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Meeting with buyer's agent, what to expect

Posted by annkathryn (My Page) on
Wed, Feb 3, 10 at 10:41

I have listed my house as "Make me an offer" on zillow. I received an email from an agent who said he often has buyers who would be interested in a house like mine and could we meet. I emailed him back and said that I wasn't interested in listing with anyone at this time, but that I would pay 2.5% to a buyer's agent.

We met the agent, he gave us a relatively un-pushy sales pitch, and said he might have a buyer. The sales pitch included the following:

If he listed the house and we agreed to use him on the purchase of our next house, he would list it with a 5% commission (split 2.5%/2.5% to buyer/seller agent).
If he had the listing and one of his partners brought in the buyer, he would drop his commission to 4% total (2%/2% split).

We didn't sign anything or agree to anything with this agent, although we said if he had a buyer, we'd be happy to show the house.

He has emailed to say he has a qualified buyer who would like to look at the house. He wants to meet us the day before.

I'm not in a rush to sell the house and in fact would prefer to wait a year. However, this seems to be a good time to sell in my area as interest rates are low and inventory is low. In addition, if I had a buyer now then I would avoid all of the staging, painting and minor repairs that I'm already planning to do. So, at the right price, I would agree to a sale. The "right price" is close to the amount a nearly-identical house to mine sold at in December.

My question is: what should I expect from this meeting? Will the agent press to be the listing agent as well as the buyer's agent? Would the 2.5% I'd already agreed to in writing be enough incentive for him to show the house? How do buyer's agents normally get paid by FSBO sellers? Is their percentage just written into the purchase contract?

I plan to run any contract by my attorney so I don't feel the need to hire an agent as well.

Thoughts?


Follow-Up Postings:

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RE: Meeting with buyer's agent, what to expect

My guess - you'll just get a higher pressure pitch for the same stuff.

When we listed on a flat fee site, we got tons of these "offers". If he has a buyer, great. Bring the buyer for a showing. If they want to make an offer, have them include the 2.5% to the agent. My guess is that he doesn't have a buyer at all and is trying to become your listing agent.


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RE: Meeting with buyer's agent, what to expect

I doubt he has a buyer. It is a common tactic used on FSBO properties to get in to discuss listing with them.

I refused most of these requests, by saying that I already had a realitor that I was planning on using if I list (i did) and that if they want to bring a buyer through I would offer commission but I'm not looking for a listing agent. at least 50% drop it right there. a few persistant ones I do end up showing them the house.

I even had a realtor tell me they are looking for themselves, I give them a tour, they give me their life story about their current out of state house, and selling that, and kill a good 45 minutes of my time, then turn to, do can I have the listing....


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RE: Meeting with buyer's agent, what to expect

I agree. Since you have already met and agreed to a pay him a commission, if he had a qualified buyer, he'd just ask to show the house.


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RE: Meeting with buyer's agent, what to expect

All good points, thanks. He's scheduled to come tomorrow afternoon and bring his buyer the day after. I'll update this thread when the dust settles.


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RE: Meeting with buyer's agent, what to expect

Update: I had misread the agent's email. It's not his buyer; it's that of another agent in his office. So the standard 5% commission was the starting point. He didn't know very much about the buyer, other than that he was pre-approved by a lender to purchase a house in my price range. The agent left a message with the buyer's agent to get more details about him. The buyer seemed to be in a hurry to find a house.

So we agreed to a 1-week listing for this buyer only. The buyer will tour the house tomorrow at 2pm. I negotiated a commission of 4.5%, with 2.5% going to the buyer's agent and 2% to my new listing agent. I increased the asking price of the house to cover the additional commission (since I'm not a motivated seller). Apparently, as an off-market sale, the price is not negotiable. It's take-it-or-leave it. I asked my agent if he thought the house would appraise at my higher listing price, and he showed me comps to support the price.

To be continued....


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RE: Meeting with buyer's agent, what to expect

Based on what you said in the original post, the agent misled you, he did NOT have a buyer, he just knew another agent who had a potential buyer.....and other than passing the word to that other agent, he really did nothing for you......I'd give the actual buyer's agent the 2.5% and offer a referal fee to the original agent, not the 2% he is going to get.


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RE: Meeting with buyer's agent, what to expect

"other than passing the word to that other agent, he really did nothing for you"

This kind of thing runs me nuts.

It's right up there with "X% is a lot of money to answer the phone & let people in the door."

What do you think a Realtor or real estate practitioner does, anyway?

The agent may have gotten a buyer for this seller.

I say "may" because the sale hasn't closed.

but getting buyers is what we do for sellers;
however we do it, we get buyers for sellers.

Would you think your attorney hadn't "done anything" for you if he wrote your will...but you hadn't actually died yet?

Do you think your doctor should be paid for measles vaccinations only if there's a measles outbreak in town?

Should an adoption agency not be paid a fee if they place a healthy newborn that you'd have "taken" even if an agency hadn't been involved?


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RE: Meeting with buyer's agent, what to expect

If you are willing to pay 4.5% commission why are you only listing on zillow?
Why not just list with an agent get on the mls to get full exposure and service?
What is usual commission in your area?
Really, I think you are being taken for a ride and wasting time since you are willing to pay usual commission.


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RE: Meeting with buyer's agent, what to expect

Although my first reaction is distaste at this agent's methods, Sylvia has a point. If you HAD listed this property with an agent and the agent went back to the office and found a full price buyer by talking to other agents before the property was marketed, you'd be thrilled at the agent's performance in a slow market.

I wouldn't pick a listing agent long-term based soley on a solicitation, but judging from what you say in your update the agent doesn't appear to be doing anything wrong. Doubtless he hopes you sign a longer listing contract with him, but that's just the nature of sales.


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RE: Meeting with buyer's agent, what to expect

"Apparently, as an off-market sale, the price is not negotiable. It's take-it-or-leave it. I asked my agent if he thought the house would appraise at my higher listing price, and he showed me comps to support the price. "

I have no idea who is feeding you this type of information, but I wouldn't trust them. An agent who tries to worm his way into a listing like this is likely willing to tell you anything you want to hear in order to get your business.

Price is ALWAYS negotiable. This isn't walmart.

You didn't post anything to give any indication of the house's actual value, but I find it hard to believe that you had your house listed so low as a FSBO that you could just add +5% to the price and have it appraise for that. It is possible, but you would have to be the only homeowner in the current market to undervalue their house by 5%. Everyone else seems to be overvaluing their home by at least that amount.


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RE: Meeting with buyer's agent, what to expect

Sounds to me that this "buyers agent" is trying to take a cut that he isn't entitled to IMHO.

Put it this way, if the house was listed, and some agent in some office saw the listing, passed it on to his friend agent who had a buyer, then the first agent probably wouldn't be owed a commission. If he were, it would be a split of the buyer's side of the commission.

He didn't have the house listed, and isn't paying for, or doing any marketing, he wants a finders fee, whcih would be fine, but his friend does too. does his friend have another friend who might be due some commission as well?

I agree some commission should be paid, but I don't think you should be paying a listing agent in this.


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RE: Meeting with buyer's agent, what to expect

see what I mean?

If the agent has a listing agreement with the seller, *that agent is legally bound to look out for the seller's best interests & to try to get the seller the best price & terms*.

The agent does not have to spend money on advertising, distribute flyers door-to-door, etc.

He has to get a buyer to the closing table.

There's no such thing as a "finder's fee" in the real, true, actual real estate business.

If you are a licensed agent, & your name appears on any contract, you have one of 3 kinds of relationship with your client:

1. seller's representative; you are *bound* to work for the seller's best interests.

2. buyer's representative; you are *bound* to work for the buyer's best interests.

3. intermediary/dual agent/whatever term your state uses when one broker represents both buyer & seller. The way this works depends on the state & usually on the size of the agency, but it always means that you have obligations to both buyer & seller.

I don't know of anyone, in any field, who would take on that kind of responsibility for a "finder's fee".

If you want someone to work for a finder's fee, hire a high school girl to comb the internet, put out flyers, etc.


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RE: Meeting with buyer's agent, what to expect

An update: the buyer came through the house on Saturday as part of a tour of 13 houses in my area. He is going to make an offer on a house in a neighboring town, so no sale for us. Feedback from the buyer's agent was mostly as expected:

- kitchen is dated
- wallpaper in powder room has to go
- faux painting in LR and DR needs to be neutralized
- square footage is good for buyer(3000 sq ft)
- rest of house is gorgeous
- buyer didn't want a pool

I'd already planned to update the kitchen and strip the powder room wallpaper, wasn't sure how the faux painting would be viewed but will repaint if needed. The pool...well, why look at a house with a pool if you don't want one?

The house is overpriced given the dated kitchen; new granite countertops and appliances would support the higher price.

Lots of interesting comments above. I'll try to address what I can.

The poster who said my agent misled me: actually, he didn't; he was clear in his email that it wasn't his buyer. I read the email again and saw my mistake. He had brought up my house to another agent in his office who had a buyer looking for houses in my price range. I didn't think it was ethical to cut out my agent completely and just offer 2.5% to the buyer's agent; I had no idea who the buyer's agent even was, and my agent would have had no incentive to give the buyer's agent my contact information/address so she could show her client my house. Whether my agent's services were worth the additional 2% is of course debatable. I saved him a lot of money that he would have spent marketing the house, and a lot of time. However, I feel he should be compensated for the referral and for any work he might do to shepherd the sale along (not a trivial process in my county). All this for 2%? Maybe, maybe not, but we thought it was a reasonable, low-risk opportunity to test the market and get feedback on the pricing and condition of our house.

If you are willing to pay 4.5% commission why are you only listing on zillow?

Because I don't really want to sell the house, but would be willing to sell at the right price. When I get to the point that I'm 100% committed to selling the house, I'll definitely be on the MLS. The usual commission in this area is 6%.

This off-market strategy is something I really need to investigate further as it's quite new to me. The idea is that in return for an "exclusive" look at a house that's available for sale, the buyer agrees to meet the seller's asking price. That's why the price isn't negotiable in this kind of a listing. The listing agent markets the listing to other agents, rather than to potential buyers. I think the main advantage to the seller is that it keeps the dreaded days-on-market clock from beginning to tick. Any house with DOM over 30 days or so and people begin to wonder what fatal flaw the house has that keeps it from being sold.

I live in an area where it's quite common for the following:

Agent open house on Friday
General open house on Saturday
Offers accepted on Tuesday

My next door neighbor's house sold like this for $62,000 over asking, 7 offers, late last year.

I know my area (Silicon Valley) has a very unusual real estate market. My town is completely built-out, there's no land at all for new building, and it's a very desirable place to live. Inventory is quite low right now. Prices have come down around 10% here in the past couple of years, based on the values of the peak in mid-2008. The comps for my house support this: a house in my neighborhood with the same floorplan as mine sold in 2008 for 15% more than my zillow price. A more recent sale of this floorplan was December 2009 at the same price as my zillow price. Could I get more than the zillow price for the house and have the appraisal support that? Who knows, but I was willing to take that risk.

The only issue I have with this agent so far is that he didn't do his homework regarding the buyer who came through the house on Saturday until I started asking questions. At that point he called the buyer's agent and got all my questions answered, but I thought he should have done that without my asking. Otherwise I think he's an honest agent. It's a small world - another agent from his office is a neighbor, and a third is a friend from my son's soccer teams. References will be thoroughly checked if we decide to sign any longer-term listing with him. I was upfront with him as well: I told him my soccer mom friend is someone we'd consider listing with if/when we decide to hire an agent.

And I forgot to add that my "listing" agent actually does have a buyer, a different person who is out of the country. Whether this buyer is interested in my house or not hasn't yet been determined. I'm not counting on it, at any rate.


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RE: Meeting with buyer's agent, what to expect

Silicon Valley is a challenge for sales. I do wish you the best. For those not familar with the area, there is alot of computer people and engineers. That in it's self is a challenge. Good luck and be careful. There are some good agents in the area.


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RE: Meeting with buyer's agent, what to expect

"there is alot of computer people and engineers. That in it's self is a challenge."

Why???


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RE: Meeting with buyer's agent, what to expect

annkathryn-

I'll amend my comments; you weren't misled, you misled yourself....If you agreed to hire an agent on the basis of them having one possible buyer, and not making it a short-term agreement, you've put your house sale in the hands of someone you know nothing about. Would you hire any other professional that way?

slyviatexas-

OK, here we go:

In my opinion, I don't hire a realtor to bring me a buyer, the realtor has no control over that. What a realtor does for me is to maximize the opportunity that someone will want to buy the house. Semantics, you might say, but I think it's the difference between a passive realtor and an active realtor. I'm selling my place, and I have a very active realtor; she's working closely with a contractor and decorator to make the house look great, has a high-end digital camera to take great pictures, and keeps me totally informed about what's happening next and what the selling strategy will be, depending on what happens in the local market. She's spending tons of time and energy to make sure the place and the price are appealing to the largest number of potential buyers. And that's the service a realtor provides, and if she does her job well, then the buyer will show up.

In all of your analogies, a service was provided...I see very little service being provided by annkathryn's realtor except for knowing a possible buyer.....and now that the buyer passed, it's possible the realtor will provide no additional service at all.

Here's an analogy of mine in return; If a doctor refers you to another doctor for treatment, should the first doctor get the full fee for treatment?



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Lazy Agent

slyviatexas-

"The agent does not have to spend money on advertising, distribute flyers door-to-door, etc."

Wow, with that attitude, I'm glad you aren't my agent....

Do you just wait for buyers to fall out of the sky? Do you understand the direct relationship between advertising and potential sales?

Or are you just "standing on principle", that you "really don't have to do a d*mn thing for your client" as an excuse for being a lazy agent?


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RE: Meeting with buyer's agent, what to expect

you misled yourself....If you agreed to hire an agent on the basis of them having one possible buyer, and not making it a short-term agreement, you've put your house sale in the hands of someone you know nothing about.

I misread the email originally. As I said above:

we agreed to a 1-week listing for this buyer only.

See how easy it is to miss a key piece of information when reading quickly?

I also think you missed sylvia's point in the text of hers you quoted, but she can clarify.

The joke (not funny, but it's out there) about Silicon Valley engineers is that they're social misfits. I'm a software engineer myself; I don't see myself as a misfit, but I get the joke ;-)


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RE: Meeting with buyer's agent, what to expect

I've been a Realtor for 25 years.

My point is that my job is not to put in a certain number of hours, & that I don't get paid by the hour;
my job is to get the house sold, & I get paid when I've done that.

If I bring a buyer on the last day of the listing, after having had open houses & distributed flyers & hosted Realtor tours & talked myself hoarse to everybody I run into at the supermarket, I've done my job.

If I bring a buyer on the first day of the listing, I've done my job.

Your analogy of physician referral isn't accurate:
if your doctor refers you to another doctor, you still pay your doctor for the office visit & for any tests & so forth.

A more accurate analogy would be, if your doctor refers you to a specialist, should your doctor reduce his/her fee because he/she didn't cure your problem?
or should the specialist deduct what you paid the first doctor from his/her fee?

I did miss the "one week only" listing, but I don't know that it makes a whole bunch of difference.

If there's a listing, there's a fiduciary relationship between client & Realtor.


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RE: Meeting with buyer's agent, what to expect

If I bring a buyer on the last day of the listing, after having had open houses & distributed flyers & hosted Realtor tours & talked myself hoarse to everybody I run into at the supermarket, I've done my job.

And a thankless one it is! I've been on both sides of the equation till my allergies drove me out permanently. Everybody in the world seems to have a cat, dog or bird.

My favourite sales were those where both the Purchaser and the Vendor called me the next day to complain that, respectively, they had paid too much and sold for too little.

Yep, all those "easy" bucks for a mere 24/7 work week.

"Hey, all you did was come up with a buyer. Why should I pay for that?"

I'm forking out a $66,000 commission in a couple of months with only a slight wince. If I coulda sold it myself, I would have!


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RE: Meeting with buyer's agent, what to expect

Bumping this back up again because here we are, a year later, and I'm in a similar situation.

I've spent this past year getting my house ready to sell. Among the things I've done, many of which were suggestions from this forum:

- kitchen facelift including painting the oak cabinets white, granite counter tops, new stainless appliances, new paint on walls & ceiling
- stripped wallpaper from powder room & repainted; made new roman shade
- added beadboard and framing to slab cabinet doors in laundry room and hall linen cabinet (very cool idea that came from the decorating forum, see link); repainted them; repainted laundry room, installed a granite top on the hall linen cabinet to replace the glass top
- switched out all light switches and outlets from almond to white
- cleaned carpets
- decluttered & decluttered, then decluttered some more (2 garage sales plus multiple trips to Salvation Army & used bookstore, many CL posts, freecycle, etc)
- brought in a truckload of compost and a truckload of mulch, planted 200+ plants in the yard
- had the shake roof power washed and approx 500 damaged shakes replaced
- will have 4 new windows installed next month on the ground floor to replace flimsy, leaky aluminum ones

In the meantime I've kept in regular touch with the agent from my original post, along with some of the other top agents in my town. Inventory is low and agents are looking for listings right now.

I'm still not in a hurry to sell, but DH and I have done the math and we want to downsize around the time the mortgage resets next January (5/1 interest-only ARM).

So the agent from my original post emailed me again: another agent in his office has a buyer looking in our price range, would we be interested in showing the house? This time I had him make sure the buyer was ok with a pool ahead of time (he is). We'll sign another 1-week listing with the original agent, same terms of 4.5% commission with 2% to my agent and 2.5% to the buyer's agent. The showing is scheduled for next Tuesday.

There are several recent comps - 5 bedroom, 3000 square feet, 1/5 acre lots, some with pools, some without, some on flag lots which is common here but considered undesirable. My house is not on a flag lot, but is on the perimeter of my neighborhood and backs on to a busier street, which is the main negative of the location.

We haven't agreed on price yet; my agent seems to think we can get $100-$200K more than what I feel the comps support. We also haven't agreed on whether the price is negotiable. As some of you commented above, off-market listings are unusual, and it's even more unusual to say that the price isn't negotiable. I'm going to talk to my agent about this in more detail. I think he's overpricing the house, and without leaving room for negotiation this seems to be a recipe for a lost sale.

Here is a link that might be useful: Beadboard wallpaper project


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