Home Buying in 27606>Question Details

sapphire1166, Home Buyer in Raleigh, NC

Downside to Using a Buyer's Agent

Asked by sapphire1166, Raleigh, NC Thu Nov 29, 2012

My husband and I are looking into purchasing our first house. We have many close friends who have recently purchased and while most of them don't think badly of their buyer's agent, none of them recommend getting one.

I've looked online as to the pros/cons of buyer's agents. I see the pros being exalted online, but the cons are few and far between according to agents who post online. I know all about how the seller pays 6% commission and splits it if there's a buyer's agent. But if you don't mind doing the comps yourself (and know where to get accurate information) and filing the paperwork/dealing with inspections, wouldn't it be more prudent to offer a reasonable price for the house, minus 3%? Especially true if a house has been on the market for a long time. That way you end up paying less, the listing agent still gets his 3%, and the owner gets to sell his house. I don't see much downside to that. Is there something I'm missing?

Help the community by answering this question:

Answers

39
Kajal Deepak’s answer
Here's my take on this (I have bought multiple homes):

You should absolutely get a buyer's agent when you buy your first house. After that, you should only get a buyer's agent if you really need them, otherwise, remember, ultimately their commission is coming out of your pocket as a buyer.
Many of them argue "but you will pay the commission anyways" - this is only possible if the seller is a bank or an entity that doesn't have a brain, and only rules. Otherwise, any seller will realize that they don't have to pay another set of commission (they are told "don't worry about commission, the buyer is paying for it anyways" - I have been on the other side too).
Do look into what contract the seller has with their agent. If that contract says that the commission will just get doubled for the seller's agent, then you and the seller may need to pressure that agent into giving up that money they didn't earn. They may do it in order to close the deal, or under pressure from the seller.
1 vote Thank Flag Link Fri Nov 30, 2012
James.. I disagree.. In this case, this person is from Raleigh, NC asking about buying a home here.
1 vote Thank Flag Link Sun Dec 2, 2012
Ernie, with all due respect, it's a generic question about using a buyer's agent that could have been asked by anybody and apply anywhere. "What are the pros and cons of using a buyer's agent?" That's a universal question and a universal topic.
Flag Mon Dec 3, 2012
Ernie, don't be silly. The question isn't specific to North Carolina, it's a generic question about using or not using a buyer's agent. This kind of question gets answered all the time on Truila by people all over the country.
1 vote Thank Flag Link Sun Dec 2, 2012
I have to say that agents from other states really shouldn't be answering this question unless you are licensed in NC where this person asking the question is from. You simply don't seem to understand NC laws. I wouldn't pretend to answer anyones question from another state as I am not qualified to do so.
1 vote Thank Flag Link Sun Dec 2, 2012
Fundamentally you need to understand that the seller-paid commission is not reduced if a buyer shows up without an agent. Essentially by representing yourself you are forgoing all of the help, advice, counsel, and expertise that a knowledgable buyer agent brings, and allowing the seller agent to make nearly twice as much money at your expense. It's pretty similar to going to trial and having no attorney while the other side is represented by professional counsel. The other thing you should realize is that when it comes to negotiating a price, the buyer is always in control anyway. Only you determine what price you offer for a certain home, and if you want to offer a certain % of asking price you and only you determine that. I simply would not give up the opportunity for a seasoned, smart and experienced agent to assist me with the entire process. But, to echo my colleagues who have already replied, it's your choice.
1 vote Thank Flag Link Fri Nov 30, 2012
Not correct, fundamentally, not using a buyer agent (and also not using the seller's agent" does in fact reduce the commissions. The buyer, not the seller actually pays the commissions, believing otherwise is buying into a myth and facade of the money flow in buying real estate. No matter how the concept is twisted around, the money from the buyer is what ends up paying everyone.

It is not difficult to offer and state that your offer is net to seller and that buyer is paying buyer agent commission, if any.

As far as the example used above referencing going to court without an attorney. What is far worse is going to court with an attorney paid for by the seller/seller's/listing agent. Would you ever conceive of betting your financial welfare on someone paid by anyone but you? You are better just putting your money on the street corner and asking anyone who walks by to watch it.
Flag Sat Dec 1, 2012
You seem to be asking if you can act as your own agent and collect 3% that a buyers' agent might get buying a home in Raleigh. The first problem you might have is that most properties in Raleigh don't offer a 3% buyer agent commission. Back in the days of a "standard" 6% commission, Raleigh agents kept 3.6% and paid 2.4% on a co broke instead of the more common 50/50 split with 3% going to the each agent and most Wake County properties on MLS still offer a 2.4% buyer agent commission. Buy a house in Durham and you are much more likely to see 3% commissions, but many properties are offered with a 2.5% commission and sometimes less. The second problem is that the listing agent will have to do more work dealing with you directly then they would dealing with a buyers agent. They will have to be there every time you need to access the house - initial showing, follow up showings, inspections, re inspections, measure for furniture, walk through, etc. They will be responsible for making sure all the paperwork is done correctly, negotiate directly with you, troubleshoot any problems that come up, etc. The amount of extra work is significant. You also can not assume the listing agent is getting 3% for listing the property. Lots of companies offer entry only, limited service, flat fee or reduced commission rates for listings.

If you want to try to act as your own agent, here is what I recommend. Contact the listing agent directly to make an appointment to see the property, not someone else in the same company. A good agent will ask you up front if you have or plan to hire a buyer's agent. Regardless, you should tell the listing agent that you plan to act as your own agent and you want them to show you just this property as a seller's agent (not a dual agent). You have no claim on the commission and the agent is not obligated to reduce the total commission paid by the seller because you have no agent unless the agreement between the seller and agent require that, but you can make whatever offer you want on the property. Decide what you want to pay, subtract the amount of the buyer's agent commission from that or ask the seller to pay that amount in closing costs if you want to reduce your cash at closing rather than lower the price. Once you make the offer, the amount of commission paid is between the seller and listing agent. If the seller agrees to your offer with the listing agent getting a full commission, you have still gotten the property for the price you wanted to pay. If the seller wants more money, you can suggest the listing agent reduce their commission to make the deal happen or walk away if they won't.

Another option to consider is to find an agent you feel comfortable working with and decide up front what services the agent will provide and how and how much they will be compensated. If you only want the agent to get paid if you close on a sale, expect the compensation to be much higher than if you agree to pay a retainer or hourly fee as the agent bears all of the risk of expending time and resources and not getting paid. If you are willing to pay an retainer or hourly rate, the fee can be much lower because the agent knows they will be paid something for their time. Depending on the price of the property and amount of commission offered, you may be able to capture some of the buyer's agent commission in the form of a rebate or price reduction. Most buyers will benefit from the services of a good buyer's agent. Experienced buyers realize this because they have been through it before and understand the complexities and potential pitfalls in a real estate transaction. First time buyers usually don't know how much they don't know and are particularly prone to making mistakes that can end up costing them far more than the services of a good agent. I would be happy to discuss service and payment options with you.

John Goddin
919-968-2100
1 vote Thank Flag Link Fri Nov 30, 2012
This is why I enjoy working with first time homebuyers the most! Lots of good questions and frequently some misplaced or misgiven information to work with. My son and daughter in law are a great example. They are closing on their first home tomorrow and had tons of questions for me as their Realtor based mostly upon misinformation from friends or something they read online. Looks like the biggest part of your question has been answered... you RARELY gain 3% for not being assisted by a buyers agent. And it's not always 3% as some agents like myself who work for a non-national company don't have to charge 6% to make a good income. What it comes down to is that a professional Realtor has many, many hours of education and most..many years of experience. There can be pitfalls to purchasing a home which for most, will be the largest financial transactions of their lives. Why NOT have someone who understands and knows this business help you! It's basically a FREE service to the buyer in most cases.
I have some information for First Time Buyers on my website at http://www.RaleighHomeSite.com . Feel free to check it out and while there, you can even search for homes. If I can be of any service to you, please don't hesitate to contact me.
1 vote Thank Flag Link Thu Nov 29, 2012
Steven Shaw recent buyer Traverse City MI
I just purchased an $800K home not using a buyers agent. I found all of my own comps by searching online & contacting the local assessors office. I used a real estate attorney to represent me in the transaction. The listing agent who originally was to be paid 6% negotiated his commission down to 3% to get the deal done. The property had been on the market for almost a year, and I seriously doubt the agent would have lowered their cut had I used a buyers agent where the listing agent would only make 3% and had to negotiate down from there.
0 votes Thank Flag Link Sun Apr 27, 2014
no, the seller has committed to paying 6% whether you use an agent to represent your interest or not. Not having a professional represent you does not save you or the seller any money, on the other hand it does net the listing agent a higher commission as they would not have to split it with anyone.
0 votes Thank Flag Link Tue Apr 22, 2014
You can't reduce the commission to a listing agent as the buyer. That is a an agreement between the seller and the listing agent.

The only con I can think of having a buyers agent is if you find a FSBO and that house is not offering a buyers agent commission and won't pay one. Those types of sellers are few. Most sellers realize that in order to get a buyer with a FSBO they need to offer some sort of commission.
0 votes Thank Flag Link Wed Feb 5, 2014
Buyer's agent commissions are negotiated between the agent and the seller. If a client comes in unrepresented it is possibly the selling agent will receive the full commission and you are left without any representation. Your scenario could work but it would be difficult to know until you begin the offer process.
0 votes Thank Flag Link Tue Jun 11, 2013
If you don't use a Buyer's Agent, you don't have independent representation.. And, the Seller's Agent gets the entire 6% commission. The Seller's Agent will either act as a dual agent or treat you as a customer.
0 votes Thank Flag Link Sun May 12, 2013
That is actually not a choice. If you decided to make an offer without a buyer's agent then the listing agent would become your agent too. There will still be 6% paid out and now the listing agent will get it all. If you had a seperate agent then each would get 3%.
The only time something like this works, as you are trying to explain it, is if you purchase a FSBO. Then since it is not listed and you have no buyer's agent there is no commission.
0 votes Thank Flag Link Sun May 12, 2013
Reading you most recent assessment, there is some misunderstanding of how the commission is paid out. First of all, not ALL commisssions are set at 6%. Personally, when listing a home, I charge less than that. What is fairly consistant in the Wake County area is that the buyers agent, representing you, makes only 2.4% with an occassional higher amount. In Durham, this percentage is typically higher at 3%. Also as has been stated, once a seller lists their home with a real estate company at a set commission percentage, you are not saving them any money by purchasing their home freestyle. They still owe that percentage to the company, regardless of how it was sold.

The value of working with an agent? My oldest son and his wife started shopping for their first home last year. Not trying to brag but he has an very high IQ and researches many things on the internet before making any decisons. He would be the first to tell you that the assistance and advice I offered to him by simply using my 19 years of experience was invaluable to their purchase. There are just things only past experience has answers for. They have been in their home since December and he still thanks me on occassion for helping him. .....and not just because I'm family, like everyone else, my assistance to him didn't cost him a dime.
0 votes Thank Flag Link Sun May 12, 2013
That all sounds good, minus the fact that only licensed agents have access to all of the information regarding comps aside from the fact that we are professionals and are trained to do what we do, much like you hopefully in whatever occupation you have chosen. This would be similar to teaching your own children, diagnosing your own illness, representing yourself in a court of law etc etc etc. All of that aside the seller / builder had already agreed to pay the commission be it 6% or whatever and it is not negotiable at the point of sale the listing company is entitled to it if you choose to represent yourself. Worst advise I have ever heard to make the biggest purchase if your life without someone, who knows what they are doing to represent your best interest, it's not just about the money.
0 votes Thank Flag Link Sat May 11, 2013
Reading these comments and there is one agent I definitely would not use. Wow...what a way to represent yourself.
0 votes Thank Flag Link Sat May 11, 2013
There really is no downside to you having a very good agent representing you. Avoiding that assistance will have you working individually with listing agents who have a fiduciary duty to represent the seller. Without representation, here in NJ, the listing broker/agent will be representing both of you under dual agency. The full commission would be paid to that broker in as dual agent.

I suggest you spend you time finding a very good buyer's agent - if your friends are not inclined to recommend theirs, then keep up the search. There are thousands of agents - some better than others that is for sure. Align yourself with the best one you can find.

The fact is there is a long way between finding a home and getting to the closing table. I stay involved every step of the way to usher my clients to a successful outcome. You deserve as much!

Good luck and best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
Web Reference: http://www.FeenickHomes.com
0 votes Thank Flag Link Thu Dec 6, 2012
The truth of the matter is you may not be paying less and not using the expertise of a good Buyers Agent is in my opinion somewhat shortsighted.
0 votes Thank Flag Link Tue Dec 4, 2012
You are missing a full understanding of how the listing agreement is structured. There is a good chance the seller pays the same thing regardless of whether or not the sale is co-brokered. Even if it is not structured that way, you are assuming there is no value in having your own agent. If that is how you feel then good luck, you are not going to find people who agree with you on a real estate agent forum.........
0 votes Thank Flag Link Tue Dec 4, 2012
using a buyer's agent won't cost you anything because their services are usually free to you because the seller will pay the commission for your agent.

After all, your agent not only helped you find the right home, but they helped the seller and their agent find the right buyer.

The biggest thing your realtor will do for you is to help you negotiate. Remember, the seller's agent is going to help out their client as much as possible, and therefore, will try to get you to pay top dollar for the home. Your realtor, on the other hand, wants you to get the best deal. Ultimately, both sides will have to come up with a price that everyone likes.

If you've got a good realtor, he can save you thousands of dollars on a home -- especially right now, since we're in a buyer's market!
0 votes Thank Flag Link Mon Dec 3, 2012
i reemphasize the fact that if you have a Buyers Agent Agreement then your agent will have a fiduciary responsibility to you assuring full disclosure. It does not mean that you pay the commission. That is up to the way the agreement is writte. In Florida the seller pays the commission to the marketing agent and has a fiduciary responsibility to the seller. All real estate agents work as transaction brokers. I am sure that this is similar in other states. However many states allow an agent to represent both the buyer and seller as a dual agent. Florida does not allow dual agency.
0 votes Thank Flag Link Sun Dec 2, 2012
Hello Sapphire
All of what you say seems simple enough however keep in mind several things , unless you are experienced in Real Estate as a professional you cannot possibly understand all of the important things we as agents handle for buyers, and all of this experience is free to you as a buyer. The largest point that I will make and perhaps the most important is the seller of any property that is using a licensed NC Real Estate Agent has already signed a listing agreement which is paying the listing firm a % which in most cases is 5 or 6, and you not using an agent simply means they will keep it all so the strategy of offering 3% less is really not feasible.
I would not make a major purchase like a home without the help of an Agent.
Michael
0 votes Thank Flag Link Sun Dec 2, 2012
Just trying to help. ;) .................
0 votes Thank Flag Link Fri Nov 30, 2012
Hey J. Broker, Greensboro, she's a buyer, not a seller. She's considering buying using the seller's agent. That is pretty clear in her comments. Your answer doesn't apply to her situation. FYI, yes, she says her close friends used buyer's agents....
0 votes Thank Flag Link Fri Nov 30, 2012
>>Fundamentally you need to understand that the seller-paid commission is not reduced if a buyer shows up without an agent.

David said it better than I did. Isn't that the real reason why you don't think you need a buyer's agent....you will save 3%? So the rub is that since you will likely not save that money why WOULDN'T you want your OWN agent? Hence the popularity of Buyer's Agents.
0 votes Thank Flag Link Fri Nov 30, 2012
Negative could be that you don't like your agent. All contracts signed by agents are actually contracts between the buyer/seller and the brokerage firm so if you are not happy with your agent you can go back to the broker and ask to work with another agent.
0 votes Thank Flag Link Fri Nov 30, 2012
Yes. As a buyers agent I have a fiduciary responsibility to my client. This means that I have a legal contract with my buyer and must share all information with my buyer pertaining to the property. Not just information that physically affects the property. I can also share pertinent information that can affect the offer my buyer makes on a property. I cannot do this as a transaction broker. In Florida we are all Transaction brokers and have a fiduciary responsibility to the seller even if it is NOT our listing. We are not allowed to share all information pertaining to the property without permission from the seller. If a property is listed by another Keller Williams agent then I must have my buyer sign a form that they understand that I am working with them as a transaction broker and not as a dual agent since dual agency is not allowed in the state of Florida. If a listing agent also sells the property they too must have the seller sign the proper form so that the listing/selling agency is not acting as a dual agent.. Listing agents although focused on satisfying their clients must be focused on marketing a property and hope that it is seen by the right buyer/agent. As a buyers agent I am primarily interested in locating the correct property, making certain that the correct contract is used for the purpose of my buyer, that inspections and deadlines are performed and met and that, negotiations do not disengage either the buyer or seller. Selling a home is a very emotional transaction and depending on how an offer is presented can make a world of difference on how it is accepted or ignored.
0 votes Thank Flag Link Fri Nov 30, 2012
There are issues that a train professional can easily seen in many real estate transactions, that an untrained person would not normally see, purchasing a home maybe your biggest investment ever, Sometimes it may work in your favor, the risk is just too high.
0 votes Thank Flag Link Fri Nov 30, 2012
Hi Sapphire,

I don't have time to read all of the responses. But let me make a few comments.

Your friends didn't reccommend a buyer's agent? Kind of odd, since you say the all used one. FYI, I have worked only with buyers for almost 17 years and I guarantee that every one of them would tell you to get your own agent.

Your big problem? Who said the seller's agent would discount their commisson by 3%? Why do you think seller's agents practice dual agency? So they get 6%! You're under the impression that an agent will just knock off 3%. It's not that simple. Why would they? Just because you don't have an agent? How does that benefit the seller's agent? It doesn't.

You may be informed, but are you really informed enough to write up your own contract and properly compare comparable sales? I mean, you might do pretty well, but a small mistake could mean a few thousand dollars. Do you the clauses and the contract language you need to insert to protect yourself as a buyer? Do you know how to negotiate a home inspection? Do you understand all of the language in your standard purchase contract? Do you know what to do if there is a legal problem? What if you want to back out? Who holds your earnest money and how do you get it back? Should the SELLER'S agent be holding the BUYER'S earnest money? Will the seller's agent present a true picture of the property, and tell me the negative things they see and the downside of the neighborhood/area/builder?

The seller's agent is working for the seller, period. You are a first-time buyer with limited understanding of how the process works. You would be doing yourself a HUGE disservice if you didn't get your own agent. Any benefit of using the seller's agent would be WAY outweighed by getting your own agent. In the end, you will likely not "save" anything if you use seller's agent, you will loose in the long run. Ask yourself: if going to the seller's agent direclty is such a good idea why does everyone say to use a buyer's agent, even agents here who have no skin in the game? Why are there so many lawsuits against dual agents for non-disclosure? Why did buyer agency even ever begin?

Using the sellers agent is problematic. Nobody who truly undersands would ever reccommend that you do that, except the seller's agent. Don't make a huge mistake that you will regret. Trust me, you're not as smart as you think you are.

FYI, as Larry commented, unless you have access to the local Realtor data base you do not have good comparable sales info. Trulia and Zillow are incomplete.

Jim Deskins
Broker-Owner
http://www.Advocate4Buyers.com
0 votes Thank Flag Link Fri Nov 30, 2012
Well said Jim. I have a different angle. I want to buy a house for cash. I go into the listing agents office alone, make an offer for the seller to pay closing and I pay the asking price. Now automatically the agent steps in as a dual agent (OH) and states that he charges a broker fee, $200.00 to both seller and buyer in addition to commissions after everything is done. He later returns with a counter from the seller that he is not willing to pay closing cost. Should and could I return with a buyers agent to offer to pay closing and asking price if I still want the property? And is that brokers fee something I can refuse to pay?
Flag Wed Jul 9, 2014
Hi Sapphire,

Ask yourself this question.....Why do so many doctors, lawyers, educators, business people and other educated professionals elect to use the services of a buyer's agent?

It's about specialization and litigation.....buyer's agents offer a wealth of information that far exceeds finding a property and filling out papers.

You are reconfirming one of the most basic problems with real estate.......it's so easy anyone can do it. This applies only until you find out the hard way that there is much more to this than meets the eye....But go ahead, it's your choice to go it "solo" or be protected.

The choice is yours
0 votes Thank Flag Link Fri Nov 30, 2012
As many of the agents have explained the agreement for commission is alteady done and if you insist on negotiating the dealt for yourself; you need to find out if the sellers agent will be working with you as dual agent or having you as a customer instead of a client. You need to know the difference! And just a thouhg for yourself
-If the sellers had agree on commission why not go ahead and hire the best agent for yourself?
You need to fill many forms and understand what is in each one and unless you are doing it continually you need yo know all the updates on those forms too.
It's giung to be difficult to find an agent who is willimg to reduce the commission because eventhough you don't want representation; he is the one that is going to provide all the forms ti you and he has a duty as a real estate agent to treat you fairly, disclouse material facts and honesty but it does not mean he is going to give you the best price because he has a duty to the seller on getting the best deal for his house!
Another thing you will have to go to all the agents who are listing the houses and expalin your proposal each time can you imagine the time of time for you?
0 votes Thank Flag Link Fri Nov 30, 2012
Yes, first you assume the listing agent will agree to reduce their commission to 3% and they are absolutely have no reason to do so and only the truly hungry (interpret that as a sign of how unprofessional and inexperienced they really are) will agree to do so. Top notch agents shouldn't and probably won't do it and the reason is simple regardless of what you might like to think you're not at all experienced and the smart experienced ones know this and aren't going to risk the transaction not closing due to you. This leaves them to essentially do both agents jobs.

I'm particularly taken that you're an admitted first time buyer, why do you possibly believe you know how to accurately evaluate properties? (Fully half the agents with licenses have no real idea how to price properties accurately and this hasn't changed in the twenty plus years I've been a full time broker)

The Internet is rife with nonsense, Trulia, Zillow and similar sites no nothing about specific real world values, they don't need to their Internet marketing companies and the public isn't their clients, its' people like myself their marketing themselves to. The estimates of value are ridiculously inaccurate based solely on tax records which themselves are inaccurate as often as not. For example Zillow claims to be within 20% of the actual price 80% of the time here in the Triangle. So on a $100,000 home they will be between $80,000 - $120,000 eight out of ten times and the other two times their estimate of value will be even further afield. What the public needs to understand is they aren't Realtors, have no feet on the ground in any markets and have never seen a single property listed on their website. They don't know how the home is finished, what condition it's in, how old the roof , HVAC or water heater is etc.

There is no downside to having a buyers agent, there is considerable downside to allowing the listing agent to represent both sides though this is legal in NC and most states. This "dual agency" presents a clear conflict of interest and in truth the only person well represented in dual agency is the agent, the buyer and seller essentially are thrown under the bus and left to fend for themselves.

Finding a good experienced Buyer Broker isn't easy, it's going to take a commitment on your part to be prepared to interview a number of people and ask the right questions.

I've attached a link below on how to find a great Realtor regardless of where you live and I hope you'll take the time to read it.

Regardless of what you end up doing I wish you the best of luck and hope you'll realize the added value of working with a true experienced professional Buyer Broker .
0 votes Thank Flag Link Thu Nov 29, 2012
"I'm particularly taken that you're an admitted first time buyer, why do you possibly believe you know how to accurately evaluate properties?" "What the public needs to understand is they aren't Realtors," OMG, how rude! Reading these answers has not clarified anything I didn't already know about using a buyer's agent; it has convinced me that realtors are arrogant and rude. Wow.
Flag Sat Nov 29, 2014
My question for you would be where would you be obtaining this "accurate information" for comps? As far as I know there is not more acurate information than the MLS. How will you know if the home that sold for say $150,000 had a seller's concession of $5,000 or if the price was reduced a few days prior to closing from $160,000 down to the $150,000? How will you know what type of loan was used to purchase the home(s) you are using as comps? These are just few examples of many that only one who has access to the MLS can find. And the only one's with acces to the MLS are Realtors, Appraisers, Property Managment companies, and some attorneys and unless you know one of these people personally, I don't believe they will just supply you these comps becuase you ask them.

There is a reason the pros are being exalted online as you state...that is because honestly speaking, the pros outweigh the cons by measures. Bottom line you would be making a serious mistake to purchase a home unrepresented. A good agent is worth more than his/her weight in gold!
0 votes Thank Flag Link Thu Nov 29, 2012
If the average realtor weighs 150 lbs, his or her weight in gold would be worth just under $3,000,000, at today's price, so I seriously doubt that assertion.
Flag Sat Nov 29, 2014
Dear First time home buyer!
This is such a good question and I hear it often from the Real Estate Investors that really know what they are doing as they almost are like the agents practicing and sharpening their skills every day on the streets. When you are not the industry insider and not buying, selling, closing, inspecting and comparing homes every every day, it is hard to expect you to be as detailed and tuned in to what the market is doing and where it is moving and we all know how fast everything is changing every day in our business! So, the smartest and most successful investors are making their Realtors a #1 team members! The commission aside, the professional will save you lots of headaches not just money!
Now if we do talk about the commissions... When the listing contract is signed, the owner has already agreed to pay their listing company 5-6% commission, no matter if the buyer will or will not have a realtor representing them, the agreement to pay is in place. The listing agents I know always prefer to deal with another professional that represents the buyers VS the purchasers personally, as it eliminates a lot of problems, uncomfortable situations, disclosures and extra work, plus the Byers are really well informed and become knowledgeable about the process.
So, imagine you are working 2 jobs (putting the seller and buyer together) and expecting to get half of the commission, just b/c buyers decided not have a realtor and "save" the real estate commission for themselves? In this case it makes sense if the agent will get all the commission, otherwise they may prefer a buyer who has Buyer's agent representing them, who will review the offer, go through counter offers, explain the process, attend inspections, and coach buyers on what/when and how to do it. It is a complicated process with so many details and detours, believe me! And in the market that is heating up right now, you may want to have experienced agent on your side.
Now to answer your question: what would be a downside in having an agent? If you have chosen a person that does specialize in working with 1st time home buyers, does not know the area or housing developments that would be great for you to consider, not aware of the different financing options and details required for 1st time home buyer loans, is not enjoying a lot of questions that most first timers ask, and does not have time to "hold the hand" every step of the way! You may not be as pleased with that type of service.
After many years working with first time home buyers I have written an article on how to chose the right agent for you, feel free to contact me and I will send you a copy!
0 votes Thank Flag Link Thu Nov 29, 2012
As others have answered, you would not get a straight 3% off as you are thinking. The sellers and the listing agent have a contract with agreed commissions and it does not matter if you have a buyers agent or not as far as that goes. Best always to have your own representation and someone looking out for you with experience. I have 11 years if you need help and I bet you would feel good about referring me to your friends:) My company is a subsidiary of a large credit union in the area so I am able to give you a credit from my commission towards closing costs if you decide to work with me. And a buyers agent may be able to get you more than 3% off the price of a home. thanks!
0 votes Thank Flag Link Thu Nov 29, 2012
Sapphire,

The issue you are not seeing is that the commission for example the number you used 6% is pre-negotiated by the listing agent and their firm. The missing part of your equation is that the seller is obligated to pay the full 6%. It is up to the listing firm if they will allow them to "cut" the commission. In NC in real estate any agreement is with the firm first. The agent is acting on behalf of that firm. So it is the firm's decision to negotiate on that amount. They can hold the seller to the original agreement. You will find that many larger firms are not going to be willing to giveaway that commission.

Also, as far as the pro's a buyer's agent is there for you. Their job is to get you that home for as little as possible. I have seen many a buyer purchase a home (without an agent) negotiate themselves and think they got a great deal. Except for the items that were missed in the numerous inspections, the questions on any future economic factors that will affect the future value of that home, and actually have a person looking out for just you.


Hope this helps,
0 votes Thank Flag Link Thu Nov 29, 2012
"Their job is to get you that home for as little as possible." On what planet? A buyer agent gets less commission the lower the sale price goes.

As for the commissions, the seller controls it, not the seller agent or any agent. So many people accept what agents tell them about commissions when that is like asking the car dealer what the best price is for a new car. Go figure.

A buyer can negotiate the buyer agent commission. In the offer, the buyer can include the term that the buyer will pay the buyer agent commission and then reduce the offer amount accordingly. Who cares if the seller agent likes it or not? Everything is negotiable and forgetting that only insures your disadvantage in any home purchase. Of course agents are going to comment about this and offer counter comments, after all, they benefit from the commission right?

Notice that no one ever asks the opposing attorney to pay for their attorney fees unless they win and only after all is said and done?
Flag Sun Dec 2, 2012
Hi,

When a lsiting agent list a home they go under contract (listiing agreement) with the homes owner. This listing contract states that a certain commission be paid no matter if there is a buyers agent used in the deal or not. Unless there is an addendum to the listing agreement the seller is almost always obligated to pay both sides of the commission that was determined in the contract. So the seller will not be saving any money if there is not a buyers agent in most cases.
This is the way I like to interpret for people that dont want to use an agent to represent them. If you were on trial would you be comfortable using the same attorney that the other side was using. There would be an obvious conflict of interest and you would definitely want someone to represent you in the process.
If the agent is savy then they will be able to save you more than just the 2.4-3% you would save without using the agent. Good Luck to you both and should need great represention let me know!
0 votes Thank Flag Link Thu Nov 29, 2012
You know this question gets asked daily. First off, the contract for commission is between the seller and the Listing agent. There is no where that it states that not using a buyer's agent lowers the commission to the Seller.

Secondly, how many purchase contracts have you written? Do you know all the pitfalls that can occur when purchasing?

believe me it is a lot more than just agreeing to purchase price. I have seen numerous buyers screw up thinking "Oh the Seller (or Listing Agent) is so nice, they would not take advantage of me." Wrong!

You can go cheap, or you can go smart, it is your choice. just do not come back to this forum complaining about how you got taken advantage.
0 votes Thank Flag Link Thu Nov 29, 2012
That's a pretty harsh and condescending reply to a very reasonable question. I certainly would never use you as an agent, for buying or selling.
Flag Sat Nov 29, 2014
The owner doesn't pay less. They are under contract to pay a commission to the listing office. The lisitng office is offering to split it with a cooperating buyer's agent and office. The listing agent and office would then get "both sides" in the scenario you're describing. And you would have no representation.
0 votes Thank Flag Link Thu Nov 29, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer