Transactional Agent questions

[Paul C.]

Hey Guys, I am trying a new strategy of not using a real estate agent myself but trying to get the sellers agent to be a “transactional agent”. The thought is this would get them somewhat on my side(although not officially) so I have a better chance of negotiating and knowing exactly what the seller wants. Also, I am trying to get them to use a lower commission rate and reducing that from the sales price as the seller will still see the same amount. Has anyone else tried this and do you have any pointers or success/failure stories. Thanks!

[Chris Seveney]

Quote from @Paul C.:

Hey Guys, I am trying a new strategy of not using a real estate agent myself but trying to get the sellers agent to be a “transactional agent”. The thought is this would get them somewhat on my side(although not officially) so I have a better chance of negotiating and knowing exactly what the seller wants. Also, I am trying to get them to use a lower commission rate and reducing that from the sales price as the seller will still see the same amount. Has anyone else tried this and do you have any pointers or success/failure stories. Thanks!

They have a fiduciary duty to the person they represent. If you ask realtors, i would bet you have a lower chance of negotiating vs. using a realtor as a realtor who works for you can give you additional guidance on the process and the property's value. 

[Michael Dumler]

@Paul C., the seller signs an exclusive listing agreement to pay the listing brokerage X% of the sales price. Even if there is no buyer agent involved in the transaction, the agreed-upon commission would proceed to the listing agent. This would all have to be renegotiated between the seller and the listing agent. I understand the concept but very rarely does this occur. Most agents will always try to project their commission. Furthermore, as Chris mentioned, the listing agent has a fiduciary duty to their client. Don't expect them to disclose the seller's motivation. Hope this helps! 

[Timothy White]

Using a good agent would actually gove you a leg up 

brokers agents will work with great agents  to get both sides to close as smooth as possible 

spend the money and time to contact unlisted owners directly If the value of the property professional doesn't' work for you and your strategy 

[Bruce Lynn]

In my experience having a great agent will probably save you lots of time, money, and headaches.   No need to go at it alone, real estate is a team sport.  I've had plenty of people try to use this concept with me over the years and it never worked out for that transaction and certainly not to where they were saving any money, by not having their own agent.   It actually ends up costing me more time and effort of dealing with someone who is not experienced and better chances of the deal falling apart at some point because the buyer just didn't know what they didn't know.   Typically it is not an intelligence thing, it is an experience thing and maybe a resources thing?

I save my buyer clients money all the time with resources and experience.....I can almost guarantee everyone using the lender I recommend for them...and I have about 10 different ones I use for different circumstances will save them time, money, and energy over whoever they bring to me on their side.   Plenty of examples other than lenders.

[Russell Brazil]

That would be a variable rate commission. It needs to be agreed to in the listing agreement and disclosed in the MLS. If an agent engages in a variable rate commission, and it was not disclosed, then that would be an ethics violation. This is a way of making the playing field level. Evryone needs to know the rules ahead of time before making an offer so as to not be disadvantaged by an undisclosed variable rate commission.

[Paul C.]

Definitely not trying to break any rules here, but I believe this concept was actually pitched on the BP podcast when they were discussing leverage. I only do this on properties that have been sitting for a while and it’s actually been pretty wild the amount of “inside information” that I am getting from these agents that I would have never gotten from mine. Now that may be a sign that I need a better agent but unfortunately I have not found one due to the size of the market. I had one agent send me his original proposal to his client where he recommended a sales price 120k less than what it was listed for. 

[Scott Allen]

@Paul C. Just cold call and find your own deals so you can make your offer directly to the seller and negotiate what works for you. While this might be more time consuming and labor intensive on your end, you might be able to find a really good deal. Or you can find an agent that will just agree to write any and all offers for you even if they are far below asking and have a low chance of being accepted. You miss every shot you don't take.

[Marcus Auerbach]

Quote from @Paul C.:

Definitely not trying to break any rules here, but I believe this concept was actually pitched on the BP podcast when they were discussing leverage. I only do this on properties that have been sitting for a while and it’s actually been pretty wild the amount of “inside information” that I am getting from these agents that I would have never gotten from mine. Now that may be a sign that I need a better agent but unfortunately I have not found one due to the size of the market. I had one agent send me his original proposal to his client where he recommended a sales price 120k less than what it was listed for. 

I have heard this strategy pitched on BP, but I don't see it working. First, saving commission is a myth, contractually not possible, LA will double pocket. Second, a good agent can negotiate better than you can, because you have an additional layer of representation and don't have to show your cards.  

As an investor I always have one of my agents represent me and negotiate on my behalf! I know (from experience, I have tried all sorts of things) that it will lead to a better outcome. For context, I am an investor and agent with a team in Milwaukee, we close about 150 transactions per year, so I see a fair amount of deals, also from other agents, and I see what works and what doesn't.

I hear you on the limited selection of agents and finding a good one is never easy, but really worth it. Have you tried the agent finder here on BP?

[Paul C.]

@Marcus Auerbach I agree a great agent can't be beat. I have used the agent finder on BP and everyone is based on Atlanta and not any submarkets. Should I just contact them and see if they specialize in my smaller zipcode? Every agent I've ever talked to says they are an "investor agent" or have great knowledge of my area, but that tends to not be the case except for my first real estate agent who I will not name, but he was the best I ever had and met him here on BP. Unfortunately, he is too busy with his own game to help me out on a regular basis.

[Brian Cole]

@Paul C. what specific submarkets around Atlanta are you interested in?

[Paul C.]

West Georgia in particular Carrollton, ga

[Eliott Elias]

When you get the agent to work both sides their fiduciary duty is held to no one. They cant' help you or the seller negotiate. All the agent can do is play messenger 

[Patrick Drury]

@Paul C.
9 times out of 10 a listing agent is not going the reduce the full commission because you don't have an agent. They are going to have to pick up that agent's slack and make sure the deal gets done.

[Marcus Auerbach]

@Paul C. in the age of google hyper local specialization (knowing every park, street and restaurant including the owner and his kids) is no longer an advantage. Access to data and the ability to interpret the data correctly is more important. So you can look a little broader. Every agent is a self proclaimed investor agent if you ask, especially young agents with not enough business. Ask differently, for example discuss vacancy rates and the rental demand, cost per unit, cost of rehabs - you'll see the difference very quickly in a 5 minute small talk. 

Another idea: ask you old agent to keep his eyes open for a referral for you.

[Jason Roman]