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Can You Save Money by Buying a Home Without an Agent?

Reblogger
Real Estate Attorney MA 9505496/Broker

I'm passing this on as a public service announcement to all my readers.  The seller's agent is not your friend!!!  Let me repeat this again - The seller's agent represents the seller's interests.  You need a buyer's agent to protect yours.  Usually buyer's agents collect their fee from the listing agent, sometimes a buyer's agent will have a different fee structure - - in either case, you get what you pay for and in dividends over many years!

Original content by Marte Cliff

In a word: NO.

We keep hearing about people who think they can save money by acting as their own agent when purchasing a home. In truth, it will probably cost them more.

Here’s why:

For starters, without the aid of a buyer’s agent, you aren’t going to know if you’re paying a reasonable price for that home. You can look at similar homes all day and see the asking prices, but without the sales data available to an agent, you will never know the actual selling prices.

You say the neighbors will tell you what they got for their house? Yes, they might. And it only might be the truth. People don’t like to admit taking less than the asking price for their house – and some even like to put on a false front by bragging that they “made a killing.” money

Next, without the experience and expertise that an agent can lend, you may forget to include contingencies that can cost you money. For instance: What if that house needs a new septic tank and you forgot to include a contingency for approval after the inspection? What if you forgot to ask for an inspection?

Your home inspector may also find little things that should be corrected before you close – but what if you didn’t include dollars for repairs in your contract with the seller?

And, unless you’re a construction expert, you may entirely miss warning signs that would cause you to bypass a house before paying an inspector to point them out. A good buyer’s agent can protect you from that expense.

There are dozens of details to be addressed in a purchase and sale agreement – and unless you fill them in correctly, you could be liable for thousands of extra dollars.

Remember that the listing agent is working for the seller… not for you. You cannot expect him or her to point out mistakes that could cost you money, or to give you any advice at all. In fact, knowing that you have no one to advise you, they might even push a little harder to give the seller an advantage.

Maybe you’ll get part way through and realize you need advice. Where can you turn to understand your contract when you have no agent? You’ll need to pay a real estate attorney to explain things to you.

Negotiating with the seller is another area where it pays to have an agent on your side. Not only can an agent negotiate from a position of market knowledge, he or she will act as a buffer between you and the seller, or the seller’s agent. That helps keep you out of those damaging “Take it or leave it” situations, and prevents you from revealing information that will damage your negotiating position.

Remember, everything you say to the seller’s agent is being relayed to the seller.

Once you have an agreement, the real work of closing the transaction begins. Your buyer's agent will be looking out for you, coordinating with your lender, arranging for inspections, helping you re-negotiate as a result of those inspections, and tending to numerous other details that you won't have even considered.

But back to saving money… The ONLY way you’ll save any money is if you purchase a “For Sale by Owner” property. In that case you may be able to negotiate the price down if the seller has included dollars to pay a buyer’s agent.

But realize – most people try to sell their homes themselves because they want to save money – not because they want to offer you a lower price.

And of course, in that situation, you’re both back to needing to pay an attorney to make sure the paperwork is done correctly.

If a home is listed, you will not save money by doing without representation.

Some “Do it yourself” buyers say they’ll be able to talk the seller into paying them the money that would have gone to a buyer’s agent. This is entirely false thinking.

When a home is listed with an agent, the commission is agreed upon. The seller will pay either a flat fee or a percentage of the sales price to the listing broker. The listing broker will pay a percentage of that fee to a buyer’s agent – if there is a buyer’s agent involved.

If there is no buyer’s agent, the listing broker and the listing agent will share the entire commission.

Even if they wanted to share with a buyer, they could not. Licensing law is clear about this – commissions may only be paid to licensed brokers and agents. 

The bottom line: Buying without an agent won't save you money, but it could cost you plenty.

 

marte@copybymarte.com

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Comments (5)

Richard Shuman
The Only B.S. I Have is from the University of Massachusetts - Lake Mary, FL
Real Estate Broker - Orlando Area - Love Referrals

 

Great post

Thanks - i'll send some buyers to read this as well

 

Aug 13, 2010 04:31 AM
Faina Reinhardt
HotRentalsNY.com - Manhattan, NY

It's like walking around with a blindfold, coming up to a house , pointing at it and saying :"That's it!"

Aug 13, 2010 04:32 AM
Maureen McCabe
HER Realtors - Columbus, OH
Columbus Ohio Real Estate

Martin I love your lead in to Marte's  post.  I had a first time buyer tell me he wanted to work directly with the listing agent recently.  They don't know, what they don't know. 

I have considered Re-Blogging the post for consumers in my market as well.

Aug 13, 2010 04:34 AM
Brian Rugg
Rugg Realty LLC Sun City Texas 512-818-6700 - Georgetown, TX
Sun City TX Real Estate - Georgetown, TX Real Est

Hello Martin:

 

Thanks for re-blogging. My only uneasiness with this is that I know of listing agents who in fact have given money to buyers in a transaction.  It may be illegal, but the chance of being caught is very low since it is hidden and done off the HUD.

Let's catch up some time.

Aug 13, 2010 04:38 AM
Martin E. Kalisker, Esq.
Natick, MA
Real Estate Law From A Practical Perspective

Hi Brian - yes, the same stuff happens everywhere I'm afraid.  Glad to see you are doing well in Sun City.  Any referrals you want to work out for your old Boston based clientele?

best -

 

Martin

Aug 13, 2010 11:21 AM