Buyer agent VS Dual agent

the disclosure is not a contract so you can have your own buyer agent. but the listing agent will probably be very pissed, annoyed, etc.

You certainly are not found to the disclosure notice you signed. However it may be difficult to bring in your own representation on a deal you've already made an offer on. As noted above this may not sit well with the listing agent. But you should also keep in mind you should proceed the way you feel comfortable and not feel too concerned about the listing agents feelings. You were the one potentially spending a large sum of money, you should get the service you desire. And most importantly, it's unlikely the seller will be annoyed. They simply want their home sold to a qualified buyer they can close.

And I speak as someone who represents primarily buyers but also sellers. We never push back when a buyer decides to bring in their own representation, regardless of the stage we're at with a deal. It's simply their prerogative and right to do so.

Keith Burkhardt
TBG

As a seller, this happened to me, ie a buyer made a direct offer and then demanded to introduce an agent, who then demanded to lower the offer. I told them to get lost and sold to the next party a few days later at full ask. The annoyances were several, but keep in mind that a realtor who is set to make a 5% commission rather than splitting 6% will be highly motivated to get you in, for better or worse.

This said, my experience was in a roaring hard market. Now that things are soft, YMMV.

OP- you can bring in a buyer's agent all the way up to signing the contract. It can however change the deal since the seller could have negotiated a lesser commission to be paid to the seller's agent on direct deals. and now with a co broker on hand, seller could ask you to 1) pay your agent's commission or 2) increase your offer to compensate the additional commission.

Keith : what are your thoughts on dual agency? should direct buyers sign? or should they indicate that they are representing themselves? on direct deals i tell buyers i represent the seller and if they want to negotiate, they should do so knowing beforehand.

When you sign an agency disclosure consenting to dual agency, it is not a contract - you are not binding yourself to any sort of exclusive representation by the seller’s agent. You are simply acknowledging the role of the seller’s agent in the deal and consenting to their role as dual agent. You have every right to buyer representation on your purchase and should not hesitate to bring in an agent if you decide you want one.

I never do dual agency bc I don’t believe it is possible for an agent to represent both the buyer and seller on a deal where the two sides are diametrically opposed on the most important deal terms. It is a very clear conflict of interest in my mind and don’t understand why it is even presented as an option. My agency disclosures to unrepresented buyers state the I am the seller’s agent.

Bottom line is that if you want a buyer’s agent involved, get one involved, but understand that your introduction of one this late in the game may shake the balance of your negotiations a bit.

Dan Gotlieb
Digs Realty Group
www.digsrealtynyc.com

The document was merely a disclosure to you, not a contract. Even if someone got you to sign something which was some sort of "dual agency contract" it would not be enforceable and would probably place that broker's license at risk.

That said, I've seen plenty of deals where all the buyer's agent did was throw impediments into the deal and add no value, so choose your agent wisely. Also, before 1990 almost every single deal was done with a single broker, so while I understand DOS position the concept that the world is going to end if you don't have a Buyer's Broker is a bit Chicken Little in my opinion.

If you're buying a simple product, such as a 1BR condo in a large and established building that you don't intend to renovate, and if you have a good lawyer, you might not need a buyer's broker. Situations where I'd want a buyer's broker on my side: buying any sort of unusual property, buying land, buying in a land lease building or a building with some sort of issue, buying a real fixer-upper, buying a property with title issues, buying a property that was recently foreclosed upon... You could also look at some of the limited-service brokers that rebate you part of their fees.

If you get a good lawyer, they can help with some of the issues above, sometimes more than a broker. If you don't have either a good lawyer or a good buyer's agent, maybe you got in too deep and should gracefully find a way ou.

I listened to what people were saying on these boards over 10 years ago relating to what they wanted from brokers and what their complaints were. We provide clients with 100% transparency, commission rebates and a very thorough analysis of properties.

You're never better off with somebody thats incompetent or even mediocre in the course of any business. Find somebody that compliments you and adds value to the process. Under these circumstances I believe you're better off with your own representation.

Of course, a buyer's broker is certainly not a necessity. If you're more comfortable working on your own, go for it.

Keith Burkhardt
The Burkhardt Group

There is also an inherent conflict of interest in being a Buyer's Broker: while the job is to represent the best interests of the buyer, what you get compensated for is convincing your client to pay whatever is necessary to get the deal done.

In case it wasn't already obvious, I agree with Keith.

@30 that's a very cynical take on things :) perhaps you haven't shaken off some of the training that Hank provided, lol.

I built up a very solid business simply giving people an opinion on a property including valuation. And we always do this before asking them what they want to pay. 'However we happily and enthusiastically deliver the offer they are comfortable with.'

Keith,
Let's be clear: just because there is an inherent conflict of interest doesn't mean that all buyer's brokers are screwing their clients 100% of the time. But I'm sure we have both seen many instances of buyer's brokers merely acting as a second seller's broker and saying whatever it takes to get the buyer to pay whatever it takes to get the deal done. I know I've even seen them justify it by saying their job is to get the property for the buyer. But if the agent's bread is being buttered by activity which isn't in the buyer's best interest that's the textbook definition of conflict of interest.

You can be represented by whoever you want. The Department of State is clear about this.

HOWEVER, you put in an offer without an agent, and now you want an agent. What changed? What change in the behavior of seller do you think having your own agent is going to make?

As others have pointed out above, the disclosure is separate from the actual negotiation. If you're buying a condo, I wouldn't give the change another thought.

But you are displaying a level of ... uncertainty? is that the word I'm looking for? Flightiness? (Like, if you change your mind about this, what else are you going to change your mind about?)

And if I were seller (not seller's broker -- let's disregard seller's broker's financial interest, since they might have a step-contract anyway) but actual seller, and this were a co-op, I would start to have doubts about putting you in front of a board.

I know that doesn't make me sound magnanimous, but I am trying to help you as a buyer get a lens into the minds of how real estate people's minds work, so that's my take.

As a disclosure, I work as both a buyer's broker and a seller's broker, and I've also bought and sold co-ops for my own personal use.

ali r.

@30 agree, I've seen plenty of bad behavior from both buyer brokers and sellers brokers. Surprised when a number of listing agents have provided me with information they most certainly shouldn't have, considering their fiduciary to their client. And of course plenty of buyer agents only interested in getting an offer accepted and getting that commission check. I could write a small book on the stories clients have told me over the years!

@ali many clients decide to act on their own because they're under the impression they're going to get a better deal, be treated like a VIP because the listing agent is collecting more commission. When they realize that's not the case and then they're suddenly dealing with a broker whose fiduciary responsibility is to the seller, they realize they should have their own broker representing their interests.

I've had many clients come to me after the fact because of the reasons I mentioned above. Personally we're a bit conservative with our approach when dealing with a situation like this. Typically I pick up the phone and call the listing agent, explain the situation and take it from there. Most are understanding and many are happy that they no longer have to deal with a buyer trying to achieve the opposite of what their seller is trying to achieve.

Bottom line is I firmly believe there is no advantage to working directly as a buyer. And I've had many clients tell me this based on their personal experience. In many cases you get the opposite of what you expect as a direct buyer. Many listing agents will take you less seriously, especially if your initial bid comes in at what they consider a lowball offer.

If you simply prefer being a solo act, more power to you. I definitely understand that.

Keith Burkhardt
The Burkhardt Group

But mathematically buyer can get a better deal by going direct, no?

Say there's a condo asking $1mm and you co-broke (6% commission). Net proceed to seller after commission (before other transaction fees) would be $940k. Listing agent collects $30k commission. If buyer goes direct (4% commission), buyer could bid $979,167 and everybody wins: seller still gets $940k net proceed after commission (which is equal to what seller would have gotten at $1mm ask with co-broke), listing agent gets higher dollar commission of $39k, and buyer gets 2.1% discount off ask and now avoids mansion tax.

Your assuming there would be a 4% Commission on a direct deal. There's no guarantee of that and unfortunately there's no transparency unless you're a broker and can pull up the commission through the RLS. We mitigate this by offering a commission rebate to our buy-side clients. Then we negotiate the absolute best deal that we can. You get the best of both worlds, excellent representation along with a quantifiable discount.

Keith Burkhardt
www.theburkhardtgroup.com

Keith, it's not the DECISION to use a buyer's broker that's suspect -- I myself work as a buyer's broker sometimes, and I even have clients say that I've pulled off deals that they don't think other brokers could. It's the TIMING of the decision -- deciding to go that route AFTER making an offer directly is an odd choice.

If I were listing broker, I would of course convey subsequent offers -- as seller's brokers, that's what we do -- but I'm just pointing that in seller's eyes (as @George points out above) it's a bit late in the game.

FWIW, if I'm listing broker and buyers come in and they expect that they want to use a buyer's broker but they don't know who yet, I ask them to just put "TBD." But that way it at least comes across as a thought-out course of action, and not flighty.

@bpc, as Keith points out, every listing contract is different. I have bought, for my own family, both ways -- I've used a buyer's broker sometimes, and I've gone directly sometimes. Often there is a commission savings that might motivate the seller. It is perfectly legitimate to inquire of each listing agent whether that's the case.

ali r.

I don't think the decision to use a buyer's broker at the last minute is always 'flighty'. My point was they go in thinking they're better off without a buyer's agent. They realize there's no advantage to this to them monetarily or strategically, make the decision to enlist the help of an agent.

Personally as a listing agent I've got no issue with that. Considering I've been doing this 30 years, I understand how this last-minute change could be perceived by a listing agent. As I said, I personally take a conservative route when a buyer requests representation after having substantial contact with a listing agent.

Keith Burkhardt
TBG

In my limited experience, usually people not represented by brokers are difficult and usually low ball too much. Also, it is very helpful for buyer to be represented by a broker as the broker acts as some check on buyer’s emotions which are usual for a large real estate purchase. That said, there are indeed deal which get done without the buyer being represented.

Re: low-ball offers - how do you think most sellers would react hearing that a buyer had made what they considered to be a low-ball offer and then the next thing they did was inject a buyer's broker who would be giving them a rebate into the deal?

If I were to be seller, I would increase my "agreed upon price" to reflect the net additional cost of paying for buying broker to seller or take other competing offer with better economic or in a better market may even say "I will never sell to this crazy unethical buyer who may or may not close and may be difficult in walk through etc". If the price is not agreed, then as a seller I wouldn't care if the buyer wants to get a broker's representation.

Like I said I'm very conservative when I get involved in a situation like this. If the buyer is persistent with me first step is calling the listing agent.

Anywho...first thing to do is determine whether or not it's actually a lowball offer or realistic pricing of the property. If this so-called low-ball offer does not make sense based on all available information, then of course I would discuss with the client. Perhaps submit a revised offer if they agree and maybe even come to terms with the seller. Yes this scenario has happened on more than one occasion.

Keith

Here's an interesting email I received this morning. Sort of relevant to what we're discussing here. This was a townhouse in Cobble Hill;

"Hi Keith-
I have an interesting update for you: we are now in contract on xxxx street (the place that rejected my offer a few weeks before we initially spoke) - literally all because you encouraged me to see if it was still available. It was not, but within days it was!. Wanted to let you know and thank you for all your help (especially that very helpful suggestion), especially because it didn't end up resulting in a commission.
In case helpful for your guys to know- list price was $2.75 mm, we offered $2.4 mm, which was adjusted to $2.352 mm after the inspection.
I plan to get in touch with you in a year or so when we sell our current place (since we will be renovating this new one).

Thanks again and have a good day!"

I think the majority of the time sellers/brokers characteristic an offer as "low ball" it is probably more realistic than the asking price is to market. If the asking price were realistic the unit wouldn't be sitting around collecting "low ball" offers, it would be in contract.

As Einstein like to say, it's all relative :)