There’s no requirement that you have your own agent represent you when buying a house. You may even think that going it alone will save you money. And, yes, the seller’s agent can handle both sides of the transaction. However, there are serious drawbacks to these approaches that you should consider before you start shopping.
It’s not uncommon for experienced buyers to act directly, writing up their own offer, hiring a lawyer to draft their contract and working on their own through escrow. This type of buyer understands the market like a real estate professional in addition to knowing the ins-and-outs of negotiating and purchase contract details. Working this way means the buyer spends more time to study the market and has more work to do to bring a purchase to close, even though it doesn’t necessarily save the buyer any money.
Alternatively, when you directly contact the listing agent asking to see a house and then ask that agent to draw up a contract offer on it, you’re asking that agent to represent both parties of the contract. This sets up what’s called a “dual-agency,” in which the agent’s brokerage handles both sides of the negotiations. The danger in this situation is that the listing agent’s first loyalty is to the listing client – the entity paying the commission on the sale. This puts you as the buyer at a distinct disadvantage when negotiating subsequent rounds of price offers and other concessions. You need to be aware that the listing agent’s primary goal is to sell the listing for the highest price.
Understanding how real estate transactions work before you shop for a home will help you decide why working with a buyer’s agent is in your best interest. This brings us back to deciding to work with a buyer’s agent, a real estate professional who is interested in one thing – representing your best interests. Remember, using a buyer’s agent generally doesn’t cost the buyer anything. The commission to both the buyer’s agent and the listing agent is paid by the seller, and determined by the listing agreement the seller signs at the outset.
The first thing a buyer’s agent will do is ask you questions to determine as best as possible what you really need and want in a home and why. You’ll also discuss the current market, and come up with a realistic game plan and time frame for finding you your new home.
Following is a list of the other essential service benefits a buyer’s agent provides:
• Help in getting you pre-approved for a mortgage; introduction to a mortgage broker
• Preparing a detailed list of all available homes that meet your unique criteria
• Contacting listing agents of properties you want more information on and to set viewing appointments
• Meeting you at properties you select to see and discussing their merits/drawbacks
• Acquiring additional information on homes that interest you
• Provide current research on homes that are comparable to the home you choose to determine an offer price
• Work with you to determine the price and terms for your offer – presenting your offer to the listing agent
• Negotiating on your behalf to reach a price and terms that work for you and are acceptable to the seller
• Arranging for an inspection and meeting with the inspector
• Explaining the inspector’s findings to you and arranging for repair estimates and additional inspections if needed (by engineers, pest control professionals, general contractors, roofers, etc.)
• Negotiating with the listing agent/seller for repair or other credits when warranted and appropriate
• Meeting with an appraiser and a surveyor when needed
• Coordinate required paperwork between the buyer and seller, buyer and mortgage company, buyer and title company, and so on, to help the transaction close