RING RING goes the cell phone.
“Hi, I’m calling about your listing at blah blah blah.”
“Well, that’s not my listing, but let me look it up real quick for you.”
“It’s your listing, it’s on your web site…”
“My site has all the homes listed for sale in the Toronto area, hang on just a second…”
“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 $1,180,000. The caller knew that.What the caller didn’t know was that the home was previously purchased in May 2016 for about $860K, by Blah, Blah that is in the business of buying, remodeling and “flipping” houses — then 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 five months ago, put approximately $150K into it and is now trying to get over $170,000 in profit?
My guess is no.
Will the seller knock off the buyer’s agent commission by 1% resulting in a savings of $11,800?
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 $12K in buyer agent commissions:
The home is overpriced by at least $80K.
There is a $170,000 profit margin built into this home.
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” $12K 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 $1,180,000 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?