House Purchase with a Single Agent

[arf1410]

I am considering purchasing of a second home a few hours from home, in a very strong market. I do not have a "buyer's agent", and best I can tell, Redfin, or any other discount broker does not service this area.

The seller's agent will soon be showing us the home. If we decide to make an offer, I am thinking of just going thru that agent, rather than find my own. Part of the reason is, the selling agent would have some financial incentive to make my offer stand out from possibly others, and on a previously related thread, no one was able to provide any examples of a buyer's agent actually saving the buyer from making a bad decision.

So can someone here say what added risk this may be, and what I should "look out for" when going this route?

And a bonus question - this home is currently in the VRBO market, and we may keep it that way (via a management company) for a few years, as it appears to gross ~10% of the market value each year. Any added contingencies I may wish to add to the offer, to verify the financials?

[London]

I’ve used the sellers agent as a buyer and it definitely worked out great for me. Sometimes, an agency will have another person represent you in the negotiation but that’s rare. In general, the agent will have great incentive to have the seller accept your offer.

[stan1]

There's nothing wrong with using a dual brokerage as far as I'm concerned so long as you know how the game is played. It is your job to give the realtor directions on negotiating price and identify things that need repairs, not the realtors job to do those on your behalf without guidance. The realtor is motivated to close the sale quickly not to save you $1000 or $10,000. The realtor is your representative. You make the decisions not the realtor.

Two of the three sales we've done over the last 40 years ended up having our realtor as the sellers also represent the buyer. The broker may be willing to lower commision but keep mind the seller pays the commission to the realtors so you'd have to negotiate the split of the commision with the seller. Resort/vacation markets can be quirky so the realtor may not be willing to negotiate a reduced commission even if you ask. If the realtor also runs a property management company (many do in resort areas) you may be able to strike a package deal.

[celia]

The broker may be willing to lower commision but keep mind the seller pays the commission to the realtors so you'd have to negotiate the split of the commision with the seller.

You can negotiate with the seller, but I wouldn't mention "splitting the commission savings". That sounds rude to the agent. Just give your offer price. The agent will already know how to tell the seller that they still come out ahead compared to a buyer who has their own agent.

I, too, just sold a property and the buyer didn't have an agent, so called up my agent's office and worked with a different agent there. I ended up with a 5% commission instead of 6%.

[stan1]

The broker may be willing to lower commision but keep mind the seller pays the commission to the realtors so you'd have to negotiate the split of the commision with the seller.

You can negotiate with the seller, but I wouldn't mention "splitting the commission savings". That sounds rude to the agent. Just give your offer price. The agent will already know how to tell the seller that they still come out ahead compared to a buyer who has their own agent.

I, too, just sold a property and the buyer didn't have an agent, so called up my agent's office and worked with a different agent there. I ended up with a 5% commission instead of 6%.

The listing contract is between the seller and their agent, so the seller's agent has to be involved as the contract would need to be changed. I should caveat that by "that's the way it works in my state". Happens all the time, agent's are generally happy to do it. Not considered rude at all at least around here where dual agency situations are pretty common. There are lots of local customs in real estate sales. Talking to the agent will figure out what the local customs are.

[tj]

Use upnest.com and see if any agents will give you a percentage.

[FrugalProfessor]

I did this. It worked out well.

The best protection you have against getting screwed is to make an appropriately priced offer; something a buyer's agent ridden with conflicts of interest (a-la-Freakonomics) fails to help you achieve.

[Watty]

I found my first house at an open house and I did not have a real estate agent. When the negotiating went back and forth it stalled out a few thousand dollars apart and the real estate agent reduced their commission some to make the deal work. It was not a real strong housing market so your situation could be different.

Sometimes the listing agreement that the seller signs will specify that there be a reduced commission if the buyer does not have an agent so that may already be accounted for but there is no way for you to easily know that.

So can someone here say what added risk this may be, and what I should "look out for" when going this route?

You should be sure to use a lawyer to your offer to make sure that nothing is missed that a real estate agent would have done if you are using one. Using a lawyer when buying a house varies depending on what state you are in. In some states using a lawyer is required but in some states it is not unusual for people to just use real estate agents and a title company.

One thing is particular to watch out for is that there will be a laundry list of fees in the closing paperwork. They may try set it up for you to pay most of these fees even if that is not customary in your area.

[hicabob]

Some of the more reputable realtors refuse to do this because it's of course conflicts of interest all over the place. That being said I've done it twice - taken for a ride a bit the first time but the second time I was older, meaner & wiser so it worked out well for me, not so much for the seller.

[adamthesmythe]

And a bonus question - this home is currently in the VRBO market, and we may keep it that way (via a management company) for a few years, as it appears to gross ~10% of the market value each year. Any added contingencies I may wish to add to the offer, to verify the financials?

If your objective is to maximize the attractiveness of your offer, adding additional/ unusual contingencies is not going to be a good idea.

[arf1410]

And a bonus question - this home is currently in the VRBO market, and we may keep it that way (via a management company) for a few years, as it appears to gross ~10% of the market value each year. Any added contingencies I may wish to add to the offer, to verify the financials?

If your objective is to maximize the attractiveness of your offer, adding additional/ unusual contingencies is not going to be a good idea.

I'm willing to waive the financing and appraisal contingencies, will NOT waive the inspection continency... uncertain about the "financials" contingency, as the house is being marketed as having great income as a nightly rental.

[brajalle]

I have done it before, it was not much different than anything else in that you still just need to watch out for yourself. I think it actually helped me gain some extra concessions on the sale because the agent was talking directly to both parties. The seller sold the property at a slight loss from the purchase a few years before and I gained several concessions. I imagine there are horror stories out there though with doing this.

[tmcc]

whatever happens do NOT allow the seller's agent to collect 6% since they have both sides of the transaction. or if they do, it must be netted out of purchase price.

real estate agents will feed you lies about how the seller pays that and you shouldn't worry about it. but who is paying the seller? YOU!

[BillyK]

Not knowing your state, various types of agency relationships exist throughout the states. Unless they have already disclosed the relationship to you, I am certain the agent will at your first substantive contact with them. Many people confuse the various types of state dependent relationships that may exist such as dual agency or transactional. Regardless of whether no other agent is involved in the transaction, if he or she is solely representing the seller, the agent isn’t operating in either of those capacities. Therefore, it is important to stay guarded with any information you tell the agent since they are solely negotiating with you on behalf of their client which includes helping them to get the the best price and terms from you.

[adamthesmythe]

whatever happens do NOT allow the seller's agent to collect 6% since they have both sides of the transaction. or if they do, it must be netted out of purchase price.

real estate agents will feed you lies about how the seller pays that and you shouldn't worry about it. but who is paying the seller? YOU!

How much the selling agent collects under various circumstances is determined by the contract the seller signed with the agent. The buyer does not have any influence on this.

All the buyer can do is negotiate the price and/ or terms. Perhaps the (single) agent will give the seller a concession or perhaps not. It has nothing to do with what the buyer will "allow".

[tmcc]

whatever happens do NOT allow the seller's agent to collect 6% since they have both sides of the transaction. or if they do, it must be netted out of purchase price.

real estate agents will feed you lies about how the seller pays that and you shouldn't worry about it. but who is paying the seller? YOU!

How much the selling agent collects under various circumstances is determined by the contract the seller signed with the agent. The buyer does not have any influence on this.

All the buyer can do is negotiate the price and/ or terms. Perhaps the (single) agent will give the seller a concession or perhaps not. It has nothing to do with what the buyer will "allow".

you can disallow it by canceling the contract within the 10d inspection if the contract is signed

in this case, the contract is not signed and it is negotiable

never enrich a realtor. they are useless

[arf1410]

"never enrich a realtor. they are useless" - a bit more harsh than I would say it... but I agree that their reason for existence is to earn a commission, not look out for either the buyer, or seller's, best interest.

As I said at the onset, it is a seller's market... so I can't be too hard nosed about lowering commissions, or I'll get laughed out of the room

[bsteiner]

There’s no need for a second broker if the listing broker has found a buyer.

[toomuchRE]

Just do it if you want to win an offer...In hot market. I bet I would not get my house on this hot market if I had a buyers agent..

Make sure you have an attorney.

[rich126]

Just do it if you want to win an offer...In hot market. I bet I would not get my house on this hot market if I had a buyers agent..

Make sure you have an attorney.

I definitely agree with the attorney part. Someone should have your interest at the top of the list and it sure won't be the seller, seller's agent, appraiser, or most anyone else involved in the transaction since they are mostly interested in getting the deal done.