Buyer Representation

So, what's the big deal about having a Buyer Agent?  I just need someone to open the door and show me the house. 

I can do the rest.  Right?

Wrong.

Imagine the scenario where you find the house of your dreams.  You call the Realtor who has their name on the sign in the yard.  They open the house for you and excitedly, you write the offer on the spot.  After hunting through the thousands of houses on Zillow and calling many of the overpriced and irate For Sale By Owners, this place stands far above anything you've seen.  You know that you'd better grab it before someone else discovers it.  The Agent presents the offer to the Seller and after a few counteroffers, everyone agrees and you are at contract. 

Buying real estate isn't the nightmare everyone says it is, you think.  It was actually pretty easy.  You have an agent - the one who listed the property.  Who knows it better than them?  They're really nice, and you both are from the same city or have the same hobby.  They practically seem like family.  You're walking on clouds and start looking over the Frontgate catalogs to decorate your new home.

Then the house inspection takes place.  It's all going great, until the inspector says the house has problems.  How did your Realtor BFF not warn you of the problem or advise you that you might find problems with the house and tell you how to handle it.  Suddenly, the Agent is not so friendly anymore.  Now they're saying only what the Seller is legally obligated to do and how all houses in this state are "sold in as-is condition."  What happened?  Weren't you good friends?  Why can't they ask the Seller to help you?  You feel betrayed and trapped.

I've received many calls from Buyers in this situation, terrified and desiring to get out of the contract, not knowing what to do.  Truth is, the Listing Agent in the story was doing their job.  It was your presumption that they were YOUR agent.  In all actuality, they remained the SELLER'S AGENT and were merely a scribe when you told them to write up the offer.  They never represented you, nor owed you anything but truthful dissemination of material facts about the property. 

Let's rejoin the story.  As the Buyer, you are still panicked about what to do about this situation over the inspection, when a colleague at work overhears your plight.  They mention that they just bought in that neighborhood last month and absolutely love it.  The schools are perfect for their kids.  You were focused on this subdivision for that same exact reason.  No other community in this price range exists zoned for that top ranked elementary school.  It was either here or stay in the world of apartments, since you couldn't afford anything more pricey.  The colleague asks how much you have the property under contract for, and when you answer, they're taken aback.  Apparently, they paid $15,000 less and got a cul-de-sac lot with a screened in porch.

Now you're completely ready to call that Listing Agent and give them a piece of your mind.  Not only did you pay full price, but that was more than others with a better location and features.  To top it off, you're now starting to believe the place is falling apart after seeing the home inspection results.  Why should you pay such a high amount for this shack?  You're convinced they took you for a fool and start calling your parents, friends and Facebooking about how you've been taken advantage of by a less than honest Realtor.

That Realtor is still the SELLER'S AGENT.  They owe you no confidentiality or counsel.  That is only given to their clients, which are the Sellers in this case.  Unfortunately, on that Sunday afternoon when you wrote up the offer, you were so excited about finding the perfect place for your family that you told the Listing Agent about the great school and how you haven't been able to find anything else in your price range.  After you wrote the initial offer, which was a little below list price, you said to the Agent, "I don't want to lose this place.  If they don't like that price, we can go higher."  Afterall, you had become fast friends and the Agent was helping you to get that perfect place, right?

What happened was that the Listing Agent was LEGALLY OBLIGATED to tell the Seller of your words.  They do not owe you any confidentiality.  What you said weakened your ability to negotiate.  The Seller and the Listing Agent looked over comparables and felt that countering with a strong full price or no deal counteroffer was in their best interests, so that's why you ultimately went under contract with a full price offer.  You didn't want to lose out on that perfect house, so you reluctantly agreed.  The Listing Agent did nothing underhanded or sneaky.  They simply did what they were hired to do - protect the Seller's interests.  Not yours. 


While this is a sad story, it happens often.  What buyers do not realize is that in the 1990's, the concept of BUYER AGENCY was born.  Previous to that time, Buyers were purchasing property without counsel.  Why should the Sellers be the only ones who get that privilege?  Buyers should (and now do) have the opportunity to have equal representation in the transaction if they should elect to do so. 


The beauty of this law is that the cost to the Buyer to have representation is $0.00.  That's right, my friends.  FREE.  Buyers DO NOT pay sales commissions.  The Seller is the party who pays for all sales commissions - for the Buyer Agent and the Listing Agent as well. 


"Oh, but I want to negotiate a better deal for myself," you say.  Do you think that by not having representation the Seller will reduce the sales price by half the sales commissions he would have paid?  That won't happen.  Why?  That's because at the time of listing, long before you came along with your offer, the commissions were set in the Listing Contract the Seller has with the Real Estate Brokerage.  In the story above, that Listing Agent would receive ALL the sales commission since there was no other agent in the transaction.  They don't lower the price of the property.  All that you've accomplished is to enter into a legally binding transaction without proper representation (which you could have had for FREE).

While I understand not all reading this will heed my warnings or call me to represent them when purchasing a home, please do yourself a favor and RUN from anyone insinuating that they can possibly get you a better deal if you don't have representation.  If someone makes that promise, ask them by how much and to put it in writing.  I guarantee you won't find anyone who will, since that is unethical and would put their real estate license at risk by doing so.

I work hard for my clients, not just to get them the best deal, but to ensure that they receive wise counsel and that their best interests are protected at all times.  If you are looking to buy a new home, please let me be the first person you call.  After all, a home will be your largest financial investment.  You owe it to your financial future to have a professional assist you in making this purchase.

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