Should you buy a home through the seller's agent?
With home prices on the rise and for-sale homes in short supply in some markets, it's no wonder home buyers are looking for an edge. Some think that making an offer through the seller's agent, rather than their own buyer's agent, will save them money and provide an advantage amongst multiple offers.
The answer isn't exactly clear since there are both pros and cons to purchasing a home through the seller's agent.
Reduced commission? Maybe.
Some listing agents will indeed give the seller a break on their commission if there is no buyer's agent, but that's not automatic. Rather, it's solely up to the agent to decide.
Some listing agents -- not all, but some -- will offer a discount to the seller if they find their own buyer. In that case, a seller might say, 'I have these (two offers) and one is from my listing agent and one is from a buyer's agent, so instantly, I save maybe 1 percent. That does happen. Sometimes, not all the time.
Most agents understandably aren't keen to give up part of their commission even when there's no buyer's agent. Extra work and liability exposure are two reasons why.
Buyers don't understand that now the agent is taking the responsibility of both sides, so giving up the commission isn't high on their list. Some will do it.
A bigger gun in a bidding war?
Whether buying a home through the seller's agent will help the buyer in a bidding war is also a maybe.
A lot of buyers think that because they worked with me, they automatically are going to get the house. Some unscrupulous agents will make that happen, but in all honesty, I work for the seller. It's not always the best-case scenario for the buyer to come to the listing agent.
Most experts think it's a poor strategy for buyers to sacrifice the buyer's agent.
There are lots of other things buyers can do to improve their position in a multiple-offer situation short of forfeiting their right to representation. I highly discourage any buyer from ever seeking out the listing agent to buy a house.
Inspection and appraisal bias
There are two particular areas of concern regarding buyers choosing to work with the seller's agent:
Many states allow one agent to represent the buyer and seller. But others prohibit this practice, known as dual agency. And still others use transaction brokerage, in which the agent doesn't represent the seller or buyer, but offers services without representation.
Buyers should ask their agent, whoever that is, about agency laws.
The bottom line is that buyers should consider the risks as well as potential rewards before they decide to forgo buyer representation.
Although it may be tempting upfront to work with the listing agent, I think in the end, it hurts you more than it helps you.
The answer isn't exactly clear since there are both pros and cons to purchasing a home through the seller's agent.
Reduced commission? Maybe.
Some listing agents will indeed give the seller a break on their commission if there is no buyer's agent, but that's not automatic. Rather, it's solely up to the agent to decide.
Some listing agents -- not all, but some -- will offer a discount to the seller if they find their own buyer. In that case, a seller might say, 'I have these (two offers) and one is from my listing agent and one is from a buyer's agent, so instantly, I save maybe 1 percent. That does happen. Sometimes, not all the time.
Most agents understandably aren't keen to give up part of their commission even when there's no buyer's agent. Extra work and liability exposure are two reasons why.
Buyers don't understand that now the agent is taking the responsibility of both sides, so giving up the commission isn't high on their list. Some will do it.
A bigger gun in a bidding war?
Whether buying a home through the seller's agent will help the buyer in a bidding war is also a maybe.
A lot of buyers think that because they worked with me, they automatically are going to get the house. Some unscrupulous agents will make that happen, but in all honesty, I work for the seller. It's not always the best-case scenario for the buyer to come to the listing agent.
Most experts think it's a poor strategy for buyers to sacrifice the buyer's agent.
There are lots of other things buyers can do to improve their position in a multiple-offer situation short of forfeiting their right to representation. I highly discourage any buyer from ever seeking out the listing agent to buy a house.
Inspection and appraisal bias
There are two particular areas of concern regarding buyers choosing to work with the seller's agent:
- The listing agent might not push the seller to make repairs or compensate the buyer for material defects that turn up in the inspection report.
- If the appraised value is lower than the agreed-upon sale price, the listing agent might not fight for the buyer to be able to purchase the home at the lower value.
Many states allow one agent to represent the buyer and seller. But others prohibit this practice, known as dual agency. And still others use transaction brokerage, in which the agent doesn't represent the seller or buyer, but offers services without representation.
Buyers should ask their agent, whoever that is, about agency laws.
The bottom line is that buyers should consider the risks as well as potential rewards before they decide to forgo buyer representation.
Although it may be tempting upfront to work with the listing agent, I think in the end, it hurts you more than it helps you.
Comments
Post a Comment