We’ve been in this business a long time and have gone through plenty of buyers’ markets and sellers’ market cycles. Our keen observation skills have shown us this one phenomenon! It’s that in a seller’s market, buyers’ don’t want to use a buyers’ agent and in a buyer’s market, they want a buyer’s agent. Is doesn’t cost a buyer a penny to have an advocate in either market so why do you suppose this is?
In the market that we are presently in, homes are getting multiple offers and are selling for more than what they were listed at. So maybe a buyer thinks that they don’t need a FREE buyers agent because they will get the house if they go through the seller’s agent who is listing the house? Maybe they think they won’t have to over bid too much if they use the seller’s real estate agent?
Or is it because a buyer thinks they don’t need an advocate in their corner because they are going to have to over bid the list price to get into the house so what do they need a buyers’ real estate agent for?
I think it’s a little bit of both scenarios. I think buyers are hoping that if they dangle the carrot of the dual agent double commission carrot in front of the seller’s real estate agent, they will get the house AND they feel they don’t need a buyers’ agent because they have to over bid anyway so there is no need for a negotiator.
Let’s explore the benefit of a buyers’ real estate agent in both market conditions shall we?
Regardless of the market (buyer’s or seller’s), one thing a buyer should always look for is resale. During a seller’s market with lack of inventory, buyers are incredibly desperate and will settle for less than what they wanted when they dreamed of homeownership. For some reason, buyers’ think no other houses will ever come on the market and that prices will just continue to climb higher and higher. So if you decide you want to use the seller’s agent, who will let you know what the resale issues are? Who will tell you if you are paying too much for the house? Who will provide you with the comparable sales justifying the price? If there is an issue with appraisal, who will guide you through that problem? Who will negotiate your home inspection issues? Are you thinking that these are all things you can handle? How will you know if you are right or wrong? Is the information you’re using based on friends who purchased? Family? Where are your resources getting their info? I can’t tell you how many times we’ve gone on listing appointments with sellers who bought during the last boom who used the sellers’ real estate agent and who were sorry they did that. They felt they were screwed over and deceived and they ALL say they would never, ever do that again. Shouldn’t that tell you something?
IF YOU STILL WANT TO WORK WITH SELLERS’ REAL ESTATE AGENT:
If you still wish to work with the seller’s representative, ask them to have their manager get involved so that you are getting some sort of guidance or hire an attorney. Be sure to first check which form you signed for the Mandatory Agency Disclosure. There are a couple of options that the seller’s agent can check off. Also ask the seller’s agent if their seller allows dual agency. Some sellers don’t want their agent doing that because THEY know it’s not in their best interest so the agent will check off the box that they represent the seller (and probably not explain the difference to you). If their seller does allow a dual agency, then the appropriate box will be checked on the Agency Disclosure. Under either circumstance, you can request that their manager be involved.
Seller, and only seller, chooses which offer to accept. Not the real estate agent. If another buyers’ terms are more agreeable, then you are losing out no matter what. A seller will consider how much a buyer is putting down, does buyer have a home to sell, how much financing is involved, loan type (FHA, VA, Conventional), closing date, etc. Their real estate agent may try to persuade them to one over the other, but seller’s aren’t stupid and they understand the terms and which are better.
Is it possible, in this competitive sellers’ market, to overpay on a home? ABSOLUTELY! There are so many factors to consider. Buyers’ are making lots of mistakes in this seller’s market and these mistakes will have to be paid for. After you’ve won the home and moved in and the charm has worn off after 6 months or so, you start to realize you’ve made a mistake. The thing with real estate is that there is no return policy. Once you bought it and closed – it’s all yours – issues and all. And I feel the biggest mistake is not hiring their own real estate agent. Just because you are using a buyer’s agent doesn’t mean you won’t find a home or get the home that you’ve bid on. You’ll have someone advising you on what you SHOULD pay, how high you SHOULD go, what issues there potentially are and what issues you will have SHOULD you sell in the future. Why wouldn’t you want a seasoned professional guiding you??? The only person you are benefiting when you decide to use the seller’s real estate agent, is that agent! They get the dual agent commission, they represent no one and counsel no one because they can’t work for both parties so they now become neutral but collect twice the commission!
I’ve heard the horror stories of agents for the seller at the open house actually tell prospective buyers that if they use them, they’ll make sure they get the house. This is utterly unethical and why the heck would you trust someone who has already shown themselves to be unethical!!! Do you honestly believe they will protect you when they aren’t even protecting their own seller!? Gasp! There are real estate agents who are only looking out for themselves and this seller’s market brings them all out of the woodwork so BEWARE!
During a buyers’ market buyers actually seek out a buyer’s agents and wouldn’t dream of putting in an offer without one! Why? Because they NOW need someone to negotiate off the price, tell the buyer if it’s over priced, etc. Which is funny, because a buyers’ agent does the exact same thing whether in a buyers’ market or a sellers’ market! The only difference is how low should the offer be (in a buyers’ market) vs. how high it should be in a sellers’ market! Everything else is the same – advocate for you, advise you, counsel you, coordinate, negotiate, problem solve, etc. All things a seasoned buyers’ agent does, or SHOULD do, when representing a buyer in any market.
When Chris and I work with buyers, we don’t care how long a buyer takes to find a home. We believe it should be the right decision not a rushed decision. We have zero problems telling one of our clients if we don’t think the house it worth it or what the issues will be for future resale. We’ve maintained our honor and integrity over the years because we firmly believe homeownership should be the right decision for our clients! Selling homes may be how we make our living and it is a paycheck, but we will not compromise our clients for a paycheck which is how we’ve endured the good times and the bad times in real estate! After a sellers’ market is a buyers’ market, the cycles will never change.
Start working with a trusted buyers’ agent. Find one that you’re comfortable with, can reach anytime day or night and weekends. Find out how many buyers they represent, check reviews on their brokerage websites (not just Zillow and Trulia). If you don’t mesh with them, find another. Don’t sign an exclusive buyers contract unless your 100% comfortable with that agent. After you’ve had the agent show you a couple of homes and you can evaluate how they are.
As always, Chris and I enjoy working with both buyers and/or sellers. So if you want to start working with us, text or call 781 269 2195 or email email@example.com
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