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We're ready to buy a house in Long Island and don't have a buyer's agent. We've researched comps and have come up with a fair offer.
What are the good, the bad & the ugly truths of not having or having a buyer's agent. The way I am understanding this now is that we can use this as a bargaining chip when we make our offer.
I mean, we did alllll this leg work in finding our home, comps... why should we get one now?
When a Real Estate Agent is showing you homes, chances are he represents the SELLER of the home. He is required by law to disclose this to you when you first meet. However, even if he does disclose this fact to you, you may, because of all of the time that you spend together, not fully appreciate what this means.
When a Real Estate Agent represents the seller, his only job is to get the best deal possible for the seller. Put another way, he is required by law to try to get the most money out of you and get the best terms for the seller! Anything that you tell him he will tell the seller. This includes how much you are willing to pay, the amount of mortgage that you have qualified for, and your motivation. In short, he is required by law to not treat your information as confidential.
You spend so much time with "your" agent, driving around looking at homes, discussing your needs and wants, that you may think that he is your advocate or even your friend. Nothing could be further from the truth. All of the information that you reveal to him will be used against you when you are ready to make an offer on a home.
Why not level the playing field? You do not have to accept this situation. You are permitted by law to hire your own Buyer's Broker to act in your best interests during the home buying process. Instead of revealing your confidential information to the seller, your Buyer's Broker is required to keep that sensitive information confidential. Your Buyer's Broker will also negotiate on your behalf to get you the best deal possible. That is his job. By engaging the services of a Buyer's Broker you get professional representation by someone who is "on your side" and who owes loyalty only to you.
Many people do not pursue using a Buyer's Broker because they wrongly think that they will have to pay the brokerage fee. In fact, the Buyer's Broker fee is usually paid by the seller. Using a Buyer's Broker does not cost you more money. When you engage the services of a competent Buyer's Broker you will probably pay much less for the home that you purchase.
I think the sellers agent will make a little bit more (maybe 4-5k) on the transaction if you do not have a buyers agent.... how much that motivates them.... I guess it depends.... (that will fall under the GOOD part of the title of your post)
I don't think you can just go after the sellers agent and tell them to split the extra $$$ but there are other intangibles that might help you a bit.... like for example, if you have another buyer who has a buyers agent bid on the house at the same price (or maybe even just a little more, say 2k-5k) ... then if all things are equal between you and the other buyer.... the seller's agent will most likely favor you. (again the GOOD part)
Other than that, as a first time buyer you need to know all the scenarios that can happen after the inspection is done, (the CO, the survey, the title etc etc) so I suggest get a attorney first (you need one anyway) and find out if you can factor in all possible scenarios into the offer before you sign the contract. (This could be anywhere between BAD to UGLY)
When a Real Estate Agent is showing you homes, chances are he represents the SELLER of the home. He is required by law to disclose this to you when you first meet. However, even if he does disclose this fact to you, you may, because of all of the time that you spend together, not fully appreciate what this means.
When a Real Estate Agent represents the seller, his only job is to get the best deal possible for the seller. Put another way, he is required by law to try to get the most money out of you and get the best terms for the seller! Anything that you tell him he will tell the seller. This includes how much you are willing to pay, the amount of mortgage that you have qualified for, and your motivation. In short, he is required by law to not treat your information as confidential.
You spend so much time with "your" agent, driving around looking at homes, discussing your needs and wants, that you may think that he is your advocate or even your friend. Nothing could be further from the truth. All of the information that you reveal to him will be used against you when you are ready to make an offer on a home.
Why not level the playing field? You do not have to accept this situation. You are permitted by law to hire your own Buyer's Broker to act in your best interests during the home buying process. Instead of revealing your confidential information to the seller, your Buyer's Broker is required to keep that sensitive information confidential. Your Buyer's Broker will also negotiate on your behalf to get you the best deal possible. That is his job. By engaging the services of a Buyer's Broker you get professional representation by someone who is "on your side" and who owes loyalty only to you.
Many people do not pursue using a Buyer's Broker because they wrongly think that they will have to pay the brokerage fee. In fact, the Buyer's Broker fee is usually paid by the seller. Using a Buyer's Broker does not cost you more money. When you engage the services of a competent Buyer's Broker you will probably pay much less for the home that you purchase.
First, the buyer's broker fee is worked in to the selling price of the home, thus one could argue if Buyers agents did not exist, house prices across the board would drop 2-4%.
It's the same thing as a retail establishment knowing what their electric bill is each month and acounting for this bill in their sell prices.
It's a cost of doing business.
Next, if the sellers agent, by law, MUST get the highest price for the house and the sellers agent MUST get the lowest price, these two entities cannot exist together. It's a complete conflict. Any house is only worth what someone is willing to pay for it.
In this case, the buyer has comps and a buyers agent cannot help.
With all of the info available to buyers and sellers FOR FREE, I hope buyers agents disappear.
I know RE agents don't want to hear this.
It's not much of a bargaining chip, if at all, to not have a buyer's agent. The commission has already been decided upon and the only one benefitting from this situation is the seller's agent (they don't have to share the commission).
Since you have already done all the upfront legwork, the only thing left for your own agent to do, at this point, is to line everything else up. The agent I used when we purchased last year arranged everything with my attorney, the seller's agent, the seller's attorney, our inspector, etc. We really didn't have to do anything other than answer a few phone calls, provide yes/no decisions, and show up at closing.
The additional benefit we had from having our own agent was being able to leverage a discount offered by our credit union (whom we were using for the mortgage). Since our agent was affiliated with the credit union, part of their commission came back to us at closing.
In a nutshell, it shouldn't cost you any more to have your own agent, and a good one will help to facilitate all the legwork from start to finish.
That said, do you already have some kind of arrangement with the seller's agent? I'm not sure how legal or ethical it would be to now go with someone else depending on what point you're at.
The additional benefit we had from having our own agent was being able to leverage a discount offered by our credit union (whom we were using for the mortgage). Since our agent was affiliated with the credit union, part of their commission came back to us at closing.
Thats great, but do you talk to the agent about this before you choose the agent or did this come in as a pleasant surprise. If it was the later then I guess you got lucky on that point, else you just have to weigh in the other benefits that you have mentioned and leave this specific one out.
First, the buyer's broker fee is worked in to the selling price of the home, thus one could argue if Buyers agents did not exist, house prices across the board would drop 2-4%.
It's the same thing as a retail establishment knowing what their electric bill is each month and acounting for this bill in their sell prices.
It's a cost of doing business.
Next, if the sellers agent, by law, MUST get the highest price for the house and the sellers agent MUST get the lowest price, these two entities cannot exist together. It's a complete conflict. Any house is only worth what someone is willing to pay for it.
In this case, the buyer has comps and a buyers agent cannot help.
With all of the info available to buyers and sellers FOR FREE, I hope buyers agents disappear.
I know RE agents don't want to hear this.
Sounds plausible, but in reality, sellers agents would just keep the whole commission to themselves, so the price point won't change based on that attribute alone.
Secondly, the seller agent getting the highest price possible and the buyers agent getting the lowest price possible are not mutually exclusive terms - they just have to meet in the middle. At the end of the day, eveyr buyer's agent I've ever used (and we've been using them outside of NY for longer than it's become common here) merely advised us as to what a reasonable offer was, and where they felt we should start and try to end up at. It was always ultimately our decision as to what offer to present. I guess what I'm saying is they don't really do the negotiation driving for us, but they do advise on whether or not they think the offer will work or where to take a counteroffer to.
That all said, if home sales commissions were guaranteed to be cut in half due to not using a buyer's agent, I'd agree that it would be worth it to do your own homework and save the money. Unfortunately, I don't see that as being the case.
It's not much of a bargaining chip, if at all, to not have a buyer's agent. The commission has already been decided upon and the only one benefitting from this situation is the seller's agent (they don't have to share the commission).
Since you have already done all the upfront legwork, the only thing left for your own agent to do, at this point, is to line everything else up. The agent I used when we purchased last year arranged everything with my attorney, the seller's agent, the seller's attorney, our inspector, etc. We really didn't have to do anything other than answer a few phone calls, provide yes/no decisions, and show up at closing.
The additional benefit we had from having our own agent was being able to leverage a discount offered by our credit union (whom we were using for the mortgage). Since our agent was affiliated with the credit union, part of their commission came back to us at closing.
In a nutshell, it shouldn't cost you any more to have your own agent, and a good one will help to facilitate all the legwork from start to finish.
That said, do you already have some kind of arrangement with the seller's agent? I'm not sure how legal or ethical it would be to now go with someone else depending on what point you're at.
we showed up at an open house last weekend. not sure if there was a checkbox "are you working with an agent" on the seller's sign in sheet, but we chatted about how flexible the seller's were, she asked us our income and i blurted it out without thinking (iknow, dummy), and we said thanks for the show.
we just found out on the internet they're having another open house this weekend, and we're bringing my in laws to check it out too. after this, we plan to make our offer.
we do like an agent who we've met at a couple of open houses we were thinking of using simply because she sounds knowledgeable and is really nice. only thing is, not sure if she's familiar with this particular area.
and i'm not sure i see the value fully yet of having a buyer's agent other than making some final appointments.
Thats great, but do you talk to the agent about this before you choose the agent or did this come in as a pleasant surprise. If it was the later then I guess you got lucky on that point, else you just have to weigh in the other benefits that you have mentioned and leave this specific one out.
It was a specific benefit we knew of beforehand. We still would have used our own agent, but this just made it more finanically attractive to us. We got 20% of their cut.
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