Let me just clarify that when I mentioned "insider information" it was referring NOT to the buyer's agent getting this information, but your hopes--in working with the listing agent--of getting information about offers and pricing that would not normally be divulged to buyer's agents. Nothing shady, just a comment.
Okay, as to your observations about pricing, I will admit (as would others) that pricing is never a "science" so much as a hunch based on empirical information gathered from "backward looking" data. In other words, we use the comparables as a basis for our estimates, but because these prices are at least 30 days old or older, we use our knowledge of the market (often coming directly from our experience in viewing homes, gauging buyer traffic, and discussions with colleagues), as well as our experiences in recent sales to determine the likely range of the offers to be received for a home. We also try to prepare our clients for what might be, in my mind, "the price to beat" in order to be the successful bidder. But, as you know, what offer the seller selects may be far different from our guesses.
As my pal Marcy Moyer astutely pointed out, the offer that the seller selects can be based on many factors--so while price is a big one, so are the seller's needs and the conditions placed on the offer by the buyers. We'd have no way of knowing what the offers looked like without being a fly on the wall when the sellers are reviewing and discussing the one to select.
So if there is a "take away" for you from this posting it's probably this...
1. Have your own Realtor when you buy. Using the listing agent puts you in a situation that, personally, I would not ever do, which is to have one agent serve as a "dual agent" for both buyer and seller.
2. While your Realtor might suggest a price to offer on a home, ultimately, it's YOUR wishes that must be complied. In other words, if you feel a home is worth "$X", then have the offer written with that amount. You're in the driver's seat here, so simply ask that the offer be made with the pricing that you feel is comfortable for you. As I always tell my clients, "the decision on how much to offer for a home rests with the buyer...not with me." I'm the agent--your my client--provided its not unethical, illegal, immoral or outrageous, I'll write the offer in a manner that you request.
Again, if you want to recruit the listing agent to be your agent, by all means, please do. Keep in mind that you will have to "hire" that person with a contract, so be very clear that the relationship terminates with that particular home, if you wish not to employ the agent for other transactions as well.
Well, fine, then. Meanwhile, people are buying properties, and you're writing about buying properties.
Well - there you go...........so, if you think you can do it better than an agent (and you basically stated that above)....then.....go for it
Why waste any more time here, as I not really sure what anyone can offer or add to this after all the input you've already received .
If you are working with an experienced agent she will be quite certain that your offer is presented to the home owners (and most likely so will you). If your agent has any concerns about the listing agent appearing to be impartial she will take steps to make the situation visible to all, not necessarily because she has doubts about the listing agent's integrity, but to eliminate concerns of everyone involved. There are common steps taken to have the most favorable offer besides price. Some of these steps would make almost everything visible to you.
These are some of the reasons why you should use an experienced agent to help you buy a home. Making wild accusations about someone you don't know will pretty much put you at the bottom of the list as a buyer who will carry through on your obligations and as someone to do business with.
I very much understand the frustration and emotional toll loosing offer after offer can cause. The fears expressed in the original question are not uncommon. The reality is that an experienced agent is working more than 8 hours a day understanding the real estate market and how to be successful buying and selling homes. Only full time real estate investors can spend nearly as much of their time improving their ability to buy and sell homes.
Use an experienced agent and talk with her. Fear often comes comes from lack of knowledge. Buying a home involves a lot of money, ask questions to people who have been through it many times.
Juliana Lee, MBA LLB
Keller Williams Realty
Over 1,000 home sales completed in Santa Clara, San Mateo Counties
Over 20 years experience
When an agent is most needed (in my opinion) is when you're in the middle of a transaction and obstacles show up that you could not predict. It is during these situations that an agent with experience who has your back will be most crucial. Here's an example: I had buyers. It is the final walk through. The home suffered during the 89 quake. When the belongings of the sellers are removed from the garage (we are talking 3 days from close of escrow) SUDDENLY you can see this 3.5" crack along the bearing wall of the inside of the garage/into the home. The crack is 3.5" deep and about 20' long.
I get with the clients. We discern they still want the house (despite the crack) and they want to close escrow on time also. The buyers are 100 percent firm on still wanting the house and they do not want the loan to fund late.
The seller simply did not tell the buyers that the home had major earthquake damage.
We find an experienced foundation expert and get a $55,000 estimate on the damage. The home sells; the buyer is allowed to choose the repair company of choice; seller pays for damages; home closes on time but repairs are not until after close of escrow.
In this scenario, who do you want representing your interests? If you are completely comfortable with every aspect of anything that might show up during a transaction -- you can get on the internet and ferret out information -- then you may be that rare person who doesn't actually need representation. But since the seller pays for the representation, be it his agent or your own representative, why not have someone in your corner?
And since you are wicked price savvy, get an agent that will let you name your offer and write it up for you. But you could be served by someone with experience in your corner navigating the transaction.
Maybe 85% of my transactions don't ever have complicated odd scenarios that show up but those that do, I've never had a client say "I wish I didn't have my own representation."
Erica Glessing Nelson
Editor/Co-Publisher "Sell Your House Fast for the Right Price!" on Amazon & bookstores everywhere!
Cash investor for houses
It is no wonder why your still "trying" to buy a house. You have to offer more than the asking price in most cases as they are priced below market value to start with in a lot of cases to get the bidding wars started. You have to stack any costs your asking for which makes it tougher to get an appraised value when it is at the top of the market value. You can't get a loan for more than a home appraised for? You want to have an Agent/Broker to assist you in determining what a market value is to submit an offer unless you have access to the mls and experience to do so yourself? Your agent should be able to do a market analysis of comparables to share homes of similarity to evaluate what is a fair market value to offer. You also have to add what you feel it is worth to you to buy now and get into escrow so you can have a home before they increase any further. With home prices rising and interest rates at record lows, now is the time to buy. You are going to pay more every day longer you wait?
You have stalled 8 months by not understanding the program of best chances to get into escrow. It would have been fine years ago but now home prices are on the rise. Sellers want to get the most they can as they are taking a big loss as it is. Would you sell something for less when you have another buyer offering more? Appraisal value is what the sellers are having to deal with these days on financing offers not coming in at what is offered. Most homes are in multiple offers so it automatically goes to highest and best and final offer situation. You may never get one accepted at a lower than market value unless you have cash and it is a very competitive market with cash buyers as well. Even if you paid a few thousand over market value it would be worth that much in a month or two later. It is only around $7-8 dollars per $1,000 and if your trying to save $30 to $70 dollars a month and losing to higher offers, you need to get educated faster. These days you need to pay for your own closing costs to have a better chance of acceptance. I can go over financing options with you to strenghthen your possiblilities.
I have other options to share with you if you don't have a large down payment and closing costs. How does your financing look?
Sheryl Arndt, Broker â€“ Loan Officer
I am sorry you are having such a hard time but unfortunately the odds are stacked against you, especially if you are buying in Palo Alto where every home priced at or below market value is getting multiple offers. There are 5-20 buyers for every home for sale. In order to get your offer accepted you have to make the best offer, who ever your agent is. Most Palo Alto listing agents, though not all, will not represent a buyer on their own listing in a multiple offer situation. Some will, and will have their broker represent the seller, and a few will do it themselves, despite what it does to their reputation in the community. But again, in the end, the best offer wins.
The best offer is not always the highest. The terms of the sale are often just as important. If a home is worth 1.5 million and the buyer is putting 20% down, contingent on an appraisal, then offers 1.6 million, it is not nearly as good an offer as one for 10% less and not contingent on an appraisal. If the seller has had all the inspections done and there is a good amount of work to be done, an offer for 1.6 with a 17 day contingency period will not be nearly as good as one for 1.5 million and no contingencies, to some sellers. Sometimes, a seller who is divorced will not be impressed by an offer where the happy family pictures are shoved in their faces. There are many more factors that go into an offer being accepted or rejected. However, In almost 18 years in the business I have never had a seller say to me I want to take the offer that your client brings me because he/she is your client.
So my advice is, find an agent that you are comfortable with, who will represent your best interests both contractually and monetarily, and maybe look into buying in an area outside of Palo Alto where you may have more choices.
Keller Williams Palo Alto
Today, buyers are using the internet more and more to find homes, view homes and to make pertinent decisions about investments. Similarly, as agents, in using the internet, our jobs have become much more streamlined and--for those of us with internet firms--we, too, can be more competitive both in terms of efficiency and costs to our clients (list and buys).
I'll never begrudge the full service agent his/her commission nor belittle their talent in handling either clients, listings or their transaction. I used to teach at Coldwell Banker, so I know the quality of the personnel at these firms. So I cannot understand why, so often, a full-service and full-commission agent will go to the "discount agents are not qualified" excuse. Agents come in all shapes and sizes, and all experience levels--diversity exists both at the internet companies as well as the "brick and mortar" firms. I would never paint all Realtors with the same brush nor make broad statements that those who offer rebates are unqualified or unable to handle the job. I think Redfin, for one, is a good example of an internet company that does a LOT of things right.
This is a competitive market for both full service and discount agents...why one gets or does not get the home relies almost entirely upon who can pay the most money or has the strongest guaranteed offer to pay. The seller seldom looks to the name of the Realty in determining who is best qualified to buy the home--it's money first, financing and terms second.
Just my take. Sorry, I will take my soapbox and leave now...
You need to understand that the vast majority of agents (in my opinion) should never have been issued licenses to begin with. It's a sad fact but most agents don't last in the business, don't know what their doing and barely earn a living. Not all agents are created equal and you've begun to realize this.
You do need a good buyers broker, I assure you you don't know half as much about real estate as you may think and sites like Trulia and Zillow are worthless when it comes to really evaluating a property and for negotiating a deal. I've attached a ink below on how to find a great agent regardless of where you're located. It may take you several hours of interviewing, expect it and don't sweat it. Getting a great broker who will help you is worth the effort.
Best of Luck,
Century 21 Tenace
If you feel you have the best sales strategy, go for it and buy the home with the listing agent. There is nothing wrong with that.
However, if you think that by using the listing agent, you will get:
1) inside information on the sales price of the home or the offers being made, or
2) a competitive edge over any other offers, or
3) the ability to negotiate the price, the terns, or the listing agents commission aggressively because you are, ostensibly, doing all the work,
Then, sir, you would be wrong--dead wrong, but you will learn this soon enough.
If your offers have been nothing but the lowest offers you are willing to make, then no matter how sharp your agent, you will be unsuccessful. Appealing to the listing agent will not change that scenario one bit, and you will continue to be unsuccessful in your offers. This is not a winning strategy, since it's basic flaw is an assumption that the listing agent will provide you with pricing information that hitherto has not been and will not be given to buyers until the seller chooses the buyer and the deal closes. You are not going to get the opportunity to know what everyone is bidding, and the listing agent is not enticed to work with someone who states, at the outset, that he s smarter than all the other agents out there. This doesn't engender any cooperation from professionals with whom you seek to ask favors and sway, and seems a decidedly weak negotiating tactic.
Personally, I think trying to make offers with the listing agent will be sn excellent means by which to increase your understanding of the housing market and the offering procedures. When you learn that this, too, falls short of the mark, you might consider making fair offers for homes and understanding that, in this market, with so few homes and so many buyers, failing to get a home in a mulitple big situation is de rigor and not a indicative of the greed or ineptitude of any agent..just the intrinsic qualities of Keynesian supply and demand models.
Do definitely contact the listing agents and test your theories. I hope that you are successful in the future.
Of market listings do happen, but they are mostly in the high end, over 3 million dollars. Occasionally a seller wants to sell off market for personal reasons, but this is pretty rare.
I believe that if too many buyers do what you are suggesting many agents will start turning to buyer representation agreements to protect themselves. These are like listing agreements that contractually bind a buyer to pay their agent if they buy a house, regardless of who sells it to them. These buyer representation agreements are not common in this area, but if enough agents get burned I suspect they will be.
It seems the most logical thing to do is find an agent you trust to go all out to find you a home, and then go over the plan of attack frequently to make sure everything possible is being done.
I realize most people don't want to hear this, but getting a home may also mean being realistic about what your chances are in a given neighborhood and then offering at the top of what it takes to get a home there, not at the bottom. So if homes are selling at 1.5 million and you keep offering 1.4 it is not going to work. It may not even work to offer 1.5 It would make more sense to go to a neighborhood where homes are going for 1.3 and offering higher.
Good luck! I hope you are successful in this crazy market.
Keller Williams Realty
One conclusion we've made after looking for 5 months is that buyers cannot rely only on one agent as they have in the past, where it was a matter of hopping their car, touring a bunch of homes for sale over the course of two or three weeks then picking the one you want. Buyers need to have the widest exposure possible. Knowing about "coming soon" homes that aren't on the MLS, for example. Do you think a brokerage would readily tell our realtor about those? You bet not! They are "coming soon" so that brokerage can keep the deal in-house. So what's a buyer to do? Contact every brokerage and pretend they are working only with them? It's just a crazy mess. I think buyers ought to pay realtors for every house they show them and get their money back if they actually buy using that agent. I feel sorry for the time ours has put in which will probably be to no avail because that one agent cannot possibly have the focus we have or the determination we have or time we have to find a home.
Another thing to consider too is that I know for a fact that agents will lean more toward offers via particular other agents, or more precisely, will steer away from offers from agents they dislike.
Although listing agents have a contractual agreement to sell for the best price I sure know of situations where realtors have done otherwise in order the double-end the deal or to keep it within the same brokerage (there's another term for that but I forget). There is one particular brokerage in Clayton that has a reputation for doing this.
One question posted in here was "How do I know my offer was shown to the seller?" I'd bet many aren't and that the realtor would sell the seller a bill of goods about how complicated it is (after the realtor talks them into thinking it's too much for them?). There's a place on the offer form to ask that the seller be shown the offer -- do realtors look at that obscure check-box? When we make an offer we write a letter to the seller when possible.
Our real estate market is every changing. The ebb and flow of the market is why 'house-traders" need a Broker. The broker is to read, understand, and interpret the market so the the consumer can make an informed decision. I can't think of any other commodity where the price is determined by the final bidder. Each home is unique and the value to that home is determined by who wants that property. Some people more than others. Now you are sitting down to a poker table with all your best cards in hand and bidding against others on this same property. How much you want that home will determine if you want it as much as the next. Add to that the players of; agents and sellers.
There is not a formula to win the offer. Each individual agent/broker is different. Just because they are associated with a "Big Name" company doesn't mean that they stack up against the same people within that company. However, because our inventory is so low and properties are selling above market value, the numbers are not going to make sense to you. One property may sell under your offer for various reasons, it was cash, the buyer let the seller stay rent free for a period of time, the buyer didn't have certain contingencies, who knows, but each transaction is different because the house is different, the seller is different and the agent is different and therefore that is why there is not a mathematical formula - it is an emotional formula.
And to closing the deal, isn't that what you want? An accepted offer which goes to closing and delivering keys to you is a closed deal.
So why go to the listing agent? That has been answered, they are contracted to get the highest price for the Seller. Do you have a buyer contract with your agent? And the fee is contracted at the time the listing agreement is signed. The fee is assigned to the listing Broker. It is paid regardless of who writes the offer. The listing contract states commission is $x and in the event another Broker brings in the buyer then the listing Broker will share $x with that Broker. If the listing broker writes the offer they get the whole amount. So they are being paid to get the highest price for their seller and compensated for it.
I suggest you find a Buyer Broker that you feel comfortable to trust and give them loyalty so that in turn you get the home you seek.
Have an amazing day!
The reason I didnâ€™t bid on the two properties I worked with the two big firms on was that the prices the agents, in both cases, said I needed to bid were out of line with what I thought the places should go for given the prior comparable sales Iâ€™ve seen, i.e. numerous (20+) places Iâ€™d seen in person and then watched to see what they actually sold for. These are very well-known, reputable agents in the area â€“ you all would recognize their names. The prices they suggested I needed to bid to â€œget me in the placeâ€ were out of line with what I thought the market value was. But I accepted their advice, and decided to sit out the bidding rather than waste everyoneâ€™s time writing an offer that would not succeed. It turned out their suggested prices were out of whack â€“ they were MUCH higher than the final sale price. Sure, had I bid that price I would have won, but Iâ€™d have paid 10% more than the next closest bidder. And in fact, had I bid at the price I thought the first place was worth, I would have won the bidding (My price for the other place was just 10K south of the final sale price). In both cases I felt that the agents are too focused on closing the deal at ANY price and not focused on figuring out the BEST price. This is not surprising given the commission structure, btw.
So, again, Iâ€™m skeptical Iâ€™ll find an agent who can better price a property than me â€“ theyâ€™re just not paid to price properly, but rather to price to get the deal (same as sellerâ€™s agent, btw). And Iâ€™m willing to bid all cash, or at most a finance contingency. Given that, what other value is there left for a buyerâ€™s agent to add to the process other than paper pushing, which the sellerâ€™s agent can do as well? Iâ€™m not looking to trash agents here â€“ Iâ€™m just trying to see what I may be missing.
BTW, the various comments above about buyerâ€™s agents having â€œinside informationâ€ on the sale price and other offers not only seems slightly shady, but it can be counter productive: In one case this insider info probably contributed to my agentâ€™s recommending too high a price â€“ I believe she was mislead by, or she misread, the sellerâ€™s agentâ€™s body language on the other offers.
A good negotiator never negotiates for herself in the same way that a lawyer who represents herself has a fool for a client. Using negotiators gives each party a little breathing room to think about and discuss what is offered before making a decision.
If you are buying in Palo Alto, we have low inventory of homes for sale and lots of buyers. So if the home you want is receiving multiple offers, the winner usually will be the one that overpays everyone else, but not always. If your agent is experienced with such situations, she can sometimes work with you and the seller's agent to position you better against the competition.
My most recent buyer did not find her dream home until the seller had already received and countered 3 offers. We had to work very fast to write an offer, which was accepted 5 minutes before one of the counters came back higher. The seller's agent was already representing one of the buyers. A buyer representing himself in this situation would have had very little chance of success.
If the agent for the seller gives away some of her money to get your business, do you trust her to not give away your money to close the deal?
Best wishes in getting your dream home.
Don't you realize that there is a potential conflict of interest inherent in dual agency? That is one agent representing both the seller and the buyer.
Ask yourself this question: Do you believe that the seller's agent will tell you that "I think the house is overpriced and should not be paying this xxx amount? The answer is NO.
The seller is the client and his/her job is to get the most money for the seller.
Best of Luck.
The listing agent is focused on getting a good deal for her client, the seller. Why do you think you would get a better deal from someone wanting to get as high of a sales price as possible? Suppose you got the listing agent to give away all of the buyer's side of the commission ... perhaps 2.5%. Would that make the home a great purchase?
Homes sell to the person who wants them the most or at least close to the most. If you don't really want the home it is easy to say it is overpriced. If you focus on finding the home you like then it will seem like a good deal. Put more effort into working with your agent. The more your agent understands your strengths and weaknesses the better the outcome will be for you.
A good listing agent makes sure that the best buyers for the house know it is for sale. The "good deal" isn't likely to come from finding a house no one else knows about, it comes from making the best choice for you and using your strengths during the negotiations.
Keller Williams Realty
Over a thousand home sales completed.
Many times in order to get a "good deal" it involves a lot of back and forth communication between agents who will fight for their clients. If there's only one agent, they become more of a mediator. We have an agent in our office who represents buyers only and tends to be more conservative when making offers because we go by what the appraisal value will be. A good agent will advise their clients but will ultimately allow their client to make the final decision.
You just need to find the right agent. If you would like some referrals please contact me.
Mortgage Center Corp
199 California Drive # 200, Millbrae, CA 94030
Office: 650-652-9000 Fax: 650-652-9811
DRE Lic #01905237 NMLS #851470
Truth be told: The listing agent has a signed agreement with the seller specifically stating the commission to be paid at closing (usually as a percentage, however, sometimes in a dollar amount,) along with the percentage or dollar amount that will be offered to cooperating brokers.
You certainly have every right to go at it on your own and present offers directly to the seller's agent. However, asking to negotiate a fee that would be paid by the seller could actually work against you You're interested in getting an offer accepted at the lowest possible price. Attempting to meddle with a formalized agreement between the seller and agent may result in your lower offer being rejected, as he or she could easily argue that you might try to pull a fast one on the seller as well--down the line.
If you're comfortable going through the entire closing process on your own (with the help of an attorney if need be) then by all means, go for it. If you're able to find solid listings along with recent sales comparables online, then go directly to these agents and submit offers as you please.
I'm sure there are plenty of buyer's agents in your market area that would be more than happy to submit any and all offers on your behalf, regardless of price. Not all people are the same: some are more patient than others. The same holds true with agents.
A buyer's agent is supposed to serve your interests by: negotiating the best possible price, smoothing out the closing process, and saving you money wherever and whenever possible. There are plenty that do just that. Of course, there will always be some that are just out for a quick buck and bring little value to the table.
With that said, even though it is legal in California, there can be a "conflict of interest" when representing both sides. You want someone fighting for you...someone in your corner, on your side with the same goals and mentality.
Finding the right real estate agent is not always easy but probably in your best interest long term - don't forget all of the insurance risks and liabilities that come with buying and selling residential property in the Bay Area specifically.
Plus if it's Palo Alto, we are talking about, arguably, the most competitive real estate market in the area...if not the entire state...
What is surprising for me in your story that you did not write the offers and complain about the agents suggesting higher price than final sale price. At the end of the day it is you who set the offer price, not the agent. Did the agents refuse to write an offer for you?
However, would you want to be represented by an agent that is trying to get the highest price for their client, the seller?
A possible reason that the 2 agents gave you above final sales price estimates is because.... they are estimates. If you were an actual bidder on either of those 2 homes you would find yourself in a bidding war. In a bidding war prices jump up in small increments through counteroffers so it is a very controllable environment and if you want to jump ship you leave, easy as that.
Yes, agents are focused on closing a deal, this should be quite obvious because if they don't close the deal they are wasting their time since you, the buyer will not be paying them.
What do you mean you are interested in getting a good deal? Are we talking about non populated areas of the California bay area? Everything right now IS a good deal if you include the current interest rate and the current rebounding economy. A rebounding economy means home prices will go up, we've seen this in the market as we have already hit the pricing bottom. The real estate market works based on comparables so if you don't buy now, in 3 months time the price will be higher. The only counter argument to this is if you don't believe the economy is getting better, that home prices will drop down again, and that the interest rate will get even lower.
If you have any further questions give me a call at (408) 840-3852 or Thomas.Feng@gmail.com