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Thread: Buyer's agent's motives in the Seller Market

  1. #1

    Buyer's agent's motives in the Seller Market

    I am a first time home buyer in DFW. We have a realtor who was highly recommended by online reviews. He is not someone who gives back rebate etc. So far he has patiently shown us about 25 houses. We finally made an offer on a house. The house looks great. Needless to say, there was a bidding war. We went $45K over asking price and won the bid.

    So now we are in option contract phase. Before the contract was signed seller had us agree to multiple conditions - extend their lease after closing, asked us to pay for seller's title fee, denied paying 1st yrs home insurance, put a new contingency for the new house they are buying etc.

    We agreed to all of it. Why? Because we really liked the house, want to get done looking at houses and most importantly because its a seller's market.

    Everytime we thought we would push back, our realtor goes - well, this is seller's market!
    Ofcourse it is seller's market and that's why we are over paying for this house. But sometimes I feel what is the buyer's agent's incentive to get the buyer a good deal?

    Since seller pays the agent's commission and more the selling price - the higher the commission for my agent. What motivates my agent to get me a good deal, even though that means reducing his commission by a few hundred bucks. I am clueless how this model works? how can my agent represent me genuinely with only my interest in mind when he is paid by the seller and his commission is driven by sale price!

    Our home inspection report said the pool needs resurfacing and many other fixes - totaling around 10K.
    I want my agent to negotiate and ask the seller to pay for atleast some or all of the fixes. But my agent thinks I will risk the sale by asking this.

    I feel so frustrated! It's like anything a buyer wants is shot down immediately with "its a seller's market"!

  2. #2
    Honestly, there are very few good deals to be had out there today. Many people are making 7-10 offers and still not getting a home (depending on price level). It is very frustrating even for agents. I've completely given up working with Relocation Buyers.

    We agents don't like this market either. It's not balanced and out of kilter.

    None of us can judge your Agent. Hopefully he's honset and ethical and just trying to get you into a home. Buyers have had very little power or room to negotiate.

    There again it all depends on your price range, location and school district.

    A Rookie agent in our Flower Mound office left a home out of contract too long without a deadline for offers. Believe it or not, she had 93 offers after it was all done. That wins my ridiculous award.

  3. #3
    So what are the price ranges we are talking about? The house with 93 offers...what was the list price? At what price point do things become a bit less crazy?

  4. #4
    You are right to be skeptical of motives. Realtors don't actually owe you any sort of legal fiduciary duty. They are looking out for their own interests first and foremost. Having said that, their incentive on both sides of a transaction is to get it closed, get paid, and move on. As a seller's agent, they will gladly give up $100 on their fee if they think convincing you to take a slightly lower price will mean you can reach a deal and they can move on. This is just the reality of how their business model works - I don't mean to imply malice into their actions. It is human nature to focus your energies in a business to maximize revenue against a certain amount of work.

    The reality is, they probably do assume that pushing back will mean you lose the house. If you aren't happy with the deal, let it go and find another house. If you like it and can afford the increased outlays for some of the issues that have been uncovered, then take the advice of the professional you hired who is likely being honest about the situation.

  5. #5
    Might be a dumb question - why do you have buyers agents? I can understand the seller's agent, organizing promotion of the property, handling required paperwork, conducting viewings, etc. But the buyer? I can find houses online myself, read inspection reports, negotiate price, etc.

    Disclaimer: I'm from Norway and have never bought a house in US before. Only know how it is over here, and buyer's agents are non-existent. In fact, getting rid of the seller's agent is also increasingly popular.

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