Not using a buyer's agent in this market

[CanadianDriver]

@ beaconer:

Thanks for that post. Very enlightening and it makes a lot of sense. I did feel that agents I dealt with in the past didn't watch out for my best interest all the time. Looking back now, there were more instances where I was "forced" into making a decision, rather than instances where they "fought hard" for me.

I'll research more about this and from the looks of it, I'll be joining your crusade in minimizing buyer's agent involvement. I have a trusted lawyer anyway who will help/protect me on the legal side of things.

 

[cabbagetowner]

private deals are the best. otherwise go dual agency.

in the past i've beat out other bidders by paying less.
example: a 500k (dual agent) offer is equal to or better than a competing offer of approx 512.5k (with ba), assuming 5%commission split b/w ba and va.

in this environment 12k can make or break a deal. i'm suprised how many people still use ba. I suspect this isn't the case in other places.

 

[Yossi Kaplan MBA]

Theory or Reality? where is the industry going?

Furthering the example of the $300,000 property:


If the seller is listing at $300,000 and actually wants $290,000 as their final offer(listing prices are always inflated), If I came in as a buyer $285,000 without an agent, the listing agent with a 4% commission recieves:

~$11,400

If there was a competing offer, that came in at $290,000 from a buyer with a buyers agent, the selling agent makes (2.5%*290,000):

~$7,250

Now I am not suggesting that both offers would come in at the same time (in this situation the listing agent would have an obligation to take the higher offer on behalf of the client), but I am suggesting that it would serve the selling agents best interest to deal with me without the buyers agent if I make an offer first or in isolation. It would also be in the sellers agent interest to convince their client to take my offer, thereby not serving the sellers best interest.

Very interesting as I do believe the industry is changing, mainly b/c of access to information which is more and more readily & publicly available.

In case of the example above, or any other, can anyone provide an actual address of deal done where the Listing Agent acted for both side (Multiple Representation) and has agreed to reduce his or hers commission? I don't expect an answer here (reality) but would give it a try anyways (theory).

 

[cabbagetowner]

Very interesting as I do believe the industry is changing, mainly b/c of access to information which is more and more readily & publicly available.

In case of the example above, or any other, can anyone provide an actual address of deal done where the Listing Agent acted for both side (Multiple Representation) and has agreed to reduce his or hers commission? I don't expect an answer here (reality) but would give it a try anyways (theory).

since 2005 I have operated exclusively on this basis (except for private deals). i'm wondering why you would want to know the addresses?

 

[simuls]

I just met with one of the top agents in C01 over the past several years and his selling fee is 5% commission if there is a buyers agent (2.5+2.5) and 3% if he's the dual agent. It's all there in writing clear as day.

I also just met with another RE agent, top of sales for his company, etc., in C01 as well and his fee is 4% (1.5him, 2.5buyer) or 1.5% if he's dual agent. Plus, the contract allows me to still try and sell my property privately and if I do so, I owe no commission whatsoever and the agreement is null and void (this is all very clearly laid out in writing in the contract with additional schedules added to the standard).

 

[bandana]

What happens to the commission?

Is it possible to represent yourself in the role of a buyer (ie. NOT have a buyer's agent) and not enlist the seller's agent as a de facto buyer's agent?

Reading through this thread it seems that if you don't have a buyer's agent, then the seller will take on that role, although the combined commission payable will then be around 3-4% rather than a full 5%.

Is it not possible to have the seller's agent represent only the seller at the standard 2.5% so that the a self-representing buyer can knock off the other 2.5% from the price?

 

[cdr108]

Is it possible to represent yourself in the role of a buyer (ie. NOT have a buyer's agent) and not enlist the seller's agent as a de facto buyer's agent?

Reading through this thread it seems that if you don't have a buyer's agent, then the seller will take on that role, although the combined commission payable will then be around 3-4% rather than a full 5%.

Is it not possible to have the seller's agent represent only the seller at the standard 2.5% so that the a self-representing buyer can knock off the other 2.5% from the price?

Possible, but it also depends on what the listing agent is willing to negogiate on their commission outlined in the contract.

He/she may reduce the commission for the seller to get the deal done, but there is no obligation since he/she could legally get the full commission (5%) even if you're not represented.

 

[cabbagetowner]

i think the key is to get other fsbo sites to the level where people will have comfort in listing there, knowing that it will get enough exposure. right now realtor.ca is the only real game in town.

 

[bandana]

Thanks cdr108.

I am confused by an incident that occurred this morning and was hoping folks might be able to shed some light on it. I called up the seller's agent on an MLS listing. She was paged and called me back. She first asked if I had a buyer's agent. I said no, I am representing myself. Whereupon she asked me to sign up with her. I said I would consider doing so if she was willing to act as a dual agent when and if I made the decision to purchase this property, but until then, I wanted to represent myself. She then refused to show me this property claiming that I would be wasting her time. I was confused enough to call up the agency and have a chat with the manager who basically tried to promote the merits of having an agent, and couldn't really address why this agent was refusing to let me view this property. But I was offered to option of viewing it with another agent from her office.

Has anyone else faced this when not signing up with a buyer's agent?

 

[Cave Spot]

Thanks cdr108.

I am confused by an incident that occurred this morning and was hoping folks might be able to shed some light on it. I called up the seller's agent on an MLS listing. She was paged and called me back. She first asked if I had a buyer's agent. I said no, I am representing myself. Whereupon she asked me to sign up with her. I said I would consider doing so if she was willing to act as a dual agent when and if I made the decision to purchase this property, but until then, I wanted to represent myself. She then refused to show me this property claiming that I would be wasting her time. I was confused enough to call up the agency and have a chat with the manager who basically tried to promote the merits of having an agent, and couldn't really address why this agent was refusing to let me view this property. But I was offered to option of viewing it with another agent from her office.

Has anyone else faced this when not signing up with a buyer's agent?

When you call them up do not say you are representing yourself. Just say you don't have an agent. DO NOT SIGN ANYTHING, until making an offer.

If they still refuse to show you the property don't waste your time talking to the manager. Communicate to the ONLY person that matters, the seller. If I was the seller, and I found out my agent was making it difficult for buyer's to see my property I would be very upset and wonder if he was really looking out for my interests. Just leave or mail a note to the owner that you are a qualified buyer (preapproved for a mortgage) and their agent refused to show the property to you. I'm sure the owner won't be too pleased and you may get your showing. Otherwise move on, there are plenty of properties out there.


See more details here:

Purchasing without a Buyer's Agent

 

[simuls]

That is absolutely despicable behaviour!!!!! I am flabbergasted and shocked. You should call The Toronto Star. If this is typical real estate agency behaviour then they need to get their heads knocked off. It is a complete breach of trust with their seller by putting their desire for a larger commission over the seller's needs. Disgusting. Oh man am I mad!! Get me the info and I'll take it to the Globe.

 

[Devils Advocate]

Buyer's Agents Liability

After reading the foregoing posts, I failed to find any reference to the law governing real estate agents and in particular the common Law of Agency that encompasses the fiduciary (legal) obligations of an agent to his or her principal (client).

In the event a agent who has been formally retained by a client, be it a seller or a buyer and that agent fails to fulfil and/or breaches their fiduciary obligations they can be held legally liable, a fact which most real estate agents chose not to advertise.

There is case law where agents have been successfully sued by their former clients for a breach of their fiduciary duty and where the plaintiff’s were awarded damages and/or legal costs.

Today, because of the agents Error & Omission insurance, the agents insurance company usually makes an undisclosed settlement with the plaintiffs.

One of the primary reasons that a party should be independently represented by their own agent is the knowledge that they have recourse against their agent for inadequate service and/or a breach of the fiduciary duty that they as clients are legally entitled to.

A consumer in choosing an agent, should make it clear to the agent that s/he expects them to fulfil all elements of their fiduciary duty, and any agent with a degree of intelligence will realize that they had better cross all the T’s and dot all the I’s in the representation of this particular client.

That being said, a consumer has the choice of deciding whether they wish to forego the ability to hold their agent legally liable for any of his/her errors and/or omissions or wish to be self-represented and assume the consequences for their own errors and/or omissions.

Remember that unless the agent has been formally retained by the buyer, that agent by law in Ontario is acting in most instances as a sub-agent of the listing broker and therefore compelled to act in the best interest of the seller or be held liable by the seller.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .

 

[cabbagetowner]

After reading the foregoing posts, I failed to find any reference to the law governing real estate agents and in particular the common Law of Agency that encompasses the fiduciary (legal) obligations of an agent to his or her principal (client).

In the event a agent who has been formally retained by a client, be it a seller or a buyer and that agent fails to fulfil and/or breaches their fiduciary obligations they can be held legally liable, a fact which most real estate agents chose not to advertise.

There is case law where agents have been successfully sued by their former clients for a breach of their fiduciary duty and where the plaintiff’s were awarded damages and/or legal costs.

Today, because of the agents Error & Omission insurance, the agents insurance company usually makes an undisclosed settlement with the plaintiffs.

One of the primary reasons that a party should be independently represented by their own agent is the knowledge that they have recourse against their agent for inadequate service and/or a breach of the fiduciary duty that they as clients are legally entitled to.

A consumer in choosing an agent, should make it clear to the agent that s/he expects them to fulfil all elements of their fiduciary duty, and any agent with a degree of intelligence will realize that they had better cross all the T’s and dot all the I’s in the representation of this particular client.

That being said, a consumer has the choice of deciding whether they wish to forego the ability to hold their agent legally liable for any of his/her errors and/or omissions or wish to be self-represented and assume the consequences for their own errors and/or omissions.

Remember that unless the agent has been formally retained by the buyer, that agent by law in Ontario is acting in most instances as a sub-agent of the listing broker and therefore compelled to act in the best interest of the seller or be held liable by the seller.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .

so there is no recourse if you go dual. you really need to talk to a lawyer, they can explain this to you.

 

[picchu]

What happens to deposit upon offer?

Very interesting perspectives. I was talking to a RE and he mentioned that one of the advantages of using a buyer's agent (in a private sale) was that a RE could protect the deposit that is usually given upon offer. Otherwise, we'd be writing a deposit cheque to a virtual stranger (when we make the offer) and assuming that it will all be good.

Thoughts on this?

 

[cabbagetowner]

Very interesting perspectives. I was talking to a RE and he mentioned that one of the advantages of using a buyer's agent (in a private sale) was that a RE could protect the deposit that is usually given upon offer. Otherwise, we'd be writing a deposit cheque to a virtual stranger (when we make the offer) and assuming that it will all be good.

Thoughts on this?

put it thru a lawyer, funds held in trust.