During my many years as an exclusive buyers’ agent, I occasionally spoke with prospective buyers who believed that it was in their interest to deal directly with the owner of a property or the sellers’ agent rather than have a buyers’ agent represent them.
This perspective is puzzling and doesn’t make any sense to me. In my experience, I’ve found that most sellers attempting to sell their home without representation (For sale by owner) substantially over-price their homes. Buyers who allow the sellers’ agent to handle the paperwork are not represented and typically pay considerably more than a represented buyer.
In either case, buyers without representation normally pay thousands more than a buyer with competent representation. To add insult to injury, they pay for the representation as part of the purchase price and get nothing for it.
The false perception by some that buying property without representation is beneficial may be due to a bad past experience with a broker who didn’t question the asking price and refused to negotiate on their behalf; they may have concluded that they don’t need an agent to pay full price or feel that they can do a better job of negotiating on their own behalf.
The big mistake for these misguided buyers is the false perception that all real estate agents are the same; if they had a better outcome and experience in the past by doing their homework (checking references), interviewing multiple agents and choosing the best one, they would understand and appreciate the benefits of working with a competent buyers’ agent.
Most homes that sell have a customary commission built into the purchase price that is split between the buyers’ and sellers’ agents. So when an owner, agent or appraiser uses those sales to justify the value of a home for sale, it includes the commissions for two agents. If a buyer works directly with the owner and doesn’t get the home for substantially less than the market value, which almost never happens, then the seller is unjustly lining their pockets with the buyers’ money in the form of an inflated price.
Similarly, if a buyer decides not to be represented by choosing to let the sellers’ agent handle the paperwork, the sellers’ agent retains what would have been the commission of the buyers’ agent and the buyer gets absolutely nothing in return.
A competent buyers’ agent will insure that you are getting the lowest price and maximum concessions. Prudent buyers interview more than one agent before making a commitment or viewing any homes.
If you view homes with an agent you later decide not to work with, you may be legally obligated to him/her on those particular homes. So it’s best to first decide on who will represent you and then start looking at homes.
Steve Setka is a buyers’ agent at R1 Colorado. Contact him at steve@DurangoRE.net.