There is no "deal" or "discount" of the buyer is not using a Buyers Agent. A buyer can go to the seller directly; but the seller has already signed a contract to pay out commission; so no one is benefiting (expect the Listing agent getting the FULL commission).
A Buyer's agent can negotiate you a better deal is most circumstances. They (should) know much about that local market and know exactly which forms to use, have contacts with lenders, title attornies and inspectors. Most importantly - Buyers Agents are working FOR YOU. Representing YOUR interests.
The Listing Agent (by law) must represent the seller. While he cannot lie or hide 'material defects' about the property (which he knows); he owes you little else. His job is to get as much money for the seller as possible; while being 'honest' to the buyer.
Not having a Buyer's Agent can be costly. They are another set of eyes and ears that are there to help you the buyer - and you are not paying for them. They will be able to get you into any home on the market, without having to worry about of the seller is there.
Let me know if you have any other questions.
To answer your questions more directly, no you do not need a buyer's agent. It would be in your best interests if you did have one though. No, it does not pay to have a buyer's agent, but it can save you a lot of money.
No, not having a buyer's agent will not increase your purchasing power. Most buyer's agents do not charge a fee, and receive their compensation through their share of the commission paid by the seller--which does not change because you have a buyer's agent.
A good buyer's agent will tailor a negotiation strategy to fit the buyer's needs and what they may be able to learn about the seller--and suggest it. You will actually make the decisions about how to proceed, and be the negotiator--and a well informed negotiator. You can bet that having an agent who understands the process represent you is worth every nickel the seller pays to the listing broker, who, in turn, pays the buyer's agency.
The commission agreement is an agreement between the seller and listing agent/agency. That agreement does NOT have to change, simply because you arrive at a property without a buyer's agent. Yes, a seller's agent could agree to reduce their fee (and probably should) in order to make the deal work, but they're not obligated to do so.
Even if they agreed to reduce their price, an inexperienced buyer would most likely not be able to out-negotiate the experienced listing agent, and would hugely benefit from using a buyer's agent who would not cost the buyer anything out-of-pocket. I doubt very seriously that you would come out ahead by not using a buyer's agent, unless you're experienced in the buying and selling of properties.
Buyer's agents do this for a living, and they do it day after day after day. They offer their experience to assist you in identifying and obtaining the best deal possible on the home that you're looking to purchase. They also help you navigate the potential mine-field of the process that follows the 'contract', all the way through closing, and beyond. A good buyer's agent is worth their weight in Gold.
When you attend an open house and are not represented by your own Buyers Agent, you will probably have to use that Sellers Realtor for that deal. That means that that Realtor is working for the Seller of the house and looking out for the Seller best interests above and beyond your interests. They still have to be fair and honest with everyone, but that does not mean that they will not negotiate in the best interest of the Seller and NOT you. If you have a Buyers Agent they will ALWAYS be looking out for your best interests and negotiating on your behalf and not the Sellers. So definatley it is always better to have a Buyers Agent to represent you especially if there is no additional cost to you.
Don't let all these real eastate agents fool you. Sure you get some benefit (most of the time) by having a good buyer's agent rather than having no one at all but it all comes down to whether the benefit is worth the financial cost to you. Also, again, saying that you are getting a "good" buyer's agent presumes A LOT. By good, I mean they have to be concerned with getting you the best possible deal - this is almost always the exception rather than the rule. In most cases, like any other person working on commission, once they've got you at the table, they want and need that sale to go through. So ask yourself, are they REALLY going to look for any little thing they can that could potentially do the deal in? Heck no. Sometimes, they may even know the selling agent and wouldn't think to represent your interests over the interest of themselves and the other agent getting this sale done.
If you are talking about a typical home in Alexandria ($750k), the buyer's agent is going to get .03% or $22,500 from the sale!!! I have been at enough closings and been around enough real estate aagents to know there is NO WAY their time and knowledge is worth that kind of money.
Also, all these real estate agents that are talking about the contracts entered into buy the sellers that mandate 6% commission regardless of whether you have a buyer's agent or not are being somewhat disingenuos. First, that presuposes that you are buying from someone who is in an exclusive contract with an agent - not all sellers are - a seller can negotiate whatever they want into those contracts and if the agency refuses - fine, that seller can go to another agency OR go without a selling agent. So, if you're looking for a way to save that huge commission given away to a buyer's agent you can look for someone who is selling on a for sale by owner basis - a growing number of people are doing this.
Although the agents on here don't want to hear it, their usefulness almost never equates to their profit. My wife and I have had numoerus agents, and have purchased 3 times. NOT ONCE, did the agent find the house - we did. NOT ONCE did the agent make any point(s) of value or offer anything of substance at the closing. Some agent on here compares the value of an agent to that of trying to go to court without an attorney - wow - that is WAY OFF. YOU know what you want in a house, YOU know what you can afford, YOU know what neighborhoods you like, and YOU can find alsmost any and all information about sales in neighborhoods, etc. on the I-Net. You can find all the listings you want on sites like this one. Further, the sales contracts are bolier - use the same ones over and over and any real estate attorney can be hired for an hour to go through it to protect you from potential problems - they'll have a far better mind for that than some agent. Real estate isn't rocket science and becoming an agent certainly isn't like going through law school and taking the bar exam, or going into court. All you have to do is go to a closing and see how little the agents pipe in - b/c they are empty suits for the most part and at that point it is the attorneys who handle things.
Hence, you can find what you want by yourself, have an attorney read through the contract, do business with a sale by owner seller or a seller who is smart enough to negotiate a reduced rate in their agency contract, and have the attorney go to your closing and buy your house without throwing thousands of dollars away to someone who put in a mere couple of hours of work. Being a real estate agent is one of the biggest rackets out there and thankfully people in the market are beginning to figure that out - so if you want to cut costs, they should be the first to go.
As far as splitting the savings...the house is already listed with an agent, so a Listing and Marketing Agreement has been signed by the seller. In this agreement, the seller has committed to the full commission for both the listing agent and the buyer's agent. There is no "savings" to split.
There are some services in life it truly pays to have. A buyer's agent is one of them. He or she can greatly reduce the stress on you through the homebuying process, help limit the emotional load of the experience, and keep his head cool through impasses that might get hairy. She'll walk you through contracts and make sure the deal stays on schedule. And yes, this agent very well may save you a bundle, through negotiating a better selling price or terms such as repairs and extras.
If you don't have a buyer's agent, you're counting on being able to outwit a sales professional with years of negotiating experience. Consider the seller's perspective here -- you're his dream buyer. Not just because he could pay less commission, but because he'll be dealing with someone unrepresented.
I was not always a Realtor, and I love to save money. I can understand wanting to do what you can yourself to save a few bucks. But I can truthfully say you're not going to lose anything by having someone skilled and educated in the real estate business working on your behalf -- you're likely to gain. Hire a buyer's agent who you feel understands your needs and wants and that you feel you can trust, and go after that house you want!
Also besides from burning gas buyer agents are a useful resource, have tools not available to the public, know their markets and are negotiators. We can save you a lot of frustrations and a lot of time while providing you with a FREE service.
Elvis had already mentioned that the commission split is already set and no listing agent will give up a potential full commission just because the buyer has no representation. They will be happy to deal with you just because they will get the asking price and perhaps more.
Perhaps we should start charging buyers for our service, perhaps than they will want us???
It is adviseable for you to have your own agent to represent your best interests.
A seller and the seller's agent agree to a fee for the sale of the seller's property.
As a member of the MLS, the agent, when placing the property in the system, publishes what of their commission they will pay the agent representing the buyer.
This is a published fee or percentage and in most boards it is unethical for the listing agent to change the published amount. The amount may or may not be half of the total commission. Many boards these days leave the published compensation split to the listing agent or listing brokerage.
Seller offers their house for sale. Buyer makes offer.
Pretty much the seller has a bottom line, the buyer has a top dollar.
The seller being a serious seller and the buyer being a serious ready willing and able buyer, the final sales price will negotiated into contract.
If either the buyer or a the seller has a significantly more experienced agent, that party may end up a little ahead.
In the real world, one has nothing to do with the other.
There have been negotiations that fight tooth and nail over a $500 difference, then the buyer goes out and gets into a mortgage that costs him several thousand dollars too much up front.
Or buyer gets hooked into a mortgage with higher than necessary closing costs, tries to negotiate purchase with seller paying buyer's closing costs. Seller looks at net, and contract purchase price is negotiated several thousand dollars more than it needs to be because of the excess closing costs.
If you have a good experienced knowledgeable agent working for you, there are many ways your agent can save you unnecessary expenses.
Best of luck
Sorry to go on and on but I just read some more of the comments on here and all you have to do is read through the BS that is being dished out and you'll see I'm speaking the truth.
As I explained in the previous post, a buyer's agent is not FREE. These agents want you to believe that b/c either, they are too dense to understand the economics at work, or are being disingenuous - neither is good. Again, as a hypothetical, if you didn't have a buyer's agent and there was no fee, then you'd save THOUSANDS. At least one or two of these guys is admitting that a listing/selling agent may be willing to remove the buyer's 3% - whereas the majority of agents on here are acting as if that is an impossibility - if the listing agent cared about their client and not those in their industry, they'd do it in a heart beat. Again, afterall, if you don't have a buyer's agent and that 3% was ear-marked for them, then what basis does any agency have in keeping that 3% if you're not using a buyer's agent? NONE, they are merely penalizing you. Hence, that explains why the buyer's agent is NOT FREE. B/c without a buyer's agent you could stand to save $22,500 on a $750,000 home. So is having a contract b/t the listing agency and the seller that mandates 6% regardless of whether there is a buyer's agent or not help either you or the seller - the two most important people in the transaction - the two people who are putting up all the weatlh in money and in house?? Why is the agreement designed to fleece you two?? If the buyer's agent were truly FREE, then there would be no cost for NOT having one. Again, the cost is the additional $22,500 you are being forced to pay essentially for a bundled service you may not want.
Here's a good way to think about it. Say you want to buy a shovel at a hardware store and you are charged $100, and you also receive an ax. You ask about the price and the guy tells you $50 for the shovel and $50 for the ax. You explain you have utterly no use for the ax and he says, well you can just keep the shovel but I still have to charge you $100. You ask, well how much is the shovel? $50 bucks he says. And the Ax? That's free he says?? You say huh? The shovel isn't $50, if the ax is "free" then the shovel is $100" Nope, shovel's $50 he says and the ax is free but I have to charge you $100 for the shovel b/c of the ax whether you want it or not.
Now, wouldn't you want that guy to have his head examined??? There is no difference here. These slippery agents can't have it both ways. On one hand they will tell you that they are only charging you %3 $22,500 for the sellers agent fee and then they'll tell you all day that the buyer's agent is FREE. No it's not!!! Without a buyer's agent suddenly, without having performed a single additional task, and according to many on here having an easier time of it (b/c buyer's agents are so valuable and skilled negotiators) a seller's agent all of the sudden is worth twice what he/she was??? Hence, they are making double the profit for at least the same if not less work. Do you not think that affects the ultimate price of the house? Of course it does. A seller's bottom line will factor in what the agent fees are and he's going to pass those costs on to you. Who's buying the house?? YOU ARE! So who's paying that 6%? YOU ARE! Now tell me that buyer's agent is free. She's not free, she's a supposed mandatory cost that in 95% of the cases gets passed on to you and these people will have you believe it is an inevitable cost. IT'S NOT! If you get a price on the house, say $750k and the buyer tells you he has a 6% deal and you negotiate with him (in this buyer's market especially) to have that 3% for the buyer's agent removed, it should be no skin off his back as he's getting the same $. ONLY DIFFERENCE IS, instead of a greedy selling agent dictating the process and taking an extra 3% for no extra (and again, if you believe these people then less) work, you get the benefit of the fee that is supposed to go to a buyer's agent YOU DECIDED NOT TO USE!! Why should the seller's agent see any of that $????!!! They shouldn't - it is extortion to try to get you to higher a buyer's agent. The idea that the buyer's agent is FREE is the same extortion attempt and a flat out lie. Don't kid yourself into thinking that you're not the one paying for most if not all (in most cases) of it! You are. Therefore, if you think you can do seraches on the I-net for listing - attend open houses, find public records of all sales in a neighborhood on the I-net and get infromation about it and schools, etc. on your own, can have any real estate attorney for $150-$300 read through a stardard boilerplate contract and then represent you at a closing for probably less than $1,000, then you shouldn't need a buyer's agent and if you're smart enough, you can avoid paying the listing agent a 3% fee as a penalty for being smart!!!
Again, all these agents have one thing in common - they wrok on commission and they don't want anything to jeopardize that commission. Their goal is to get you into a deal not into the best house for you. Don't believe me? Try having an agent look at properties for more than a couple of weeks and you'll see them be far less vigilant or give up on you alltogether. They have an internal clock - basically the amount of hours they are willing to put into finding you a place compared to what they make is insulting. It takes them seconds to pull up a list of properties that meet your criteria. Then they have to view the homes with you (maybe an hour or two out of their day). Assuming you looked at 5-10-even 20 different places, and even assuming they had to produce a boilerplate contract and spend about an hour with you to get you to an offer figure for the seller, and maybe attending a home inspection for an hour and spending a couple of hours at the closing, etc., the average time spent is VERY LITTLE (maybe 20-40 hours in a typical case) compared to the thousands they make. Again, insulting.
NEvertheless, they are going to keep telling you that you are deriving a benefit from a buyer's agent for no cost. NOT TRUE. The cost is that your seller in many cases is agreeing to give away 6% of the cost of the final price (3 % to your buyer's agent and 3% to their agent who typically does NOTHING other than setting a price (which the seller usually has the most influence over), providing common sense home presentation tips (cheap or no cost improvements) that if you're not able to come to yourself you can trust to a miraid of free or low cost advice-giving sources in books or on the I-net, and hosting a few open houses (which some assign to others). On this last point, is it better to have a cheesy sales person do that or the owner who knows absolutely everything about the home, street, neighborhood, etc.? So, you're paying for a pre-arranged industry practice to pay 6% (about $45,000 for a $750,000 sale) to people who actually do VERY LITTLE for you.
Hence, the question is, how do you get around this. This is a BUYER'S market if there ever was one. Hence, even if you can't find a for sale by owner home or a seller who hasn't signed an exclusive contract with an agency, then again you'd still probably be able to negotiate with a seller to have his agreement modified to exclude the 3% to the buyer's agent. I.e., contracts are NEGOTIABLE - the agreement should reflect you and the seller's needs - NOT THE REAL ESTATE AGENCY. If you don't need a buyer's agent (which you don't) then there is absolutely no justification for an agency refusing to back out of that remaining 3% to the buyer's agent. Again, if you don't have an agent, they are essentially telling you and the seller the price of a $750k house will be $22, 500 higer B/c WE SAY SO, b/c even though you don't have a buyer's agent, WE the seller's agent are then going to take that extra $22,500!!! A complete farce and an antitrust violation in my opinion. The price of the house therefore is artifically increased by $22,500 unless you believe for one second that the seller's agent is worth $45k!??! They even admit on here that "you are basically getting the services of a buyer's agent on here for free so why not use one"? NO WAY!! You are being coaxed into paying that extra $22,500 b/c by admitting the buyer's agent is free and that the seller will pay the same price whether you have one or not, they are admitting that the $22,500 is earmarked money absent any specific service - i.e., whether the service is used it will be charged. You and the seller don't have to do that - you don't have to do it the way the agency says - it is the seller's house, and it is your cash buying it - tell them to go blow.
In actuality the besst scenario for BOTH you and the seller is to exclude agents altogether therefore saving $45,000 and not having to deal with a glofrified car salesman and all the phony lies that comes with that person. Nevertheless, even eliminating the buyer's agent and insisting on a 3% fee, the seller gets to offer his house at a significantly lower price, and you get to pay much less. This helps seller sell and you buy. Shouldn't that be what the supposed caring real estate agency want? No, they want 6% to go to the industry and they are going to pretend to insist on it regardless of whether a buyer's agent is involved or not - it is highway robery and an artificail restraint on trade.
Don't let them sucker you - be more creative. My neighbor sold his house by owner and the 2 real estate agents that live in the neighborhood did everything they could to bad mouth the house - people who bought the house saved as did the sellers - everyone happy except the useless agents. Savings in that case was $38,000!! You could take 7 honeymoons for that!!! Again, all the info is out there sans the cheese of an agent!