I’ve heard a lot of people say that they are considering representing themselves when they buy a home. Their reason? They want to save money. They assume that since the seller won’t have to pay a buyer’s broker, they will be able to get a lower price. In most cases, that’s not true. They also think that they can find every home that is available for sale. That also is not true.
Let’s start with saving money. If a homeowner has a home listed for sale with a broker, that homeowner has a contractual agreement with the broker. In that agreement, the seller agrees to pay the listing broker a fee for selling their home. In most cases in the state of Texas (and for the sake of my illustration) the fee is 6% of the sales price.
When a buyer’s broker places an offer on the home, the listing broker agrees to pay buyer’s broker 3% of the sales price. That leaves the rest of the 6% for themselves. In most cases, each broker in the transaction receives 3% of the sales price.
What happens if a buyer that is not represented by a broker presents an offer? In almost every case, the listing broker keeps the entire 6%. Remember, the homeowner has a contractual agreement to pay the listing broker 6%. It’s the broker’s responsibility to pay the buyer’s broker. If there is no buyer’s broker, then there is no one to pay. They keep it all.
Why not give that 3% to the buyer? Because in the state of Texas, a broker cannot pay anyone except another broker, a licensed agent or an attorney.
What about finding the home? Surely you don’t need an agent. It seems like the internet has every home available for sale. That’s not quite the case. Every year, dozens of homeowners approach me and tell me that they want to sell, but they don’t want to put their home into the MLS system or on the internet. They ask me to market their home to my database of potential buyers and other agents in my office. That’s what is called a “hip-pocket” listing. My office currently has over 600 agents. If only half of them had hip pocket listings, that would be 300 extra homes that you would never see or know about.
And the biggest problem of all when you don’t have an agent? You don’t have anyone representing YOU and your interests in the transaction. The listing agent has a responsibility to the seller. The seller’s interest will always come first to them.
With that kind of money on the line, you should have a licensed professional looking out for you. There are so many things your agent can do for you, and most buyers have no idea what their rights are. I’ll cover what we do for you in a separate blog entry.
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