Why do I need a buyers agent when I can run around to open houses and find the property myself?
Implicit in this question is the thought that they will somehow save a big fat 3% by dealing directly with the listing agent. And why not? It sounds like a great way to save money. After all – the only thing agents do is open doors and fill out a few forms. The listing agent should be thrilled to just sell the home, surely he/she can afford to fork over the other side’s commission to seal the deal!
Where to even begin on this one – except to say -not so fast!
1. The agreement is between the listing agent and the seller. You do not know the details. What on earth makes anyone think the buyers agent is being offered 3%? Coops (the commission offered to the buyers agent by the seller) are all over the map around here. As a buyer, you have no idea what the seller offered to pay the buyers agent. That is between the seller and the listing agent.
2. Why would a seller give away the buyers agents commission to an unrepresented buyer? They certainly don’t have to- nor should they. Once again – the agreement as to what would happen if the agent “double-ended” the transaction is between the seller and their agent. Once again – the contract is between the seller and the listing agent. The buyer has nothing to do with it.
3. Even if the buyer is treated as a “customer” (more on this in a moment) – working with both buyer and seller is not the least bit trivial – it is a lot of extra work and there is a great deal of added liability involved. Therefore, even if the seller were willing to give away the entire buyers portion of the commission, few – if any listing agents would be willing to take on the work and liability probono.
The above are obvious reasons why the commission is not a very valid “negotiating tool” for buyers who think going in unrepresented will save them a bundle. It won’t. At the end of the day, you are saving a few hundred while risking six to seven figures in the biggest financial transaction of your life.
Do buyers agents offer any intrinsic value? Yes they do – and here are just a few good reasons to use a buyers agent.
4. From a logistical point of view – trying to find houses through open houses and on Trulia or Zillow is not all the practical. Chances are buyers will miss a good deal of current inventory because open houses aren’t given on each home that is for sale every week – or even every month. The decision to hold or not to hold open houses depends on the listing agent and the seller. Much of the information on the internet is outdated creating further frustration. Calling every listing agent in town requesting showings isn’t a very practical alternative either. Working with a buyers agent will give you the most complete access to the current inventory of homes in your price range.
5. This brings me to my next point – it really is in the buyers best interest to have representation. A buyers agent knows the market better than a buyer does. They are generally local agents who are in and out of homes all the time. They know the condition and what they sold for. Putting in an offer that makes sense is key to securing the home that you want. A buyers agent has that extra knowledge of the market that a buyer really couldn’t have because the buyer doesn’t eat, drink and breathe real estate every day of the week.
6. Since we know what we are selling and can help you find the right fit. For example – there are cooperatives that have very difficult boards. If I have a client with a slightly higher debt to income ratio – I know that there are some complexes that just won’t fly. Buyers working on their own haven’t a clue. This can get them into a world of hurt, and cause them to waste time on money on a transaction that falls apart at the last minute. Another example – A buyer sees a great neighborhood with a lot of green open space – what they don’t know is that a developer has just bought that property and soon your great natural view will be replaced by rows of McMansions after clear -cutting the woods of course.
7. Negotiations…when you negotiate the purchase of a home, you are generally negotiating with the listing agent. The listing agent is a pro that negotiates terms for sellers all the time. They aren’t mean or cruel people – BUT their fiduciary obligation is to the seller. They are obliged to secure the best price and terms for the seller. For the average buyer this David going up against Goliath.
8. In New York, the attorney’s take over the process once “a meeting of the minds” has been reached. However, agents are still very much in the picture and guide the process along. Inspections, lending and other pitfalls. I’m not going to prolong this post much further except to say that things can come up during both processes. Things like – the home might need a new roof in five years. What will that cost? Agents have lists of qualified contractors at their fingertips that can help clear up weather this is a deal killer or just a minor hiccup. Issues like this need to be resolved quickly and with as little fanfare as possible. Buyers flailing about on their own can end up being their own worst enemies when they run up against a situation like this.
9. Lending problems. These days there are generally multiple hiccups in the lending process before the loan is cleared for a closing. We see this all the time and know how to deal with many issues buyers can’t imagine happening. This is especially true for condos and cooperatives. Some loan products will not work with specific complexes for various reasons. Two recent issues that I have had: a cooperative board lacked sufficient fidelity bond insurance for the lender. what would a buyer do if this happened? In another instance a buyer was trying to use an FHA loan in a complex whose board had a right of first refusal requirement that eliminated them from FHA. Agents can short-circuit issues like this before they happen.
I’m not going to prolong these issues with more examples – the point is that trying to avoid using a buyers agent just to save a few $$$ when you are dealing with the single biggest investment of your life makes very little sense and involves no small amount of risk. The savings are not nearly as great as most buyers are thinking.
© 2011- Ruthmarie G. Hicks – https://thewestchesterview.com – All rights reserved.
Please feel free to contact me anytime to request additional information or to set up an appointment so we can explore your listing or purchasing needs. I am easy to reach by phone, text or email. Or, if you just want to continue your search online, the links below will help you get started.