The real question is “Can you afford NOT to use a REALTOR®?” The process of buying a home can feel overwhelming; for most people buying a home is a huge financial decision and likely not a process you have done frequently. With legal contracts, an amortization schedule, inspections, repairs, and the ‘closing’ thing…there’s a lot to navigate.
Still, I often hear from people here in Hampton Roads think representation is unaffordable and they entertain foregoing a REALTOR®.
Bad idea, friend. Terrible. Awful.
What’s the problem with that? Do you even need a REALTOR® in Virginia?
Well, no – not technically. Where I am licensed in Virginia you don’t have to use a REALTOR®; you can buy and/or sell your own property in Virginia without a REALTOR®. You can also go to court without a lawyer, but that probably doesn’t make a whole lot of sense in most cases. It’s the same with a REALTOR®.
Can’t the listing agent just handle it?
There are two options in Virginia for a buyer to work with a listing agent; either through dual agency or with the buyer as an unrepresented third party. As a buyer, that means that there’s no one double checking the verbiage to make sure the language protects you. In the dual agency scenario, an agent owes the same limited duties to both parties; in the unrepresented third party scenario the agent owes fiduciary duties to the seller and limited duties to the buyer. Do either of those scenarios sound like it is beneficial for the buyer?
We just want to save money and not pay commission for 2 agents
Technically yes, the listing agent can handle the entire transaction, and that does happen sometimes. Listing agents like it because if you don’t have your own REALTOR® they can earn the entire commission.
Yes, that’s right. Homes listed in the MLS have an offer of compensation to the buyer’s agent as offered by the seller. Not only have you not saved any money, but now you also don’t have an advocate in your corner. The listing agent gets the full commission as the fees are agreed to in a separate contract between seller and brokerage; if there is no other agent to split that with then it’s a windfall for the listing agent.
Who pays the REALTOR®’s commission?
It depends on the home and the parties to the contract, but compensation is offered by the seller on homes listed in our local MLS. It should cost you NOTHING as a buyer to have a REALTOR® on your side. The seller will usually bear that expense.
Commissions are “built in” to the asking price
Sigh. No they aren’t.
When an agent runs a market analysis to determine list price, there is a lot that goes into pricing strategically. For example location, updates, square footage, condition, and other factors help determine a reasonable price range to list.
A REALTOR® doesn’t come up with a likely sales price and then tack on extra fees for their services. The suggested list price is based on a market analysis of comps that are similar to the home being sold. There are also things a REALTOR® knows about the market and about improvements that see the most return; about reputable vendors and service providers and about negotiations that can actually save you in costs. If an agent can net more money in your pocket even after you pay brokerage fees, isn’t that worth considering?
What are the biggest advantages of using a REALTOR® to purchase a home?
Working with a REALTOR® as a home buyer is a net advantage to you, not a disadvantage. Not only can it actually save you money, but the REALTOR® can help make sure that your interests are protected. They can help negotiate repairs and help navigate contracts, refer you to incredible resources, and ensure you meet deadlines. As a seller, you also have an expert guiding you through the steps. A REALTOR® typically has a preferred vendors list to make the transaction as smooth as possible. They advise as to the necessary disclosures, discuss required repairs, justify pricing, and negotiate to net you the most money.
CONTRACTS
Lots of different parts of real estate contracts are pretty formulaic; the ones we use here are drafted by attorneys for use by our MLS members. It is a standardized form for the most part.
But there are places in the contract where agents can customize it. They can make specific requests regarding the property, financing, terms, closing costs, and other factors as the transaction calls for. Knowing where those places to negotiate are and exactly how much wiggle room you have can make a huge difference.
EXPERIENCE
If you’re making an offer with a contingency, asking the sellers to pay closing costs, or trying to negotiate other details, hire a REALTOR®. I’m not saying that an agent can procure all of the things on your list; like any other legal contract it’s a negotiation. An experienced REALTOR® who actively sells can make suggestions for a strong offer without waiving protections. Ultimately, the REALTOR® ‘s experience can add up to a really valuable transaction for you.
Take just ONE home repair – like an outdated but functioning HVAC system in the home that you’re looking to purchase. It’s probably not realistic to expect the seller to install a brand new HVAC if the current system is working. However, there are some other options a REALTOR® may present that protect you and are less costly to the seller. Lots of things can be negotiated here, and you should look to leverage the expertise of your REALTOR®.
CONTINGENCIES
Even though buyers don’t usually pay the commission, you have a lot tied up in the purchase of this home. Take for example things like inspections. With the market the way it is these days we’re seeing offers waiving a home inspection more frequently. Without hiring your own agent how can you judge if this is the right option for you?
EXPOSURE
Not only do we pay for the marketing and photography, but we list directly in the Multiple List Servie (MLS). This pushes your listing to third party internet search sites. Did you know that it can take days for listings to be syndicated to those sites? If you list with a REALTOR® all the agents in the area have instant access to your home within an hour. These agents put listings in front of qualified buyers, unlike the unqualified folks that may be browsing the one site you listed. Isn’t it better to have multiple well-structured offers to choose from instead of settling for the one offer that may come in?
Your REALTOR® can help you make sense of your inspection and educate you about which issues are worth pursuing. I never recommend that my buyers move forward without an inspection; this is a big investment and a buyer should know the condition of the home before they sign. Once my buyer has the inspection they can make educated choices about repairs and decide if they’d like to move forward.
There’s also no cost to you to meet with a REALTOR® (like me) to talk about your real estate goals. You’re also free to interview agents up until you sign a brokerage agreement. This way you can be sure that you’ve found a REALTOR® who is a good fit for you. Don’t make the expensive mistake of assuming that you can’t afford a REALTOR®! For more information, or to schedule a meeting, give me a call at 240-381-5596.
Coastal Towne Realty
