Please share this with everyone you know, as it is probably the number one thing that MOST home buyers don't know and absolutely need to know!
In fact, if there is one thing I wish I knew when I bought my first house (and second house) before I became a Realtor myself, it would be this ONE thing!
In almost every situation, you, the Buyer, can be represented by ANY Realtor that you would like COMPLETELY FREE! And that Realtor can represent you in the purchase of almost ANY house in your market!
I'm going to explain how and why this works and then I'm going to explain why it is extremely beneficial, almost crucial, for you to know this and take advantage of it.
First, in order to understand how and why this works, you need to understand the mechanics of how Real Estate works in the current Real Estate world.
(It wasn't always the way I'm about to describe, in fact it changed in the early 90's, so if you bought your last house in the 80's stick with me here!)
When a Seller signs a Listing Agreement with a Real Estate agent, they agree to certain terms as to how that agent will be compensated. They also agree to terms regarding how the Buyer's Agent (also known as the Selling Agent) will be compensated.
The SELLER agrees with THEIR agent how much the SELLER is going to pay the BUYER'S agent.
(Read that again if you were dozing off!)
Rather than talk speculatively about how much any particular Seller may agree to pay in any particular transaction, we (Realtors) like to refer to donuts as payment.
Let's say that the Seller agrees to pay the List Agent (the Seller's agent) 6 donuts if/when he/she sells the house for the Seller. They also agree that, of those 6 donuts, 3 will be given to the Selling Agent (the Buyer's agent) to compensate them for bringing a Buyer to the table and for representing them.
The amounts of compensation agreed to may vary greatly, but the principle is the same, the Seller agrees to pay their agent AND the agent that represents the Buyer. This agreement says that they will pay that agent no matter who the other agent is. Even if the "other" agent is the same agent that is representing the Seller.
So, you, as a Buyer, can be represented by ANY Realtor in your market AND the SELLER is going to pay them!
Now, at this point, you may think, "Isn't that all still a scam to me?" If the Seller is paying "my" agent, is he/she really "my" agent"?
The answer to that is a resounding YES. Your agent has the fiduciary duties of loyalty and confidentiality to YOU. He/she is legally obligated to represent YOUR interests in the deal. If you feel that your interests are not being represented or that you are not being represented well, you should very seriously consider whether or not you are working with the right Realtor for you. Remember, you can choose ANY Realtor in your market.
Hopefully that explains sufficiently the HOW and WHY you can receive professional representation, absolutely free!
In case it is not already abundantly clear, I want to outline how knowing this information is absolutely crucial as you navigate your hunt for a new home!
If you are like I was, you are thinking, "If I deal directly with the List Agent (the Seller's agent) and don't "drag my own Realtor" into this thing, they (The Seller and their List Agent) will be able to "cut me a better deal" and/or I won't have to pay my Realtor.
The (very logical) thought being that if the Seller is already paying their agent and I "piggyback" on their services, there is some money left on the table that I can take advantage of. Oh, and I'm a pretty good negotiator and good at figuring things out, so I'm sure I don't need another stuffy shirt telling me what to do!
Here's the problem. You will be represented by an agent, one way or the other. If you don't have a Realtor, one will be appointed for you... Well, not exactly, but what does happen is that the Seller's agent also becomes your agent. This is called a "Dual Agent". When an agent becomes a Dual Agent, their role changes. They go from representing one party (either the Seller or the Buyer) to 'representing' both parties. This is legal and (in my opinion) can be done ethically and with integrity.
I like to tell my client that all that changes in this situation is that I go from being able to "guess" with them what the other side might be thinking, to being a mediator. I can no longer say, "I think they might take less" (to the Buyer) or "I think they'd be willing to go a little higher" (to the Seller) because I now KNOW whether or not they will take less or offer more and I am obligated to keep BOTH clients confidence and be loyal to each of them. I am still there to help put together a deal that is good for both parties, but I am no longer an advocate (per se) for either party.
If the List Agent becomes a Dual Agent, the agreed upon compensation is still the same. The Seller has still agreed to pay the List Agent the same amount (6 donuts) regardless of who brings him/her the Buyer.
So, you are thinking that you are going to try to get a crack at those 3 donuts that "your" agent is not getting because you don't have an agent?
You are negotiating for the best deal on the house that you can get. The Seller wants to get the most amount of money out of the deal they can get. Who, do you think, is the most likely to "give up" those 3 donuts? Is the List Agent going to say that, now that he is doing your paperwork and the Sellers, he is going to give up the 3 donuts he negotiated with the Seller for? Is the Seller going to ask his agent to get paid HALF just so that the Seller can take those 3 donuts out of the price of the home just because you don't have an agent?
No, in all likelihood, those 3 donuts will go to the List Agent. The Seller agreed to give the List Agent 6 donuts when the List Agent successfully sold the Sellers house. If he/she accomplishes that task, all 6 donuts are rightfully his/hers!
I can't emphasize enough that this scenario is not necessarily bad for you. The List Agent, assuming they are professional and hold themselves to the high standards and code of ethics of the Association of Realtors to which they belong, will represent you and the Seller professionally and help put the deal together and receive their compensation for their efforts.
When I work with Buyers, I take as much time as I possibly can to get to know them, to understand their priorities and help them get the home that they need at a price that works for them. We may look at 2 houses (this is my absolute minimum at this point as we always look at a second one "just to make sure") or 46 (I know this because one client actually kept count of the houses we looked at), but if the deal we have going starts to look like it's not the right deal, I have no problem helping them pull out of that deal to move on to a better deal.
If you are calling the List Agent on every sign you see and you end up writing an offer with the one you finally land on, how well does that agent know you? How invested are they in making sure that THIS house is the right house for you? Especially if you let them know that if this isn't the house for you, you will just be calling the next sign? From their perspective either this is the house for you and they'll get paid, or it's not and they won't.
I will go much more in depth regarding how to find a good agent at a later time, but easily the best guidance I can give you is to find someone that you feel comfortable with and that you trust. Buying a house is a very big investment. For most people it is the biggest investment they will ever make. Don't entrust this very important decision and process to the person whose sign is in the front yard! Find someone that you know will represent YOU well and trust them to walk you through the whole process!
I am a Realtor here in Spokane, WA. I work hard for my clients and I would be honored to represent you in your upcoming home purchase. Please feel free to message me or give me a call if you have any questions. Even if you choose to work with a different Realtor, I would love to know that you found a Realtor to represent YOU and didn't just call the name on the sign or sign up with someone you met at an open house!
PLEASE SHARE THIS ARTICLE with anyone that you know that is getting ready to buy a home! If there is one mistake that I can help people NOT make, this is it! You don't let your friends drink and drive, don't let them call random signs!
I'd love to hear from you! Comment below any experiences you've had (good or bad) with calling the name and number on a Real Estate sign. Did you know how this part of Real Estate works? When did you first find out about it? It took me getting my Real Estate license to understand it and now I hope I can help everyone not make the same mistake I made! Comment YOUR experience below!!