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.
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.
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.
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.
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.
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.
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.
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,
Unwavering Commitment to Service, Unsurpassed Results
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!
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.
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.
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.
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
-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?
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 .
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!
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!
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,
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!
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.