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Should Home Buyers Work Directly With Listing Agents?

Marlene is a California real estate broker who has been selling property since 1989. California Real Estate License number 01056418.

Agents represent buyers and sellers

Agents represent buyers and sellers

A National Association of Realtors (NAR) 2021 survey states that 88% of buyers used a real estate agent to purchase their home. When representing a home buyer, the real estate agent must help the buyer find a property and help them through the negotiation and facilitation of the transaction.

A buyer who works without an agent might purchase the home directly from a seller. Or, the buyer might work with the real estate agent who represents the seller of the property.

Some buyers perceive that working directly with the listing agent might be advantageous.

In most cases, the perception that buyers have an advantage when working with a listing agent is incorrect.

I suggest buyers have representation when buying or selling a home. This article will answer whether or not buyers should work with the listing agent when purchasing a home.

Representation

Let’s talk about representation. When the seller has a listing agent, the seller has someone to represent them. When a buyer approaches a listing agent directly to place their offer, the buyer approaches an agent who must represent the seller. While many states allow the listing agent to handle transactions involving both the buyer and the seller, in the situation mentioned above, the buyer should ask themself, “Who is representing me?” The elemental answer is, “No one!”

In my experience, I have found it challenging to represent a transaction where I am responsible for the successful facilitation involving both the buyer and seller. In these types of transactions, the buyer will inevitably ask what price they should offer.

My response is always, “Because I have firsthand knowledge of the seller’s bottom line, I cannot counsel you on what price or terms to offer. And, because I have firsthand knowledge of your upper limit, I cannot counsel the sellers on how to view your offer and whether or not they should ask for more. In this situation, all I can do is take your offer to the seller and see what the seller decides.”

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In a transaction where I represent both the seller and buyer, I cannot assure the seller receives the highest and best offer, nor can I ensure the buyer gets the lowest and best terms. Essentially, I represent no one in a transaction where I am responsible for both the buyer and seller. My purpose is to make sure the transaction closes escrow where both the buyer and seller receive their minimal expectations.

Competence

Buyers may choose to work with the listing agent because they feel they are competent enough to handle negotiations independently. Frequently, buyers ask the listing agent to discount their commission. The presumption is since the listing agent is operating one transaction, the seller should only have to pay half the listing agent’s fee.

The actual truth is that the listing agent is conducting two transactions because each side of the transaction is unique and requires specific handling concerning whether it is the buyers or the sellers. Because each side of the transaction has particular requirements, listing agents share their commission with the agent who brings the buyer, allowing the buyer’s agent to handle the documents for the buyer. In contrast, the listing agent can handle the documents for the seller.

Buyers who feel they can handle the transaction on their own would do well to realize that there is more involved in closing a transaction than merely handling paperwork. And although they may be competent to handle the paperwork, they may not be as abreast of industry standards as a real estate agent who spends numerous hours studying to stay educated about the real estate industry. It is the real estate agent’s job to be keenly familiar with the rules and regulations. Rules and regulations change on a regular basis, and one missed comprehension of the agreement may place the buyer at a negotiated disadvantage.

Open Houses

Buyers sometimes go to open houses without agents for various reasons. Perhaps their agent is not available at that time. Maybe the buyer wants to go freely to peek at homes. Or perhaps buyers feel that they can get a better deal if they purchase a home directly with the listing agent.

Should buyers go to open houses without their agent? Yes, buyers can feel free to go to open houses without their agent. Before going to an open house without their agent, buyers should have a signed Contract Commitment Agreement with their real estate agent to ensure professional representation.

This agreement allows the buyer to go to open houses with confidence. It doesn’t happen often, but sometimes the listing agent may encourage buyers to purchase the home with them, offering incentives. While this is somewhat unorthodox, it does happen. What buyer doesn’t want a good deal when buying a home? With a Contract Commitment Agreement, the buyer could tell the listing agent that they have an agent to represent them. Any incentives would need to be negotiated through their agent.

Final Thoughts

Home buyers often think going directly to the listing agent is a bright idea. They go with the hope of saving money by asking the listing agent to accept a lower commission. They go with the idea that they are competent enough to handle the deal and that they do not need the expertise of a real estate agent.

When buyers do not have an agent representing them, they risk placing themselves at a disadvantage for both negotiation purposes and the expert knowledge of a professional real estate agent.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2022 Marlene Bertrand

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