Is there a need for a buyer’s agent in my case?

Question

Hello,

My wife and I are currently looking for our first investment property for our future real estate goals. We recently came across a property that is in need of extensive repair and seems to be scaring off the competition in our area. (And making their bank loans difficult to acquire)

It is a 60s 2 bed/1 bath on 1 acre and would be a complete gut job with a possibility of adding a bathroom and/or bedroom depending on how it perks.

We are interested in treating this as a BRRRR deal, and have called and toured the home already.

My question is: The agent that showed us around the house is with the listing agency. Is there a conflict of interest with using the same agent who has interacted with the seller many time on other offers to make our own offer?

Would there be a bias, somehow?

Is there any foreseeable reason we should not go directly through this agent and have another agent to represent us as the buyers? (Especially since we plan on making a fairly low offer)

Thank you for any insight,

Braden

Jose L Torres · Answer

@Braden Klope Braden, there are three types of relationships in Real Estate: Single Agency, Transaction and No broker. Only the first one carries a fiduciary responsibility to either buyer or seller.

Buyer’s Agents are paid for performance. Meaning they only get paid when the transaction closes and their commission comes from the seller’s proceeds. That said in a Buyer’s Single Agency relationship the agent is there to fight for you and help negotiate, find information that may not necessarily come out from the seller’s agent and make sure you know everything there is to know about that property before you commit to a purchase.

I work with investors as a Buyer’s Broker Single Agent.  My job is to dig up all the details about any particular property ensure that they know as much as possible prior to making an offer. They are my priority.

I hope this helps you in your decision.

S D Burton · Answer

Why not get your own agent (Buyers Broker) and agree to pay your agent in cash at escrow which cash amount is deducted

from the amount you agree to pay for the house [which would be half of the amount the sellers

Broker would otherwise receive.]

Since your Buyer’s Broker is paid directly out of your checking account that’s an expense in the year it was paid rather than becoming the capital basis of the value of the property that would have to be depreciated over at least 2 decades!

Rob Massopust · Answer

Well besides the agent issue. Do you really want your first house to be such a fixer. If that is your plan and you have experience that is one thing but lots of other factors to consider.

Of course there is a bias, the listing broker and subsequent agents know alot more than you do. How many offers, sellers price point and such and what those details are. You have to ask alot of questions and piece together the entire puzzle.

Dual agency is problematic. Many times RE transactions can be contentious if an agent represents you and a seller his fiduciary duties lie with the seller first, he has to only treat you honestly and openly there is no rule for fairly. He might know that the seller will take much less than you are offering but can not tell you that. If the other agent is in his office its a little better but under same broker. They want to sell it for as much as possible you want to buy it for as less as possible. Its a math problem. Not to say its not a good deal it might be but just go in with open eyes.

Keep us posted

Steve Vaughan · Answer

I offer solo but state I have the right to obtain representation if my offer is countered.  Especially on deals like this.

I still get a quality inspection done regardless but not the inspector agents recommend.  Agents in general like inspectors that are fast and don't get in the way of the transaction closing in my experience.  You want the one they dont like. Ask who they recommend so you know who not to hire.

Bob Prisco · Answer

@Braden Klope why would you need an agent at all ? You walk it , you access what is needed. I buy and sell weekly never ( well in the last 8 years ) use an agent.

Good Luck

Anthony Dooley · Answer

If this were a retail deal that you were going to live in, you would want a buyer's agent as a second set of eyes to make sure you didn't miss something in negotiation, inspection, etc. A deal like you are describing, you already know the house is a wreck and this is just a transaction. Either way, you are not paying the agent's commission. The agent is still bound to disclose any unseen problems they have knowledge of. If the house is scaring off the competition, make sure it's going to pay off. If it were a good deal, there should be more investors interested.

Jonathan Greene · Answer

Dual agency is permissible and many agents know how to manage it correctly. They should not be giving private information to you or the seller when representing both sides, however you always have to remember that their ultimate obligation is to the seller because that's they only way they get paid. You don't pay for a buyer's agent and you will now be paying for advice from the listing agent which inherently has a slight bias to selling this property and not another one. But if you do get a buyer's agent, they won't be able to sneak into this deal. Once you've seen it with the listing agent, they have agency for the deal.

Brandon Roof · Answer

When it comes to making a low offer, using the listing agent as your agent may prove to be more beneficial to you in some cases.  Let's say the property is listed at $50k and you are offering half, effectively cutting the listing agent's potential commission in half.  Having them represent you on the transaction now provides them with the opportunity to pick up the other half of the commission that normally would have went to an outside buyer's agent, and may be enough of an incentive to them to prioritize your needs over the seller's and lean harder on them for the sale.  Any dollar over half the asking price you offer should, in theory, be even better for them as they now stand to make more on the deal than they would have simply as the seller's agent.

Megan Swiger · Answer

It is allowed but the sellers agent is working for the seller not you...

Amanda Kessler · Answer

You really don't need an agent, but if you feel like you need representation then go for it.

Is there a need for a buyer’s agent in my case?

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