My buy-side agent found the deal off market. Should she get the listing when I sell it?

Question

Coming off a 1950s three bed I bought at $186k from a seller she found through a property manager she knows. Nothing on MLS, no competing offers, and she took a reduced buy-side fee because I already had the crew lined up.

Now the renovation is nearly done and she's assuming she lists it. She said so in a way that made it clear she thinks it's already settled. And I understand why. The cheap buy-side fee only makes sense to her if the sell side is coming.

The problem is that she's an acquisitions person. Her whole skill is knowing who's tired of owning something. When I look at what she's actually sold, it's six houses in three years and two of them sat over ninety days. The retail sale of a finished flip is a different job. Staging, photography that isn't from a phone, pricing against the new construction two streets over, and managing an FHA buyer's appraisal and inspection list. I have watched a real listing agent on someone else's project get $18k over what I thought the ceiling was, and I have also watched a listing agent add nothing but a sign.

So the choice as I see it. Give her both sides and keep my best source of off-market deals fed. Or split it, hire a listing specialist, and accept that my acquisition fee goes up on the next one or she starts calling somebody else first.

There's a third path where I list it myself through a flat-fee service and pay the buyer's agent out of proceeds, which works fine on the cheap stuff and terrifies me above $300k. Curious where the room lands.

aaron_fitz10 · Answer

I don't have a flip to sell, so treat this as an outsider question, but the thing I can't get past is that you've described two different businesses and one person doing both. Finding a tired owner is relationship work. Selling a finished house at the top of its range is marketing work.

What I don't understand is why the answer has to be all of one side. Could you not pay her a referral or a bonus on the acquisition instead, priced so she comes out where she would have on a double-sided deal, and then hire the listing person separately? Then she's getting paid for the skill she actually has.

Maybe the answer is that agents hate that structure because it's unusual, or maybe there's a licensing wrinkle. It seems cleaner than pretending six houses in three years is a listing practice.

jessreyes12 · Answer

I'll ask the thing I'd normally be embarrassed to ask. What is the listing agent actually doing that gets $18k more? I've heard people say a good listing agent adds real money and I've never seen anyone show me the mechanism.

The parts I can see are photos, staging, and days on market. Are there parts I'm not seeing? @girder, when you watched that project, do you know what she did differently, or is it just that the house was better than you thought?

Because if it's mostly the photos and a staging bill, that's $4k of vendors and I could hire those directly.

luis_carrera · Answer

@compass, the piece you're missing is buyer-side conversation. A listing agent with a real practice has forty buyer agents who take her call, and she knows which of them has a client circling that price band this week. That's how a house gets three offers in a weekend instead of one on day twenty-two. Days on market is the money, because price cuts follow time and buyers read a cut as a defect.

@girder, the appraisal management is the part I'd weight highest for you. A financed buyer at the top of a neighborhood's range means an appraiser has to be handed a comp story that supports your number. An agent who does that routinely brings a packet. An acquisitions agent may never have done it once.

I've been stuck in analysis for a while so take my confidence with salt, but I'd split it and pay her more up front on the buy. Feeding your source is real, and there's more than one way to feed it.

omar_haddad · Answer

Scope creep is my whole life so I'll say the unpopular thing: keep her on both sides and stop optimizing.

Here's what the split actually costs you. On my last two projects the finish decisions came from what the sale side wanted, and the person telling me what the sale side wanted was the same person who'd walked the house with me at purchase. She knew the buyer pool. I skipped quartz in one and put it in the other on her read, and both were right. Split that role and you get a listing agent showing up at week ten telling you the bathroom tile is wrong and it's now $6k to change.

The $18k you watched somebody else capture is one data point on a different house. What you can measure is what her off-market pipeline has been worth. If that's one deal a year at a $186k basis that nobody else bid on, that pipeline is worth more than a marketing upgrade on a single exit.

And if you split it, be honest with her before the reno finishes rather than three weeks before you list. She'll survive being told early. She won't survive finding out from the MLS.

aliyah_b · Answer

I'm still costing out a first deal, so I'm reading this for the numbers rather than the politics.

On a $186k basis, call it a $290k exit. A full sell-side fee at 2.5% is roughly $7,200. If the specialist genuinely gets you a faster sale, my holding cost math says thirty fewer days at maybe $1,400 a month in interest, taxes, insurance, and utilities is only $1,400. So the case for the specialist has to be built almost entirely on price, not on speed.

Which makes @harrow's point land harder than I expected. You'd need the specialist to beat her by about 3% on the sale price just to be even against the relationship you'd be spending. That's a bet on marketing skill I couldn't make with confidence on one house.

What I'd want to know, @girder, is her median days on market on the two that didn't sit. If four of six moved in under three weeks, the ninety-day pair might be pricing decisions the seller forced, which is a different story than her being bad at listings.

My buy-side agent found the deal off market. Should she get the listing when I sell it?

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