Should Home Buyers Let Listing Agents Write Offers?

Posted by: Chris Palmeri on July 7, 2009

I never thought I’d refer twice to the same string in an online real estate forum, but a reader of this message board at online brokerage firm Redfin.com raises an interesting issue for home buyers in some increasingly competitive markets.

Listing agents are the Realtors that represent the sellers of the home. They split the commission, paid by the seller, with the agent representing the buyer. In some markets where banks are dumping foreclosed properties the competition has gotten so fierce there are often multiple offers over the asking price. The listing agent is supposed to present the offers to his client but are they more apt to push an offer when there is no buyer’s agent and they get to keep both sides of the commission?

That’s the argument made by one reader named Janer on the Redfin message board.

“To Everyone out there just want to share with you the “Secret” since I can so relate to your frustration with being outbid on properties and properties going pending before you even have a chance to write an offer and I am speaking from experience - DROP YOUR AGENT and when you see/find a property you like find out who the listing agent is (you can go to www.realtor.com and type in the MLS# ; towards the bottom of the page it will tell you who the selling agent is and usually have a telephone number to contact. We had been looking for several months and being told by our buyer agent that we were being outbid like most of you or according to the listing agents they were already pending with only one or two days on market. The only offer we made and that was accepted which I wrote about in an earlier thread was when we bid way high over list price per our last agents advice to “get” the property and according to our agent the Bank would lower $$ to near the appraisal if it came in lower - WRONG! Bank wouldn’t lower and we had to walk since there was such a huge gap between appraised value and our offer. We had to eat $275 for inspection and $450 for appraisal. Oh sorry, still haven’t gotten over that yet… Anyways, we decided to drop our last buyer agent (mind you this was our third) and try this new strategy; we found a property we loved and contacted the listing agent all I got was his voice-mail so I left a message that we were interested in his listing and were also looking for a buyer’s agent since we didn’t have one. I got a call back I swear within an hour to show the property, we saw it, loved it and he wrote up our offer same day and per his advice asked for 3% closing costs paid by seller. Our offer was accepted today; day after we wrote offer at list price which comps show property is right at. Coincidence this could all happen so fast not to mention even getting an offer in considering we have been trying for months?? I think not. I will let everyone know how the process comes along but as of now my mantra is: If these listing agents want to play games to get their double commissions I say “let the games begin”.

What do you think of this strategy?

Reader Comments

Same experience

July 7, 2009 10:24 AM

RE agents are dirt bags...or at least there are enough dirt bags to give all of them a bad name. This industry is so messed up and it starts with the MLS/Realtor monopoloy and the "unwritten agreement" that if you don't have an agent then the listing agent will not present your offer. Of course, they are protecting their personal interests in the 3% fee or 6% if they represent both seller and buyer. Furthermore, the listing agent AND buyers agent has no incentive to get the best price (either higher or lower) since 3% of the incremental difference is de-minimus in their pocketbook...while the buyer and seller absorb the remaining 94%!!!

My experience has been the same. Call the dirt bag listing agent and offer to have them represent you as buyers agent. Do this if you really want the house, otherwise you will have to be lucky or overpay significantly.

Squeezebox

July 7, 2009 12:48 PM

I think a fool and his money are soon parted. You were in such a hurry to get the property that you were willing to pay anything to get it. You need to set a price point and stick to it. You'll have houses taken from you, but eventually you'll get something you like at a price you can live with.

Sharon & Dan Ellsworth

July 7, 2009 2:14 PM

My husband and I work with a lot of foreclosed properties and we rarely get a chance to show it to someone that contacts us direct. These properties are usually priced so well that we get offers coming in site unseen almost as soon as they are listed. All of our offers are presented over the internet program that the bank uses and there is no direct contact between the bank and us, so we can't persuade the bank in any way with our offers or anyone elses.

Charlie Kentnor

July 7, 2009 10:00 PM

I'm sure if we asked Chris' buyer's agents, (note they could not find it important to stay with one agent), there would be "more to the story". I could probably write a book on this subject. However, I will use the analogy: If you were in a lawsuit, would you want one attorney representing both sides? Probably not - and it is unethical anyway. When I have someone contact me about one of my listings, I fully explain the issue of dual agency or transaction brokerage and tell them I would not have my feelings hurt if they wanted a buyer's agent to represent them. Most of the time they stay with me, but frankly, I'd be just as happy if they brought me an offer from another agent.

Phil Szanto

July 8, 2009 5:09 PM

This is a bad strategy. You need your own agent. There is an ethical issue with that seller's agent (who has a legal fiduciary duty to the seller) telling a buyer to request 3% closing costs. Also, if you can't get the property unless you do this, chances are it's being bid too high.

The fact that the seller pays the buyer's agent's commission makes the decision to have a buyer's agent a no-brainer for all parties involved.

Best of luck,

Phil Szanto
http://LAHomeDude.com

costa rica condominioums

July 21, 2009 5:58 AM

A real estate agent may ask you to do some things that you really don't want to do to in order to get you moved into your new home as quickly as possible.
When real estate agents advise you about what you can do to make the transaction work, they are acting as part coach and part business consultant.

DougFrancis

November 16, 2009 5:51 PM

One agent insisted on writing up the contract that my were making and I coached my nervous clients that, before they signed, we would change the price. The listing agent was pissed but her client took the offer.

Post a comment

 

About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

BW Mall - Sponsored Links

Buy a link now!