This is a great article that introduces the misconception among buyers who believe that working directly with the listing agent will bring about an advantage. However one detail buyers overlook is that the listing agent has a contract with the seller to represent their best interest in the sale of their property. Sensitive information that might affect the purchase price, the seller’s bottom line price, how negotiable the price is, etc. is hardly disclosed. Be safe rather than sorry and have someone on your side to represent your interests.
In the past couple of days I have had a few conversations with listing agents who were confronted by potential buyers wanting a discount on the sales price because they didn't want to use a buyer's agent.
I Want A Discount
This is one of the biggest misconceptions we face as real estate agents. For whatever reason, buyers seem to think that by working with the listing agent they can automatically get a reduction in the sales price of a property. So what do you say when you are approached by a potential buyer who wants a discount?
Educate The Consumer
The very first thing you need to explain to them is that the commission is a legally binding agreement between the seller and the Broker. It is not an agreement with the listing agent, but their Broker. The seller has agreed to pay the Broker a certain percentage. Of course there are exceptions and those would be stated in the listing agreement, but I'm speaking in general terms. So while the buyer thinks they would get a "discount", in most cases they wouldn't. The listing agent would simply get the full commission.
Explain Agency Laws
The next conversation would need to be that of Agency. Since Agency laws vary from state to state, you need to discuss the level of representation you would be able to provide to these potential buyers. Lastly what is your standard of practice when it comes to working both sides of the transaction? Of course they will say that other Broker's offer a discount to buyers, but you can't control what other Broker do or don't do. You can only talk about what you do. Consumers need to understand the value of having someone represent them and their interests 100% and hopefully you understand the importance of representing someone fully.
What Is The Property Worth?
Although many jurisdictions allow dual agency, I find it difficult to walk that thin line...but that's just how I choose to run my business. There is no right or wrong way of running your business, but it is our obligation to educate the consumer so they can weigh all of their options to make an informed decision. At the end of the day it's about the consumer feeling as though their interests were represented fairly. Buyers should make an offer based on what they feel the property is worth, trying to get a "discount" has nothing to do with what a property is worth.
- I Don't Want Representation
- I Want It All
- It's Nice To Be Appreciated - Tips for Working With Buyers
- Selling Real Estate Is A Job
- Be Careful What You Start
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