Some people today like to shop for their new home without an agent. Why? Simply put, they think they will save money and get a better deal if they don’t have to pay a Buyer Agent’s (BA) commission. Is this true?
Let me break it down for you. Before the property hits the market the Listing Agent (LA) and the seller decide on how much commission will be paid for the sale of the house. Regardless of how many agents are involved. The total commission to be paid usually ranges between 3.5%-6%, but in most cases it is 5%.That commission includes the Listing Agents and the Buyer Agent’s commission.
Now what the LA does to entice other agents to bring their clients over to their listing, is they offer 2.5% commission from the sale of the home to any BA who can bring in the right client.
And this is where the misunderstanding begins. Your average buyer believes that if they don’t use the help of a buyer agent they will save 2.5% of the purchase price. It is in the buyer’s mind that the house is 2.5% cheaper if there is no BA involved. If you think, hey I’m not using an agent, they don’t need to be paid 2.5%, so that means I will save…
…you are mistaken my friend.
Whether you decide to use a Buyer Agent or not, the Listing Agent already has an agreement with the seller as to how much commission will be paid out. And if a person comes in to buy the house directly from the listing agent, the LA will earn the full commission of 5%. Furthermore, the listing agent’s first priority is to take care of his client, the seller. He will do everything in their best interest, not the buyer’s. He may give the buyer the illusion that they are getting a great deal, when in fact they are not.
When you use a Buyer Agent to help you purchase a house you are hiring a professional who will be on your side. Like a lawyer, or an accountant. When you venture into something you don’t fully understand, it is always better to hire somebody who knows what they are doing. Your agent will be on your side and they will negotiate for you against the listing agent. They have your best interest in mind and not the sellers. Their job is to make sure you get a good deal. This is the biggest transaction of your life! Make sure you do it right by hiring someone to walk you through the process.
And only in the end, after showing you many properties and shopping around, comparing prices and negotiating for you, will they actually earn their 2.5%. Plus the BA is paid by the LA’s brokerage, and not directly by the buyer!
It is the buyer who is left with the greatest advantage.
An expert Buyer Agent will read the buyer’s needs and guide them to the right property. They will spend time analyzing their requests, desires, and financial ability to figure out what they can and cannot afford. The BA will find out certain information on the property and the neighborhood for the buyer. And they will negotiate to the bone to make sure the buyers get the best deal possible. This will end with the buyer having to pay less for the house, than if they had come in without a buyer agent.