Discount Buyer's agents (sale, 2013, broker)

[gwarnecke]

Originally Posted by mcfroggin

Why use a buyer's agent at all? In Texas, it is legal to use an attorney instead. I have a contract attorney I use regularly. I have him review my home purchase contracts. He instructs the seller's agent to remove the 3% buyer's agent fee and credit it toward a 3% lower sale's price. I pay him an hourly rate to do this.

This is exactly what I've been trying to do. I've lived in Houston for years and am intimately familiar with the areas that we're looking to buy in. I'm pre-qualified and have explained my intention to forego agent representation to my lender, who is supportive. I've bought multiple homes in the past and have a list of preferred inspectors (standard, termite, plumbing, and structural) lined up, as well as a title company that I have been pleased with in the past.

When I've explained my intentions to listing agents, most are happy to show the house but will not consider an offer that is not submitted by a buyer's agent, even accompanied by a pre-approval letter. Most (but not all) have told me that if a buyer forgoes representation, they keep the full 6% to themselves and don't pass on any savings to the seller. One listing agent actually thought she was being "helpful" by having her colleague meet me at the house, ready to write an offer letter and act as "my" agent. Of course "my" agent was encouraging me to make an offer substantially over asking price. We walked out.

This is a blatant conflict of interest. If a well-qualified buyer chooses to forgo agent representation, and is willing to hire an attorney at his own expense, wouldn't a listing agent be doing her client a disservice by either failing to present his (highest net) offer to the seller, or by keeping the entire commission for herself? I know that if I sell my current house in the future, any listing agent who tried to include language entitling herself to the full commission even for unrepresented buyers would get the boot.

For now, I'm considering looking for a discount buyers agent. Or waiting to see if the market keeps slowing and listing agents get more motivated to make deals on the buyer's terms. No disrespect for the services that agents provide - but if I'm well-qualified and am doing 100% of the legwork up to the point that I'm writing the offer letter, then as I see it I'm saving a buyers agent a LOT of time, and I feel that asking for 1-2% back is not unreasonable, especially for higher-priced homes.

[mcfroggin]

Why are you telling the seller's agent anything about representation? Any good salesperson will attempt to dissuade you from making them more money.

I tell all agents that I haven't chosen an agent yet, and I have my attorney do all the talking/negotiating.

[Sugarlandbubba]

Gwarnecke,

My suggestion is to submit the offer on the TREC form and negotiate from there. It may be that your offer is not attractive to the seller when another buyer is offering the same amount without an attorney involved.

Most people like to deal with a normal transaction. If your attorney added a bunch of conditions, then the listing agent has to forward the contract to an attorney for review because agents are not allowed to give legal advice. This possibility makes it a difficult situation and most people rather deal with a normal transaction when buying or selling.

Similar to a financing situation, if you are selling your house, which offer would you take if everything else is the same: Cash offer or a 3% down offer?

It may be a negotiating tactics and not a conflict of interest if the listing agents said that they will keep the whole 6%. If your offer is not in writing with an explanation of your request for a 3% discount, then the agent may not have to relay your oral offer to the seller....you were just negotiating.

[gwarnecke]

Good tips, thank you.

[Failed Engineer]

What I'm concerned about is are there listing agents out there not presenting offers to their clients from buyers coming with offers without agents and/or from attorneys?

[mcfroggin]

Originally Posted by Failed Engineer

What I'm concerned about is are there listing agents out there not presenting offers to their clients from buyers coming with offers without agents and/or from attorneys?

Sounds like a great way to lose a license and have an attorney make someone'S life difficult.

[marksmu]

Originally Posted by Failed Engineer

What I'm concerned about is are there listing agents out there not presenting offers to their clients from buyers coming with offers without agents and/or from attorneys?

This is actually a TREC violation that an Agent can lose their license over.

[gwarnecke]

The particular house already had multiple offers (none of which had been accepted by the seller at the time).

I'm guessing that the realtor didn't want the hassle of bringing forward an offer that included an attorney-drafted legal addendum stating that the buyer agent's commission would go to the buyer (since I'd be forgoing having a buyers agent), especially if this addendum would have to be forwarded to an attorney for the seller. Would probably get a warmer reception on a house that had been sitting awhile with no offers.

[recuerdeme]

My POV... What you think you are saving with your "discount" could probably be negotiated by a good real estate agent.

[marksmu]

Originally Posted by gwarnecke

When I've explained my intentions to listing agents, most are happy to show the house but will not consider an offer that is not submitted by a buyer's agent, even accompanied by a pre-approval letter. Most (but not all) have told me that if a buyer forgoes representation, they keep the full 6% to themselves and don't pass on any savings to the seller. One listing agent actually thought she was being "helpful" by having her colleague meet me at the house, ready to write an offer letter and act as "my" agent. Of course "my" agent was encouraging me to make an offer substantially over asking price. We walked out.

First I will preface this with the statement, that I 100% agree with you that you absolutely should be able to reduce your offer by 3% due to the fact that you are not represented by another agent and are paying an attorney for your own representation. This exact dynamic is what led me to get my own license. I was sick of overpaying for real estate transactions where I did all the work.

BUT there is one important factor you are missing...The buyers agent commission has nothing to do with the buyer. The contract which provides for a commission to be paid is between the Seller and the Seller's agent (the listing agent). It simply provides that a commission of ___% often times 5-6% will be paid to the Seller's agent upon sale. There is a version where the Seller's agent commission is reduced when the buyer is not represented, but it is almost never reduced by half, on the assumption that if the buyer is not represented, the Seller's agent will have to do twice the work. I dont agree with this, but it is how it is.

The buyer's agent is paid by agreement through either the MLS or a written agreement between brokers. The buyers agent IS PAID by the Sellers Agent, not the Seller. Read that sentence again because it is important. The buyers agent is paid by the Sellers Agent, not the seller. If the property sells through the MLS, the MLS states the terms of commission. If its outside the MLS, the brokers have an agreement, which usually splits the commission in half between buyer/seller agents.

So when you ask the Seller's agent to reduce their commission by 3% they get all huffy and refuse, it is b/c they want to keep the full commission. Many brokers refuse to reduce their commission for unrepresented buyers. Mostly because brokers usually dislike working with unrepresented buyers since they believe it undermines their profession, though they often claim its because they do twice the work.

Bottom line. You are within your rights to make any offer. The agent is required by law to submit your offer. In your offer's terms you can ask for a reduction in price of 3% in lieu of a buyers agent commission. The seller is welcome to accept or reject, or accept it and renegotiate the contract between himself and the Listing Agent. That is not your problem.

Lots of agents/brokers like to threaten that you are tortiously interfering with contract by writing an offer that changes the terms of THEIR contract between the seller and seller's agent, but you are not. You dont care what that contract says...You do not even know what it says...you are merely reducing the price you are offering by 3% because you do not have an agent. How they deal with that is their own problem.