Real Estate Agent Doesn't Cost Buyers More

Many home buyers believe they can negotiate a discount off the price of the home they want to purchase if they forgo the services of a real estate agent and instead contact the seller’s realty agent or the seller directly on their own. This strategy may be successful on some occasions; however, it could also flop and potentially alienate both the seller’s agent and the seller.

Here are some reasons why that’s the case:

Promise to pay
The listing agreement that a seller signs to place his or her home on the market is a legal contract between the seller and the realty broker. This contract typically obligates the seller to pay a certain commission to the broker if the home is sold, and that obligation typically exists regardless of whether the buyer is represented by an agent. Even if the buyer is unrepresented, the seller’s agent has no obligation or incentive to reduce the amount the seller already has agreed to pay.

No obligation to split
The listing broker typically makes an offer through a multiple-listing service (MLS) to share a portion of the commission that the seller has agreed to pay with the broker who procures a buyer for the property. That offer is optional and would not be made to buyers, only to other brokers who belong to the MLS. That means, again, that the seller’s agent has no obligation or incentive to reduce the commission simply because the buyer chooses to remain unrepresented. And if the agent agreed to reduce the commission in such circumstances, the seller would have no obligation or incentive to share the savings with the buyer.

Buyer not privy
If the listing broker makes an offer of compensation through the MLS to other brokers, neither the agent nor the seller has an obligation to disclose the details of that offer to prospective buyers. A 50-50 split is customary, but realty commissions are negotiable between the seller and the listing broker and splits vary widely. That means the sum offered to the buyer’s broker could be any amount between tens of thousands of dollars or even just $1.

Bigger workload
Some entrepreneurial home buyers want to shoulder some of the responsibilities in the transaction to save money, but few buyers truly have the know-how or experience to do so in easy cooperation with the seller’s agent. Either way, the perception among some agents is that unrepresented buyers create more work for the seller’s agent, who may feel entitled to the "full" commission as additional compensation for that extra effort.  

Given these realities, a seller’s agent is unlikely to welcome an unrepresented buyer’s attempt to re-negotiate the commission the seller has agreed to pay.

Real estate agent can help negotiate sales price
Moreover, a buyer who’s represented by a competent real estate agent may be in a better position to negotiate with the seller. A savvy real estate agent may be in a better position to negotiate with the seller, depending on the specific circumstances of the situation. A real estate agent who is well informed about local market trends and home sales prices may be able to advise the buyer as to whether the seller could be receptive to a discounted offer for the home. The buyer’s agent also may be willing to rebate a portion of the commission to the buyer, if such rebates are legal in the state.

An agent also can help a buyer identify which homes might meet his or her needs, set up appointments to tour those homes and complete all of the paperwork that’s required for the transaction to close, among other tasks.