Use a buyer's agent of go with the listing agent?

Question

Hey there fellow BiggerPocketers and local greater Seattle area investors!

I would love to know regarding the situations where you have used a Relator to procure investment properties for you, how often have you used your own buyer's agent vs working with the listing agent on the deal? 🤔

Thank you for your input! 🙏

Cody Charnell · Answer

@Aaron Morrow

We do a ton of buyer rep and we have been able to win deals because 1)we have relationships with other agents in our market 2) because we have a reputation for spending a lot of time educating our clients and closing on deals.

At the end of the day the listing agent wants to close the deal for the seller and get paid. It’s risky to open escrow with someone that you don’t know who called you out of the blue. One one hand you could make double the commission but on the other hand that buyer might waste a bunch of time cancel escrow and potentially cost you a listing.

Kevin Douglas · Answer

Hi Aaron- I love working directly with listing agents. My two most recent deals were won this way in an extremely competitive market. I simply called them about the listing, let them know I was an investor and why I was interested in the specific property, let them know I was unrepresented and ask them if they were open to representing both the buyer and seller and in turn they would get both sides of the deal. 9/10 the answer is yes. I then ask them, what type of offer would the seller need to be presented with to get an offer excepted by the end of the day... when it’s worked they basically tell me exactly what I need in the offer and have won the listings. Not going to lie, it’s pretty fun when you get an offer excepted in this way!

Ridge Tullos · Answer

@Aaron Morrow many people think going straight to the listing agent will get them a better deal...and sometimes that may be true.  But from my experience more often than not, the listing agent is simply going to refer you to another agent in their office so they can get their split of commission plus 25% referral fee from the 9ther agent.  They don't want to hold a buyers hand for the same amount of money when they can refer you out and get more money for less work.  This is also state and even broker dependent as some states and brokers you have to be careful of potentially representing both sides of the transaction as an agent.

IMO if you're buying off the MLS it's easiest to just use an agent you know and trust to help you accomplish your goals.

Kevin Douglas · Answer

@Ridge Tullos - All things equal, the offer where the selling agent gets an extra 3% commission is going to win. It’s all about incentives. Though, I would agree, if someone is new to investing, it’s best to work with an agent you trust to help you through the process.

Ridge Tullos · Answer

@Aaron Morrow I just realized you're also an agent...in that case disregard everything I said and just represent yourself.

Ridge Tullos · Answer

@Kevin Lee the joys of RE Investing...it changes in all 50 states! Lol

John Morgan · Answer

Gotcha! I had no idea about all that. I just figured the listing agents were bending over backwards for me so they would get a bigger commission out of the deal. Almost all of them tell me good info about the seller which helps me in determining my offer.

Ridge Tullos · Answer

@John Morgan some most certainly will it just seems more often than not they don't.  Think about it this way 90%+ of the time someone who doesn't have an agent and calls the listing agent isn't actually serious about buying the property any way (not talking about investors just general calls received on a property).  With that said if they refer that buyer to another agent they receive 25% of the commission earned no matter what property that buyer ends up buying and they spent a whole 15 minutes to do so.  My area average commission is $7,500 so a referral could net you $1,875 for 15 minutes worth of work...that's a pretty good ROI!  And if you are strategic about who you give referrals to you will get referrals in return.  It is ultimately all dependent on the agent and how they run their business.  From an investor standpoint I personally would prefer to work with a buyers agent who knows my goals and how to help get me there...just so happens for me that agent is myself lol.

Listing agents can renegotiate and sometimes get 4 or even 5% if the seller agrees but they can still only represent one side...in this case the seller.  One party or the other is not supposed to be given "advice and opinions"...unless someone reports them this is very hard to prove so it definitely still happens.

Kevin Douglas · Answer

That makes sense! I didn’t know that about Texas.

Ridge Tullos · Answer

@Kevin Lee this is why I mentioned about state specific and broker specific in my post.  Obviously in areas/brokerages where you can get a full 6% vs 3% that will definitely work...though it doesn't offer any benefit if you aren't getting the deal any cheaper imo vs someone you work closely with on a regular basis.

In Texas we are not permitted dual agency per the state...so we would have to have a work around and create a FSBO situation and represent the buyer which quite litterally breaks are fiduciary duty to the original client...the seller.

Use a buyer's agent of go with the listing agent?

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