Working with Buyers Agents or Listings Agents Which is Best?
Working with Buyers Agents or Listings Agents Which is Best?
By Alexis McGee - June 2009
If you are new to buying homes in foreclosure, you may be wondering if it is it better to go through your foreclosure listings on your own (do your own legwork), or should you ask a Real estate agent to represent you and do the work for you?
As with any decision, there is always a tradeoff between both options. So before I tell you my answer, you must first ask yourself this simple question, what is more important to YOU?
Saving Time OR Saving Money?
If your goal is to do as little work as possible, or if you are in a big hurry and must buy quickly, then doing your own leg work to buy a foreclosure is not for you. Because it is your TIME, effort and patience that you put into the deal brings you the best PRICE (hence you save money).
Or you can do your own legwork and work directly with the foreclosure sellers or their listing agents directly. There is nothing that says you must have a Real estate agent represent you in your dealings. You can find your own deals, and then negotiate and write your own purchase agreement. Of course if you are not familiar with real estate contracts it would be wise for you to get a good real estate attorney to review your paperwork first.
Here are the Real estate agent protocols you can use while hunting for a deal…
1. Understand Agents Work on Commission
* Real estate agents are paid on commission. If an agent does not close a transaction, he does not get paid.
* Agents are not public servants and do not work for free. Do not ask an agent to work for you if you intend to cut the agent out of your deal.
2. Buyers Agent Representation vs. Listing Agents Dual Representation
* Decide whether you want to work without representation: dealing directly with listing agents, or if you want to hire your own agent.
* If you decide to hire your own buyer’s agent interview agents with experience in foreclosure purchases.
* Always ask for references and make sure you check them out, as well as search on google their name to make sure you don’t see complaints about them on the web.
3. Working with Listing Agents Directly
* Listing agents work for the seller, but can also represent you the buyer. That is called dual agency.
* One benefit for you in working with the listing agent directly is the ability to ask them questions about the seller or the seller’s motivation directly and hearing their answers first hand.
* The benefit to the listing agent in working with both you and the seller is their ability to get twice as much commission (not having to split it with a buyer’s agent).
* In working with the listing agent directly (and them making twice the commission) you can position yourself to be their “pocket buyer” to bring you deals first.
* You would think that the listing agent getting twice as much commission is not a good thing for you, but in the end if you are close on making a deal, it’s not unusual for the agent to cut their 6% commission a bit to make the deal.
4. Hiring a Buyer’s Agent to Represent You
* By law, agents are required to give buyers an Agency Disclosure.
* Signing an agency disclosure is your proof of receipt. It is solely a disclosure. It is not an agreement to agency. Read it.
* The best and most practiced type of agency is the single agency. This mean you are represented by your own agent who owes you a fiduciary responsibility.
* Many agents will ask you to sign a buyer’s broker agreement. I would wait to do this until they have proven to represent your best interests in prior dealings.
* Ask about the difference between an Exclusive and Non-Exclusive Buyer’s Broker Agreement.
* Ask your agent if she will release you from the contract if you become dissatisfied. If she refuses, hire somebody else.
5. Do Not Sign Forms You Do Not Understand
* Many forms are second nature to agents but not to you, so ask for explanations until you are satisfied you understand.
* Do not sign forms titled ‘Consent To Represent More Than One Buyer’. This is never in your best interest. Find another agent if this happens.
* Real estate agents are not lawyers and cannot interpret law.
Buyers Agent Traps
Don’t be surprised if your Buyer’s Agent tries to change your mind on your offer price. Many will say “it can’t be done” and try to talk you into paying full market value (or close to it). Do not buy into their misery.
There are motivated sellers out there that need your offer, as so many successful Foreclosures.com clients have already discovered. (Read just a few examples here.) There are foreclosure deals right now in your neighborhood that are oftentimes NOT in the MLS (multiple listing service) who want to sell their property today.
You need an agent who will do the extra legwork to find those deals. It may take a long time to find such an agent, which is why I suggest you start buy representing yourself and make calls to listing agents directly for your deals when you start.
Remember the reason you came to Foreclosures.com to find house? You want to save MONEY buying wholesale vs. retail real estate. When you follow my 7-Step plan you should make at least 15% profit on every purchase. On a $300,000 house that’s $60,000 in net profit right at your purchase and well worth your effort of time and energy!
Before you jump in you have some homework to learn what to do and how to do it. The good news is, we can help you. Just follow my 7-Steps to Mastering Foreclosures plan here.
Once you have completed the course you know more about buying foreclosure property than 99.95% of all the Real estate agents in your area, but you will have bought property cheaper than they EVER DREAMED POSSIBLE!
Invest in yourself to learn how to buy foreclosures on your own. Whether you buy one house to live in or buy and sell foreclosures for profit as a great source of income, it is well worth your investment.
Here’s to a great 2009 and beyond. Happy investing…
Alexis
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