Many buyers, particularly first time buyers seem to have the “I want to go it alone” mind set. As an agent who works a great deal with first-time homeowners, I have to ask why? Since the seller pays the buyer’s agent, the service is essentially free to buyers.
Going it alone creates more risk for home buyers:
Most buyers fail to wrap their arms around representation issues. Buyer’s agents are not paid high fees to search the MLS and unlock doors. That may be the way the public PERCEIVES it, but that is not really what we do. We are certainly there to help the buyer find a home, but beyond that we are there to represent them during negotiations, coordinate little things such as inspections, appraisals, walk-throughs, and the myriad issues that can rear their heads during the contract period. The hard work starts AFTER the home is found, not before.
The unrepresented home buyer:
This is the single largest financial transaction that people make. Do you really want to enter into such a transaction unrepresented? Let me make this point crystal clear: Unless you have a buyer’s agent representing you in your home purchase, you will be unrepresented during the negotiation process. Further, chances are, you are up against a pro who has a fiduciary obligation to represent their client – the seller.
“But I can save a bundle on commissions….”
Many feel that they can “save a bundle” by dealing directly with the listing agent. They have visions of saving a nice fat 3%. Buyers might save a few dollars, but it certainly won’t be any 3%. Furthermore, the lower the purchase price, the less likely the listing agent will be to slash commissions. Although the public seems transfixed on high-end commissions, one of the dirty secrets of real estate is that at lower price ranges, profit margins are very, very tight – they can even be negative.
When an agent takes on dual representation, they are doubling their work load while increasing their liability – there is no way they are going to work for half price. Many (myself included) won’t double-end a deal because of the potential conflicts of interest and because it is really in no one’s best interest that I do so. If a buyer walks into an open house of mine and wants to purchase my listing, I will find another agent to represent them and their interests while I fulfill my obligations to the seller.
So what’s the bottom line?
For all of the above reasons, the savings buyers are hoping to reap are not likely to be significant in the scheme of things. So the vital question is this: Is taking the risk of going unrepresented worth saving a few hundred dollars? In my opinion the answer is NO WAY!
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I am buying in a neighborhood where I have already lived for six years, and am very aware of market prices. I also have access to a myriad of inspectors. The sellers agent offered about 2.5% off the price for dual agency, which is close to $20,000 here in CA. I found my last buyers agent so worthless that I’m taking them up on it. I am well aware of required seller disclosures and terms I need in the offer, etc..
If I were moving to a new town, I’d get an agent. But there are some situations where dual agency really benefits all parties.
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Does a so called Buyers Agent really represent a buyer? I don’t see any difference between a listing and buyers agent. They both want you to buy a house.
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Hi David –
RARELY will a listing agent cut their commission in half. Many brokerages won’t allow it. Personally, it depends upon the agreement I had with the SELLER at the outset and the buyer has nothing to do with it because my contract wasn’t with them. There is a great deal of increased liability when you double-end a deal and there is also a great deal more work so getting the entire buyers side of the commission back is NOT realistic.
Hi Jim –
The buyers agent has a FIDUCIARY obligation to represent the BUYER. The listing agent has a FIDUCIARY obligation to get the best price and terms possible for the SELLER. Generally you are up against a pro who negotiates for their clients on a daily basis. Unless you do this for a living, you are at a major disadvantage when you work with the listing agent. They may be very nice and friendly and they may want desperately to sell that house to you, but – make no mistake – they are in an adversarial position. That doesn’t mean they are bad people, but they know what their job is – and they have to do their job.