When you first begin looking for a home, many buyers ask “can’t we do this on our own”? Do we really need to use a Real Estate Buyer’s Agent?” The answer is yes; you “can” do it on your own. There is no law that prevents you, as an individual, from buying property without professional Real Estate assistance. You can search for homes, arrange showings, and even negotiate on your own (although, in some localities, the actual contract for purchase will need to be drawn up by an Attorney). The real question may be “do you want to do it on your own”?
There is a misconception among many first time homebuyers that by using a Buyer’s Real Estate Agent, they will be subject to paying a Broker Fee. In virtually all situations, this is not the case. The seller, not the buyer, pays for the Broker Fee for the sale of a home.
If you do decide to “go it on your own,” your choices will obviously be very limited. The only homes that you can buy without any Agent assistance are those that are “For Sale By Owner” (FSBO), generally a small percentage of the market. These are homeowners who, for whatever reason, have decided not to use an Agent in the sale of their house. It may be because they think they can get more return on their investment by not paying a commission, or it may be because there was no Agent who would take their house listing at the unreasonably high price they thought their home was worth.
Many Real Estate analysts have found that the selling prices of most FSBO homes are equal to, or higher, than those listed by Agents. The fact remains how do you really know what the home is worth, where are you going to get the information that will let you analyze the most current home sales for that model, that tract, and that area? Do you really want to accept the liability, just to save a few thousand dollars? You need to make a determination whether or not the house is worth the asking price, how can you do that without your agent doing the homework for you. There is too much lost money potentially involved to make a “seat of the pants” decision. In this case, you will need to either secure an independent appraisal to determine a realistic price range for the property or develop your own determination of value. Is this something that you have the time and know how to do?
Through e-mail an Agent can automatically send you profiles of all the homes per your criteria once you have been entered into the MLS system. Once you receive all of the homes available in your first e-mail the MLS system up-dates 2 or 3 times daily and will send you the new listings that match your criteria automatically. You “can remain anonymous” and give the Agent just your e-mail address if you are worried about an Agent constantly nagging you on the phone. When you see something that looks good, then give the Agent a call. It’s that simple. If you are serious about buying, then you need to know the minute a home comes on the market. There usually is not a dime to be saved with the strategy of approaching the Listing Agent. The seller is still going to pay a commission that he has agreed to in the listing contract.
Usually the way it works is that at the time the seller lists the property the seller agrees to pay the listing agent a percentage of the sales price of the home, This percentage is not fixed and by law, is always open to negotiation. When the agent puts the property on the Multiple Listing Service, which allows all the other agents in the area to be informed of the fact that this property is now available for sale, he will offer them an incentive to sell his property, most of the time they will offer 1/2 of the commission rate they have negotiated with the seller, sometimes more. This gives the Buyer’s Agent the incentive to show the Sellers listing to his buyer and subsequently earn his livelihood. If you go directly to the Listing Agent, you run the risk of ending up with no representation at all, since the Listing Agent is duty bound to first represent the seller and be honest and forth coming towards both parties, that’s not something that I feel is in your best interest. In some States An Agent, by law cannot represent both the Seller and the Buyer and for good reason. In most cases the seller’s agent will tell you that he can save you thousands of dollars if you just use him as your agent to purchase his listing, but most of the time he will not be representing your best interest when it comes to making an offer on the property, the bottom line is he may have cut you a few thousand dollars off of his commission to give to you, but you will not have adequate representation without your own Buyers Agent, you will almost certainly pay more for the home in your offer than if you had used your own buyers agent to represent you, the bottom line is that you lose money. After all, as the Seller’s Agent is representing the needs of the seller, he is also serving his own best interests, as most of the time his commissions are based on a percentage of the purchase price of the home. The higher price he gets for the home, the more cash he puts in his pocket, its just Human Nature.
The last thing you may want to consider is this, am I really willing to accept all the liabilities of doing this myself? Do I really know how to represent myself in a Real Estate transaction? Do I have the Resources to determine an accurate analysis of the real value of the property that I am about to make an offer on? Do I know all about the disclosure laws that protect myself in a Real Estate transaction and what the ramifications mean to me? If you are a little fuzzy about any of these areas, it would be in your best interest to be represented by your own Buyer’s Agent, After all, you have nothing to loose, and it doesn’t cost you a cent.