I have conversations with current and past home buyers all the time during which they describe a desire to not use a real estate agent to help them buy their home. Frankly, their logic for not using a real estate agent is usually not very well thought out and the reason they're talking to me is because something went wrong on the transaction. Oddly enough they often don't connect their problems to the decision to not use a real estate agent.
The best I can tell is that these people want to buy a home without a realtor for some combination of the following reasons:
- They are somehow going to save money on the transaction
- They don't want to be bothered by a realtor
- They don't feel like they really need their own realtor
- They were just casually looking on their own and they found something they wanted to buy
So I really don't want to write some self-serving propaganda piece that tries to convince you that the buyer's real estate agent is free and that you desperately need the local expertise of your own agent who is going to help you negotiate a 10% lower price on the purchase of your home. Because none of these notions are completely true. However, let me put the situation in a more honest perspective:
Trying To Save The Commission By Not Using A Real Estate Agent
This may be the number one reason that some buyers don't want to use a real estate agent and the reason is that the buyer's real estate agent is really not free to the buyer. While it's true that it's the seller that is paying the buyer's agent's commission that money could in theory go into the buyer's pocket if they didn't have their own agent. The only problem is that some or all of that money could just as easily end up in the listing agent's or seller's pocket.
This is actually a fairly involved topic and I've previously written an entire blog post For Home Buyers That Want The Real Estate Commission For Themselves. Suffice it to say that the key is not to necessarily go completely self-serve in order to pocket the entire commission but to ensure that you can benefit from your own realtor at a reasonable cost - i.e. get a rebate from your agent or just pay them by the hour. And at least in that case you will actually know for sure that you got the money and not the listing agent or the seller.
The Real Benefit Of The Buyer's Agent
Buyer's agents don't provide the same value that they used to. You can surely identify the properties that you want to see on your own and you may even think you have a pretty good sense of property values. But where a realtor comes in handy is:
- Taking care of all the busywork in a fraction of the time that it would take you to do the same - e.g. scheduling showings, gathering additional information on properties of interest.
- Identifying property issues before your write an offer
- Knowing what questions to ask about homeowner's associations, property repairs and maintenance, home systems, etc...
- Keeping the transaction on track by monitoring the progress of each transaction step
- Asking additional questions during the home inspection to make sure that issues are fully understood
- Providing objective advice on property values since buyers tend to have a downward bias
- When the deal starts to go off track figuring out a way to salvage it
Again, what it really comes down to is what is the value of having someone provide all these services to you. As long as you are not overpaying for them then no harm, no foul and you can pocket the excess commission.
Buying New Construction
Buying new construction is a topic unto itself because it presents a unique and significant set of challenges. In fact, not too long ago I wrote an entire blog post on The Challenge Of Buying New Construction Homes In Chicago. The bottom line is that in many ways it is a much more involved transaction. Unfortunately, a lot of home buyers check out a builder's development on their own and start writing an offer directly with the listing agent. In fact, the normal protocol is that if buyers show up without their agent on their first visit the developer will not pay their agent a commission. So once the buyers start the process rolling on their own they usually end up completing it on their own.
I don't know if buyers think the developer's agent is supposed to be helping them or not but let's be perfectly clear on this point. That real estate agent in the developer's office is working for the developer and they have only one allegiance. In fact, developers prefer to have their own dedicated sales staff in the office so that the sales people have no alternative to selling the developer's product. That way they are going to give every buyer that walks in the door the hard sell. So, no, that sales person is not trying to help you.
This is where your own real estate agent can come in really handy, counterbalancing the developer's sales person. As I pointed out in my earlier blog post the sales contracts used by developers can be quite onerous so at a minimum your agent should be reviewing the key terms with you before you submit an offer. And they can also help you make additional requests, make sure that the developer's commitments are precise enough, and help you inspect the final work prior to closing.
And as I pointed out above, just because you have your own real estate agent doesn't mean you can't still get some of that commission in your own pocket.
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