| Buying

Every so often, we are approached by a Buyer who would like to represent themselves in their potential purchase of one of our listings. There seems to be a lot of confusion about what it means to represent yourself, so we are going to answer some of the most commonly asked questions and hopefully clear up some confusion.

Can I buy a property without a REALTOR®?

Yes. Buyers can represent themselves, but let’s look at a few reasons why that might not be the best choice.

How does that work?

In the state of Texas, real estate agents usually work with Buyers in one of two ways:

1) Having a Buyer sign a ‘Buyer’s Representation Agreement’ (TAR1501), making that Buyer his or her Client. Once you’re considered a Client, the real estate agent must:

  • The agent must act in their Client’s best interest (Fiduciary),
  • Maintain confidentiality, and
  • Take reasonable steps to determine and then disclose all material facts about the property.

2) If you (the Buyer) chooses not to sign any agreement, you are considered a Customer. When you are a Customer, the agent does NOT work for your best interest and you are not entitled to representation. A salesperson cannot make any decisions on your behalf. However, they still have obligations to their Customers such as:

  • Limiting privacy obligations,
  • Full disclosure of who they are representing,
  • Being fair, honest, and acting with integrity,
  • Providing competent service, and
  • Disclosure of only material facts that he or she already knows about the property – they are not required to take additional steps.

Will the Listing Agent help me negotiate the sale?

If you are representing yourself as a Buyer in a transaction, the Listing Agent would only work for the Seller. Therefore, their loyalties are only to the Seller. Their job is to get the best price for the Seller, and they should not give away any information, including recent sales price information, if it will not be beneficial to the Seller.

Do I get the commission that would have been paid to a Buyer’s Agent?

 

You do not get a commission. A Listing Agreement lays out the commission percentage and who it will be paid to. In a normal transaction where the Buyer has a Buyer’s Agent, the Listing Agreement percentage would normally be split evenly between both agents. If no other licensed Realtor is involved in the Buyer’s party, the listing brokerage gets to keep the full commission that was agreed upon between the Seller and the Listing Agent in the Listing Agreement.

If the Listing Agent is going to make more money, shouldn’t I get a discount?

A commission discount, if any, would be listed in the Listing Agreement when the Seller decides to list with their Listing Agent. Since the Buyer is not a party to the Listing Agreement, they will not reap the benefits of a commission discount. The discount would go to the Seller.

So why would someone want to represent themselves?

Most Buyers who choose to represent themselves have the huge misconception that they are automatically entitled to the other half of the Listing Agreement commission if they do not have a Buyer’s Agent representing them. These people may be stretching their financial budget and are hoping to get the commission to help them with the purchase of their new home, although there is no assurance of any savings.

As a Buyer, why would I want an agent to represent me?

Buyers Agents are more experienced in handling real estate transactions. This means that they have the expertise to negotiate contracts, understand option periods, assess the value of properties and neighborhoods that isn’t easily accessible to the public, and protect buyer interests making them an important partner when you’re buying a property. Usually, there isn’t a financial benefit to not using an agent to represent you in the buying process since they are compensated from the commission paid by the Seller.

Should I buy with the Listing Agent?

Agents that represent the Sellers are called Listing Agents. When a buyer contacts them to buy one of their listed properties, that Listing Agent then becomes an Intermediary. This means that they now represent the Seller and the Buyer. While contacting the Listing Agent seems convenient, that agent would be working for not only your best interest but the Seller’s as well. You may want to consider finding a Buyer’s Agent that will only represent you and your best interests to make sure you are getting the most out of your agent and property buying experience.

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