Do you have any tips for people who are opposed to using a buyer’s agent?
A: In our columns, we’ve talked about the effect the Internet has had on the real estate industry. For the most part, the information you get on real estate properties has improved vastly over the years. It was only 30 years ago that almost all the information on properties for sale was kept in black and white listing books printed on newsprint by local Realtor associations, refreshed every two weeks. And you couldn’t view those listings without working with a real estate agent that was a member of that Realtor association.
The real estate industry has come a long way.
Today, you can get information about homes from so many different online sources. You can find specific real estate tax information and hyperlocal crime statistics, view information on school districts and individual schools, obtain flood zone information and see almost any property from the air and ground. You can also measure the size of the land, determine what the price history was for a home and even compare what a handful of websites think a particular property might be worth. (And, of course, you can check the online rating of individual brokers and their firms.)
With all that information, a resourceful buyer might not need a real estate agent to help them buy a home. But you still might not get the full picture of a property without the insider knowledge of a great real estate agent. Some first-time home buyers will benefit greatly from the expertise a good real estate agent can provide in evaluating the various options they have when buying a home.
You seem to feel that you have a good handle on what you want and how much you can spend. If you don’t feel you’d benefit from the advice, knowledge and experience a good real estate agent might bring to the table, and if you’re comfortable searching for a property on your own, you can go without a real estate agent.
Remember, however, that a mistake in this area could cost you thousands of dollars.
Let’s say you find a property listed with a real estate company. And let’s say that the seller is willing to entertain an offer from you, an unrepresented buyer (not all will). You might think that you might go in and negotiate a purchase price and then try to get the listing broker to pitch in one-half of the commission. Well, you’ll quickly find out that listing agents won’t give much, if anything.
Their listing agreement with the seller requires the seller to pay them a commission (let’s say, 4 percent to 6 percent of the sale price), which they are required to share with the buyer’s agent — if there is one. If you aren’t represented, the listing agent may not be obligated to pitch in some of that cash to make the deal work. (They might, or not.)
We like that you’ve taken the initiative to do the work it takes to find the right home. But finding the right home is just the first part of the process. Next, you need to negotiate the right price and terms for the home.
Here’s the rub: Buyers who buy without an agent are at risk for overpaying because they may not have critical information about the property or what similar homes in the neighborhood are selling for in real time. Sellers who sell on their own may likewise settle for less than the true market price simply because they don’t know what kinds of bids (or bidding wars) the local market is generating.
If you want to buy a home on your own, and you’re prepared to get as much information as possible about the property, neighborhood, school district, upcoming changes in the neighborhood, what other similar homes are selling for and other information critical to a successful outcome, have at it.
But in a hot market especially, going it alone may feel daunting. If you keep losing bids, or find that homes are being sold so quickly there isn’t time for you to make an offer, then consider hiring an agent to assist you in making your single biggest purchase to date.
One last point: Exclusive buyer’s agents require you to pay for their services. They work to negotiate a lower purchase price to cover that amount. Agents who represent buyers and sellers are paid a share of the commission paid by the seller. While that ultimately is funded by you, since you’re paying for the home, going at it alone may not reduce how much buying power you have.
Good luck and please let us know how things turn out.
Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (Fourth Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them through Glink’s website, bestmoneymoves.com.
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