Quick question to the experts:

Is the agent for the buyer expected to fight for the best deal for the client (rather than themselves)? Do they have an obligation to thier client to take an offer when the deal is good for the client, but not the agent? In effect, not letting the client know they may find a better agent elsewhere?

For instance: Say there is a house for sale for $1 million, and the buyer tells the agent to offer $900k. The seller agrees to $900, but only under the condition the agents agree to cut the commission. If the buyer's agent refuses, thus killing the deal, are they obligated to explain the situation to thier client, or can they simply say "the seller refuses the offer"? Leaving the buyer in the dark as to the reasons why.

I feel that they would need to disclose this, giving us a chance to find another agent that will accept the offer, but my wife is thinking that the commission is, in reality, a part of the offer and therefore the statement "they refuse the offer" is correct and all that needs to legally be said. Is there validity to her logic? Consipiracy nuts will think both agents are working together against both parties..

Thanks for clearing this up.

The Law of Agency requires that the Agent put the interests of the Principal ahead of their own; as difficult as that is to do sometimes.

If you submitted an Offer in Writing; then you should also be entitled to see a Written Response; which would include this Seller's stipulation.

Others may have another Opinion; but that's mine. In this Market, a smaller piece of the Pie is better than NO PIE; but seldom is the Commission a Deal Breaker . By using the term "Client", I presume you have a Contractual Relationship with this Agent; meaning you are a indeed a Client, and not a mere Customer ? Many people confuse the two terms.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information.

Well said Vermont007 but the question posed is a legitamate concern. I think the buyer will almost always wonder if a better deal wasn't available but the agent would not be making as much money. It is one of several reasons why I still prefer the traditional sub-agency role for selling agents. Buyer agency does have a place but I think it is over used.

Thanks for the quick response.

As far as "client" I didn't really mean either. This is just a hypothetical question I thought of today.

I am looking to buy a house and have choosen an agent who is very well respected in the area (no contract with him, we search ourselves for homes then we arrange to see them, he basically only unlocks the door for us). Out of the 20 or so houses we have looked at (we are very picky), the one we want most just so happens to be his listing.

We accept that he is representing both sides, and he called yesterday saying the only way he can get the deal we want is if he drops his commission to 3% (1/2). This was the deal he made with the seller, we were not involved, we simply made an offer. I don't really feel so sorry for him losing 3%, as we found the house ourselves and only then realized it was his listing, but it also made me think what other types of games agents might be playing to make or break deals and how much of it they have to let you know.

Thank you for acknowledging our responses. There are Three (3) Parties in this scenario: The Seller; the Agent; and You.

"No man can serve two masters" This Agent is under Contract to represent the Seller. And we already know that he/she will has a natural and somewhat unavoidable inclination to look out for himself. But he does not represent the Third Party - You.

Without a Contract, he CANNOT represent you. I think your Profile indicates that you are in Orange County, Calif. (We have an Orange County in Vermont, too), so I will leave it to someone more familiar with California Real Estate Laws and Regulations to explain "Dual Agency" as it may exist in your Jurisdiction; but without a Contract you should be under No Illusion that you are represented, as you implied above.

All of my comments of earlier yesterday still apply; except that you should understand that, without a Contract to represent you, the Agent has no Fiduciary Duties, required Loyalty or Allegiance to You. That's why the Terms "Customer" and "Client" SHOULD NOT be interchanged so frequently.

Right now, you are only a Customer, and the only representation you have to rely on is your own. In most instances, and as Mr. Foreclosure indicated above, when dealing with "An Honest Broker" this shouldn't make any difference; but "ForeWarned is ForeArmed".

Wow, I didn't know that. When we decided to try and jump in the market now that prices are down, we looked for agents that had a lot of nice houses that sold quick, etc and called him up and told him we wanted him to show us around. He said that would be great and for a year we went from house to house, never once mentioned a contract to sign or anything.

It is only out of shear luck (if you want to call it that) that one Sunday we were driving around and saw a sign for an open house, and decided to go inside, and there he was in the living room. He said he never mentioned this new listing he got because it was above our price range. But it was so nice, we had to keep it in consideration. We eventually negotiated to within our range (due to his 1/2 commission cut) so we decided we wanted it.

I guess maybe I should look for someone else to handle it to look out for us, except I have no choice as there is no commission for another agent. I guess as long as we are happy with the final price, it doesn't matter. Now to find a good inspector (not one he recommends).

Thanks for the information.

this is a very interesting subject. I had a buyer approach me on my of my listing recently that was priced at $530,000. Buyer mentioned to me that her buyer agent informed her my listing was no longer available and we already had an offer accepted. I was wondering why agent would say this especially if they had an interested buyer. Come to find out, buyer said her agent was trying to steer her to another property that was offering a buyer agent bonus. Needless to say, buyer was very upset and ended up terminating relationship with this buyer. Bottom line, as mentioned previously, it is buyer agent's responsibility to hold buyer's interest above their own.

There are some caveats to this.

As an agent we do not have to do anything illegal, unethical or immoral.

We also do not have to work for free or for a discounted fee. It would be in all of our clients best interest if we worked for free or at a discount.

If we discount for one do we have to discount for all of them?

If I discount my fee for one client I run the risk of acting in a discriminating manner if I don't discount my fee for everyone. Services offered to the public have to be the same for everyone or we run the risk of offending someone and being accused of discriminating. This is federal law territory.

[quote=Bigtoe][quote=Vermont007]

The Law of Agency requires that the Agent put the interests of the Principal ahead of their own; as difficult as that is to do sometimes. [/quote]

There are some caveats to this.

As an agent we do not have to do anything illegal, unethical or immoral.

We also do not have to work for free or for a discounted fee. It would be in all of our clients best interest if we worked for free or at a discount.

If we discount for one do we have to discount for all of them?

If I discount my fee for one client I run the risk of acting in a discriminating manner if I don't discount my fee for everyone. Services offered to the public have to be the same for everyone or we run the risk of offending someone and being accused of discriminating. This is federal law territory. [/quote]

I agree 100% with BigToe... What we do for one we do for the other, not to mention, I work hard for my customers/clients and I perform a professional and valuable service and I have never, nor would I ever discount my commission! When the seller signs the listing/commission agreement they are agreeing to pay me a certain amount and if an offer comes in and it's not high enough then it's not high enough and we look for another offer... You don't go to the doctors office and have him perform blood test and other exams and when he's standing in front of you about to give you the results you say owe wait can we talk about what you're going to charge me ??? I'd like you to charge me $50 for that test instead of $60 cause I thought I'd be getting the results sooner or whatever the case... You look at him as a professional, providing a valuable service and it's "non-negotiable" so you don't question his charges but people look at Realtors as people with just a "job" looking for a big paycheck and so the first pocket they try to pull money out of is the Realtor's, not realizing that maybe that person is a professional, who has provided a valuable service, done a great job and spent lots of money advertising, marketing and time dealing with the listing, in which case they deserve FULL payment... Now, I'm not saying that $%*##@* agents/brokers aren't out there but we (the few honest and hardworking bunch) shouldn't suffer for them... I'm proud to say I'm not a discount brokerage, my agents and I work too hard and too well for that... Sorry for the rant but it's something I feel strongly about...

Dan Ortiz ABR CRS CREOS (Hablo Espaņol)
Licensed Broker/Owner
Manor Gate Real Estate of NY Inc

"If you think hiring a professional is expensive, wait till you hire an amateur" Red Adair

Foreclosure King,

Let me ask you this though, if the offer is contingent on you dropping your commission, which you say you would never do, would you tell your client?

Would you actually tell them that they had a deal, except it would require you to drop you comission, which your integrity won't allow, therefore the deal is dead? Or would you keep them in the dark?

The offer is between the buyer and the seller. How can it be "contingent" on what a third party will or won't do?

If the seller's agent comes back and says the seller will take the offer only if the agents will cut their commission then this is not a true counter offer. The counter would be the amount after the discounted commission is figured into the equation.

This only ever happens with weak listing agents. Agents that know how to handle their sellers don't have deals like this.

I have had agents try it on me. I explained to my buyers how much the confused seller and their useless agent actually were countering back with in monetary terms and we stuck to our original offer. The seller's agent ate my share of the commission that I wouldn't give up.

One time, a client and I made a deal where I matched the listing agents commission cut and my client paid me back the money after closing.

I have had sellers try to pull it on me as a listing agent. A simple "no" is all it takes. At this point it is now up to them to kill the deal. Call their bluff. You will win most of the time.

You will be surprised how positively people/clients react when you stick up for yourself.