I think that maybe it varies by area or perhaps by the definition of "meet’ . When I bought my house 35 years ago and when my daughter bought hers (about an hour away) 4 years ago, we met the sellers of every house we looked at unless it was either an “open house” or the seller wasn’t currently living there. But we never met or communicated with the seller in the absence of the real estate agent.
When I had to sell my mom’s house a few years ago, I met the buyer – but only after the sale was agreed to, everything was signed, etc. I walked the property with them, pointed out where the cesspool was, warned them to be sure to duck when going into the basement, things like that.
I’m from a small town, so I had gone to school with his younger sister and we talked “towny” stuff as well.
I know we met one seller while condo shopping in '99. Didn’t buy the place, though – way too small and their agent didn’t exactly inspire confidence.
As long as the agents are involved, I fail to see how any arrangement that results in a lower price would benefit the seller, unless the agents agree to change their commission rates. Again, the risk becomes greater when the agents are not involved - get everything in writing!! (I.e. “we agreed to knock $10,000 off the price if I removed the mess in the back yard after the sale. You didn’t say it included a leaking heating oil tank spill.”)
Besides, most realtor agreements have a “holdover” clause. I.e. if for, say, 90 days (length depends on contract) the seller sells to someone that was introduced by the realtor, then the commission is still payable - specifically to prevent such a side deal that avoids paying commission. If the realtor went through the work of finding the buyer, then they can’t simply be cut out of their commission by waiting until the realtor agreement expires. If you’ve thought of a trick, so have people who do that thing for a living.
If it’s the difference between selling the home and not selling the home, then selling the home is better for the seller.
The agents may want to hold out for a buyer willing to pay more, meaning that the seller has to hold on to the house for longer, and it doesn’t guarantee that another buyer will come along and give a higher offer. It may in fact, mean that the end up lowering the listing price to below what that original buyer was willing to pay, if no one is willing to pay what the realtor is holding out for.
When I was buying a home 20 years ago, I walked away from some houses that I liked when they wouldn’t come down. I know of at least one of them that ended up selling for less than I was offering several months later.
In order to get a loan from a bank, you have to have someone come out and physically inspect the house for issues like that.
And it’s less that they go through the work of finding the buyer, and more that they control most of the avenues of buyers and sellers coming together.
There is the MLS, but in order to get listed on it, you have to go through a realtor, and in order to get a tour of the home, you have to go through a realtor. When I bought my house, the only homes that my agent chose to show us were ones that were specifically contrary to what we were looking for. The house that we bought, we had found and researched ourselves. The only parts that he was involved in were the parts that realtors have carved out for themselves to insert themselves into.
He did pretty much no work, even the paperwork that was done was done by the seller’s agent, and still got his commission.
That’s really exactly the point … if and when the agents agree.
For anybody to whom this is foreign …
A seller may be willing to take a lower price than they were originally asking, but be committed not to taking anything that would net them less than $X (a number which is obviously not disclosed to the buyer or (likely either) their agent).
So … if the asking price for a house was $100,000, and the agreed-upon real estate commission was 6%, the seller – in a full-price sale – would net $94,000.
If the seller was willing to accept a lower number, as long as the net proceeds were greater than $90,000, then … an offer of $95,000 … after paying a 6% commission ($5,700) … would net the seller $89,300 – less than their ‘bottom line.’
As one who was in commercial real estate years ago, sometimes the buyer and the seller – implying that neither will budge another cent – will ask the agent to lower their commission in order to bridge the gap (in this case, $700).
If there is a seller’s agent and a buyer’s agent, sometimes they agree between themselves to each eat $350 of the agreed-upon commission.
It benefits the seller by arriving at a sale price that is acceptable to the seller with neither the buyer nor the seller having to budge beyond their ‘bright line’ positions.
But isn’t it ultimately always the seller’s decision? If I’m the seller, and you offer something below the listing price, as far as I know the agent can’t keep me from accepting it even if they wanted to. And I’m not so sure that they even want to - I remember reading ( Freakonomics maybe? ) that real estate agents keep their own homes on the market a bit longer than their customers do because their incentives are different - with a customer, the agent has an incentive to sell the house quickly because a $10K reduction in the price might only result in the agent losing $150 in commission ( a 6% commission on $10K is $600 split between 4 parties - broker and agent on both the buyer and seller side) while a $10K reduction on agent’s own house would cost the agent $9400.
That’s kinda the point. If I never meet them, then they may never hear about my offer. Either my agent may talk me out of giving such an insulting offer, or theirs may just not pass it along. And even if they do, the agent may council the seller to hold out and not accept a lower bid.
My personal experience involves a seller losing out over not taking my bid, and I lost out as well, as I would have preferred to take that house at my offered price than the one I ended up buying(for more than that one finally sold for).
Anyway, the overall point that I made that has been sidetracked here is that the buyer’s agent does not have the buyer’s best interest in mind, as the more the buyer pays, the more the agent gets in commission. At least, yes, the seller and their agent both want a higher price, even if the agent has less investment in selling the property than the seller does, and as you point out, they still don’t have that great an incentive to work too hard for the seller.
There is a flip-side.
Just a few months ago my brother sold his condo. Realtor got a 5% commission (maybe 6%%…not sure but good enough as an example).
Someone in his building bought it two days after he put it on the market. The realtor did pretty much nothing.
Let’s say his condo was sold for $300,000 (example). That’s $15,000 for almost no work.
Couple of points here:
- Whether or not you use an agent (or plan to apply for a mortgage from a bank), a competent pre-purchase property inspection is essential.
- A seller who failed to disclose something like a leaking oil tank would be exposing himself to a nasty level of liability.
This is “sort of” true for the seller’s agent. A high price produces a better commission, but often at the cost of many showings over multiple weeks / months. A low price often yields a quick sale: agent pockets a decent commission for negligible work.
“My agent got me two offers in the first two days, and a sale much quicker than I’d expected!”
Translation: “My agent collected a quick 6% commission for selling my house 10% below market price.”
Real Estate broker here, with 24 years of experience. The answer is, it depends.
Conventional agent wisdom says keep buyer & seller apart until closing, when they often meet at the closing table. But not all closings happen in person nowadays, especially if one party is out of town.
But I am not a conventional agent by any means. I feel that if both parties are willing, that the buyer can learn much from the seller during a personal meeting. I almost always want to be present, but try not to interfere. Sellers can often show how to turn something on or off and it’s more efficient than relaying the same info thru one or more agents.
Of course, this works best if they property is already under contract and we are just counting down to a firm closing date.
Again, conventional wisdom says the seller must vacate the premises during showings. The idea is so buyers are talk among themselves privately. But I don’t think this should be a hard & fast rule, as a seller can often answer questions better than his agent can. When I was selling a property I owned not long ago, I informed other agents that I would be present at all showings whether they liked it or not for exactly that reason.
I have had sellers who expressed a desire to make the transaction easier and the buyer happy; not every transaction is adversarial. If I detect that it might be, I might try to keep them apart, or consult with the other agent (if there is another agent). So, it depends.
RE: “Holdover” clause
The standard contracts in my state (Wisconsin) say that the listing contract continues for one year for any parties who made an offer, were shown the property, or entered into any negotiation about a sale. This time period can be extended, or modified prior to signing if all parties agree, although I can’t recall any time that year period was shortened. And I never heard the term “holdover” clause used in my state; it’s just an automatic contract extension.
To avoid arguments, any agent who wants to preserve their relationship in a transaction or potential transaction past the listing expiration date must give a written list of the buyers (called “protected buyers”) that fall in the extension category to any other applicable agent immediately after the contract expires, also to the seller. If the seller attempts to go around this provision, they are subject to a suit, since they are violating a written contract that they signed.
This last year I purchased one home and then sold the home that I had lived in for 40 years. I heard one story about a deal fell through because the buyer met the seller. The buyer had plans on tearing out the seller’s flower gardens. The seller would not have that and killed the sale.
I would have liked to have met with the buyer of or old house. I had some modifications to the house that were not common. A two pipe hot water system with a circulating pump, start buttons at three places in the house, and a time delay run relay. A whole house fan that could be started by throwing a switch or with a time clock, and stopped by time delay or the time clock. In the winter The return air to the HVAC unit was opened at floor level. IN the summer the return air was high and a return air fan from 2nd floor could be turned on. If operated right it was possible to have the 2nd floor 2 degrees lower than 1st floor. And there were a few other small things that I would have liked to explain the operation of.
But because I never got to met with her I left an operation manual for the house. I hope that he was able to figure our my instructions.
the seller’s agent is obliged to take any offer to the seller, unless the seller has already instructed “I will not accept an offer less that $X”. Presumably, if the offer is even close, an agent will pass that on. If all the offers seem to fall a little short, then maybe the agent will let the seller know they are overvaluing the property. If the agent talks the seller out of an offer, well - the seller decided in the end not to take it.
Sometimes it’s the seller - the agent tells them “you would be very luck to get $X” and the seller won’t go lower - until they figure out they have to, nobody is offering what they want.
Quite often people skip the formal inspection. I did. (no regrets). Some banks need it, some don’t. Sometimes the inspector misses a lot.
There’s no doubt the realtor business is incredibly self-serving, but that is changing, it seems.
However, the idea of bypassing the realtor and their commission with someone the realtor brought to the table is simply unethical - and as I mention, enforced by contract generally.
That’s why it’s called “negotiation” and why it can’t hurt to have someone who knows the market and the business advise you if things get interesting. Also, maybe the seller desperately needs to meet a deadline - in a face to face meet, they may give this detail away putting them at a disadvantage. And so on…
But again, the commission and the holdover clause are standard contracts pieces. I think current commission structures are unconscionably high (as does, it seems, a growing part of the discount realtor market) but using agents to do the initial work, and then bypassing them would be equally unethical. Which is why they have contracts to prevent it. So the decision would be - how long are you willing to not sell to bypass the holdover time? if you have mortgage payments, waiting 3 to 12 months may not be advantageous. If you own the property outright and don’t need the cash right away, go for it.
But this is my whole point. An agent is an independent and unbiased party who will keep track of such information and ensure it is passed on - in fact there will be two of them to verify such an exchange. If there is a private conversation between buyer and seller, the lawsuit will boil down to “I told you about it” and “No you did not” unless it is in writing. The resulting legal fees will likely be higher than any commission would have been. OTOH, if the agents can verify the only communication was “the oil problem was discussed” or “…not mentioned” will settle any threatened lawsuit in record time.
Another fun realtor story…
Friend of mine bought a nice property, years ago. He saw it in a realtor’s flyer so he called and asked about it. He then got his own buyer’s agent (wife’s cousin), went to look at the property. Turns out the flyer was just some local agent who had put together a whole bunch of MLS listings, hoping any nibbles would make him the buyer’s agent. He got incensed when my friend and the cousin cut him out to the deal, since it was cousin and seller’s agent. Even after the sale, they guy was banging on their door screaming he’d been gypped out of a huge commission. (Half a million was an EXPENSIVE property back then…) They had to threaten him with a restraining order.
If not, the manual would be helpful to any HVAC contractor they called.
Not sure how many residual HVAC contractors would understand a return air fan, or opening or closing floor and ceiling return air registers,
I agree, but in our current market, with multiple offers, it seems that insisting on an inspection is a deal breaker. Yet another reason why I’m not budging until this blows over.
I felt that way when my realtor was showing my rental apartment that I had just renovated.
Mostly because I had put a lot of thought into certain things, and I wanted to make sure prospective tenants knew about it.
It was stuff like —— the power outlet by the kitchen counter has a USB port, that outlet in the bathroom is on its own breaker so you can run a high wattage hair dryer, the fridge has an ice and water dispenser inside the door - it doesn’t show in the photos, stuff like that.
My realtor did a good job and found me a good tenant, but I still wish I could’ve shown it myself. I was proud of my renovation.
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