Real Estate Blog - Buyers --- why do they choose to deal only with listing agents?

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Buyers --- why do they choose to deal only with listing agents?

Sunday night, I spent time with buyers who want to write an offer on my listing which they have seen 3-4 times, and once with their contractor. We have the offer packaged and ready to go to present to the seller.

Today, one of them dropped off a letter they wrote to appeal to the seller. On his way out he stopped to talk to another agent from my office.

As luck would have it, the other agent and I were going out together for dinner. She told me that the buyer has told her they don't think the offer they wrote with me will be accepted, so they want to make an appointment to see my co-realtor's listing on Thursday. And that if they like it, they will use her to write the offer on her listing.

When she asked him why they're asking her to do that when they have already signed with me (agency disclosure), they said that they only want to deal with listing agents.

What benefits do the Buyers think they're getting by working only with the listng agent? And how should we handle such a delicate situation of using multiple listing agents to write offers on their respective listings?

Posted by Pacita Dimacali - e-PRO, SRES, CDPE, MBA East Bay, North CA real estate on 09/23/2008 10:21 PM

Comments (44)

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Originally posted at: Pacita's Quick Bytes of Real Estate: Buyers --- why do they choose to deal only with listing agents?

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44 Comments on Buyers --- why do they choose to deal only with listing agents?

SEP

2008

Pacita, I find it interesting, this phenomenon. These are buyers who think they are' smarter'. They do not understand that our feduciary responsibility as Listing Agents is equally devided between buyer and seller and they will not get an edge. They are banking on that maybe we are unscrupulous enough to get them a 'better deal'. I found that to be one group, as well as the other group that thinks that they can get a better deal again by trying to have us reduce our commissions since we are on both sides of the transaction. Over the years I have been on both sides and closed transcations, but I have also been in a situation when I basically told them to get another agent, because I saw potential problems down the road. Hope this helps.

Pacita, I don't think this is that unusual. If I am understanding what is happening here, I believe the buyer thinks they can get a reduced purchase price by going directly to the listing agent; ie, having the listing agent act as a dual agent, possibly reducing the percentage paid on the sale by the seller and thus reducing the sales price the seller is willing to take. Maybe the buyer can save a few dollars, but I am sure they don't understand that in most cases they would not get the same representation as having their own buyer's agent. It is difficult representing both parties equally, I believe. The other possible issue is dealing with a control freak... Been there, done that with my own stepson...

You get them to sign a Buyer's Agency agreement- and explain how in each and every case - you will be looking after their express best interests? I think Sherry Lee is right - they think they'll get a better price - because the Realtor will be twice as motivated considering they get both ends!

Uneducated buyers are really hard to work with. They are like spoiled children who think they know the Real Estate business better than thier Realtor. This is why I try not to take on clients that I feel are going to be difficult by not providing me with a pre-qual, or if I get a hint that all they are going to do is make low ball offers, (especially in this market). I will refer them to another agent.

Im trying to answer this question myself. I get alot of my listings sold by people just like this. They run all over town and call whoever is on the sign in the yard.

In my opinion, they truely do not trust us to represent them. They think something is going on between the agents.

Pacita: I have buyers trying to cut me, the listing agent out of the deal completely. They are approaching my seller direct and telling them that I am a horrible agent. The good thing for me is that my seller knows me better than that. These folks are just trying to cut me out so they can "save money". This is what I like to call the Walmart mentality and it is pervasive in our society. There was a time when people dealt with others with integrity. That has changed in many places now that the dollar has become more important than ethics. This sounds cynical, but it really is not, its simply a fact of doing business today. You have to do the best to build deep, etchical relationships with your clients so that situations like this will not happen as often, but they will still happen I am sorry to say!

Pacita, you would be surprised at the number of buyers out there that think they can put in a lower offer because the seller is saving money if they do not use a buyers agent. Also they maybe thinking that the sellers agent will push the deal more if they are getting both sides. So choose your logic.

I agree with those who said the buyers are trying to get a better price by working directly with the listing agent. They don't see the need to work with a buyers agent since they think they know best about finding a house and negotiating for themselves.

This practice of working with listing agents is unfortunately very common. Consumers in general think that if they can "cut out the middle man" then they will save some money. Just think how often we all hear advertising on how we can save money by going direct - their are furniture outlets, clubs, etc. that support this belief. As everyone has stated in comments - buyers and sellers often don't completely respect the role that each agent plays representing the interests of the parties. Even when they do understand it, money speaks very loudly and alters behaviors more than anything. When people are buying something they are very senstive to how many people are getting paid in the process. Attorneys, title companies, inspectors, appraisers, surveyors, the list goes on and on. Since the largest sum of money is to the agents, and thier role is something that to some seems easiest to do without, they tend to target that chunk of change. Obviously they don't appreciate that we are working twice as hard representing both parties. It is especially frustrating because we are obligated to do all we can to show/sell our listings so to have a resistance to work with these buyers is counter to what we are supposed to do. At times like this I have to tell myself that I might as well know the truth up front and save myself time and money - if they want me to show my own listing, I will and if I can't convince them to allow me to show them other properties and represent them in their purchase, better I know their position and tendancy up front! I guess I wouldn't get that upset about this practice and instead would simply move on to those who do want to be represented.

Pacita - I think it is a mix of the above, thinking they will get a better deal and ignorance. I have a brother in law who insists the best way to find out about a house is to call the listing agent and get them to show it. He doesn't understand the business, the matter of agency, etc. He also doesn't understand that until he signs that agency agreement anything he says may be held against him in negotiations. He also doesn't want to be educated about the process.

One of the reasons is so much media hype about how you can save yourself the buyer's commission if you go through the listing agent. In some cases a dual-variable rate can accomplish that, but what the media fails to report or maybe understand (and hence the public isn't really told) is that the commission rate is already negotiated when the home is listed...

Going through the listing agent MAY save them half the commission or it may just put them in a position to buy their largest investment without any represenation...

Some buyers think that the listing agent will take less commission since there is only one agent and that the listing agent wants the listing sold, where a buyers agent will steer them to other properties. I have had a few buyers who have told me they will only call the listing agent to see a home.

I agree about the "getting a better deal" idea. I also think younger uneducated buyers don't know how to pick an agent so they just keep calling the numbers on the signs and are afraid to sign with anyone.

I agree with Ron Tarvin's assessment! Lots of seminars teach buyers that it is better to go through the list agent.

I don't think some buyers understand the value of Buyer Representation. We need to educate buyers more in this area.

Hi, all....

When we double-end a sale, it is a big deal. But it's also a lot of work, trying to balance the demands of each side.

I had one sale that turned out to be so contentious and horrendous. Other agents have also told me that they won't write offers on their own listings.

I also lost a client to whom I've shown so many properties until the client went to an open house without me. The listing agent told my client that she would reduce her sales commission, enabling the buyer to get it for less. This was at the height of the frenzied market when we were getting outbid. So the client decided to go with the listing agent.

I agree that it's about educating the consumer to understand the point of buyer's agency. Too little time is spent on this.

Hi, That's interesting!! Most buyers that I come across don't want to deal with the listing agent because they feel they will be misrepresented.

Pacita... this is a very interesting situation.. maybe they think they are going to get a better deal because the name on the sign.

Great Post, I have had buyers tell me that they have been advised to deal with the listing agent as they will get a better deal...who advises them of this? Family and friends...not the professionals who know better. I take 5-10 minutes and explain the way things really work and it's amazing when the lights come on and they finally understand... I know most consumers truly have no interest in the mechanics of our business, but boy the learning curve can be rough...

Much as I would like to double end a deal, it still boils down to basics:

A Seller's agent's primary focus is to get the HIGHEST and best price for the Seller.

A Buyer's agent's primary focus is toe get the LOWEST and best price for the buyer.

And when we act as the dual agent --- we can't favor one over the other. Essentially, we can simply disclose material and pertinent information to guide them with their decision making process.

I have a brochure on Buyer Representation that I give to my buyers, any TRY to explain to them that they really need a buyers agent.

I think a lot of them are just un-educated, but some just think all realtors are liars - sad.....

SEP

2008

I used to work with buyers but had to work hard to pick them up, until I started gaining listings and realized how much easier things come. I get so many more leads and qualified leads as a listing agent to pick and choose from. Ive since changed and focused my strategy to go after more listings than prospecting for buyers which take more energy, money, and effort.

A buyers rep is essential, and I provide minimal service until one is signed with me.

Some of it must be the way a state is set up regarding agency. In WA, we are not fiduciaries but our profession is regulated by agency and common law written into the Revised Code of Washington (RCW). It is legal to provide dual agency here but I find it very uncommon that an agent does it. In KS where my mom practices real estate (Myrna Haas of Myrna Haas Realty), they don't even allow dual agency and is forbidden by law.

Some buyers may choose to work with the listing agent believing that they will likely know more about the specific property. It may be that your state doesn't restrict dual agency. It might be that they do hope to get a discount.

I, for one, provide a commission discount to the seller if there is an unrepresented buyer since the price we set for the home is to reflect market value.

This reminds me of the challenges of being a good debater. First you represent one side; then you represent the other side. Either way, you have to be totally convincing!

I blogged about what we do as seller's agents.

Perhaps it's time to create a list of what we do as Buyer's agents. If someone has already done so --- please share your ideas!

Thanks!

Pacita, That is just stupid. Buyer agents play a very important role and I have to get the sellers permission before I can be a dual agent. I only have 100% loyalty...

We have been told numerous times that the reason that people want to deal with the listing agent is so that they will get a better deal. As we know it is the seller not the listing agent that determines the price.

I think the buyers think that by dealing with a listing agent, they are getting someone who is more knowledgeable about that specific property. That's why I take it very seriously to be extremely knowledgeable about my farm area. My knowledge about my farm is second to none, and I'll happily prove it when necessary.

This is an interesting topic. I have to agree with most people here....that buyers simply think they are getting a better deal by going straight to the listing agent. I still feel it is true that most sellers feel their agents are over paid and most buyers feel their agents are very valuable. I have sold my own listing and find it very uncomfortable. My office makes it difficult to do. Probably because they feel the chances of getting sued are very high in this type of transaction. Also, I just prefer handling one side of the transaction and let somebody else deal with all the issues on the other side. Makes my job a lot easier.

One nice thing about dealing with a "know-it-all" buyer is that you can decide not to work with them. One of the joys of this business is we can pick who we want to work with. What a country.

Pacita, I think some uneducated buyers think that they will be paying the Buyer's Agent commission out of their pocket. Some actually also think they are saving the Buyer's Agent commission in their deal by going direct to the Listing agent. Oh, when will they learn that it doesn't save them anything???

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I am dealing with a woman who went directly to the builder I represent, so that they would cut me out and she would get a better price on the home. The woman was an AGENT from another area! When the builder informed her they WOULD pay me my 1/2 of the commission she was so mad she won't even let me be involved at all..I will work behind the scenes...You never know what you will encounter in this business.

Oftentimes, dealing with uneducated buyers can be a draining experience. You have to teach them every part of the business to get them to understand why things work the way they do. Everyone has pretty much summed up above but i would let it roll off your shoulders as you're going to come across some like the example above by Kathy which will drive you crazy if you let it. Real Estate is not for the faint of heart. You gotta get a heart of stone to survive.

Kathy, what that other agent did in your situation was awful! In my mind, if you could prove she knew you represented the builder, she should have her lisence suspended! Unbelievable! GRRRRRRRRRR. Sorry, just had to vent. Thanks for listening.

As active Buyers Agents in our area, we ask this question a lot. Some people think that they will save on commission. We are a "Buyer Beware" state (VA) and the public sometimes does not understand the consequences...

your friend in Charlottesville!

They think they are going to get a great deal ... people like that are usually a waste of time.

It seems that buyers think that they will save on some of the commission. It's hard to understand it.

This would not be allowed in my office. If they are your buyers and have signed agency disclosure with you, then they are YOUR clients. Agents in the same office should never step on a listing or sale with another agent in their office. That agent should tell them 'no'.

Pacita - I'm not a Realtor but I have to agree with the Remax comment. If you have a contract with them then they are your clients and the other agent in your office should respect that. But then again, I'm not a Realtor.

However, for what it's worth, the few times I have discovered any of my clients engaging in this practice (only making offers with listing agents), I will also educate them on the benefits of having their own Realtor. I even go so far and to make a specific point about it in my First Time Buyer Seminars.

I don't know why buyers have a hard time understanding that a listing agent works for the seller not the buyer.

I hope you have a good talk with them. Don't let them cheat you.

SEP

2008

Buyers think they can do this because some listing agents will accept a reduced commission if they have both sides. While I understand this is something the seller can also ask for, it brings up something we need to consider. I've had this happen personally by one of my best repeat clients where I have been a dual agent on 3 separate occasions. He asked me to reduce my commission in half since I had both sides. I declined since I feel that I was going to be doing double the work in representing the buyer and the seller. While it's easier to be on both sides sometimes since as the agent, we involved with the lender and have more intimate knowledge of that side to makes sure things are going smoothly; but quite frankly, its a more delicate situation and in every dual agency situation, I still feel I did the same amount of work for the buyer and seller as if were 2 separate transactions. After explaining this to him, the seller, also an insurance salesman, was perfectly fine with the arrangement. Perhaps we need to reconsider whether we should be conceding half the commission if we get both side and then we can change this phenomenon.

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Michele Reneau, CRS, ABR, GRI
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In California, we are allowed dual agency. If there is an agreement for the agent to reduce sales commission if agent represents both sides, there is an entry on our local MLS for Dual Variable. If the seller and the agent agree to a reduced commission for dual agency, this is where we enter "yes".

I don't know that reducing the commission by half is reasonable. When such a situation arises, it may be acceptable to both parties to reduce the commission by 1%. The amount of work etc isn't diminished. As a matter of fact, it becomes such a nerve-wracking balancing act that sometimes, the stress isn't worth it.

SEP

2008

I honestly think people don't realize how it all works. I have spoken with buyers who had no idea they could have their own buyers agent, or that they would be in a better negotiating position if they WERE'NT using the listing agent. Sometimes they erroniously think they will gt a better deal and the savings in commission will go to them.

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