I encounter a lot of buyers who think they don’t need a realtor to help them find & buy a home. Many home buyers just want to deal directly with the selling agent on a property of interest. Their motivations for doing so vary. Some think they can save money by not paying realtor fees. Some think that they can negotiate a better price because one less realtor should equal a lower net cost. And some folks just don’t like realtors because of some bad past experience. As with any industry there are some bad realtors, but there’s also a lot of great realtors out there.
Before laying out the key points why a home buyer should use an independent realtor, some background context is essential:
- The “listing agent” is the seller’s realtor. When a home seller signs an agency agreement with a listing agent, that realtor has the highest duty of care & loyalty under law to look after the seller’s interest, first and foremost!
- The “buyer realtor” is the realtor working for the buyer. When a buyer signs an agency agreement with a buyer realtor, that realtor owes the highest duty of care & absolute loyalty under law to that buyer.
- In most real estate transactions, the home seller agrees up front to pay the fees for both the seller’s realtor and the buyer’s realtor. Only in very rare instances does a home buyer ever pay any realtor fees.
- Most real estate transactions have a seller’s realtor and a buyer’s realtor. Both the seller and the buyer’s interests are properly looked after which is why most transactions go very smoothly.
With the above background context in mind, I’d like to lay out why home buyers should consider using their own realtor and NOT the listing agent/realtor when buying a home:
- In most cases home buyers pay absolutely nothing to use a realtor of their choosing. The seller pays the buyer realtor’s fees. This is agreed to by the seller before the house is even listed on the market.
- The listing agent (seller’s realtor) is not your friend regardless of how friendly they are to you. The listing agent’s loyalty is to the seller – this is required by law. That said, a home buyer can enter into a “transactional brokerage arrangement” with the listing agent where that agent is supposed to act impartially. One has to ask themselves, how likely is that to occur? Even if a listing agent could truly be impartial, they are not going to identify the critical questions & issues that a home buyer should be thinking about. To do so, would not be acting impartially.
- Any way you look at it, a home buyer is significantly dis-advantaged when they don’t have their own realtor looking after their best interests. In fact, the home buyer takes on potentially adverse risk unnecessarily.
- To be clear there is no price reduction on a property because a home buyer decides to deal directly with a listing agent. The reality is the listing agent will receive both the selling & buying fees if the home buyer does not have their own realtor. It’s called “double ending”. It’s great for the listing realtor but of absolutely no benefit to a home buyer!
I hope this article was useful for you. If you have any questions or want to pass on any comments feel free to message me via the contact form below.