Home Buying in Medina>Question Details

Satimaeh Bal…, Other/Just Looking in Medina, WA

I was just wondering if anyone can tell me when does negotiation begin and end when buying a home and can I save money if I hire the listing agent?

Asked by Satimaeh Ballemarugan, Medina, WA Sun Feb 20, 2011

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I'm not sure what you mean by begin and end. The negotiations begin when you make an offer and end when you come to terms. That could take hours, days or sometimes even weeks. There may be additional negotiations over inspection items later, after you come to terms.

It's unlikely you can actually hire the listing agent. In Washington if you make an offer through the listing agent it is more likely that the agent would still just represent the seller, and you would be unrepresented. Dual agency is rare. Also, the standard listing form doesn't call for a reduced commission to the seller in either instance, but it is possible that there is such an agreement. If the listing agent is a "Realtor" that would need to be disclosed in the listing.
3 votes Thank Flag Link Sun Feb 20, 2011
Keep in mind that under the law of agency, the listing agent represents the seller. When making an offer, it's advisable to have your own agent negotiate on your behalf.
1 vote Thank Flag Link Thu Feb 24, 2011
You can't really hire the listing agent because the seller already hired that person. You can fully or partially represent yourself, but you can't hire the Agent for the Seller/Listing Agent to ONLY represent you. To partially represent both you and the seller, you need the seller of the home to agree to partial representation.

Usually you can find a way to save the same amount of money by hiring your own agent and negotiating the commission with your own agent. Most often that's the better way to approach it.

Negotiation begins when you write an offer on the house, sometimes before. If the seller is asking a lot more than you want to pay, usually negotiation starts well before the offer is written so that the written offer is not as far away from a "meeting of the minds". I recently did one at a $475,000 under asking and another at $595,000 under asking, but those took from 30 days to 5 months to accomplish. The first buyer also saved almost $35,000 in commissions and the 2nd one saved $13,000 in commissions. No two situations are alike.

A lot depends on the house and the asking price. But most things are possible if you take the time to hire someone you can work well with, and that is not usually the Agent for the Seller. Sometimes it is. But not often.
1 vote Thank Flag Link Sun Feb 20, 2011
You should hire your own agent to represent your side of the transaction competely. Stay away from any issues with conflicts of interest. As a home inspector we are hired by the buyers. Sometimes the buyer will inquire about using the sellers pre-listing inspection and I tell them this is a bad idea. You want to hire someone to represent you and your interests.
0 votes Thank Flag Link Tue Mar 1, 2011
Hi Satamaeh,

The negotiation begins with every conversation when you strategize about the offer with your Buyer's agent and ends, an amazingly high percentage of time, when the transaction closes. There are almost always problems that surface during the time between when the contract is signed, the contingencies are removed and the transaction funds and records (which is closing).

You would be very unlikely to save money by hiring the listing agent and your question means you know exactly which house you are going to buy. In my career, there have been a few times when I have successfully handled both sides of the transaction because when all is said and done, the transaction has to be win-win.

The big challenge for an agent who represents both sides of the transaction is to be certain in every conversation that they are not disclosing confidential information. When I have been in that situation, I have focused on the choices for each party. The big reason why you would not likely save fees, is first, the fees are normally paid by the seller, and secondly, the one agent is doing two jobs.

There are an estimated over 744 problems that can arise from the time the purchase and sale agreement is written to closing and every transaction requires an estimated 150 communications.

Since you are "just looking", it would be good for you to know that real estate is more affordable than it has been in a generation. That is because of the combination of low interest rates (which are certain to go up) and high inventory which will not stay high forever and low prices, which will not stay down forever.

If you would like, I have a great booklet, "Seven Reasons to Buy Now", with charts that illustrate these concepts. Just contact me and I will send it to you.
0 votes Thank Flag Link Mon Feb 21, 2011
I couldn't have said it any better than Jennifer, totally agree & well said!
0 votes Thank Flag Link Mon Feb 21, 2011
Hi There,

I feel negotiation begins when the clients and sit down to write the offer. Buyers have to start weighing what they want to offer based on their goals and motivations for buying the home. It really gets going upon presenting the offer to the sellers. The bulk of the negotiation (generally the contract terms itself) usually lasts about 2 weeks or through the inspection phase. It generally ends on the day of closing as there are always small details and considerations that are being discussed inorder the make the move smooth for the client.

Bottom line - a good negotiator on your behalf is INVALUABLE.

You won't really save money by using the listing agent. The seller has already alotted money to the brokerage for the commission and you would just be paying the listing agent twice and they wouldn't even be neccessarily looking out ofor your best interests. It's like going to court and hiring the opposing party's lawyer to try and save a few bucks. It doesn't really work.

This is not the market to expirament in. I can see endless headaches with trying to use the listing agent or not having representation in order to save money. It think there is a great potential for problems if you were to go that route.

I have done a dual representations before, but rarely does it work well and none of those trasactions went smoothly. I have chosen not to do that at all in my business anymore due to the strain it causes.

Best,
Jennifer Nilssen
TEC Real Estate, Bellevue
0 votes Thank Flag Link Mon Feb 21, 2011
If you hire the listing agent, you will be giving him a raise. He will make the commission that was otherwise slotted to go to your buyer's agent. The listing agent works for the seller, unless he becomes a transaction broker, which means he will work on behalf of the transaction.

This is the biggest purchase of your life. Wouldn't you like a professional to represent your interest in this complicated ordeal. It does not cost you anything. Believe me, you will sleep much better at night with a Realtor representing you.
0 votes Thank Flag Link Mon Feb 21, 2011
I always like to go back to the statutes when issues like this come up. In this case, 18.86.060, linked below.

Assuming you somehow get to the point of dual agency, the agent will not be able to advise you on a negotiation strategy, because that would be an action adverse to their other client. 18.86.060 prohibits that.

Assuming the other agent is not representing you, but only drafting the offer, again not only can they not advise you as to a negotiation strategy, but even worse, they would have a duty to their client to help them get the best price.

And I would also point out similar problems will likely pop up later at the inspect stage, and those might be a lot more sticky. The inspector might call out 20 items on the house. How many of those should be addressed in the inspection response, and if addressed, should the buyer request repairs or a credit? Only having one agent in that situation, regardless of whether they represent only the seller or are a dual agent, would be extremely problematic.
0 votes Thank Flag Link Mon Feb 21, 2011
Ardell is certainly correct in that the seller has already hired the listing agent to represent them and with seller agreement can do a dual representation which in a nutshell means that they don't divulge any of either parties secrets to the other. Negotiating a great purchase price is dependent of the seller's asking price. Some
sellers have put lots of monies into upgrading their homes for sale and readying them for the marketplace.
In addition some sellers are priced below other competitive sales to begin with. Some homes at full price are a much better value than others which may negotiate on their prices. I just sold such a home that was 5%
under market value when listed and had 7 offers within a 48 hour period. The seller had refinished the
hardwoods, had new interior/exterior paint, installed granite in kitchen and baths, had newer appliances,
had added air conditioning, revamped the landscaping and installed new carpet. On top of all this they
priced under market. This home actually bid $18K over full price and was still a better value than the
competition.

Some agents will negotiate their commissions but again you need to make sure you will still receive the
excellent or top notch services that other agents provide or reducing the sales commissions is not saving you money in the long run. Just as many of us shop Nordstrom in lieu of Ross and Costco versus QFC
you have to know what services/quality you expect and act accordingly to receive the best value for you.
Mary
0 votes Thank Flag Link Mon Feb 21, 2011
Mr. Krismer's answer below is quite right and I read no further. I will add that having an experienced broker/agent that represents your interests is your best opportunity to save money. Commission for the buyer's agent is already included in the price of the house and being paid by the seller.
0 votes Thank Flag Link Sun Feb 20, 2011
Satimaeh,
It is pretty hard to save money using the listing agent, although you could try & convince them to give you some of their extra commission that they are getting. But, it is far more important that you have someone in your court representing only you. If you pick the right agent, they will not only save you money, but do a lot of the work, protect you throughout the process, and make sure the loan & the deal gets done. If the listing agent does all that for you, & more, he will want to keep the commission. In fact, some agent, like myself, are very good at negotiating. Fro example, if I look at statistics for the 5 years before the market went south, I saved my average buyer 6% more then the average agent in the NWMLS when looking at the average sale price to list price homes. That is a lot of money. I also do loans & can save you a lot of money there as well if you need help with a loan.

I would suggest that as a buyer, you Google every agent that responds to your question here on Trulia, learn as much as you can about who they are online, read their client testimonials, so you know what their clients are saying about them, and then give us each a call and just ask us why we think you should work with us instead of another agent. Then, pick the best fit for you and let them go to work for you with the skill and knowledge that they have. I hope to hear from you soon.
0 votes Thank Flag Link Sun Feb 20, 2011
how would you expect the listing agent to negotiate on your behalf? at best, they will be neutral. and no, you won't save money.
0 votes Thank Flag Link Sun Feb 20, 2011
No. You cannot save money if you hire the listing agent.

Here's how it works: The seller will sign a listing agreement with the listing agent. The agreement will specify a commission to be paid to the listing agent. It will also specify how that commission will be split if two agents (a second one, representing the seller) is involved. This agreement doesn't change.

Example: The seller signs a listing agreement saying he/she will pay the listing agent 6% (just a made-up number; it's all negotiable) when the house sells. The agreement might also say that if the buyers have their own agent, the commission is split 50/50--3% to the listing agent, 3% to the buyer's agent.

You get your own agent. You make an offer that the seller accepts. Your agent gets 3% and the listing agent gets 3%. Second scenario: You hire the listing agent. The listing agent gets the full 6%. You haven't saved a penny. Further, you haven't had someone representing your own interests. You've used an agent whose primary responsibility (in most cases) is to the seller, not to you.

When does negotiation begin? As soon as you find out about the home. Most folks think it begins when you (the buyer) make an offer. Wrong. There's plenty of research to be done beforehand that will enter into your strategy. Maybe your strategy is to make a strong offer at the beginning and stick to it. Maybe it's to make a low offer. Maybe it's somewhere in between. You (and your agent) need to know as much as possible about the value of the property and the motivation of the sellers in order to make an offer that works best for you.

When does negotiation end? It can be all the way up to the closing table. Often before--but not always. For instance, you and the sellers can have a ratified contract. Then you do the home inspection and find some things wrong. That reopens the negotiation. Or you might be buying a condo and find some problems in the condo documents. Or you do a walk-through on the morning of closing and find that the appliances that were supposed to come with the property are missing, or are switched out for inferior ones. That does occur, and the negotiations to resolve the problem happens at the settlement table.

Hope that helps.
0 votes Thank Flag Link Sun Feb 20, 2011
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
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