Can you Save Money by Going Directly to the Listing Agent?
Some buyers out there think that they can save a lot of money by not having their own representation and purchasing directly from the Listing Agent of a house that they are interested in. The thought is that they can get an edge on negotiations since the listing agent is doing “less work” and can thus reduce their commission. Does this work and can you save money?
It sounds like it could be a great way to save big on such a large purchase but it could be more costly than what it saves. There are plenty of DIY people out there that end up costing themselves more than what they think.
Who does the listing agent represent?
If you had someone serve you a lawsuit, would you immediately ask their lawyer to represent you as well in order to save money or would you feel you need someone a bit more impartial?
First, let’s talk about Dual Agency. This is a term that specifically means that the agent is representing both parties equally and will operate in this capacity to the best of their ability. This is a VERY hard line to walk as an agent and many times, they will choose to simply leave the buyer unrepresented to perform their duties to the seller. Even if the agent decides to move forward with dual agency, they have become more of a facilitator than a representing agent.
So, is it Possible to Save Money by going directly to the Listing Agent?
Sometimes… but more often than not, no. Let’s say the process was very easy and the listing agent is willing to sacrifice a few thousand dollars to make a good deal happen. As a buyer in this scenario, you may feel like you’ve gotten a victory but maybe the seller was willing to take an even lower price, credit back more after inspections or make repairs that you didn’t ask for all because you didn’t want to lose a “good deal”.
At this time, it’s worth mentioning that I’ve been on both sides of a deal quite a few times. Most of those times, I held at my full commission and the transaction went smoothly; win-win at the closing table and everyone was happy. There was one particularly stubborn transaction that I did in fact reduce my commission to get the deal done because I felt it was the right thing to do in that particular scenario. The seller got a price he was happy with and the buyer got a credit that he was satisfied with.
A listing agent has no obligation to reduce their commission because a buyer has no representation or even if they are representing them. The fee agreement, which is usually 6% of the sale price, is to get the house sold, period. If they have done their job and people start calling to see the house and want to buy it, then most agents (and sellers) feel they have done their job well and earned the full commission.
The fact is that the same logic can be used against a buyer that is looking for a discount. Are you as a buyer going to walk away from an otherwise great house for you and your family for a few thousand dollars?
Having your Own Representation
If you want to know you’re getting the right house for the right price, before you decide to go all lone wolf with your buying experience, talk to an agent or two about what they can do for you when buying a home. You may find that you don’t know what you don’t know. A great buyer’s agent will be able to tell you all about the market you’re looking in, including the average DOM (days on market), the average list-to-sale price and the current inventory. These are all important factors when considering a proper offer and can be more valuable than 1-2%.
Also worth mentioning that a buyer’s agent gets paid by the seller, so they also don’t cost you anything out of pocket.
If you’re thinking to save even up to 3% by working directly with the listing agent but found out later that the average list-to-sale price in the area was 94.5%, would you still feel like you got a good deal? A professional buyer’s agent is your best tool for having a great, stress free home purchasing experience with no money out of pocket!
Thinking of selling your home? I’m passionate about helping sellers get the most for their house and hitting their goals!
I service Philadelphia and its surrounding counties such as Montgomery, Delaware, Bucks and Chester counties. Call/text me at 267-825-1192 or email me at chris@chrishvostal.com.
