Long Island Homebuyers ~ Buyer Representation introduced the concept of buyer representation on Long Island.  The follow-up post provided an in-depth look at the differences between "client" and "customer" relationships,  and how it affects the Long Island homebuyer.  This series resumes with a look into one of the most common misconceptions amongst homebuyers.

Many Long Island homebuyers have come to believe that the best chance to get a good deal on a home is to work directly with listing agents to make purchase offers.  This couldn't be further from the truth.  Listing agreements create a fiduciary relationship between the listing agent and the home seller.  As such, listing agents are obligated to protect the interests of the sellers that hire them, which includes obtaining the highest possible price for their listings.  This obligation is placed on EVERY listing agent, without exception.

For one reason or another, many homebuyers on Long Island have convinced themselves that they are somehow more in control of the home buying process if they call listing agents directly and / or go from open house to open house on their own.  But what does this really accomplish?

MORE WORK - Homebuyers that choose this approach create more work for themselves by having to find the homes on their own. 

LESS INFORMATION - The only information that these homebuyers receive is the information that the listing agents are offering.  While the listing agents are obligated to give fair and honest dealings, they are also obligated NOT to give away information that could help a buyer obtain the home for a lower price (such as the homeowner's motivation for selling).

NO COUNSEL - The listing agent is prohibited by law from giving any advice on whether or not the home fits the homebuyers' needs.  It is their fiduciary duty to get the listed home sold.

NO CONFIDENTIALITY - Homebuyers are often willing to share too much information about themselves to listing agents.  If the listing agent has been told by the homebuyer how much they would pay for the home, or what the buyer's motivation is for buying the home, they are obligated to share that information with their clients - the sellers.  Any information gathered by the listing agent about potential homebuyers is likely to be used against those same homebuyers during the negotiation process.

NO LOYALTY - Listing agents are duty-bound to place the interests of their clients above all others, including their own interests.  Since listing agents are loyal to their clients, it is impossible for them to also be loyal to homebuyers that choose to deal with them directly.

There are a few common reasons that Long Island homebuyers choose to deal directly with listing agents, rather than hiring their own representation.  Unfortunately for these homebuyers, the perceived benefits in dealing directly with listing agents are not actual benefits. 

The following are some myths and realities of dealing directly with listing agents:

MYTH # 1:    

Buyers that buy homes through listing agents save money because listing agents will take a lower commission if they do both sides of the transaction.

REALITY:     

Some agents will reduce their commission for both sides of the transaction, but many others will not.  Those that are willing to reduce their commission are still obligated to try and obtain the highest possible price for the home, whereas a buyer's agent is obligated to try and get the best possible price for their buyer clients.

MYTH # 2:

Buyers that obligate themselves to work with only one agent have no control over the home buying process.

REALITY:

Dealing exclusively with listing agents actually gives buyers less control than they have if they work with a buyer's agent.  ALL agents are duty-bound to obey the lawful and ethical instructions of their client.  The listing agents' clients are the home sellers, so they must protect the interests of the sellers.  One of the ways that this is accomplished is by keeping confidential any information that would give the buyer leverage during negotiations.

SUMMARY: 

While many homebuyers on Long Island think that working directly with listing agents is to their advantage, the fact of the matter is that the exact opposite is true.  Homebuyers that choose to hire their own agent have the benefit of having their interests protected.  Although some listing agents may agree to a reduced commission if they sell the home themselves, they are still obligated to try and obtain the highest possible price for the home.  A buyer's agent is obligated to help the buyer client obtain a home for the lowest possible price, and does so by providing statistical information and analytical analysis to their client.  Homebuyers that are interested in saving money should absolutely consider hiring their own representation.

The next post in the series will reveal why buyer clients have the largest selection of homes to choose from when searching for a home.