Our realtor is also working for the buyer...advice please

[TGod]

I’d love to have some advice from seasoned buyers and sellers. This is all in anticipation of an offer on a house we’ve had on the market. We moved to a different city in August, and placed our old house on the market. We just recently found temporary renters who moved in the other day so they are covering our costs and giving us about $200 extra. Big load off of us so we can relax a bit while the house is on the market. We intended to take the house off the market for a couple of months and relist in February or march to refresh the listing.
A little bit about our house, it’s renovated home on 5 acres (1/2 is wetlands so not all usable, but great for wildlife and privacy). The house has mostly been finished, there are a few little details that weren;t completed and it definitely needs a new kitchen. Our realtor priced it around $329K when we listed it, we dropped it to $319 after a few months of having lots of showings and no offers, but most feedback has indicated that the price was fair but the property was not what they were looking for. Her comments have been that if the kitchen had been done and it was a full usable 5 acres she would suggest listing @ around 425K. The town where it is located has always had lower valued real estate, so a house like this in our current city would have gone for about $500K, so if we’d found something like that here priced for $319K we would have snapped it up…alas they are totally different markets. We do feel this is a fair price, I’ve kept an eye on what’s been on the market and what things have been selling for. I also just asked our realtor to send me some updating comparative analysis info to get an idea of what’s been selling at what prices.
Our realtor showed the house to a couple who flew in specifically to look at our house last week. She phoned me last night to say she is expecting them to put an offer in pretty soon that they are figuring out financing. Apparently they have a couple of rentals so they made be looking to sell 1 first or get bridge financing…blah blah all beside the point, other than to say they are experienced in the buying and selling. I on the other hand have never sold a house, and was not present when my husband purchased the house, so I only have negotiating experience with the purchase of our new house that we bought when we moved.
Our realtor told me that the potential buyer thinks the house is overpriced and to expect a lower offer. That kind of made me laugh because our realtor is really good about getting viewers to complete a feedback form and one of the questions is do they think the house price is at market value and they said yes. So we’ll see what they come up with if they make an offer.
My main question is how to deal with a situation where the realtor is working for the buyer and the seller. I only know of friend’s experiences where it wasn’t a stellar situation and they felt pressured in a way that they wouldn’t have if the realtor had been working just for them.  We want to sell the house, but I feel less pressure to jump at a low offer now that we have someone in covering our expenses. The potential buyer also likes that there are renters in there as they didn’t intend to move right away.
Anybody have any advice for a newbie. Ideally I would like to sell for 310K that’s my fave #, and if I’m honest with myself I’m not willing to go below 300K. We bought the house for $100K, dumped a bunch of money into it, and have already pulled some equity out to put down on our new house, @310K after realtor fees would give us about 60K free and clear, so we do have some room to negotiate. I am going to be the main negotiator on this as my husband is a stress case when it comes to stuff like this, so suggestions would be appreciated.

[dadof4]

It depends...

The way I look at it, is that even if there were two realtors involved, you and your realtor have different interests. Your chief interest is in selling for as high a price as possible, while time is a secondary concern. Their chief interest is in selling as fast as possible, while sale price is a secondary consideration. So you need to take everything a realtor tells you with a grain of salt. Do not respond to pressure!

While not an identical situation, with my first house purchase, my realtor and the sellers realtor were from the same office.  We had one principle realtor handle the sale. There were no issues - in fact when we hit a snag at the last minute (seller refused to fix a deferred maintenance issue), both realtors agreed to bridge the gap by lowering their commissions.

[willn]

Does she have a buyers agreement with them?  If not, she has a duty of agency to represent your best interests. You state will have laws governing disclosure of such agreements when there may be an apparent conflict.   

dadof4 is right--practically speaking she's out for herself no matter what.

Your job now, since you have some time on your side, is to stay patient, don't feel pressured--spring is often a better selling season and you have your costs mostly covered.  If people are looking at 319 then you are probably pricing about right.  If you have to sell at 310 that's an amount approximately equal to a split realtor commission. Many realtors will drop to 3% if they are the only realtor involved so just ask for it.

[SnackDog]

If it is priced faily, it should sell for full price or more in the spring. Dec is a terrible time to sell. If you are urgent to sell, I expect the offer will be $300.  If you want 319, stay firm. If they think it is overpriced, ask for a comps analysis with identical properties sold within 60 days.

The realtor will be peeing her pants over the double commission so expect lots of drama if you play hardball. If dropping price I would definitely expect realtor to drop commission to as low as 3%.

If you go into contract, brace for more dramas with realtor about inspections and repairs.

If you have good renters, have you considered just holding onto it?

[sol]

I've never met a real estate agent I felt was really on the up and up, and I'm related to a few real estate agents.

Property transactions are typically the single largest expense any of us deal with in our lives.  Do your own due diligence.  Find and rate your own comps, know your local sale volumes and market cycles, and understand how interest rates impact offer prices.  Your agent should only be telling you things you already know, and if he/she starts feeding you alternative information then something is fishy.

I basically think of agents the same way I think of title insurance companies.  They are providing a very expensive paperwork processing service at your request.  They do not represent your interests or care if you get a fair deal on the transaction.  You pay them to handle the paperwork, not to represent you or negotiate for you.

In your case, you're currently making money off the property because you have renters covering your expenses plus some.  Selling in Dec at market lows when you could pocket an additional $1k and sell at full price in the spring seems a little silly.  I'd hold strong for your 310.  Several deals I've been involved in have fallen apart when parties couldn't settle on a price, both parties have walked away, then a week later one of them came crawling back.  So don't be afraid to say "no thank you but my last offer stands" as politely as possible.   

[totoro]

If they come in low, below what you are willing to accept, you can ask your realtor to discount her commission.  She is double-ending the commission right now which will not be the case if someone else makes an offer who is represented by another agent.

In order to act for both parties you will need to consent to the dual agency in writing when and if you accept the offer.  This is not my favourite way to sell a place because I'm responsible for the full commission unless the realtor agrees to a reduction  I do like it as an unrepresented buyer because I know I can ask the listing realtor to reduce their commission because I represent a bonus to them - this has worked for me in the past.

If you are not willing to go below $300,000 you may want to walk on this deal.   You may want to remove it from the market until spring - as someone else suggested.

[Another Reader]

As a seller, you should be aware that mortgage qualification for most loans will become more difficult as of January 10th because of more restrictive debt to income ratios.  Pricing will also increase to reflect new agency fees, especially for most mid-range credit scores, that take effect in April.  These two changes are likely to push a significant numbers of buyers out of the market.

Having said that, I'm suspicious of the agent's motivation because of some of the comments made.  In most states, her obligation is to represent your interests, but in practice dual representation is about getting the deal done.  If your market really is slow in the winter in your area, that would favor canceling and relisting, even with a possibly smaller pool of buyers.  However, if your fairly unique property is not attracting offers at the current price, you may have to consider if it's overpriced, independent of the market.

[totoro]

As a seller, you should be aware that mortgage qualification for most loans will become more difficult as of January 10th because of more restrictive debt to income ratios.  Pricing will also increase to reflect new agency fees, especially for most mid-range credit scores, that take effect in April.  These two changes are likely to push a significant numbers of buyers out of the market.

Having said that, I'm suspicious of the agent's motivation because of some of the comments made.  In most states, her obligation is to represent your interests, but in practice dual representation is about getting the deal done.  If your market really is slow in the winter in your area, that would favor canceling and relisting, even with a possibly smaller pool of buyers.  However, if your fairly unique property is not attracting offers at the current price, you may have to consider if it's overpriced, independent of the market.

The OP is in Canada.  I don't think the same changes are occurring here?

[CommonCents]

This is one of the reasons we opted for no agent, and used this point as leverage in our offer.

OP you talked about different markets, and I want to urge you to put what you could get if you had that particular house in a different market out of your head.  Where I just bought (today!) a house on 5 acres would be millions of dollars.

[Another Reader]

Sorry, I missed the Vancouver Island location.  Mortgage comments withdrawn!

How much of the failure to sell is price and how much is the annual cycle needs to be determined.  The OP's description makes the property appear to be fairly unique, with a limited pool of buyers.  The season likely reduces the pool more.  Potential buyers generally try to be positive in feedback so I would not put a lot of weight on that.  They were interested enough based on the listing to look at it, so there was something about the property or the price that got it off their list.  What the agents say privately to the listing agent might be more telling.

Do agree that asking the agent to lower the commission if she double-ends the deal is reasonable.  If she sold you the new house as well, it's more than reasonable.

[totoro]

This is one of the reasons we opted for no agent, and used this point as leverage in our offer.

OP you talked about different markets, and I want to urge you to put what you could get if you had that particular house in a different market out of your head.  Where I just bought (today!) a house on 5 acres would be millions of dollars.

Congratulations!

[CommonCents]

This is one of the reasons we opted for no agent, and used this point as leverage in our offer.

OP you talked about different markets, and I want to urge you to put what you could get if you had that particular house in a different market out of your head.  Where I just bought (today!) a house on 5 acres would be millions of dollars.

Congratulations!

Thanks!  :)  Seems so very anticlimatic, considering we didn't even get the signed deed at the closing (the seller's atty fedexed it over late) or the keys (getting from seller's agent later today).

[TGod]

Thanks for the feedback everyone. Our realtor is dangling the carrot at this point. She let us know yesterday that we could probably, maybe, sort of expect an offer in the next couple of weeks and that they're  talking to a mortgage broker so of course they're super interested...insert sarcastic face here. The feedback here has really helped give me a different perspective on the realtor-seller relationship. If we could sell ourselves we would, but we live in a different city so that's near to impossible. But really for the amount of money they make off this they should have my back and be jumping through hoops to get me the most money possible.

But we're in a good place now with renters so we're pretty low stress about the whole thing, holidays are here so we're chilling, there are good people renting the house so we're not stretched. And ya, spring is around the corner so we'll see what happens. I got an updated comparative sales analysis from the realtor the other day, most properties with older houses were selling around the 300k or just below, so we may be a bit high, but we had a larger chunk of land then most (altho no all usable).  It is a unique property and a unique house in a not so hot city so we're not surprised its taking this long to sell. But it's been on the market for 5 months now without any offers so something is turning the buyers away. We'll see what these guys come in with if they ever do make an offer otherwise we'll see what the spring market brings us.

Our renters are by no means a long term deal. We wanted temp renters in so we could sell it in the spring, and we found some good people who may be here until the end of March, or may stay longer if their contract is renewed. So it's up in the air. We'll take it month by month and enjoy the covering of costs while we have it.

[msilenus]

I hate that this situation is even legal.  It's such an obvious conflict of interests for the agent.  I disagree with dadof4 et al that this can be viewed under the general rubric that the agent is out for themselves.  Usually the seller's agents' interest is in closing any deal fast.  That's bad enough, but at least they're neutral w.r.t the pool of potential buyers.  In the case where the agent is representing the buyer, their interest is in closing the deal with that specific buyer.  That said: it's possible in this case that it just doesn't matter.  You aren't getting offers, which means there probably aren't other buyers.

Here's how I'd play your situation: no matter what the buyer's offer comes in at, if it's significantly less than asking, I'd counter.  Even if the price seems reasonable.  No matter how much the agent insists it's reasonable.  Counter.  My line to the agent would be that I think I can get a better price than that if I pull the listing and relist in the Spring.

The reason is that that should put the agent back in my corner.  For all the same reasons I'd expect the agent to pressure me hard to sign the offer, I'd expect the agent to pressure the buyers to sign the counter.  Or at least to offer a counter of their own.

Disclaimer: I've never sold a property (and only bought one), but that's how I'd play this situation, especially if selling in the Spring were a fine alternative.  Having a great backup plan is excellent insurance against overplaying your hand.

[Financial Threedom]

As always some great points from the MMM folk. 

I have bought two houses and sold one, all through a realtor.  My biggest piece of advice is that when you are the seller, most times, YOU are in control.  The exception would be if you are selling on an emergency, or an as soon as possible basis, but it seems you have some time, and you have renters in place, so you seem to be in a good spot.  If these people, or anyone really, wants your house, they will give you a reasonable offer, and they will also come back with reasonable counters to your counter offer.   I don't have any experience in the "double agent" situations, but don't cave to any pressure from your agent because he/she is going to be double dipping on commission in this situation.  The ball is in your court, remember that, and you will be in great shape.

[Another Reader]

Why is your agent showing properties to someone that has not been pre-approved or at least pre-qualified for a loan?  In the US, most agents won't waste their time with a potential buyer that does not have the proven ability to buy.  If your agent is showing the property to unqualified buyers, I would be concerned.  I certainly would place no weight on vague promises of an offer from buyers that may or may not be able to get financing.  In your shoes, I might be in the market for a new agent when the listing expires.

[TGod]

Well it is the beginning of February and our house still hasn't sold, and we haven't received any offers tho lots of showings. We had it off the market for a couple of weeks after our contract expired mid-January as we had renters in. Our renters let us know that they were leaving at the end of the month, not surprising but still disappointing, so it's back on the market for 10K less.
The "very interested" buyer that our realtor was also representing is apparently still "very interested", but hasn't made any move. I just sent my realtor a text asking what their deal was, and she got back to me and said they are working with getting financing (realtor's daughter is a mortgage broker) but they are slow to get info to her, and said they were nervous about the decision but she's refreshed the bug in their ear.
I'm 95% sure nothing will come of these individuals, but who knows.
The kitchen needs a reno, we did our best on that, painted all the random cupboards white, ceiling is all done with pot lights etc. Flooring is horrid - 1/2 laminate, 1/2 old vinyl (we took a wall out in the middle to make a bigger kitchen). It's also uneven (no rot...just an old house), we are considering throwing down some floor leveler and spending a grand to install vinyl that matches the hallway and laundry room. Would definitely make it look 100 times better. The upstairs master loft also needs flooring (it's about 700 sqft), so even if we lucked out with something decent (2$/sqft) it would cost us 1.5-2K to do that not to mention time (we now live in another city, 1.5hrs away). 
We initially bought the property for 107K, dumped in another 100K (massive reno, added the upstairs, landscaping, some of this went to living expenses as well as I was casually working for a couple years when my first son was young so we were going in the hole....not a lot of decent paying jobs in that town). We paid it down to 138K over the next 5 years. We're trying to sell for 309K (was 329, but have dropped). We took 100k out in equity for our new house so we owe 238K. In my head I want to walk away with 60K to invest....but I think I need to let this # go and be happy with whatever we can for it..
We either dump another 5K into the house and potentially have to drop the house to below 300K or just leave as is and drop the price.
Or move back there, we could probably sell our new house here pretty quick for what we paid for it, minus closing costs and live in a cheaper house in my hometown (where I don't wanna live and won't be able to get my old job back).....I keep saying this to my hubby, mostly as a joke, but sometime I feel like this house will be a yolk around our necks forever and we'll end up doing just that.
Must be Monday....I feel like a complainy pants.

[Another Reader]

Did you list it with the same agent?  Given that she was showing the house to unqualified buyers in hopes of double-ending the deal, I would have found a new agent.

You are at the beginning of the spring selling season.  You are getting showings but no offers.  That means the price is still too high.  In your shoes, I would lower the price and get it sold.

[TGod]

It's a little different in Canada than what I understand from the States regarding unqualified buyers. Most home offers have clauses referencing, pending inspection, pending financing approval etc.
We just listed again, dropped the price to 309k. Since relisting mid-last week, we had one showing on Saturday and one coming up on Wednesday. We've never gone through the spring selling season.
I did just ask my realtor if a "cash back" option might work, where we offer 5K cash back for updates. Not sure how common that is up here in Canada, still waiting to hear back from her.

[calcsam]

Why not just find new renters for a year? Explain the situation, that the house will be on the market. Write into the contract that if you have to kick them out you will pay $2,500 or some such as compensation.

As a recently-emerged-cheap-college-student I would salivate at the prospect of $2,500 free money.

That is cheaper than lowering the price $10k.