1) Are you an experienced buyer (e.g. actually purchased homes before) or an experienced shopper (lots of research but haven't committed to a property/agent yet)?
2) Would you choose a doctor or a lawyer on the same basis? (How low a price)
If you've never gone thru the process, I'd recommend a Buyer agent definitely. The seller pays buyer commission in most cases. So as someone else is paying for professionalism and experience - you don't want to learn expensive lessons because you did it without a professional or based solely on how much you could get back. If price is paramount, a good buyer's agent can show you how their experience saves you money and expensive mistakes (e.g. getting 2% lower price for buyer is better than 25-40% back).
Check REBAC for Buyer agents who have the ABR (Accredited Buyer Representative) designation.
The sale price difference is not going to make a huge difference in the commission. You might as well ask how the buyer/customer's agent, who has a relationship with the buyer but not the seller, can be looking out for the SELLER'S best interest. Most agents take their fiduciary reponsibilities seriously.
"I mean, if I come to you saying: "I found this property that I want to buy, will you do the paperwork and due diligence?" How much is that worth to an agent in time savings not having to drive me around for months looking at dozens of properties before I make up my mind?"
I tell my seller clients "We may find a buyer for your home in a week. Or it may take 5 months." The commission is the same either way. The seller hires us to do a job: sell the home. Same way with customers, we may show them 3 houses and we may show them 50. The work we do afterwards is the same. And believe me, very few buyers find a home on line, call us, and that's that, house sold. But it does happen. I'm working on selling one of my listings right now. This is one of the most difficult sales I've done, and I also have to split my commission with a referring agent. I'll probably make about 2,500 on this sale before taxes and expenses. It's balanced out by the last house I sold, where I had both the buyer and the seller, and it was an easy painless relatively quick sale.
If you can get a top negotiator to rebate commission, all the better. You might try setting up a formula in advance: Full commission for x amount under market value, and slide the scale accordingly.
Secondly, I can tell you that one of the people interested in my home is not using a seller's agent, and I will not go under contract with her for anything less than full price/cash/quick close. The fact that she's not using an agent, coupled with other weird behavior (such as showing up at my house unannounced/uninvited to take pictures, and suggesting we make a deal after my listing expires) make me very reluctant to enter into any contract with her. I find the behavior off-putting, I don't trust her, and I'm not interested in pinning such an important transaction on someone who's not going through proper channels.
My two cents...
Showing you homes and writing a contract is only a small portion of what a Realtor does to earn his paycheck. We protect you in the investment, make sure you get the needed inspections, and negotiate any needed repairs and other nuances after throughout the escrow. PLUS, the seller pays for your agents commission.
What happens if you use the seller's agent? You don't get a discount on the price - the sellers agent simply makes both sides of the commission.
Why not allow the seller to pay your agent for good representation that has your sole interest in mind? If you both use the same agent, who do you think wins in a negotiaion?
Good luck - it's a great time to buy!
Also, always work with someone who offers an Easy Exit Guarantee. Even if they don't, as a client you have the right to fire your agent if they're not performing as agreed, although you should voice your concerns and give a reasonable amount of time to correct the situation.
The other thing to remember is an excellent Buyer agent will also know of, know how to locate and get, properties NOT on the MLS. That knowledge (and ability to buy without other competing offers in some cases) is often invaluable.
Now Agents, don't flip out and jump down my throat: I do understand the services you provide, but perhaps they are more geared to buyers unfamiliar with your area or the homebuying process in general. And in that case, why should you not be paid by the buyers?
I've been on both sides: When I sold my home, I was happy to pay the commissions because there is much more work involved. But even then: I felt the buyer's agent was "working for me" as in: go find me a well-qualified buyer and receive your 3% bounty. I felt somewhat slighted when the guy was negotiating for a lower price. I felt like saying: you want a lower price? Take it out of your commission!
Now that I'm on the buyer-side again, I feel there SHOULD be some sort of rebate or sharing of the commission if I find my own property. I mean, if I come to you saying: "I found this property that I want to buy, will you do the paperwork and due diligence?" How much is that worth to an agent in time savings not having to drive me around for months looking at dozens of properties before I make up my mind?
I am first time buyer but have been doing research in the area and know which area I am looking for and what kind of REs. Plus have ca$h ready to put abt 25% down and will have loan pre-approved from my local credit union.
I asked this question to evaluate my option and get some good/neitral feednack.
Thanks for help. Will check into REBAC as well.