county and in Santa Barbara):
1. All MLS listings are available on the internet. Sign up with realtyTrac, or use any of the following: yahoo realestate (updates daily), trulia, realtor.com, etc.
2. Research the areas you want to live in. You can get all school scores from greatschools.net. Then you can go and drive around the towns you want to buy in and get a feel for them.
3. Now here’s the cool part: sign up with a discount realty service. like Redfin. You pay a flat fee, they hook you up with a local guy who will handle the paperwork of the transaction. For a newbie this works great. I used them in my last transaction in SB, and they credited back 2/3 of the buyers-agent commision to me, which I used as part of my down payment. I saved more than $25K. This is a sea-change in the way RE is conducted, and will likely sweep all the RE chaff off the floor within a few years. See, YOU are paying for your buyers agent AND for the seller agent. What not take at least one of these skimmers off the books?
4. Make appointments to see the homes you like directly with the selling/listing agent. Redfin charges you per home shown, so its not worth using them for this. But who cares? Every selling agent is dying to show you their home directly – the greed factor (getting both buying and selling commissions) kicks in, you see!
5. To make an offer on your home, use the Redfin guy – he’ll do all the paperwork and help you with escrow. I found their system to be clean, relaible and no-nonsense. Do not use services provided by the seller. If they insist – walk away fro the transaction. The Redfin pre-negotiated value is better, in my opinion.
6. Remember, the REAL people behind the trnsaction are the escrow and title companies. You can deal with them directly, but if you are doing this for the first time, learn by using someone like Redfin.
7. Always, always bid lower than what the seller wants. My last purchase in SB was in a good part of town, lots of interest, but the house needed work. So I summarized what needed to be done to the house on a spreadheet and the Redfin agent submitted it with my offer at 12% below. They rejected it, of course. I then came in again at 7.5% lower, having already seeded the sellers mind with what ought to be done to the property, and my bid was accepted. Remember, when buying a home, especially an older one, there are PLENTY more where this oe came from…so be prepared to WALK when things aren’t going your way. It may take a couple of times for you to get used to this, but you’ll figure out how much bargaining power you really have.
8. Over the years, I have come to have a rather low opinion of realtors. Out fof 8 transactions, I was involved with only one couple who had some integrity, and that was because they were both 7th-day Adventists – very sincere folk. The rest were people like high-school jocks, ex-car salesmen, housewives looking to make a fast buck, bible-thumpers, and whatnot. The more educated ones were cynical and actually the worst – they were smart enough to know how to make the most money. There are very few requirements to becoming a realtor. My gardener became one last year (he was a house flipper!), and he had no formal education beyond grade school.

in any case, remember…zara dekh ke chalo!

[PerryChase]

I agree with exeunt for the most part.

The Internet has changed things a lot. In the past, some agents would monopolize certain neighborhoods (especially the better ones) and refuse to show homes that weren’t listed within their informal buddy network. There are less able to control showings since buyers can view them on the Net.

I’ve read SD Realtor’s post for a while now. He’s a full service broker but charges discount prices; and I believe he’s part of the new (rather then the old) paradigm of real estate. I would use someone like SD Realtor to make an offer on a house — full service at discount prices, why not?

[SD Realtor]

Thanks for the compliment Perry. I used my sister in law at at Coldwell Banker for the first few properties I purchased and that got old. Then I bought a FSBO and neither the seller nor I used a Realtor. In retrospect I wish I would have but live and learn. Everything Exeunt said was true and it would seem somewhat self serving for me to argue the points. Most people have a low opinion of Realtors because of bad experiences which is unfortunate. It is what it is though. I do hope/think that the buyers and sellers I have worked with have had good experiences. Cannot say much more then that!

SD Realtor

[Ranjan]

Hi exeunt

Thanks for taking time to reply my specific queries.
Yes, I am inclined to use redfin services though I am quite novice on home front. This would be our first home when we buy. We almost bought into a new development in 2004 but dropped out sensing a possible downturn. ( Dekh ke chal raha hun..Thanks for the advice)

So, how smooth was your experience with RedFin? Since there are a lot of paper works involved,do I loose any advantage vs. an agent in person? But it seems like RedFin is doing it all just like real agent..Then how do they afford to be so low priced? Is it because, the buyer is basically going around and finding the home he/she wants to purchase.

Another thing that comes to mind: will seller’s agent will push back or avoid if an offer goes thru RedFin? I assume there would be a lot of resistance to this new method of brokerage. How to get around that?

Btw, for the two homes I was targeting to put an offer on, went to Escrow. It seems home have started selling and selling rather fast.

Thanks again…

[FutureSDguy]

Can’t the buyer simply say “represent both of us for 3% or I’ll walk?”

[sdrealtor]

Sure but that really means represent the seller for 3% and I’ll represent myself. Please feel free to take my pants down and bend me over.

[SD Realtor]

FutureSDguy, the buyer can even inform the listing agent that he/she will represent themself. Also as you said they can ask the listing agent to represent them for any commission they want. After all, all commissions are negotiable. It is doubtful that the listing agents broker will allow it but the buyer can certainly ask.

It is simply the quality of the representation that is in question here. Most everyone here feels that realtors are not worth much if anything at all. That is okay and certainly understandable. Most all transactions work out okay for people. However if you are the unlucky person who happens to have taken the shortcut and you get boned, it can be a very expensive lesson.

Lets say you had the listing agent represent you in a purchase… lets say the home have polybutalene plumbing and the other comparable home down the street didn’t have poly but in every way was just as comparable. Would that listing agent encourage you to consider the other home?

I think that when you buy a home you really want to enlist as many advocates as you can. A good realtor will not press you into buying a home just to get the commission. If the realtor is good, they know you will buy eventually, whether it is a week later, or a few years later. Again, many people do not see value in the representation and experience a good realtor can give you. Those that do, certainly benefit. If you ask enough of your friends, you will eventually come across someone who did find great value in a realtor. It may take awhile but you will.

SD Realtor

[SDbear]

How is that different from having a buyer’s agent. The buyer’s agent gets 3% of the sale price and the seller pays him/her. So what is the financial incentive for him/her to work for the buyer’s interest. If I were a buyer’s agent it wud be in my interest to get the buyer to agree for the highest price possible.
Then it would be more like represent the seller for 6% and the buyer represents himself. Feel free to take the pants down and bend over for 2 people.

[JJGittes]

The system could never get by without skilled representation by seasoned professionals. For instance, take the below ad on craigslist, high level psychology is employed through the threat that if the house thats advertised is not bought now, the seller will retaliate by delisting it, and then raising the price later. Slick baby, slick…

http://sandiego.craigslist.org/rfs/279693003.html

[sdrealtor]

SD R,
Thanks for clarifying exactly why I said what I said. You did a very nice job with it. I’m just too busy these days to go into the depth you just did.

SDR

SDBear,
If I was a scumbag that would be accurate but I care greatly for my clients. Many of the agents I know and respect do also. I get a strong sense that Adam (SD R) does as well. To us it’s about more than a commission check. It’s about guiding people through a major life event in a way that hopefully has a very positive impact on their life in the future. A buyer’s agent also has a strict fiduciary responsibility to their buyer which courts have strongly upheld time and again.

SDR

JJ
While price is certainly a major factor it is far from everything in purchasing a house. Quality representation will protect you in ways you would never even think about.

SDR

[JJGittes]

You may be right, but judging from the grammer used by RE agents in their write-ups on properties, I wouldn’t depend on the intelligence of 95% of them to protect me from a blind chihuahua…..”This house is a steel!!!”

After going through four personal RE transactions in my life, I’ve noticed it seems like the business is almost entirely form driven (taken a look at the Winforms index lately?), and agents/brokers do all they can to avoid any liability to their own client, much less the other side. With the new natural hazard disclosure even more is taken care of for sellers through the escrow process, which handles the bulk of the paperwork.

Don’t get me wrong, there are some pro’s who add value, just not many, and certainly not $24k of value to an $800k transaction. For that amount of money, you could hire the best law firm in San Diego to handle the paperwork, and a chunk of the resulting litigation if something went horribly wrong. I mean really, if you use the same agent for your sale, and then your next purchase, at N. County prices you’d be putting $40-50k in their pocket. I can’t be convinced that the value is there for the middle class transaction. $10k maybe, but not Mercedes numbers.

Look, again, don’t take all this the wrong way, I’m not saying it with hostility, but the RE profession is absolutely overrun with moronic goofballs and they have irrevocably soured the punchbowl.

[SD Realtor]

JJGittes I totally understand your post. It is hit and miss… For instance, yesterday I was showing homes to a couple who I have been working with for about 4 months now. Yesterday we saw homes number 34-39. That constitutes about 10 full days over the last 4 months of looking with them. This is after working with them for about 3 months last spring. I am not justifying the commissions made, however I am saying that there “can be” alot of legwork. Now I have also had my share of quick hitters who I had to basically do no showing time at all so it does all even out and I am not at all justifying the dollars you are talking about in your previous post.

The commission structure is not an argument that I can win. I can say that there are alot of alternatives. Realize though that even your best realtor at a large brokerage does not pocket all that commission. He/she splits it with the broker, the corporate entity of the brokerage itself, etc… Am I defending this? No not at all. However some people do not realize this and they think that the idiot realtor walked with all that money when that is not the case.

There are lots of alternatives out there for people to save money, commission rebates, using a real estate attorney, etc… Again though, whoever you use, be it a realtor who works for a full service brokerage, or anyone else, if they are good and EARN your trust, then in the long run it will be a good decision.

Oh yeah, and yes JJG I have dealt with alot, ALOT, of those moronic goofballs you are talking about… Aye caramba… Over the past week I had a run of 3 of them that drove me crazy on 3 different transactions. Your post was on target, these types make messes that forever stain the industry.

[Author]

Posts