Can any agent be a buyers agent? Is this a good idea?

[marmalade]

I was talking to an REA this morning (he wasn't on the job, I actually bought a motorbike from him!) and he said that any agent can effectively be a buyers agent by agreeing to split the commission with the selling agent. In fact he said that it was against the law for the selling agent to refuse.
They will then negotiate a price you are happy with, or if not you can just walk away.

From what I can see this seems like a pretty good thing for an inexperienced investor, because no matter how much reading and knowledge you have about negotiating, you will never have as much experience as someone who does it for a living. Also, agents will share more info with others in their peer group, while they are unlikely to be so honest with a buyer.

The only disadvantage I can see is that the agent wants their commission so it's only in their best interest to get it sold, not get a really good price for you. But if you decide what you are willing to pay and don't go above that, what can go wrong?

Am I missing something here?
Has anyone done this before?

 

[Propertunity]

.... he said that any agent can effectively be a buyers agent

That is true. A RE certificate holder is able to act as either a buyers agent or a sellers agent (but NOT both at the same time. You cannot take a commission from a seller and a fee from a buyer on the same RE transaction).

by agreeing to split the commission with the selling agent.

This is where the term "buyers agent" can get confusing. There are a number of agents getting around at the moment that are calling themselves Buyer's Agents by virtue of the fact that they only work with buyers (i.e they do not list). However, the vast majority of them, only seem to sell their own agency's listings. i.e. they sell for the agency what a listing agent has listed, for the same agency . On occassion one of these so-called Buyers Agents will sell another agency's listing and this is where the commission split you speak of will come into effect. It is quite common for a 60/40 or 50/50 split of commission (or whatever they agree to) in this case.

However, this is a completely different scenario to an exclusive Buyers Agent who charges a purchaser either a set fee or a commission to loacte a property. In my view (biased I know, because I am one), these types of Buyers Agents are truely independant and can offer the best kind of service to a purchaser. They can buy any property listed by any agent and they do not get a commission share off the selling or the listing agent or the vendor for that matter. It is the purchaser that pays them.

In fact he said that it was against the law for the selling agent to refuse.

They may not be able to refuse but they can offer a poor commission split 99/1 say - 1% to the seller (and I've heard of worse) that it becomes not worthwhile for the agent involved.

They will then negotiate a price you are happy with, or if not you can just walk away.

Pretty much true of all RE transactions.

From what I can see this seems like a pretty good thing for an inexperienced investor, because no matter how much reading and knowledge you have about negotiating, you will never have as much experience as someone who does it for a living.

I'm not so sure. Two commissioned selling agents (one calling himself a buyers agent) and both getting paid by the seller. Methinks the buyer is not getting truly independant advice in this scenario.

Also, agents will share more info with others in their peer group, while they are unlikely to be so honest with a buyer.

That's true. I am constantly amazed at what a selling agent will tell me as a Buyers Agent, that he will not tell a buyer. And yet, I run back and tell my client, the buyer

The only disadvantage I can see is that the agent wants their commission so it's only in their best interest to get it sold, not get a really good price for you.

Correct.

But if you decide what you are willing to pay and don't go above that, what can go wrong?

Oh just all the usual things that can go wrong I guess.

For me, I prefer my Buyers Agent to be paid a fee-for-service by the purchaser not the vendor.

 

[urban cowboy]

I was talking to an REA this morning (he wasn't on the job, I actually bought a motorbike from him!) and he said that any agent can effectively be a buyers agent by agreeing to split the commission with the selling agent.

firstly tell him to hand his licence back to the OFT as he is not fit to trade - he is being misleading in terminology and his knowledge of the law.

Propertunity is right. Just a couple of clarification points as your post is in qld and qld law and terminology is often a little different to other states.

What you refer to from your description in merely a conjunction. At no point is that agent acting as a buyers agent.

Any agent may act as a buyers agent, but the definition largely comes from who signed the appointment to act in regards to a particular transaction.

To act as a buyers agent, an agent must have a form 22a signed by the buyer in the transaction with the "commission" or payment for service coming from the buyer themselves - not from the selling agent.

Under Qld law, if that agent merely "conjuncts", the agent still has a fiduciary responsibility to the seller as it is in the end the seller paying the agents fee - this is regardless of the fact they are working with a buyer to purchase a property listed with another agent. As a buyers agent, the agent is responsible to the Buyer only as the buyer is paying the fee.

under a conjunction, there will be only one appointment to act (form 22a), that being between the listing agent and the seller...the conjunction is a simple agreement between the selling agent and the agent with the buyer to split the comms.

in a Buyers agent scenario, there is usually two 22a's, one for each agent reflective of whom has the authority to act for each party in the transaction.

does all that make sense??

in short - a conjuncting agent is not a buyers agent. There is a big difference in the accountability and authority to act.

oh, and it is not unlawful to refuse a conjunction, if it were, almost every agency in Queensland would be in a whole lot of hot water as there are very few agencies that like to share these days!!

in fact thinking more about it - the law is something along the lines of being required to communicate ALL interest in the property and provide the client with timely advice in their best interest and then be guided by what the client instructs. An agent cannot lawfully make a decision that impacts on the clients property in any manner without providing accurate and timely advice and being instructed first...this would also apply to conjunctions. So if the conjunction was not in the best interest of the seller and they agreed with that, the conjunction would obviously not occur and would be completely lawful in that regard!!

 

[neK]

Splitting of commission = conflict of interest.

That means the supposed "buyers agent" you are dealing with is only prepared to buy off people who give him a cut of the deal.

With that motivation in mind, they are only after getting you to sign not getting you the best price.

In my opinion thats pretty much going directly to the selling agent, giving them your maximum budget you're prepared to pay, then asking them if you could buy it cheaper. It just doesnt work.