Buy Home Via Listing Agent?

When buying a home, some folks are tempted to go straight to the Listing Agent, i.e. the Agent whose name is listed on the sign post, and forgo representation by their own Buyer’s Agent. They hope to get an edge on offer acceptance, or save money by negotiating commission.

While these good intentions often lead to a perception of value, they virtually never result in actual value. Moreover, the unintended consequences can be huge… and the result could offset any perceived discount by many multiples.

While general market conditions can arguably be called “distressed”, anyone who has spent even a bit of time searching homes recently knows that good deals and/or good market segments are pretty competitive. The better opportunities often come with multiple offers.

“Pushing offers through” is a function of many variables, including price, motivation, down payment, credit worthiness, payment capacity, organization, technology, Buyer attitude, Seller scenario, Agent experience, and Agent incentive… just to name a few.

The idea of “pushing offers through” itself is largely subject to marketing spin. The main thing to realize is this: if you were selling a home, wouldn’t your main concern be to identify and accept the highest and best offer received? … regardless of who brings the offer?

Since a home purchase is typically one of your largest investments, it is likely your senses will be heightened to perceive any sign of advantage, social proof, or sense of validation. While these same deep-seated human survival instincts have been instrumental in propagating our human species… they also unfortunately tend to make folks vulnerable to compliance professionals who lever emotions. This is where it helps to trust in self-reliance and see outside influences for what they are.

In California, Agent commission is negotiated between the Seller and their Listing Agent. If for example, the total commission is 6%, the Seller usually authorizes the Listing Agent to pay 3% (or half) to the Agent who brings the home Buyer.

It is pretty easy for Listing Agents to plant a seed about “knocking off some commission” since they will “earn both sides” by representing you in addition to the Seller to create a “win-win” deal. But think about it… the commission is already pre-negotiated, and since the Seller pays for all of it… where in the process do you actually even see how much commission gets paid? The fact is you don’t. The total commission and subsequent breakdown do not get disclosed to the Buyer.

The Listing Agent usually has a good idea about what bottom line the Seller will likely accept. Ask yourself how hard it would be to inflate this number by an extra couple of thousand and then say they could take off the adjusted amount “just for you”. Since the commission is pre-negotiated, what incentive would the Agent have to give this money to you?

And if the Seller and their Listing Agent happened to agree in advance to reduce the commission payable by the Seller, then still… what incentive would the Seller have to pass this through to you? No Seller I know likes to give money away even in a good market.

Even in the extremely unlikely event whereby a Seller receives two remarkably similar offers simultaneously, I guaranty you one thing… the order of savings goes like this: first the Seller, then the Agent, then you.

And think about this. The type of property, which fetches competition, is priced low enough that only the highest and best offer wins anyway, and the Seller has ample opportunity to cherry pick everything from inflated offer prices, to all-cash quick-close deals. If a Seller is struggling to get top dollar, then they are unlikely to fetch multiple offers in the first place… and the odds of receiving multiple identical offers are staggering.

Either way, by law, and by every ethical standard we Agents are conditioned to uphold, every offer must be presented to the Seller in a timely fashion. Not doing so could result in license revocation.

At the end of the day, Listing Agents seek first to lock in a typical commission, before risking a sale, or client satisfaction by holding out for “both sides” of the commission.

Now, while the idea of pushing offers through is mostly myth, there are quite a few things we can do to strengthen our offer in its own right, aside from increasing offer price. This skill-set is more art than science, and you should seek a Buyer Advocate who can succinctly quantify their strategy in laymen’s terms.

There are many factors to consider when buying a home that far exceed the prospect of saving a few thousand bucks, and frankly too, whether or not we can beat the competition on securing the first listing we like enough to buy.

Meantime, out of all the variables that make up our home purchase, asking how to “push offers through” or how to “save a few bucks” are not the biggest of our concerns.

The aspect to really focus on is how many tens of thousands can be gained from buying the right property, with the right positioning for long term appreciation, and how to avoid the not so intuitive pitfalls that could bring tens of thousands in liability.

Bottom Line: using a Listing Agent to represent you when buying that same home is kind of like going to court with the same lawyer who represents your opponent. The Listing Agent gets paid by the Seller. Even with the best intentions, there is a conflict of interests. Meantime, since the cost of receiving your own independent advocacy is paid by the Seller, then you may as well enjoy it.

Further, since Buyer Agents are not limited to selling you just their own listing, they are better positioned than a Listing Agent to separate their advice from commission. And if an opportunity does present, to negotiate authentic value on your behalf, rest assured it will be the Buyer Agent, and not the Listing agent, who is better positioned to do so, since they are solely dedicated to fighting on your behalf, to further your interests at every turn.

This entry was posted in advice, cardiff real estate, observations and opinion, services. Bookmark the permalink.

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