Buyers Agent/sellers Agent

[happyardy 0]

Hello All,

I am a novice to the real estate field, (have done some reading but haven't started investing as yet).

I read somewhere that when a real estate deal is done using agents, the seller usually pays for the 6% commision and it is split between the seller's agent and the buyer's agent, (It could be that the brokers receive it and then they give their agents some part, but that is not my concern for this question).

If the seller is going to pay the commision on the sale price and the buyer agent/broker also receives his commission based on that, (3%), wouldnt it be that, the more I pay for the house, the more my agent, (buyer's agent) gets ? Why would he,(the buyer's agent) be interested in negotiating a good deal for me(the buyer)?

I can understand the role of a seller's agent since the more price he gets for his client, (seller), the more commission he gets.

Would my agent, (buyer's) also be secretly hoping that I pay the max. price for the house that I can afford ?

- Ardy

[Doug Pretorius (ON) 9]

Yes! That's one of the reasons why having a buyer's agent do your negotiating for you is useless. It's called conflict of interest.

[MichaelC 160]

Hello happyardy, and welcome to The Naked Investor.

Good question. The official answer is that the buyer's agent is signing a document with the buyer, that he/she is representing you and your interests. This being the case, they are obligated to assist you in getting the property for the best possible price. Is this a guarantee? Of course not. But that's the design and intent of the setup.

I suppose the question a buyer needs to ask themselves is are they comfortable and trusting with the Agent in question. If so, take a leap of faith and go for it. If not, find another Agent to represent you, or do your homework and try it on your own.

[happyardy 0]

Michael & Doug,

Thanks for your answers. I had read that the agent representing you has a commitment to your interests. In the case of buyer's agent, I just wasnt sure how since it conflicted with the agent's chance to earn more money.

Will now go and find out about an agent's role in Lease Options.

- Ardy

 

 

Hello happyardy, and welcome to The Naked Investor.

Good question.  The official answer is that the buyer's agent is signing a document with the buyer, that he/she is representing you and your interests.  This being the case, they are obligated to assist you in getting the property for the best possible price.  Is this a guarantee?  Of course not.  But that's the design and intent of the setup.

I suppose the question a buyer needs to ask themselves is are they comfortable and trusting with the Agent in question.  If so, take a leap of faith and go for it.  If not, find another Agent to represent you, or do your homework and try it on your own.

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[MichaelC 160]

Will now go and find out about an agent's role in Lease Options.

Don't expect to find too much. Not all, but the typical Agent has no idea how a lease option works, and so will be quite negative about it. Not to rain on your parade, just be prepared for some resistance.

[happyardy 0]

Michael,

In case of FSBOs, it is not a problem. There wouldnt be any agent involvement.

But, what if, an agent finds me(buyer) a house and then I want to do a L/O on it with the seller ? The agent might be getting paid his commission only when the Option part of the deal is closed. I am sure most agents wont be too happy with that especially since they might have to wait for long periods before they see a commission. I am sure there are ways around it. I'll find out more.

Well, here is my case.

I live in the USA right now(renting) but would be moving to Canada next year for good. Say, for the first house(the one that I would be buying to live in--owner occupant) I might use an agent since I would be totally new to the city, it would be my first property buying experience anywhere ever, etc etc.

Now after I have bought this home using an agent, if I mention to him about my interest in buying income properties and tell him that I would be interested in L/O, would he be interested in pulling up houses for me from his MLS ? Or I would need to work out a profit-sharing plan with him ?

I am thinking about a power-team and am trying to understand motivations.

Since, I have a short time left in the USA, I am still trying to get a solid foundation in real estate education so that I can start full-fledged once I go to Canada. I have read about your "Paralysis of Analysis" phenomenon and I agree with you but since I have some time to kill, I would want to understand the process really well and have a system/plan in place.

thanks

- Ardy

 

 

Will now go and find out about an agent's role in Lease Options.

Don't expect to find too much. Not all, but the typical Agent has no idea how a lease option works, and so will be quite negative about it. Not to rain on your parade, just be prepared for some resistance.

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[Doug Pretorius (ON) 9]

Now after I have bought this home using an agent, if I mention to him about my interest in buying income properties and tell him that I would be interested in L/O, would he be interested in pulling up houses for me from his MLS ? Or I would need to work out a profit-sharing plan with him ?

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Ardy, you may of course experience something different, but here's what I've seen investing in 4 different cities in Ontario.

I've made somewhere around 500 L/O offers to/through agents, guess how many got accepted? Zero!

[happyardy 0]

Doug,

I can imagine. I am just wondering if some kind of a win-win situation can be created so that the investor can do a L/O and the agent also could get something out of it without having to wait long periods for their commissions.

I read that many big real estate brokerage companies are training their agents to adapt to the L/O model of investors since that is too big an area to ignore.

By the way, if an investor works out a something(a profit-sharing plan) with an agent, is that illegal?

Not that I would want to work with an agent by choice, but having access to an agent's resources(MLS) could be really helpful. An agent could probably open many doors and get many offers to the investors which the investor might not be aware of.

my $0.02

- Ardy

 

 

Now after I have bought this home using an agent, if I mention to him about my interest in buying income properties and tell him that I would be interested in L/O, would he be interested in pulling up houses for me from his MLS ? Or I would need to work out a profit-sharing plan with him ?

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Ardy, you may of course experience something different, but here's what I've seen investing in 4 different cities in Ontario.

I've made somewhere around 500 L/O offers to/through agents, guess how many got accepted? Zero!

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[MichaelC 160]

Ardy, using an Agent to help you relocate is a good idea. But afterwards, you might be better served by using the Agent to feed you expired listings that you can work directly. Beats having the Agent in the middle. In exchange, you can provide the Agent with leads of homeowners who need a Realtor.

[happyardy 0]

Michael,

Thanks for the reply.

Yeah, that can provide motivation for the realtor.

regards

- Ardy

 

 

Ardy, using an Agent to help you relocate is a good idea.  But afterwards, you might be better served by using the Agent to feed you expired listings that you can work directly.  Beats having the Agent in the middle.  In exchange, you can provide the Agent with leads of homeowners who need a Realtor.

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