Now that so much information is available to potential buyers on the internet, from virtual tours to tax records, I have noticed a number of buyers purchasing homes unrepresented by a buyer’s agent. Most of the time, their reasoning behind doing this is that they hope to get a better deal on the home: thinking without bringing an agent with them, the seller won’t have to pay a commission on the buying side, and will lower the price of the house. Unfortunately…
That isn’t what happens. The buyer is not part of the listing agreement, which spells out the commission. That agreement is between the brokerage firm (via the listing agent) and the seller. The seller is responsible for the full commission amount either way; the buyer’s agent compensation is offered to a cooperating brokerage firm for bringing a buyer and handling that side of the transaction. If the buyer isn’t represented, the listing agent has to accomplish all of the contractual work that the buyers’ agent would handle, except the BUYER DOESN’T HAVE THE BENEFIT OF BEING REPRESENTED.
Allow me to explain further: an unrepresented buyer will still need to have the listing agent help them write their offer to purchase, including all of the assorted addendums and clauses that they need and/or want to have included. This will be done without any advice as to exactly the purposes of the provisions, or how to take advantage of the many protections for the buyer that are standard in the sales contract, if you include them properly.
If the offer is countered, the buyer is on their own on how to respond to that counter, including what terms of the contract to adjust to make both sides happy and get the deal done. The listing agent will handle moving the paperwork back and forth, but will be representing the seller’s best interest (which is his/her job, and in fact legal obligation.) Once the contract has been ratified, the listing agent will be the one to make sure that all paperwork reaches all parties: seller, buyer, lender, title company; the listing agent will make sure the inspections are completed and contingencies met, addendums written and signed.
In this situation, the seller is the CLIENT of the listing agent, while the buyer is a CUSTOMER. It is the obligation of the listing agent to be fair to the customer, but their fiduciary duty is to the seller. They are ONLY representing the seller’s interest in the transaction, even though they are facilitating the paperwork for both sides. Whether or not the buyer is represented has no bearing on how much commission is being paid on the listing.
As a buyer, doesn’t it make more sense to have someone representing YOUR interests?
If you have questions about buyer representation, or about the real estate market as a whole, please contact me at 571-233-5491 or by email at firstname.lastname@example.org.