Many home buyers are under the impression that if they go to an open house or call a listing agent directly they will save money. They might even think they have an edge in the negotiations or that the agent could give up part of their commission to make the deal go through. But, are they really saving money?
This is a unique illusion that real estate agents and brokers have struggled with for years. Most agents will try to get the buyer to understand that it is only an illusion of saving money, rather than the reality of being unrepresented by an agent.
How am I being unrepresented? Isn’t the listing agent facilitating the transaction?
Yes. But who does that agent originally work for? Not you, the buyer but the seller.
I’ve heard many stories about buyers who think get a better deal by going directly to the listing agent but most of the time losing out on poorly negotiated terms.
The listing agent does not represent the buyer. The listing agent represents the seller first and foremost. That is the contract that the agent has signed with the seller. Their responsibility is first to the seller and then to the buyer. Their primary goal is to get the home sold for as much money as possible. Does that sound like someone that could save you money as the buyer? Probably not.
The listing agent owes no one any loyalty but the seller.
This can also be a conflict of interest for the listing agent. Agents have a legal right of fiduciary duty or loyalty toward the first party they contracted with. The listing agent is therefore obligated to disclose anything they know about the buyer to the seller. There’s really no confidentiality. Also, the listing agent cannot advise you in any way and if they do, they could be breaking their loyalty to the seller or advising you against equal housing laws.
But what if the listing agent reduces their commission?
Having the listing agent facilitate the transaction for a buyer is not illegal. It’s called “dual agency or intermediary” and even though it is legal, it may not be the best option for all buyers. As a buyer, you might want to try to have the listing agent reduce their commission thinking you’re getting a better deal but the seller is actually the one that has to reduce the commission. If the listing contract is already in place, which mentions the commission, the seller nor the listing agent is in no way obligated to reduce the commission. So, while you might think that you’re getting a better deal by going straight to the listing agent, you can see that your negotiating skills, confidential financial situation, and every other factor about the transaction are not in your best interest.
What it does pay is to have your own representation throughout the process. The buyer’s agent you choose gets half the commission from the seller so you owe nothing to the buyer’s agent that’s helping you through the process but, your needs, your finances, and your negotiating strategies are kept confidential and negotiated on your behalf. The buyer’s agent’s primary goal is to make sure you get the home you want, not just sell any home.
If you would like buyer representation on any home throughout the Texas Hill Country, Kerrville and Gillespie County contact me today.