I *know* I can get a better deal working with the listing agent!

RING RING goes the cell phone.

(Well, actually the phone ringtone is “The Eyes of Texas”, but it feels silly to type, “‘The eyes of Texas are upon you‘ goes the cell phone”…)

“Hi, I’m calling about your listing at blah blah blah.”

“Well, that’s not our listing, but let me look it up real quick for you.”

“It’s your listing, it’s on your web site…”

“Our site has all the homes listed for sale in Phoenix, hang on just a second…” (We’ve been there, done this before.)

“While you are looking it up, can you tell me what “Owner Agent” means in the listing?”

“Sure, that means the seller is a licensed real estate agent. In Arizona that is required to be disclosed up front. OK, I have the listing information up now, how can I help you?”

“I just want to talk to the listing agent, I have a couple of questions.”

“I understand, there is a lot of info here, I can probably help you…”

“Look, let’s just cut to the chase. I am a cash buyer. You and I both know I can get a better deal working with directly with the listing agent. Can you give me their name and number?”

I make an attempt to tell the caller that the listing agent works for the seller (or themselves in this case) and has their seller / self’s best interest at heart, not you the buyer. But it’s swiftly apparent the caller won’t listen and only wants the listing agents contact info.

Now I could be all douchey and tell the guy to find it on his own. But he seems nice, albeit misguided. We chit-chat a little more while I’m looking through the listing info in the Multiple Listing Service (MLS). I tell him, “Look, I’m seeing some things here that I seriously doubt the listing agent will tell you…”

“Listen, I know you just want to sell me the house. And I’ll call you if I can’t reach the listing agent…”

[No you won’t, I think to myself.]

“So can you give me their number or not?”

“Sure, here it is. Good luck!”

What Did I See?

This particular home was listed for around $280K. The caller knew that. What the caller didn’t know was that the home was previously purchased in November 2011 for about $185K, by an LLC that is in the business of buying foreclosures, fixing / remodeling them, and “flipping” them — reselling them quickly for a profit.

Nothing wrong with flipping for fun and profit.

But do you think the agent / owner is going to tell this buyer that he bought the home three months ago, put $30 – $40K into it and is now trying to get $55 – $65,000 in profit?

My guess is no.

Will the lister / seller “waive” the buyer’s agent commission of $7,000?

Probably. They will at least reduce it, and pocket what’s left.

Is the buyer “getting a better deal” working directly with the listing agent?

Maybe, maybe not.

Personally, and professionally, I think that armed with the following information — that the buyer will never get — they could quite likely save more than the $7K in buyer agent commissions:

  1. The home is overpriced by at least $10K.
  2. The home is “over upgraded”. It has been upgraded above and beyond what is typical for this neighborhood. It looks nice from the photos, but over upgraded homes can be difficult to resell, and they rarely will garner what the upgrades cost.
  3. There is a $55,000 – $65,000 profit margin built into this home.
  4. Some of the neighborhoods surrounding this property are pretty hot right now. An unseasoned buyer (and through the brief conversation I had with this buyer, it was readily apparent they are not very experienced) could easily be lead down the wrong path by a less than scrupulous agent/owner. I’m not saying this particular agent/owner would take advantage of an unseasoned buyer, but I assure you some would. In other words, there is a distinct possibility the agent/owner could produce data showing the buyer there is a hot sellers market and use that misinformation to lead the buyer to believe they don’t have a lot of negotiation room.

But, the buyer wanted nothing to do with having their own representation. They are convinced that they can get a commission reduction and a “great deal” working directly with the listing agent. What they don’t even know is they are working with a relatively high volume flipper who is out for one thing — to maximize their profit.

The buyer may well “save” $7K in commissions, and think they’ve gotten a great deal.

Hopefully for their own piece of mind they’ll never come to the realization that by using a good buyers agent, one who represents THEM and their interests, they may very well have saved ten or twenty thousand dollars. Or more.

Think about it folks. Why would an investor disclose details (that they aren’t required to disclose) in order to get you the lowest possible price on a property that they are trying to maximize their profit on?

Find a good buyers agent. They will work for you, not against you. Don’t plunk down $280,000 and let yourself be represented by the other side. This owner/agent makes their living selling homes for profit. You don’t. Why would you voluntarily go into battle with such a disadvantage right out of the gate?


Photo Credit: Louis Docker, aussiegall on Flickr. CC Licensed.



  1. mortgageporter says

    I cringe when I see buyers not working with an agent who will represent their interest. This happens often with new construction when a buyer is swept away by the site agent…only thing worse if they work with the builders lender too.

  2. thesachambers says

    Eyes of Texas uh, guess that works with my Sweet Home Alabama – hope he calls someone else rather than deal with the listing agent – it’s so hard to get through to some people on this topic others get it right off the bat.

  3. says

    My script is more like this, “Sure, I would be happy to look that house up for you in the MLS but you know I don’t represent the seller of that home. I have all 20,000 homes listed in the MLS on my website and my picture is next to all of them since it’s my website. Did you only want to talk to the listing agent?”

    “Yes, I just want to talk to the listing agent.” “You can find the name of the listing brokerage at the bottom of all the listings on my website. Just look up their phone number online, call the brokerage and they’ll put in in contract with the listing agent.”

    Or, “No, I just want to know more about that home.” “Are you already working with an agent?” “Yes, but she’s not available right now.” “I’m sure your agent would be very happy to help you with this. Feel free to use my website to research homes and if you have any questions on the homes just write down the MLS numbers and ask your agent to help you with them.”

    Or, “No, I don’t have an agent yet.” “Great, let’s get started.”

  4. says

    Jay: This is the flip side of the FSBO conversation, and the illusion of “saving” money is too much for some people to resist. They throw all logic to the wind and end up paying $275K for a $250K house, and come away smug about the fact that they “saved” $7K. Sometimes you can’t save people from themselves . . .

    • itsEric says

       @Phil Boren
      Or they go to the big fancy over-hyped foreclosure auction and pay market value with no inspections! I remember distinctly talking to own “smart” owner who didn’t want to tell me what he paid at the auction since he thought he got a “good” deal. Turned out he paid market rate. I went to one of those auctions and it FLOORED me on what the auctioneers could say and get away with! “Hey, folks. This house sold for $XXX 2 years ago, this is a bargain price!” Agents would be quickly hung out to dry for even saying things close to that.  Sigh…

  5. says

    One last point. I used to have 124 email lists and I sent out homes sold in those 124 individual zip codes in Maricopa County each week. Occasionally, I’d get an email from a subscriber asking me why a home sold for such a high price. If the data was correct, I could sometimes figure out why the home sold far above market; 1) Family Sweetheart Deals – The buyer and the seller had the same last name; or, 2) Dual Agent – The same agent represented both the seller and the buyer.

  6. says

    The use of a Buyer Agent save people a lot more than they think they can save on their own. It’s a shame some home buyers think it’s best for them to go out on their own in to the home buying world and think that the listing agent is going to give them the best deal possible.

  7. says

    It is very hard to find a very good buyer’s agent. I know that every agent will tell you that they are willing to work for you, but at the end of the day many of them are completely clouded judgement wise. What do I look for in an agent? Someone who is willing to absolute lowball places. Why, because if you get a lowball offer accepted — you may have just instantly made money/equity. It would be better to have 100 offers rejected and 1 accepted at a lowball price than 1 offer accepted at a price that you aren’t 100% confident in — Let’s not forget that once you buy that real estate, if you want to liquid it — you are going to pay commission on the way out, so you have effectively lost 6% of the selling price on the first day you purchased the property. I need an agent that is willing to get me a place, dirt cheap.

    • itsEric says

       @Drew EpicFinances Why should an agent waste their time with you when Phoenix is clearly in a hot market with low inventory? Total ARMLS is at 2.4 months of inventory, while Maricopa County houses under $300,000 are at 1.3 months of inventory!  I’ve had 10 real offers at or near ASKING price that got rejected, low balls have no real chance in today’s market. If you want a possible equity deal, go to the shark infested waters that surround the foreclosure auctions and try your luck there.  That is just the brutal truth.

  8. says

    Here in MD we have a agency disclosure that lays it all out, explaining who represents who in a transaction. I’m real good at going over it with my clients but I can’t say that for other agents. So many buyers are robo signers, not really understanding.

  9. says

    Yes I agree, being with an agent makes you feel secured and comfortable when buying a home, you will not worry anymore about anything, everything will put into place since their job is to make you satisfied & relax when buying your own home because they will be the one to arrange everything for you. This post is really helpful to those first timers who are looking to get their first investments! Cheers everyone.

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