Should you buy a home through the seller's agent?

Bypassing a buyer's agent presents pros and cons for homebuyers to consider.

By MSN Real Estate partner Oct 8, 2013 7:57AM

© Mark Scott/Photodisc/Getty ImagesBy Marcie Geffner, HSH.com

 

With home prices on the rise and for-sale homes in short supply in some markets, it's no wonder homebuyers are looking for an edge. Some think that making an offer through the seller's agent, rather than their own buyer's agent, will save them money and provide an advantage in multiple-offer situations.

 

Are they right?

 

The answer isn't exactly clear because there are pros and cons to purchasing a home through the seller's agent.

 

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Reduced commission? Maybe

Some listing agents will indeed give the seller a break on their commission if there is no buyer's agent, but that's not automatic, says Ken Pozek, a real estate agent with Keller Williams Realty in Northville, Mich. Rather, it's solely up to the agent to decide.

 

"Some listing agents -- not all, but some -- will offer a discount to the seller if they find their own buyer. In that case, a seller might say, 'I have these (two offers) and one is from my listing agent and one is from a buyer's agent, so instantly, I save maybe 1 percent. That does happen. Sometimes, not all the time," Pozek says.

Carl San Miguel, broker-owner of Highland Properties in Campbell, Calif., says most agents understandably aren't keen to give up part of their commission even when there's no buyer's agent. Extra work and liability exposure are two reasons why.

 

"Buyers don't understand that now the agent is taking the responsibility of both sides, so giving up the commission isn't high on their list. Some will do it," he says.

A bigger gun in a bidding war?

Whether buying a home through the seller's agent will help the buyer in a bidding war is also a maybe.

 

"A lot of buyers think that because they worked with me, they automatically are going to get the house," Pozek says. "Some unscrupulous agents will make that happen, but in all honesty, I work for the seller. It's not always the best-case scenario for the buyer to come to the listing agent."

A listing agent or "seller's agent" can "legally manipulate" the seller's net sheet to make an in-house buyer appear more attractive, says Douglas R. Miller, an attorney and executive director of Consumer Advocates in American Real Estate, a nonprofit group in Navarre, Minn., that educates the public about conflicts of interest in real estate.

 

The net sheet shows how much money the seller will get from the sale, and an in-house buyer is one represented by the same brokerage company as the seller, resulting in what agents call a "double end" or "double pop."

Miller says that he thinks it's a poor strategy for buyers to sacrifice the buyer's agent.

 

"There are lots of other things buyers can do to improve their position in a multiple-offer situation short of forfeiting their right to representation. We highly discourage any buyer from ever seeking out the listing agent to buy a house," he says.

 

Inspection and appraisal bias

Pozek points out two particular areas of concern regarding buyers choosing to work with the seller's agent:

  • The listing agent might not push the seller to make repairs or compensate the buyer for material defects that turn up in the inspection report.
  • If the appraised value is lower than the agreed-upon sale price, the listing agent might not fight for the buyer to be able to purchase the home at the lower value.

"If the listing agent is one-sided," he says, "that will usually scare them off and they will get their own representation."

 

Who represents whom?

Many states allow one agent to represent the buyer and seller. But others prohibit this practice, known as dual agency. And still others use transaction brokerage, in which the agent doesn't represent the seller or buyer, but offers services without representation.

 

"Buyers should ask their agent, whoever that is, about agency laws," Pozek says.

The bottom line is that buyers should consider the risks as well as potential rewards before they decide to forgo buyer representation.

 

"Although it may be tempting upfront to work with the listing agent, I think in the end, it hurts you more than it helps you," Pozek says.

 

"There's nothing wrong with the agent doing both sides,"  says San Miguel, adding that buyers must decide whether they will be treated fairly.

 

More from HSH.com

 

Tags: buying
 
6Comments
Nov 19, 2013 7:53AM
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A bit of good advice which helped me get my house....if you really find the right home that meets your wants and needs, offer 1 or 2 thousand dollars above the asking price. I admit that it may seem a crazy thing to do, but believe me here, it totally catches the sellers interest and makes it irresistible to them. Rarely done, this can make the entire often painful experience of buying become a pleasurable undertaking. Many buying events can turn ugly, often due to perceived insult from a buyer feeling that he is not getting the house cheaply enough, or by the seller, thinking he is not getting what he/she believes the property is worth. Called a "sweetheart" deal, doing this correctly can leave both buyer and seller feeling happy and successful with the transaction. It worked out beautifully for me, and when I did find a problem which needed fixing before sealing the agreement, the seller was amenable to doing what needed fixing.
Nov 19, 2013 7:16AM
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Real Estate agents don't work for the buyer or the seller...they work for themselves.  They don't get paid unless a transaction closes and a large difference in the sale price of a home from a list prices has a limited impact on their commission.  This means their ultimate goal is to close a sale above all other factors.  So, that said, whether you're a seller or a buyer, YOU and only YOU have to look out for your own interests.  Educate yourself about the market and your home's relative value.  Consider the agent as a consultant but not one who comes without bias.

I used my seller's agent when I bought recently because I believed she would be highly motivated to get the deal done, which she did, and which worked out in my favor.  Obviously she wanted the ENTIRE commission in lieu of sharing it with another agent.  It's business people.  There's the ethics taught in real estate courses and then there's the real world.

Nov 19, 2013 4:07AM
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My agent was the seller agent but now I know all she wanted was a quick sale so it worked out well for the buyers. Lesson learned is that the agents are out for themselves so be cautious of both agents.
Nov 18, 2013 11:31PM
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When I bought my house, I was offered my seller's agent as a 'dual agent'. I refused, of course.


A buyer's agent represents the best interests of the buyer; the seller's agent, the seller. One cannot serve the interests of both buyer and seller without conflict. That's why the practice is prohibited in some states.

Oct 9, 2013 3:59PM
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Buyer's don't need to be just treated 'fairly'.  That just means they won't be cheated.  Buyers need someone to look out for them. They need an advocate. They need someone willing to make sure they have a 'plan B'. An agent working for the company representing the seller can not do that.  

Agents that NEVER work for the seller and ALWAYS work for the buyer can be found at http://www.naeba.org.
Oct 9, 2013 3:59PM
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Buyer's don't need to be just treated 'fairly'.  That just means they won't be cheated.  Buyers need someone to look out for them. They need an advocate. They need someone willing to make sure they have a 'plan B'. An agent working for the company representing the seller can not do that.  

Agents that NEVER work for the seller and ALWAYS work for the buyer can be found at http://www.naeba.org.

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