When a real estate agent lists someone’s house for sale, they negotiate how much commission they are going to charge the seller. The agent and the sellers also determine how much of that commission they are going to offer to the agent who brings the buyer.
For example, Joe Agent has decided to list a house at 1234 N 4th Street for Mr. and Mrs. Smith and he has negotiated that he will charge a 6% commission to the sellers. He also indicated that he will offer 3% of that commission to whichever agent brings a buyer for the Smith’s home.
So, what happens if you approach Joe Agent without your own real estate agent? Some people think that they have saved the 3% that Joe was going to give to the buyer’s agent. However, this is not the case. Joe will keep all 6%!
And that’s fine in some respects, because Joe is doing all the work for both sides of the transaction. However, Joe’s legal and ethical responsibility in this scenario is to do what’s in the best interests of HIS clients – Mr. and Mrs. Smith. And that is probably not getting you the best price for their house.
But what if Joe lowers his commission to 4% instead of 6%? Do you save the additional 2%? Possibly, however, it may be that his lack of negotiation on your behalf – due to his responsibility to his clients – may more than counter the 2% you theoretically saved.
Now, if you sign a Buyer Representation Agreement with Joe, he is legally and ethically obligated to do what’s in YOUR best interests, as well, and his job will be to negotiate a win-win scenario for you and the Smiths. There is nothing wrong with this situation. However, if you don’t know Joe from Adam, wouldn’t you rather have someone you know and trust represent you in the purchase of your home?
We would be more than happy to help you and we promise to always look out for your best interests!