Clearing up myths about the role agents play in the purchase of a home.
Many people, especially those who have not bought a house before, often misunderstand the way real estate works with regard to agents. That misunderstanding can cause you problems when looking for a home.
Myth 1: I have to call the agent on the sign.
NO! Understand that ANY agent can show and sell ANY listed property! It does not matter at all if the property is listed with a different company. All too frequently, we hear buyers commenting about a house being listed with someone else, and thinking that they “have” to call the person on the sign. Such is NOT the case, and as we will explain below, it is a HUGE advantage to have your own agent representing you as a buyer, and to work with them instead of the listing agent.
Myth 2: I’ll have to pay a buyer agent to represent me.
FALSE! When a seller lists a home for sale with their agent, they agreed to pay a certain amount, usually a percentage of the sales price, as the total commission. That commission is what pays their agent AND yours if you have one. The commission is split between the two agents. Thus, having a buyer agent working for you costs you nothing! A buyer agent not only is free to you, but also doesn’t cost the seller anything extra. In return, you get an agent who represents only you, and not the seller.
If you deal directly with a listing agent, on your own, it makes that agent yours on that property by default. This is called dual agency, and can lead to disadvantages for you as a buyer. First, that agent already has a relationship with the seller, and may have a strong sense of loyalty to them. This could affect you negatively during negotiations. Secondly, now that you know how commissions work, realize that if you don’t have a buyer agent representing you, the listing agent will get the entire commission! This can mean they would receive twice the pay or even more. Greed is a powerful temptation, and we’ve seen several cases where agents in a dual role did NOT work in the buyer’s best interest. Rather, they did everything they could to get the buyer to purchase THEIR property, whether it was right for the buyer or not. Dual agents are not supposed to act like this, but it happens.
This is not to say that all listing agents will act this way when put in a dual role. If an agent is honest, they will tell you up front if their house does not fit your needs, and offer to find you one which does. We do this ourselves all the time when unrepresented buyers call about one of our listings, and it’s not what they’re looking for. They appreciate the honesty, and we then work with them and search for the right house. We have also represented buyers as dual agents when our listing WAS right for them. When we do, we take the role of dual agency very seriously, and diligently protect the buyer’s interests and confidentiality to the same high level as those of the seller. Many clients have trusted us in the role of dual agents, and we have never let them down. If the listing agent is truly honest and worthy of your trust, then using them may not be a problem. Usually however you have no knowledge of who they are. And, if their motivation is about money, not about doing what’s right, then there will be problems.
In general, we believe that a buyer should always have an agent representing them. The duty, obligation, and loyalty of your buyer agent is to you and you alone, and does not cost you anything. It’s the best deal in real estate! A good buyer agent can save you an untold amount of time, money, and heartache, and even help you avoid making a disastrous home purchase mistake.
Next time, we will cover some of the things that a good buyer agent should do for you.