One of the projects I’m working on is an article about agents you should never use. No, I’m not naming names, but rather categories of people that you should think twice about hiring if you’re buying a home. Two of them were mentioned during a “Chat Plus” column in the Washington Post (read it here.)
The first category of “agent” you shouldn’t use–though it’s perfectly legal if the right disclosure forms are signed, and no doubt many agents would argue with me on this one–is the listing (or seller’s) agent. This is the agent that has been hired by the seller to get the best deal for them. They have a legal and moral responsibility to keep information confidential, and to look out for the seller’s best interests. In DC and VA, it’s legal for an agent to be a “dual agent”, meaning they can represent both sides. I wish someone could tell me how it’s possible to have both people’s interests at the top of their mind when negotiating a deal. My clients look to me for advice, and in a world of negotiation, it’s quite frequently the case that what’s best for one side is not what’s best for the other. Yes, I’ve read the “win-win” books, and “getting to yes” strategies, but seriously, in today’s real estate market, isn’t 90% (or more in many cases) of the deal price? Maybe not for the agents out there, but I have yet to come across a buyer or seller who, if forced to rank what’s important, doesn’t say “price”. And if I’m fairly representing both sides, isn’t every dollar I negotiate hurting at least one of my clients?
Now the argument I hear from buyers is “I’ll save x% if I don’t have an agent.” And that’s a big myth. The truth is that the commission is negotiated between the seller and the listing agent before the property ever even goes into the MLS. That (full) commission is getting paid even if you don’t have buyer representation. The only way around that is if the buyer negotiates with both the seller for the property, and the seller’s agent (for the commission). So that agent is taking on more risk (because you’re not represented), more work (because chances are you don’t know the paperwork that’s required and how to interpret it), for less pay. Not impossible, but I know a lot of agents who wouldn’t do it. And of course if there’s another potential buyer who DOES have representation, isn’t it fair to argue to a seller that the buyer in that case is less risky? There’s less risk of something falling through the cracks and blowing up at the last minute because there isn’t someone guiding that buyer through the process.
The other issue is that the x% is already “priced in” to the list price. The seller knows that, the agents know that, and the buyer knows that. So if a buyer comes in and says “I don’t have an agent, so I want x% off,” don’t you think the seller wants that same x% back?
Of course these are all generalities, and there are exceptions to the rule, etc., etc. My point is simply that it’s not as straightforward as saying “I’ll just negotiate the x%.”
This is a complicated issue, and one that people get passionate about. (Don’t they always when money is involved?) There are lots of qualitative reasons buyers should use an agent too, but I’ll save those for another post.
By the way…I mentioned that the WP chat discussed two agents you should never use. The second? Yourself, to avoid the very issue discussed in the chat–signing documents you don’t understand.