Being a home buyer is like being on a roller coaster. Start to Finish. During the process, there will be highs and lows. The water is not always calm. Buyers who take the time to craft their team before making their first offer will feel better about the transaction than those without representation. Is all representation equal when buying a home? There is a belief some buyers have that if they work directly with the listing agent, they will get a better deal than hiring a buyer’s agent.
Think about Representation
Question for you. When you hire an attorney, would you hire the attorney who also represents the seller? Most likely, you’re answering the question by saying no way, I want a different attorney. Why would you expect to work directly with a Seller agent to be different? Their sole responsibility is to work on behalf of their seller and the seller’s best interest. They can’t tell you to offer this price, and I will get my seller to accept. They can help write up an offer but can’t really advise you honestly during the transaction. The advice they will give you is in the best interest of their seller. Let’s say you get your offer accepted, and your offer allows you to do a home inspection. Can the seller’s agent recommend a home inspector to you? Guess what they can’t. Alot of the transaction you will be acting alone since the seller agent works on behalf of the seller.
Saving Money Myth
Myth two is, well, I am saving money that I would have left on the table. This honestly is not true. Buyers often pay more for a home when working with a listing agent. The listing agent has more motivation to work the deal since they are getting the total commission versus half. Some would argue working with the listing agent is a direct conflict of interest. Buyers need to remember the listing agent’s goal is to get the highest price for their seller, which means higher commissions. You will save more money having a buyer agent work on your behalf.
Challenges working with the listing agent
When the listing agent represents both buyer and seller, it’s tough for the agent to fulfill a fiduciary duty to both parties. It is difficult for the agent to keep his knowledge of the buyer’s negotiating points, including their best price. Eventually, all will be known to the seller. It becomes challenging for list agents to advise their sellers regarding counteroffers. Buyers should understand that a single-agent deal or working with a Listing Agent creates the opportunity for a problem on virtually every deal point.
Working with the Listing agent is called a Dual Agency, and if you want your needs protected, you should have a buyer’s agent work on your behalf. I have been the listing agent and secretly hoping they don’t want to put an offer on the open house I am hosting. Why would I think that way during an open house I am hosting? The reason is simple: I want both buyer and seller to feel they were represented relatively from start to finish. Yes, working with both buyer and seller means more money is in an agent’s pocket. Still, I want everyone to feel like they won in the transaction, and working with a listing agent, often the seller wins big, and the buyer gets the home but feels they lost or didn’t feel they were represented during the transaction. Buyer Agency was created in the ’90s because all agents worked for the seller before that. Buyer agents work on behalf of the buyer only and don’t care what the seller’s goals are unless they affect their clients.
What is the Buyer Agent’s Objective
So, speak to the listing agent when you go to an open house. Gather all the info and hire a buyer agent. The buyer agent doesn’t care what the seller’s goals are. The Buyer Agent doesn’t care about sellers’ ideal terms unless it means you get the home. Their goal is solely what works best for you. They often will tell you, yeah, I doubt the seller will take this offer. When your buyer agent says something like that, it’s not them working for the seller. That is an agent who knows their market.
Buyer Agent has a fiduciary duty to work on your behalf and only on your behalf. A buyer agent works for just you and only you. So, next time you want to work with a listing agent, think about why you feel it’s essential to work with a listing agent.
If the listing agent has more than one offer on the property, direct is nice, but in a competitive market, it will come down to price and terms more, and the direct deal will not matter that much in the long run. The listing agent can’t tell you what to offer, and they can’t disclose the terms of other offers, so where is the real advantage of working with a Listing Agent when buying a home?
Silver Lining is talking to the Listing Agent.
The only plus I can see is that if the home you met them at didn’t work out, they might be able to give you a heads-up on a new listing coming down the pike before it hits the market, but they might not be able to tell you all the details. I am always happy to help clients, and if you need an agent to help you navigate through the rough waters of real estate, I am always happy to help buyers find a great home. Contact me today.
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