Why you ask…they know the most about the property, right? Probably so but that does not mean they will tell you and more importantly, they represent the SELLER. The listing agent will rarely recommend you offer a low price or negotiate hard as they will have to explain that to the SELLER. Buyer’s agents are not trying to get the best deal for the SELLER or trying to walk the fine line between BUYER and SELLER where both MIGHT be happy.
Quick story….I am part of a group that gets together once a week to play ping pong and socialize. We have been doing this for years and rarely discuss business but we do know what each other does for a living. The other night one of the guys said he just purchased 2 lots next door to him and, of course, I ask who he bought it from. He responded that he called the name on the sign and worked with that agent to buy the lots. I asked him why he did not call me and he responded “could you have helped me?” At that point, I realized that I am not doing a very good job of explaining the value of using a Buyer’s Agent when BUYING property.
With very few exceptions, the real estate commissions paid (e.g., let’s use 6% in our example) in a real estate transaction is paid by the SELLER. The commission was negotiated up front between the SELLER and the listing agent. The commission is split between the realtor representing the SELLER and the realtor representing the buyer, or 3% each. The BUYER does not pay any commissions. When an agent represents both the SELLER and the BUYER then the agent receives all (or 6%) of the commissions.
First, what is a Buyer’s Agent? In every real estate purchase there is a listing agent and a buyer’s agent. The listing agent is the name on the sign and represents the SELLER of the property. A listing agent can represent you but they have to disclose to you that the represent the seller (typically done on a document you sign that you don’t ask about). In this case, they now have a fiduciary responsibility to both parties which can create a conflict of interest. The biggest areas for this potential are in negotiating the price and inspection results. I really cannot see how a listing agent can represent both BUYER and SELLER in these two parts of the transaction.
My recommendation to BUYERS….do your homework online and when ready to actually start looking for a property, call a Buyers’ Agent who will help you with questions (answering without worrying about offending the seller), negotiating the deal (again, not worried about offending the seller, and inspections (helping you understand your options and making recommendations).
Feel free to contact me at Jeff@SmithLakeRentals.com or 205.492.3211 to answer any questions about this. Thanks for reading.