Tuesday, February 26, 2008

Getting Personal

There is a reason people involve agents in a transaction. One is for the expertise they provide, and another is to have an “arms-length” transaction between buyer and seller.

During escrow on our first home, we were on rather nice terms with the seller. It was great because she introduced us to some of the neighbors, and gave us a little insight into the home and neighborhood.

In the past, my husband has suggested skirting a seller’s agent and contacting the seller directly to make negotiating easier in some circumstances (this was also before we had an agent).

Last night it came to light that a mom I know, and called to get her thoughts on transaction, actually knows the owner of the home we made an offer on.

So my question is this, what are the pros and cons of talking directly to the seller of a home (in the different stages of the negotiations)?

In some situations I can see how it would actually help with negotiations (the agent representing the buyer of our D.C. home was a first class jerk and we came very close to killing the deal during the inspection process as a result). But in others I would imagine its best to go though an agent.


sacramentia said...

If I were the seller, and the buyer went around the agent, I would think that they don't trust their agent
or they are very anxious. And then I'd be a little annoyed that I was doing the agent's job and paying too much commission. My gut reaction as a seller would be to counter at a higher price that I otherwise would have.

Mystere said...

It can work for you or against you.

On the one hand, you need to be very cognizant of doing an end-run around one or both agents. They may not appreciate being cut out of the loop like that, and if the seller has a good and healthy relationship with its agent that may give you a black mark.

On the other hand, it can add a face and a name to the plain papers that are passed back and forth. If the seller sees that you're good people, that may help, all other things being equal.

Personally, I wouldn't do it...unless (a) I believed that I wasn't getting anywhere by channeling things through the agents, or (b) I had some connection or avenue to make contact with the seller that would be natural. In that circumstance, you have nothing to lose and may as well give it a shot, handling it tactfully and getting your own agent on board in advance with you making such a move.

G Spot1 said...

I'm struggling to see the benefit of going around the agent. I guess if you think you have an argument or something else you can use to convince them to take your offer. I also suppose there can be some agents so unreasonable or incompetent that they are just mucking up the deal. I was thinking about going without a buyer's agent for awhile for this reason, but then decided just to switch agents.

Whatever you do, don't muck with the agent's commission. That is a recipe for trouble. I also think the agent could get very touchy because if the seller is doing the work on negotiations, they might want to renegotiate the commission even if you don't bring it up. If the agent suspects that might happen, they might try to muck with the deal.

After escrow, there is no reason not to get on good terms with the sellers, and there can be lots of benefits. It was during our final walkthrough that the seller taught me the benefits of DirecTV with Tivo....

Buying Time said...

I wasn't trying to suggest going round the agent. I was more trying to find out if its good/bad to have direct personal contact with the seller in general.

I kinda see it as a good information gathering opportunity(before and after escrow). Talking to the seller before may help you decide if you want to put in an offer, and once accepted, it may be nice for learning about the home a bit more (how old everything is, is it under warranty, do they have the warranty paperwork etc.).

But I am sure there are some reasons not to do this....I just don't know what they all are.

mcb44 said...

Certainly not a black and white question, but if you’re thinking of going directly to the sellers when both of you are represented by agents, I’d suggest, you think specifically about what you want to achieve, ask yourself if this is likely to achieve your objective, identify possible downsides, and limit the scope of the discussion to only your objective. I would also make sure both agents were aware of the plan and consider whether it would make sense to have all parties present at the discussion. I’m not recommending the approach, only what I’d consider if I planned to try it. I’m also assuming you would not use this as a vehicle to impact the respective agent’s commissions.

Now about those commissions, when we sold our last house, we were about 5k apart from the buyer’s last offer. I suggested to my agent that if he and the buyer’s agent would each reduce their commissions by half a percent from what was specified in the listing agreement, we would accept the last offer. They agreed and we made the deal. Just an illustration that in many real estate transactions there are 4 parties to the negotiation and having each contribute is an approach that can be a win for all parties.

Buying Time said...

MCB44 -

We had a similar situation when we sold....we got ticked off by the other agent and some demands of the buyer based on their incompetent inspector (they said it wasn't code, we researched and said it was). Our realtor kicked in the $$ to make the issue go away!

mcb44 said...

It's a shame that your agent didn't get the buyers agent to share the cost.

Your issue with the inspection does reinforce one potential benefit of an arms length transaction though. Easier to keep emotions and unintentional non verbal communications out of play.

Sippn said...

You're gonna pay a commission anyway, hire the best agent as you "pay" them all the same, (except the "cut rate" shops - ever heard a low commission rate attract the best sales person?)

Sippn said...

Oh sorry, and let them doo all the investigation and talking for you.... if you get too attached, it will cost you.

alba said...

Buying/Selling 3 homes over the years, I haven't yet felt either the buyer/seller agent didn't have a separate agenda. The best arrangement was the last one, in 2005, where we paid the agent 1% to list the house and conduct the paperwork. We also entered into a personal relationship with the buyers. We had 4 offers within 2 weeks, and made sure the folks we "wanted" to buy the house got it (we made sure they knew the timing of the highest bid). We ended up renting their house, since the school year wasn't over. The neighbors only had to throw one party; get out finally, and welcome! Its just business, but I trust myself far more than the party/parties in the middle, who just want a sale to occur. That neighborhood continued to go up in value for another 6-9 months, then leveled off. We couldn't be happier, and we know the buyers have a great house. Getting personal may upset your/their realtor, but anybody with half a brain, who follows the market, can access the internet, reads AB blog, would likely know more than the middlemen...unless you have sippn as your middleman!