The buy home without agent sale type sebs to be a much less prevalent type of transaction, and with good reason. There are some real pitfalls that are associated with trying to buy a house without an agent, and there are some possible advantages, as well. You must be fully aware of both sides of the coin before you jump into this kind of a negotiation, because there are plenty of financial repercussions if you make the wrong decision.
What do I gain from losing an agent?
The first and most obvious advantage is that you do not have to pay an agent’s fee. Although most agents do not require an up front payment, the money that you pay on the back end likely outpaces any up front fixed fee that you would incur. Agents earn a commission that is based on the total price of the sale. This percentage is usually between five to seven percent of the sale price, and this commission is split between the buyer’s and seller’s agents.
Agents also potentially have an agenda. Because their commission is based on a percentage of the sale, agents may have a financial incentive to drive up the price of the house. If you are a buyer, this is obviously not an advantage for you. However, a seller’s agent who is pushing for a higher price is not always good, either. A seller’s agent can drive a home price out of the range of the target buyer, prolonging the time on market and effectively reducing the dband on the home.
You may also gain a clearer eye on the market. If you have experience in the real estate market, then you can handle the constant juggling of the personal negotiation along with the market stats that you have to keep up with. If an agent does not have the same focus that you have, then you may get worse decisions from him than you would on your own. You may also run into an agent with too much business for his own good. Although he may have your best interests at heart, he may have bigger sales on his plate that require more attention. This does not help you at all.
What do I get if I invest in an agent?
You are paying a significant prbium for an agent on both the buyer’s and the seller’s side. You should get some very specific services if you choose to take on this investment.
First of all, you should get an agent who knows how to negotiate. If you are paying three to six percent for your agent, then you should save much more than that amount throughout the course of negotiations. Your agent should be better at reducing the total price of the home, lowering your risk profile to your lender, negotiating terms with your seller, and informing you about government fees and requirbents.
Your agent should expand your real estate options. Agents keep up with the movbent of many different markets with an eye to the local markets and the markets that you want to target. If you have eyes on the market looking for deals, then you should end up paying less for more amenities. Agents have direct access to the Multiple Listing Service (MLS), the most up to date pricing on every house in the market. Although public real estate websites create their listings from this data, there is always a delay. Public websites may also run prices through their own proprietary algorithms when adjusting the price that you see, meaning that you may overpay if you look on a less reputable site.
An agent should also be able to direct you in the market towards negotiations that will be in your favor. Not all real estate is about money; a great deal of it is about getting to know the seller’s motives. For instance, if you have a seller with an underwater property, your agent should be able to negotiate a lower price based on that seller’s fear of the next mortgage payment.
If I want to buy a house, should I use an agent or not?
Eighty-eight percent of buyers use an agent. The ones who do not usually have much more experience in the real estate market. Many of these buyers deal with all cash transactions, a process that simplifies the real estate negotiation process immensely. If you do not want to use an agent, make sure that you have all of your ducks in a row. You need to have a solid limit on your max price, good negotiating skills, and knowledge of the entire process of buying a house, not just a figure from a free online mortgage calculator.
Keep in mind that agents do not get paid at all if a sale does not go to close. If you are going to use an agent, then make sure that you do not take advantage of that agent’s time in bad faith. Word will get around in the real estate industry, and you may have a tough time getting a good agent for your next real estate negotiation.
2 Point Highlight
A seller’s agent can drive a home price out of the range of the target buyer, prolonging the time on market and effectively reducing the dband on the home.
For instance, if you have a seller with an underwater property, your agent should be able to negotiate a lower price based on that seller’s fear of the next mortgage payment.
