Do you tell your buyer agent your real maximum price?

Question

My agent asked what the top of my budget is. I said $260k and my actual ceiling is closer to $310k on the right building.

I held back because I've watched a friend get walked steadily upward by an agent who knew his number, and every property that came in over budget had a reason it was worth stretching for. Commission goes up with price, and I don't think that's a conspiracy, it's just what the incentive does.

But I can also see how lying to her costs me. If she's filtering to $260k she never shows me the $295k fourplug that would actually pencil, and I never know it existed. She's the one with the search, not me. Also if I keep giving her a number I don't mean, she'll figure it out around the third time I say yes to something above it, and then nothing I tell her lands.

The version in between is telling her the criteria honestly, cash flow targets and condition and unit count, and letting price fall out of that rather than naming a cap at all.

Curious how the people who buy repeatedly handle it. Full disclosure, partial, or run the whole thing off criteria.

dpatel_re · Answer

Give her the criteria and the returns you need and let price be the output. A price cap is a bad instruction anyway, because $310k on a building with a 12% expense surprise is worse than $260k on a clean one, and the cap doesn't encode that. If your buy box is written down properly, an agent who understands it can find the edges of it better than you can. All of that rests on her actually being able to read the box. If she can't, no amount of honesty about your ceiling helps.

mikeoconnell7 · Answer

On the other side of this, a buyer who gave me a fake number would waste weeks of my search. I'd rather hear "$310k if it's turnkey, $240k if it needs work" than one flat figure I know isn't real.

derekj19 · Answer

@compass how would she even show you the $295k one if she believes your cap is $260k? That's the part where holding back seems to cost you the most.

tonyv88 · Answer

I've seen the walking-up thing happen plenty and it isn't usually the agent pushing. Buyers see three properties in their range, hate all of them, and talk themselves up. Then it becomes the agent's fault.

dmitri_v6 · Answer

If you're worried about the commission incentive, fix the incentive rather than the information. A flat fee agreement makes the ceiling question harmless, since she earns the same at $260k and $310k. Worth asking whether she'll write it that way.

joe_delgado5 · Answer

@warrant that's the answer. I've paid flat for two years and I tell my agent everything, including what I'd stretch to and why, because there's no reason for her to push me. On percentage I'd be more careful, and the difference between 2.5% of $260k and 2.5% of $310k is about $1,250, which is real money but not enough for a decent agent to torch a repeat client over.

monica_tran3 · Answer

The clients who hide their numbers get worse service from me, every time, and after five years in a service business I can tell you why: I'm guessing at what they want. Tell her the real ceiling and tell her out loud that you don't want to be shown things above it unless there's a reason. Then watch whether she respects that. That's the test you're actually running.

Do you tell your buyer agent your real maximum price?

7 replies