Buyers Agent or No Agent? $800k Home.

Asked by Hunt Winston, Tempe, AZ Tue Aug 28, 2007

Can I present a solid offer to buy a residential resale home without an agent? If I do, what kind of purchase price discount can I expect to get from the seller? Are there benefits to me if I do have a buyer's agent representing me? I'm looking to make an offer this next week on an 800k home, so need to know some of these answers quicly.

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14
Paul Slaybau…, Agent, Scottsdale, AZ
Tue Aug 28, 2007
Hunt,
I'm jumping in late on this thread, but here is some simple advice. You may find that the listing agent is willing to reduce his/her commission to facilitate a lower purchase price. I, myself, would not, but it is a matter of principle and ethics to the individual agent. I'm sure you are wondering whether the buyer's agent will bring enough negotiating clout to the table to offset the potential savings of dealing directly with the listing agent. While I believe the answer to that question will usually be "yes," I think this misses the crux of the importance for employing the services of a buyer's agent. Buyers can readily find properties online nowadays. Buyers can research with (admittedly clumsy) online tools. There are many things that buyers can do to help prepare for buying Real Estate. The biggest value that a good buyer's agent brings is the experience to tell you whether or not you should actually purchase this property. I personally don't like the idea of risking an $800,000 investment over a percent or so. I think that too many buyers make the mistake of doing all of the research, locating a property, before deciding if an agent is needed to negotiate. An agent who works on your behalf should help you exclude the properties that may have negative characteristics that affect resale and enjoyment. You aren't simply looking at getting a good buy today, but at a long term investment. Running out and grabbing a buyer's agent when you already have the wheels in motion on a specific property may be problematic because you haven't built the rapport and trust to know if he/she is really looking out for your best interests. Will this new agent have the guts to kill the easiest sale that ever fell in their laps? So while I recommend working with your own agent, you might not just jump immediately into an offer on the property that interests you. While you may want to act quickly so that the home you like is not gone before you conclude the exercise, you should still do your due dilligence. Have your agent show you other properties and offer community comparisons. This will provide you with more education on the value of the property you have earmarked, as well the value of the person that will be going to bat for you. Good luck!
2 votes
Hunt Winston, Home Buyer, Tempe, AZ
Tue Aug 28, 2007
As you can tell, this question is related to my last one. Here are some of the answers to the questions that have come up - no more assumptions, at least in some cases:
1)Of the three rejections, all three were with buyer-side agents.
2)I have a loan guaranty.
3)Mesa is where we've chosen our parish and school (unfortunately for our housing search, its this is right in downtown Mesa, so we've searched within a 6 mile proximity and maybe that's why we've almost exlusively been evaluating homes in this price rang - by the way, we have 7 kids so a larger than normal home is a good idea).
4) I do not have a buyer's agent right now and was (until seeing these responses) considering writing up my own offer. I expect an agent to aggressively look out for my interests in this or any other deal, but through experience, I haven't felt that I've gotten much support on the home search side.
5) The due dilligence re: comps and fair offers that I have thought through are generally only supported from online tools like Zillow.com and Trulia.com. We've been using ziprealty.com for the home search stuff.
6) The home I'd like to make an offer on in the next couple of days is NOT a for sale by owner.

I think that's about it. Thanks to everyone for their well articulated discussion and advice. This is much more helpful than I thought.
Hunt
2 votes
Carrie Crowe…, Agent, Southaven, MS
Tue Aug 28, 2007
800K is a very large investment. I would definately work with a buyer agent if I had a choice. Is the home listed? If so, there will be agent representation regardless. The seller agent will get the whole commission instead of passing the savings on to you. If it is for sale by owner, most times sellers are prepared to work with an agent on one side.
2 votes
Joseph Ferra…, , New York County, NY
Tue Aug 28, 2007
Yes you can represent yourself and MAYBE save up to 3% (the amount the buyer's agent might have earned & been paid from the sale proceeds). But how experienced are you regarding real estate valuation, negotiation, contracts? That's the main question YOU need to answer. If you are not experienced, the answer is obvious. It's a big investment. Personally, I would rather risk paying more (you may not) and know that an experienced buyer's agent got me the best deal with the most favorable conditions. I'm an attorney and a broker in NY with over 20 years experience. I have also been a buyer outside my state and I did not hesitate to hire an agent.
1 vote
Steve Belt, , Scottsdale, AZ
Tue Aug 28, 2007
Hunt,

I'm a REALTOR, and thus a buyer's agent, so of course my opinion is biased....however, if you are representing yourself, then you are NOT being represented. If you were in court, up against a felony charge or a $1M lawsuit, would you represent yourself? I suspect the answer is no.

But yet, as you are about to make, perhaps the single largest investment of your life, you would do so unrepresented? I sure hope you don't.

Consider that a REALTOR, representing a buyer through a brokerage, has E&O insurance to protect themselves when the REALTOR makes a mistake. If you make a mistake representing yourself, do you have E&O insurance? The reason I point this out, is that any time an unrepresented buyer begins to talk about using my commission for a price reduction, I immediately make sure they are aware that if any deal is struck, they understand I am not representing them, and that I am ONLY representing the SELLER. I will not negotiate my commission and then also enter into dual-agency...that's a sure fire path to ligitation that I'm not read to drive down.

What I'm also pointing out are some of the issues that a REALTOR faces, and why the scenario you paint may be faced with some resistance. I've been on these paths before, and I have set boundaries for myself. Perhaps not every agent does, of course.
Web Reference:  http://blog.101bell.com
1 vote
Jonathan Dal…, Agent, Glendale, AZ
Tue Aug 28, 2007
Hi, Hunt ... the quick answer:

1) There's no guarantee of a price discount, particularly if the home is listed by a real estate agent. The commission is negotiated between the seller and the agent and not all agents include a reduction in the commission in the event of an unrepresented buyer.

2) Your primary benefit is in having your own representation, someone who will be looking after your best interests. The listing agent certainly will not be doing so, as they represent the seller. (It's possible for the agent to represent both of you but such representation is very limited - for example, the agent can't give you advice on offer pricing and the like.)

3) If you're thoroughly familiar with the AAR residential real estate contract, all of the stipulations and the duties of both buyer and seller, go for it. If you're not familiar with them, then purchasing with anyone to aid in the process is much like looking up how to perform an appendectomy on Google and then performing one. Experience if not expertise tends to help in such matters.

Good luck with the search ... I grew up in Mesa and think I know the area you've been talking about. Not too bad at all.
1 vote
Deborah Madey, Agent, Brick, NJ
Tue Aug 28, 2007
The deal that you strike on your own may be less advantageous than the one a Realtor would negotiate. A seller, without an agent, seeks to pocket the savings for themselves. You, as buyer, see yourself as entitled. Is the seller overpriced at 800K. If so, how much of a discount do you need before you have gotten a good deal?

In addition to facilitating an initial meeting of the minds and signing of a contract, a buyers agent will guide and advise through inspections, title, mortgage, and address questions, concerns and problems throughout the transaction. The value brought to the table through the transaction can easily represent many thousands.

Am I biased? Yes, I see problems and challenges in contracts on a regular basis. Emotions get in the way of logic, problems arise with title, loans, and inspections. I see these happen and I see these issues resolved by competent diligent agents. My bias results from experience. I also have seen properties closed without agents where a buyer maybe thought they did well, but RE Pros would easily identify where the buyer made unnecessary concessions in price or terms.
1 vote
Ruthless, , 60558
Tue Aug 28, 2007
Hunt:
How did you find this property and why have you decided to put an offer on it?
Is this a FSBO, flat rate listing, or Realtor represented listing?

I just looked up BuySide Realty and RedFin to see if they service AZ. Because neither of them do, my guess is that commission cannot be rebated in AZ. If the property is listed, I would advice finding a Buyer's Agent to represent you for the reasons the others have stated.

If this is a FSBO, are you confident that it is NOT overpriced? How much homework have you done on similar homes that have SOLD in the past 90 days? If you are confident, I would hire a Real Estate Attorney to draw up the offer for you and advice you how to proceed.

Good luck and keep us posted.
Ruth
Web Reference:  http://www.oak-park-il.com
1 vote
J R, , New York, NY
Tue Aug 28, 2007
You can make an offer directly to the owner if the house isn't listed exclusively with an agent. As far as discount goes, the seller may already be counting the commission as extra money for HIM, so don't necessarily think you will get X% off by going directly to the owner. As for a buyer's agent representing you, yes, unless you know everything that might possibly go wrong during negotiations and the time between accepted offer and contract, a buyer's agent will be invaluable to you should something come up. Remember too, a buyer's agent is allowed to speak to YOU, THE SELLER, YOUR ATTORNEY, THE SELLER'S ATTORNEY, THE BANK, THE TITLE PEOPLE, THE APPRAISER....a buyer's agent can communicate with everyone involved.
1 vote
Annamidkiff, , Tucson, AZ
Tue Aug 28, 2007
You certainly can present an offer to a seller without the use of an agent, but I wouldn't recommend it for a few reasons. If the seller is represented by an agent, you will be unrepresented unless you hire your own agent, and that's an uneven playing field. Regardless of whether or not the seller has representation, however, you as a buyer have different rights and responsibilities, depending on the location of the home you like. Representing yourself, you don't have all the knowledge and skills that an agent does, and could make some serious mistakes that could cost you dearly. Also, your representative, your Buyer's Agent, is paid most often by the seller. So there should be little to no cost for you to secure professional, personal representation in this transaction, which will probably be the biggest purchase and decision of your lifetime! You wouldn't go into court without personal representation...don't buy a house without it!
0 votes
Chris Tesch, Agent, College Station, TX
Tue Aug 28, 2007
Dear Hunt,

First of all let me congratulate you on finding a house that sounds like it fits you well.

In your situation I would interview several different agents and discuss how agressive they are at price negotiations. You certainly don't want one that seems obnoxious, just very interested in getting you the best deal. Discuss strategies and pick the one that you are the most comfortable with.

Good luck in your quest!

Chris Tesch
Web Reference:  http://www.ChrisTesch.com
0 votes
Ruthless, , 60558
Tue Aug 28, 2007
Hunt:
Thank you so much for answering our additional questions and the compliment about how helpful this forum can be. Many of the one and two question posters never follow up with us. We really are answering these questions because we care. Sometimes asking your local agent doesn't help enough because of possible conflict of interest (real or not) and it's really just his/her opinion. Here you see multiple view points and a consensus. Please let us know how the next offer goes.

Good luck,
Ruth
0 votes
J R, , New York, NY
Tue Aug 28, 2007
Hi Hunt, your agent should have been using the public record to see what other homes in the neighborhood sold for. Zillow is NOT a good place to find comps. Your agent is entitled to present the offer to the seller directly, even if the home is listed with another agent. If the home does comp out, that may be why the seller has not negotiated with your offers.

Unfortunately, some sellers have not gotten the message that prices have gone down (and maybe they haven't in your search area) and some just dig in their heels. If the home has been recently listed, they sometimes think there may be a higher offer coming. That is where the comps come in again.

Good luck and you should talk about all this to your own buyer agent or whomever your next buyer agent is.
0 votes
Zoraida Matos, , 60106
Tue Aug 28, 2007
Honestly if your asking this question. You need an agent ... remember the seller is looking out for his own interest ( not giving discounts ) the agent that represents you is working on your behalf and you don't pay him a dime) and trust me no matter how beautiful a house is, a good agent can find different variables to lower the price if indeed it is overpriced or atleast get some perks thrown in on your behave, like assisting with closing cost or having the seller pay your taxes for a year.
another thing you might want to consider is running into this deal too quickly you dont want to fall flat on your face when everything starts hitting you at once.

an agents work has just begun when a contract is executed, we are like babysitters (sometimes)
making sure that the lender, attorney and other professionals involved are being dilegent and meeting all deadlines.

with all due respect to these professions but most of the time it isn't the agent who drops the ball on a client. But yet we are the ones who get blamed for almost everything that can go wrong ....
I have heard horror stories. Thank God I haven't experienced 1 yet, but I am pretty good at decerning a clients needs and if I KNOW that I can't meet them ....trust me I have no problem walking away.... Not all Realtors are in it for the money they really do want to help the client make the best decisions, and line them up with good professionals that have the clients best interest at heart.
0 votes
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