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Buyer's Agents Aren't Necessary in a Buyer's Market - Or, So I've Heard ...

"I don't need a Buyer's Agent when buying a home. All I need to do is go online, find a house and buy it."

"It's a BUYERS MARKET. I don't NEED YOU!"

"I dont need representation. That is stupid. And YOU are stupid if you think that I'm wrong."

"If I want to make an offer, I will fill out an offer sheet and you can give it to your Sellers."

All these words of wisdom were given to us by an unrepresented buyer that we showed one of our listings to the other day.

Okay, let's lay the background ...

We have a listing in our neighborhood, Greenhaven. Greenhaven (about 230 homes) was JUST finished being built last month. The builder had 4 floorplans originally and only ONE home left (the "Aria") for sale as they pulled out of the neighborhood. It was the same floorplan as the one that we have (resale) up for sale around the block.

About a week ago, we get a call from the new home representative (that we have become friends with, as she worked across the street from our home for the last 2 years...). She tells us that there is a guy relocating to Colorado Springs from across the country and he really wants the "Aria" floorplan, but does not like the colors of the kitchen in the only new one that is available. She had given him our number, as we were the listing agents on the ONLY other available "Aria" in the whole neighborhood (and city, for that matter).

Anyway, the guy calls us and sets up a time to see our listing. He only has a small amount of time before he heads back to his part of the country. Luckily we can accommodate his tight schedule - our listing is vacant and we live right around the corner. Heck! We could walk there if we wanted to.

After a few minutes in the home, he decides that he doesn't like the colors of this house either.

Knowing that he is unrepresented and knowing that he HAS to buy a home soon, but does not live here yet. Derek offers to pull some other properties that may fit his needs, email them to him, so that he can go over them while he is back home. Basically, if he was not interested in our listing, we could help him find something that he WAS interested in.

"I don't need a Buyer's Agent when buying a home. All I need to do is go online, find a house and buy it."

"You are right, many of the homes for sale can be found online - but not all of them. And not all the information online is accurate. It SHOULD be, but that is not always the case. A Buyer's Agent can help you narrow down what really IS available and what can fit your needs, especially if you are not from this area."

"It's a BUYERS MARKET. I don't NEED YOU!"

"Actually, Sir, a Buyer's Market is the BEST time to have representation. Sellers are more desperate to sell and Listing agents are working EXTRA hard to sell these homes, FOR these desperate Sellers. The Listing Agent owes an unrepresented Buyer honesty, but they represent the SELLER'S best interests, not YOURS."

"I don't need representation. That is stupid. And YOU are stupid if you think that I'm wrong."

"Sir, a Listing Agent has no reason to look out for your best interests. They only need to look out for their clients' - the Sellers. This can put you in a situation where you will NOT get the best deal when buying your next home. A Buyer's Agent negotiates on your behalf and looks after YOUR best interests. And I am not stupid if I disagree with your logic."

"If I want to make an offer, I will fill out an offer sheet and you can give it to your Sellers."

Colorado State Flag "Actually, no. In Colorado, we use state approved forms. The Contract to Buy and Sell Real Estate is a legal document and is about 10 pages long. You can find it online, at: dora.state.co.us.
Or, just write down what you want and I will fill out the rest of the contract in my Sellers' best interest. You take it to your Colorado Real Estate Attorney to look it over - you DO have one, right? - and we will have a deal."

(Grumble. Grumble. Grumble ...) We locked up the house and went home.

Posted by: Mariana Wagner - ‘Springs Realty Scoop - Colorado Springs Real Estate and Monument Real Estate

*Oh, by the way ... A Buyer's Market is technically when homes are on the market for over 6 months (183 days). Colorado Springs average DOM is 94. Just FYI ... **

Posted by Mariana Wagner ~ Colorado Springs REALTOR® on 04/15/2007 02:40 PM

Comments (46)

colorado springs real estate, code of ethics, colorado springs, colorado, buyers, buyers agents

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46 Comments on Buyer's Agents Aren't Necessary in a Buyer's Market - Or, So I've Heard ...

APR

2007

These are the types of clients who after they move in complain about everything, tell their friends the builder did them wrong, the agent for the seller told them they did not need an agent. As Ron White the comedian said..."You cant's fix stupid!" Leave these people alone...they do not want to be helped and never figure out why life is always such a hassle!

Paul- There are all kinds of people out there. You can try to educate, but you cannot CHANGE how people are, unless they WANT to change. And people ARE entitled to their opinions - regardless of HOW they get to those opinions.

I handle it by explaining to them how the commission works. I explain that the listing agreement is between me and the seller, that the commission is payable to me as well, but I choose to offer part of it to an agent who represents the buyer. I let them know that if they would like to present an offer, as the sellers EXCLUSIVE representative I will present it, but my listing contract requires the seller to pay me the entire commission in that instance, so you may as well let my buyer agent represent you.

Since it is a contractual issue, there is no argument. In a few instances we ended up with new clients. In the others, they left.

This is why we need to get away from the image that we are real estate sales people. A good Realtor has nothing to do with being salesperson instead we are Consultants. Irregardless of the market a Consultant is ALWAYS required to allow for the smooth transfer of real estate.

IF, (and that truly is a big "IF") we are in a buyers market (which really depends on the area and price range) it is all the more important for a buyer to have good, professional representation (REALTOR) when purchasing a home....

Without a buyers agent, the buyer is much more likely to:

1) Pay too much for the home, without a professional, honest and thorough CMA on the property having been done to determine the true value of the home.

2) Miss out on the myriad of financing options that are available to them and the potential cost benefits that come from choosing the right type and terms.

3) Miss the important factors that determine the quality and suitability of the home such as Home Inspections, Home Warranties, personal property that stays/goes, possession time, final walk-through, etc.

4) NEVER close on the purchase... because without proper representation, the deal is much more likely to fall apart in the process... A good agent who is properly trained is a problem solver and can clean up the little messes before they become deal killers.

Educating the buyers (especially new, first time home buyers) about the importance of a buyers agent is the key to success.

Bob- I almost forgot that. He DID metion that he would save 3% not being represented, where we told him that that is not always the case - rarely is that the case. The commission is an agreement bwtween the Seller and the Listing agent. Most of he time, the Listing agent retains all of the commission when there is no other agent involved. When commissions DO get reduced, it is a savings to the SELLER, and this savings is rarely (if ever) passed onto the Buyer.

Jeff- I COMPLETELY agree. Personally, I cant sell food to a starving person, all I can do is educate. I am not a sales person - nor could I ever be one. I know that there are plenty of agents out there selling, but I consider myself in the relationship building business, not sales.

I dont sell homes. Homes sell themselves. I just help people get what they want.

Paul- Excellent points that you made! Thank you!

Good article! Some myths out there are way stronger than a common sense regards buyers representation. I guess our job is at least to provide the information on benefits that a buyer gains from having someone looking after their best interests. Some people just have too much trust issues, that no matter what we do, they still won;t believe that we actually work on their behalf.

Edite- You are right. Trust Issues are a big deal - something that does not go away with education.

Great post, Mariana. I've also heard the objection, "My attorney is looking out for my best interests; I don't need a realtor."

BUT, the attorney doesn't get involved in negotiations. By the time you arrive at attorney review, it's too late to get the best deal on the house you want.

And, how do you really know there wasn't a better home, at a better price, at the time the buyer was looking? The best realtors not only know the listed inventory, but also the FSBOs on the market as well.

Everyone's points were valid discussion points in the instances where this objection is raised. Thanks for adding to my arsenal!

Antoinette

We don't need attorneys either, but the judge seems to find it easier to manage a case when both sides have one.

We don't need teachers either, but students seem to do better with them than teaching themselves.

We don't need the military either, but when we are attacked, they sure do help.

We don't need policemen either, but it's nice to have them there when someone steals our car.

I could go on and on, but what's the use. When I find a FSBO or an unrepresented Buyer, I just take them to the cleaners.

Very good Mariana. You handled it perfectly. Unfortunately some folks don't want out help. Sounds like he may have had a bad experience with a REALTOR(R) before. Hope he comes back to purchase your listing. Just give him the 10 page contract and have him fill it out:)

Antoinette- Very good point about the attorney aspect. We do not use attorneys, for the most part, here in Colorado, but what you said makes so much sense!

Lenn- Soooo true!! You rock.

Bryant- Thank you. I think that may have been the issue. We need update courses every year to deal with our purchase contracts, I cant imagine what a lay person would do with it!

Mariana,

Thanks for sharing this unfortunate experience. You both handled it with real professionalism, which was a wonderful example for me. I'm sure I will come across a similar circumstance at some point and I hope to handle it as well as the two of you did.

Fran

Mariana, sometimes you just can't win for losing. He is someone that would never be happy. Know wonder he is still looking. You did the best you could do with this buyer.

NEXT !!!!

Thank you, Fran. In situations like these, loosing your cool only makes it worse- probably justifying the wrong impression the person had in the first place.

JAY! Thank you, too. You can only do what you can do (and then blog about it...), right? I hope that he finds a home, and does not get too forked over in the process.

Mariana...

I agree with Blog Boy (Broker Bryant) and Jay...

Give 'em the 10 page contract and say NEXT at the same time :)

Kind of slow in the rain huh?

TLW...ROAR!

TLW!! Yes. Our "NEXT" turned into an excellent opportunity ... We got home just in time to get one of the best "sign calls" ever. Had we stayed longer at the home, we might've missed it! Everything happens for a reason.

Mariana, great post. I agree with Paul about not being able to fix stupid. But you sure did try. You handled it perfectly. Too bad he just doesn't get it.

Great try Marianna. I know your pain. I've seen so many of those types now, I've learned to cut them off at the pass. Show the home and let them on their way. And if they write an offer so we can exercise our agency with the sellers and let the self directed buyer do their thing.

Don't let the jers get to you. They just make the upsides even better.

Mariana,

I think buyers need us now more than ever with all the deals falling through.

Mariana...Don't ya just love it! Some people are just so smart they don't need you at all...they do a perfect job of representing themselves...all I can do is just ask them "hows that working out for you?"...obviously it's not working for them as they are still looking..haven't found a home yet...or successfully negotiated for one yet! This guy is getting on a plane without finding a home. Man is he doing a real good job!

I just shake my head ...and like Jay said say "Next"

Great post, Mariana. You can lead a horse to water, but you can't make him drink. There will most certainly always be do-it-yourselfers. Most of these know-it-alls don't have a clue as to how ignorant they really are, and how much money their foolishness will cost them.

Maggie- Thank you. I just hope he doesnt have to learn the hard way! But he may have to.

Keith- Thank you. I am a firm believer that everything happens for a reason. He gave me a story and a reason to validate Buyer's Agency. I thank him for that.

Neal- I completely agree.

Monika- You had both Derek and I rolling with your comment- Thanks!

Stefan- If I had a dime for every horse that I led to water ... I would be on some sandy beach drinking a Margarita right now.

Mariana ~ we talk about how the consumer has so much information these days, but doesn't have a good grasp of how to interpret it. Your experience is a classic example of a consumer who grabbed on to a concept that will burn him. It is so sad to see happen. One day a few years from now his potential listing agent will explain "why" to him.

Good story.

Great post....and the things we go through with the know it alls!

Too many times these types of buyers either think that they fully understand how the system works. In this case, a little knowledge is not bliss. I guess it would be one thing if they specifically asked if they would save any money by purchasing through the listing agent.

APR

2007

Mariana,

You write some interesting post, this is certainly one of them!

I've met that buyer, what he really means is: I want half the fee the seller agreed to pay.

I've also met the REALTOR® that was foolish enough to get involved, with him.

There is a reason that listing fees are not half of what they are, REALTORS® normally earn their money. When you're the only professional in the transaction you are going to have to do all the work, if 6% is fair for two professionals doing the work it's fair for one.

Your headline got it totally wrong, it might make sone sense to suggest that perhaps they are unnecessary in a sellers market. In a seller's market the buyer is going to have to take the sellers deal or look elsewhere. In a buyers market a buyers agent is the most valuable to the buyer!

It's been a while, like two decades, since my last deal in CO but I'll bet if you check only licensed agents are required to use the state forms, it's normally legal for consumers to use any for they agreed to. It's even legal for your seller to accept such an agreement, as long as a consumer originated it. This is a great way to make your broker go berserk!

Keep up the good work.

Bill

William J Archambault Jr

The real estate investment Institute

http://www.reii.org

Some people have distinct beliefs and they may often disagree with our views. The best we can do is exactly what you suggest - point out our intinsic value to buyers in practically every market type. If they are convinced, great. If not, well, thats just their right I guess!

BUYER'S MARKET = BUYER'S AGENT

SECRET:

I hate working with buyers. I'm not a cab, gopher or a paper whore. If the person is pre-qualified I might.

My rule: 5 listings and that's it! If you can't figure it out by then don't waste my time.

I think it should be all seller's agents.

Mariana, Sorry I am late but I am glad I saw this. This "buyer" doesn't seem to get that the seller will also want to keep that commission money that the buyer wants to keep. They will both be fighting over the same commission dollars! Plus, everything will be written to protect the seller.

You know, you never want to see bad things happen to people but this is a classic example of someone who believes that nothing can go wrong. "I look on line and find a house and buy it." What could possibly go wrong???

We have plenty of those around here - you handled it beautifully - my favorite ones are the ones that call 5 agents at the same time and refuse to sign a buyer's agency and they expect all 5 agents to be loyal.....I smell a post coming!

Kristal- Interpretation- Yes! Anyone can have all the information they want, it is all in the interpretation where things go right and wrong.

Sally- Thank you!

Patrick- There is a fine line between "educated" and knowing just enough to be dangerous...

William- Thank you. After a bit of research, I have found that you ARE right about the contract, but here is the catch: Should an unrepresented buyer submit an "offer form" and standard contracts are not used, I am not comfortable being liable for all that could go wrong with a non-commission approved form. I DO love what you had to say about the commission, though. Although I do not have a problem reducing the commission (in most cases) when there is no other agent involved.

Kaushik- Yep! Everyone has a right to their own point of view.

Luke- Buyers Agents are not that popular in NYC, are they? NYC is a whole different RE market, from what I have heard.

Virginia- When a FSBO deals with a Buyers agent, the Buyer is more protected. When an unrepresented Buyer deals with a Listing agent, the Seller is more protected. Having 2 licensed agents in the deal levels the playing field.

Ines- ok! Im waiting for the post!!

As a mortgage broker I always ask my clients if they have a buyers agent. Someone who is knowledgeable in real estate working for them, not the seller.

I think it is very important.

I love how stubborn people are - who knows if this person will ever learn their lesson.

We JUST, today, had a buyer call us asking if we would represent them. Why? Well, we had shown them a home a few weeks ago, and then they *disappeared* ... It happens, right? Well, they had found a FSBO and wanted to buy it, but their lender said that they would only OK the loan if they had professional representation on their side, to facilitate the contract process. So, they called us. :)

Mariana...

THAT is a perfect example of the Universal Law that I'm always mouthing off about.

One goes out the door....In walks one that wants to...And needs to be working with you :)

TLW...ROAR!

Do the right thing...The best thing for everyone...And it will all come back to you :)

Sorry. I left out that thought. I wanted to share before I forget :)

TLW- I love Universal Law. Sometimes I dont understand it until I look at it with my 20/20 Hindsight Glasses, but it ALWAYS is awesome. And doing the right thing ALWAYS, ALWAYS is the best thing to do.

You have a lot more patience than I. Once I heard the "I don't need.. . . . . ", I'd have been outta there.

I don't suffer fool well.

Ah! It is is the instinctive teacher in both Derek and I that have the patience to constantly try to educate. Of couse, we really knew it would go nowhere, but maybe we planted a seed?

When you say he didn't like the colors, was it paint or something more like flooring, cabinetry, countertops? Paint is easily fixed, and it sounds like that would be easier to do than to keep searching for something similar. Have you had any follow up with this buyer since he had his chance to vent?

6963 Silverwind Circle Kitchen The floors, countertops and Cherry cabinets were too much for him. He wanted more neutral colors.

The paint was very light and neutral.

We have not heard back from him. I do not think that we will, unless he decides that he IS interested in the home.

Honestly, he is entitled to buying a home unrepresented. My biggest issue was that he was blatantly disrespectful to us, when we were looking to help him.

But we do not know how his past experiences formed his current opinions.

If he DOES buy in this area, he will be our neighbor and we will invite him to a BBQ and maybe we will become friends. Maybe then we will know what was going on.

APR

2007

Mariana - you're so kind and giving, but you also know when enough's enough. Good post and good example of someone who you probably wouldn't have been able to satisfy or work well with.

Aren't those 20/20 Hindsight glasses great? I only wished they worked forward..... or maybe not. I'm growing by leaps & bounds in this business by learning through difficult deals, but also always doing the right thing. I've learned so much from your posts. Keep up the great writing and I'll see you in the 'Rain!

APR

2008

what happens when the non represented buyer or seller knows more than the realtor? Why do you all think people are so stupid. what happens when realtors are crooks. To fellow realtors play the "oh we know these buyers are stupid. Let's just get the deal done and get our commission" Seen it. I've been on the sale side and the buy side and found that we look out for our best interest and negociate better than any agent we've ever hired and had to fire because of incompetence.

Here's a secret to you agents that think people can't find out if a house is actually available...anyone can pick up the phone and call the listing agent. If someone asks the listing agent to show them the house that they are selling, don't you think it is in the best intest of the seller for their listing agent to show their house so he can do his job and sell the house? I think if a listing agent doesn't show the house he has listed to potential buyers, then the agent is in breach of contract w/his sellers. How many phone calls to the seller from potential buyers do you think it would take for them to fire their listing agent for not showing their home? Oh-and don't send another agent from your office out to show the house and then have them tell you that they are your buyers agent...pa-la-ezzzzz

APR

2008

Whoever wrote the last post (Bubba) obviously does not understand real estate brokerage, and its unfortunate he/she/it has had bad experience with incompetent agents (they do exist). But for those of us who know what we're doing, including representing buyers, the subject is instructive.

Couple of points:

1) I thought this forum was for agents only, not the general public.

2) A "buyer's market" can be defined as any market with fewer buyers than sellers. If a block in a city has 5 homes for sale, and there are 4 buyers looking for that kind of house in that location and that price, then its a buyer's market on that block at that moment, friends. Do the same math for a seller's market. A "balanced" market is when there's an equal # of buyers and sellers on the market...never happens.

3) The Internet has gutted Buyer Agency. As the buyer-subject of this post has crudely pointed out, why go thru an agent to find out what's for sale, when they can find all of the inventory on the Internet and just call the listing agent? They don't seem to understand the wisdom of representation, even when its calmly explained to them. They feel empowered by the Internet, and want to avoid the middleperson. If they could, they would also avoid the listing agent.

Hi Bubba and thank you for commenting. You are right. There ARE some idiots with licenses out there, but please do not paint the whole industry with the same brush.

Also, you are absolutely correct: "If someone asks the listing agent to show them the house that they are selling, don't you think it is in the best intest of the seller for their listing agent to show their house so he can do his job and sell the house?"

YES! And in this case the agent involved has NO DUTY WHATSOEVER to represent ANY of the Buyer's interests. None. The Buyer in this situation WILL get the short end of the stick.

Paul - Thank you for your comment. You make EXCELLENT points.

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