dual agency with realtors

[stahleyp]

Looking to purchase a home. I've read you're not supposed to use the listing agent as a buyer's agent. However, I was also told that if you do, they'll either reduce their commission and/or give the buyer a rebate. Anyone have any additional insight on the pitfalls/benefits of using the same agent?

[thepupil]

I wouldn't.

 

Instead, I'd find a discount/rebate agent in your area. At least where I'm from, houses in the liquid "affordable" end of the market trade w/i 1-5 days of list and all search is done through redfin / zillow*.

 

there's not much value-add on the part of the buyer's agent, once you know how to bid (basically remove all forms of risk aversion/contingencies you can and be ready to escalate to the highest price and don't try to be a value investor). on top of throwing away all risk aversion, i really didn't want to pay 2.5% to an agent to walk me through a house/help me prep some docs and coordinate inspections. this is my opinion and is highly market specific.

 

The one we used charged the greater of a fixed amount or 0.9% of the property and would rebate the remainder after close. this accomplishes a few things:

 

1) you have to be a realtor to get the portion of the commission (in our state), so using a realtor helps capture that. in order to save on commisions if representing yourself, you basically are asking the selling agent to waive the half of the commission that he'd be entitled to if there's no other realtor (which he/she will do). Again this varies by state.

 

2) we still had someone who closes 2-3 transactions / month to guide us through the process, recommend vendors (inspections, title, etc). doing it completely by oneself was somewhat intimidating though could be accomplished if we were a bit more prepared ffor how quick the process works (need to schedule pre-inspection/tour day of/after listing). If we didn't use her, I'd probably have paid $5K or whatever to a lawyer just to make sure nothing was screwed up. it's all standard contract so it can certainly be done without representation.

 

3) the split on the house we bought was 5%, so we saved 1.6% of the house cost (5% / 2% = 2.5% - 0.9% = 1.6%). If it were 6%, we would save 2.1%

 

I think this is a reasonable middle ground between having no representation/conflicts of dual agency. Our agent still made a good amount for <20 hours of work. she is totally independent (no agency to share it with) and pretty much only represents buyers for this process, carved out a nice niche for herself as sort of a "transaction processer" does 2-3/month, makes $5-10K/transaction, qualifies as a real estate professional and owns rental property on the side w/ great tax efficiency.

 

 

*there are some "pocket" listings, but these are the exception rather than the rule.

[cubsfan]

Looking to purchase a home. I've read you're not supposed to use the listing agent as a buyer's agent. However, I was also told that if you do, they'll either reduce their commission and/or give the buyer a rebate. Anyone have any additional insight on the pitfalls/benefits of using the same agent?

 

You do have to be careful, that is for sure. Yeah, you may get a discount and that is nice.

 

20 years ago, we sold our home in Chicago. Our agent functioned as a dual agent since the buyer walked into her open house.

The buyer bounced 3 earnest checks - our agent never informed us, as she did not want to lose the commissions.

The broker was also holding the escrow down payment...supposedly. Because the closing was coming up and we were moving

3 days before - I verified with the agent that everything was set - and the closing was on. Of course, she lied to me as she was

working to save the deal.  My attorney called me the morning of the closing to tell me the problem - as she had to cancel.

 

To make a long story short. Closing cancelled. I sued the broker and the firm - as the buyer flaked out. Spent 2 years in

court. Basically, judged settled it as insurance company covered my court fees and a few grand extra. Both the real estate

agent and the managing broker who supervised her were fired.

 

My advice, from my attorney: tread carefully with dual agent. Document stuff in writing. Also, if you get a downpayment,

don't let the dual agent firm hold it - have your attorney hold it.  Just be careful. Real estate agents can be very sleazy

and inexperienced. The incentive of a dual agent works against you. Do NOT disclose your "bottom line" price to a dual

agent - ever - that's what you'll get in a negotiation.

[SharperDingaan]

If the house is in an 'OK' market, and would sell in days, you should not be agreeing to pay the full fee - simply because the agent hasn't had to do much work. If you were approached with 'offers to buy' - maybe 1-2% for the 'flip' at best.

 

If the house is in a 'hot' market (limited supply SFH in a urban market), pay full freight conditional on a sale > X% > ask, < Y days. The additional cost is an option premium, and the expectation is a bidding war settling at materially above ask. No risk, no return.

 

Forget taking the bribe by agreeing to dual list.

 

SD

[thepupil]

 

If the house is in a 'hot' market (limited supply SFH in a urban market), pay full freight conditional on a sale > X% > ask, < Y days. The additional cost is an option premium, and the expectation is a bidding war settling at materially above ask. No risk, no return.

 

 

He’s buying not selling (though I agree with you, on the sell side you go full non discount broker to dress up the house and conduct the bidding war).

 

I don’t agree with paying a full 2.5-3.0% to a buyer’s agent to prepare the bid in said bidding war.

 

There is a risk a listing agent won’t like the discount/rebate broker, but they have a fiduciary duty’s to seller and must present your bid.

[thekiefs]

I struggle to find value in an agent, especially when buying a home. I used a dual agent when I bought ~2017 and saved ~2%.

 

imo dual agents work best when you are the buyer and approach the seller's agent. This can be especially beneficial in a seller-friendly market since houses likely have multiple offers. Approaching the seller's agent could be a differentiator both on price (agent could offer a kickback to the seller, which depending on the structure can reduce your tax basis) and on negotiation (incentivizes the seller's agent to push your deal through).

 

As a seller, dual agent likely doesn't work well since you want to maximize the # of buyers interested and a buyer likely has another agent under contract.

 

I get that dual agency can be tricky and there are horror stories out there when things go wrong. But at ~5 million houses sold in the US every year I think the probability of these transactions going badly is low if you've done enough of your own DD on the property and have an inspection as a buyer. I'd try to save the 1-2%. 

[fareastwarriors]

I struggle to find value in an agent, especially when buying a home. I used a dual agent when I bought ~2017 and saved ~2%.

 

imo dual agents work best when you are the buyer and approach the seller's agent. This can be especially beneficial in a seller-friendly market since houses likely have multiple offers. Approaching the seller's agent could be a differentiator both on price (agent could offer a kickback to the seller, which depending on the structure can reduce your tax basis) and on negotiation (incentivizes the seller's agent to push your deal through).

 

As a seller, dual agent likely doesn't work well since you want to maximize the # of buyers interested and a buyer likely has another agent under contract.

 

I get that dual agency can be tricky and there are horror stories out there when things go wrong. But at ~5 million houses sold in the US every year I think the probability of these transactions going badly is low if you've done enough of your own DD on the property and have an inspection as a buyer. I'd try to save the 1-2%.

 

 

I only use dual agent when I'm buying. Couple of times I was able to snag up the house before it hits MLS. I see sign saying coming soon and I would contact that agent. I'm in the Bay Area in California so there are rarely deals in the past  5 years.  With dual agency, I was able to lock up the house but still I paid cash, and closed fast.  Still use title insurance and zero commission savings but at least I got the houses.

[Gregmal]

I'd point out that dual agency is not even legal is some states(IE the best state in America...Florida, it is typically not permitted)....that said, Ive never had any issues...but I have my "people" and Ive used them regularly for the past decade and if there's a benefit to dual agency I am probably the one who is on the receiving end of it....as with anything, choose who you do business with wisely, and make sure they're intelligent enough to know where and how their bread gets butter.

[stahleyp]

thanks for the feedback and insights, guys.

 

I've been working with redfin. What's the difference between redfin and a "real estate processor?" Redfin will rebate back around .6%. Is redfin okay for higher end homes?

[thepupil]

thanks for the feedback and insights, guys.

 

I've been working with redfin. What's the difference between redfin and a "real estate processor?" Redfin will rebate back around .6%. Is redfin okay for higher end homes?

 

i probably used confusing terminology. that's just how I informally described my rebate/discount agent. she presented herself as a cheaper alternative to redfin (our rebate was 1.6%).

 

 

not sure what you mean by whether or not redfin is okay for higher end, but i'd just say that the listing agent has to show the sellers your offer. if you're worried about competitiveness in a bidding war and someone at a traditional agency disfavoring you because our agent is from redfin, that is possible, but the listing agent would be taking a lot of risk to do that (re their license). we got some snide "who are you working with..."oh i've never heard of her" at open houses, but our money was still green and our offers were considered.

 

all this depends on your market, it's competitiveness/quirks etc.

[stahleyp]

thanks for the feedback and insights, guys.

 

I've been working with redfin. What's the difference between redfin and a "real estate processor?" Redfin will rebate back around .6%. Is redfin okay for higher end homes?

 

i probably used confusing terminology. that's just how I informally described my rebate/discount agent. she presented herself as a cheaper alternative to redfin (our rebate was 1.6%).

 

 

not sure what you mean by whether or not redfin is okay for higher end, but i'd just say that the listing agent has to show the sellers your offer. if you're worried about competitiveness in a bidding war and someone at a traditional agency disfavoring you because our agent is from redfin, that is possible, but the listing agent would be taking a lot of risk to do that (re their license). we got some snide "who are you working with..."oh i've never heard of her" at open houses, but our money was still green and our offers were considered.

 

all this depends on your market, it's competitiveness/quirks etc.

 

Thanks man. I didn't even realize there were agents that rebated more than Redfin. I found a guy who rebates 50% of the commission! Any idea if Redfin will rebate more than what their site says?

 

From what I've read someone told me Redfin agents tend to be inexperienced. I've also wondered if traditional agents would be "ugh a redfin realtor".

 

 

By the way, how did you find your agent? .9% is awesome.

 

[thepupil]

 

Thanks man. I didn't even realize there were agents that rebated more than Redfin. I found a guy who rebates 50% of the commission! Any idea if Redfin will rebate more than what their site says?

 

From what I've read someone told me Redfin agents tend to be inexperienced. I've also wondered if traditional agents would be "ugh a redfin realtor".

 

By the way, how did you find your agent? .9% is awesome.

 

1. I don't know know if redfin or any other agent for that matter would go a higher rebate. I imagine a salaried redfin agent probably isn't the most flexible in how they can price. You'd need someone with some more decision making ability if you want to negotiate (just a thought).

 

2. With respect to your "inexperienced" comment, I think you need to ask yourself what you are looking to get out of your realtor. If you want someone with tons of experience/local knowledge/etc, then maybe consider going full price. there is some element of "you get what you pay for". In our case the certain 1.6% of savings were worth some of the drawbacks. my friend who used an experienced realtor and was buying a house that needed some work very much valued the realtor who had lots of experience with local contractors/coordinating estimates in a very tight time frame (during the 5 day pre-offer deadline period that's custom around here). my parents are closing on a house this month after a 1.5 year long search / several near misses in a competitive vacation area. that agent earned his whole 3% and more! every transaction / market is different.

 

3. I googled. I would just search your city/county/state (i actually brought mine in from 50 minutes away which shows i was hiring her for her fee structure, not local knowledge) "rebate realtor" "discount realtor" discount buyer's agent, etc.

 

I feel like you're going to take me up on this and have an awful experience and blame me. huge asymmetry here lol!

[stahleyp]

hey pupil,

 

You won't be blamed at all! If I get myself into trouble, it's my own doing. I even get in trouble when I didn't do anything (so my wife says haha).

 

With that said, what are the differences between "full service" and "discount" realtors besides fees? This will be my third home purchase and the other two were foreclosures. I can't say I see a lot of value the traditional brokers bring to the table.

 

We went with one (who was supposedly one of the top in the area) and she didn't really seem to know what was fairly valued. For instance, we looked at 3 and the two she thought were priced fairly are still sitting there (after 1-3 months). And the one that she thought was overpriced sold shortly after we looked at it.

 

I mean, I can determine the price I'm willing to pay, set up appraisal and inspection and find a real estate attorney to look over the paperwork. I don't see why the buyer's agent should be getting $20,000-$30,000 or whatever.

 

With all that said, again just wanted to say thanks. I didn't even know this was out there.

 

 

[Gregmal]

thanks for the feedback and insights, guys.

 

I've been working with redfin. What's the difference between redfin and a "real estate processor?" Redfin will rebate back around .6%. Is redfin okay for higher end homes?

 

i probably used confusing terminology. that's just how I informally described my rebate/discount agent. she presented herself as a cheaper alternative to redfin (our rebate was 1.6%).

 

 

not sure what you mean by whether or not redfin is okay for higher end, but i'd just say that the listing agent has to show the sellers your offer. if you're worried about competitiveness in a bidding war and someone at a traditional agency disfavoring you because our agent is from redfin, that is possible, but the listing agent would be taking a lot of risk to do that (re their license). we got some snide "who are you working with..."oh i've never heard of her" at open houses, but our money was still green and our offers were considered.

 

all this depends on your market, it's competitiveness/quirks etc.

 

Means Pauls got a nice house!

[stahleyp]

thanks for the feedback and insights, guys.

 

I've been working with redfin. What's the difference between redfin and a "real estate processor?" Redfin will rebate back around .6%. Is redfin okay for higher end homes?

 

i probably used confusing terminology. that's just how I informally described my rebate/discount agent. she presented herself as a cheaper alternative to redfin (our rebate was 1.6%).

 

 

not sure what you mean by whether or not redfin is okay for higher end, but i'd just say that the listing agent has to show the sellers your offer. if you're worried about competitiveness in a bidding war and someone at a traditional agency disfavoring you because our agent is from redfin, that is possible, but the listing agent would be taking a lot of risk to do that (re their license). we got some snide "who are you working with..."oh i've never heard of her" at open houses, but our money was still green and our offers were considered.

 

all this depends on your market, it's competitiveness/quirks etc.

 

Means Pauls got a nice house!

 

haha well, I think it's nice (the one we're thinking about buying) but I'm sure others would stick their nose up to it.