When it comes time to buy a house, traditional thinking goes something like this.
“You need a good Realtor guiding you though the whole process. It’ll make buying a house so much easier to have someone you can trust in your corner.”
This doesn’t go over so well in reality. Back when I was a Realtor, I sold some friends a house. They came in with an offer at about 10% under asking. After telling them that wasn’t going to happen, I asked what their bottom line was. And they refused to tell me, saying it would weaken their negotiating stance.
(They ended up buying the place for about 4% under list price. A win, I guess? I dunno.)
A lot of people only begrudgingly use a Realtor when they buy a house. Sure, the average Realtor clearly knows more about houses than a typical home buyer. Even a crummy Realtor is far more knowledgeable than 80% of first time home buyers. Have you met the average home buyer? They’ve got the intelligence of an empty Coke can.
But there are plenty of criticisms towards Realtors, too. Many refuse to show houses that don’t offer full commission. Others will lose enthusiasm about six houses in. Most just care about getting the deal done. And if the deal goes smoothly, the hourly wage often eclipses $1,000 an hour.
What’s a buyer to do? Sure, you could ask around and find a great agent. Or you could do things the easy way and just use the listing agent.
Why use the listing agent?
I really liked what Reddit user Absolute2014 had to say about the topic.
(Click vigorously to embiggen)
This strategy is so simple and so brilliant I just had to share it. Well played, Mr. Absolute2014, IF THAT IS YOUR REAL NAME.
It’s clear he’s talking about the Toronto market, but it makes sense no matter where you live. The listing Realtor wants activity. They want showings. And if you show up, they’ve got the potential to show you different places. You probably don’t want to take them up on that, but they don’t know that.
Remember how real estate commissions work. A listing agent negotiates a fee. If a pesky buyers’ agent shows up, they’ve got to split that fee in two. And as one four-year-old once told me, sharing is for suckers. That dinosaur was HIS, DARGBLOOMIT. Yes, I know a four-year-old that talks like a 19th century pirate.
If you exclusively use the listing agent, he isn’t forced to split that fee. I guarantee he’s going to push your offer harder than a competing offer.
Still, do your due diligence
There is one problem with buying a house this way.
The selling agent has to dance a tricky line between representing both the buyer and the seller in such a situation. What they’re supposed to do is try to write up a contract that’s fair to both parties while keeping each side’s confidential information a secret.
Reality doesn’t usually work out like that. Most agents disclose confidential information back and forth all the time. They’re just sly about it.
“I like this house. I’d be willing to pay $225,000 for it.”
“I think a reasonable counter-offer in this situation is $225,000. Jimbo does need to buy a house.”
As long as both the buyer and seller are happy, nobody cares. And the Realtor gets both halves of the commission.
Also keep in mind a selling Realtor may be more inclined to keep certain information about the house private in an attempt to protect the sellers.
Let’s wrap it up
I think this whole strategy is a really smart way to buy a house. I’ve already tried it with one Realtor in town, telling them “if you have any listings where the seller wants out bad, come and talk to me.” I’ll let you kids know how it works out.