Without knowing the legalities of it, hiring the listing broker as your buyers agent would give them a massive incentive to help you. If you assume a $500,000 listing that’s around the right price point and a regular 6% commission split 50/50 between the selling agent and the buying agent, the selling agent gets $15,000. Now assume that the agent is on both sides of the transaction, and there is no realistic bid possible that allows the agent to make more money, it would literally have to be double the price. So the selling agent would be massively incentivised to have the current owner sell the property to you over any other bidder, and they’re in a prime position to play up the reasons to accept your bid over any other, and downplay any other bidders for the house.
Obviously no real estate agent would ever be so unethical as to do any of this of course regardless of the legalities of it, but still it’s an interesting thought experiment right?
As a side note, as an Australian I've found it astonishing that real estate commissions are so high in the US. Over here you're looking at more like 1-2% commission and the market seems to function just fine. And whenever I discuss this with friends from the US they list all the wonderful things that real estate agents in the US do, and it's exactly the same as what the ones in Australia do.
Depending on where you are in each country the prices of homes and therefore the amount of actual dollars received by the agent may play some part in explaining the difference, but it certainly doesn't seem to explain all of it given that even in high cost cities in the US the commission rates still seem far higher.
Without knowing the legalities of it, hiring the listing broker as your buyers agent would give them a massive incentive to help you. If you assume a $500,000 listing that’s around the right price point and a regular 6% commission split 50/50 between the selling agent and the buying agent, the selling agent gets $15,000. Now assume that the agent is on both sides of the transaction, and there is no realistic bid possible that allows the agent to make more money, it would literally have to be double the price. So the selling agent would be massively incentivised to have the current owner sell the property to you over any other bidder, and they’re in a prime position to play up the reasons to accept your bid over any other, and downplay any other bidders for the house.
Obviously no real estate agent would ever be so unethical as to do any of this of course regardless of the legalities of it, but still it’s an interesting thought experiment right?
As a side note, as an Australian I've found it astonishing that real estate commissions are so high in the US. Over here you're looking at more like 1-2% commission and the market seems to function just fine. And whenever I discuss this with friends from the US they list all the wonderful things that real estate agents in the US do, and it's exactly the same as what the ones in Australia do.
Depending on where you are in each country the prices of homes and therefore the amount of actual dollars received by the agent may play some part in explaining the difference, but it certainly doesn't seem to explain all of it given that even in high cost cities in the US the commission rates still seem far higher.