Why Using A Listing Agent To Buy Might Not Be The Best Idea
If you’re thinking about buying a home, but want to work with the “listing agent,” or licensee as we are called here in Alaska, you might want to reconsider.
Zillow has taught me an important lesson through advertising with them – people think that using the listing agent might somehow benefit them.
I am about to dive into all the reasons why this will more than likely NOT work in your favor.
How The Listing Process Works & Commission
When I work with a seller, we have a contract in place for our relationship. It covers various elements such as: my relationship to Mr. or Ms. Seller, what my duties are, how long I get to market the home, what the list price is, and yes, the commission. The commission when a home is marketed in the MLS is ALREADY DECIDED before anyone ever sees it.
So if you think you’re going to work with the listing agent and reduce your purchase price by cutting out another agent, think again! The listing agent will receive the full commission as agreed in the original listing agreement. The only way to combat this is to write a purchase contract and write in that “The listing licensee to only receive the commission as designated in the ‘Exclusive Right to Sell’ for the listing licensee side.”
My main take away here is, you’re not saving yourself any commission monies by using the listing agent.
If you do decide to go this route and include a purchase contract with that specific verbiage, you better know your way around a contract, because you are only getting specific assistance!
Real Estate Licensee (Agent) Relationships
As standard for all MLS Purchase and Sales Agreements (purchase contracts), there are really only three designations for a licensee’s relationship and duties to the respective buying and/or selling parties (talking specifically about the listing agent here):
· Licensee to represent Selling party only
· Licensee to ASSIST both parties as a neutral licensee
· Licensee to ASSIST Selling party without representation
Here’s the catch, if things were to come up in the court of law (and as good real estate professionals, we prepare for the worst by doing our best), as a listing licensee who was working for the Seller first, we are representing the Seller only, while giving the buyer specific assistance.
This means when you work with the listing licensee, you are waiving your right of representation. This literally means, that licensee’s duties to serve their client with the best of their abilities only lay in that of the Seller’s. You are literally waiving your right for representation. Not the best idea as it pertains to perhaps the LARGEST financial decision and investment of your life.
Here’s another common reason prospective home buyers want to use the listing agent – “They know more about the house.”
While this certainly could be true if they’ve used that agent to buy the house, in most cases, it just isn’t true.
I can tell you that I’ve sold homes for clients before that I’ve never stepped a foot into. Three things sell a house: price, condition and marketing. None of which does a licensee technically have to be present to ensure. As a listing licensee for my seller, I can long-gun the whole transaction with a team of people. That doesn’t mean I won’t do a tremendous job representing them and their interests, but it does mean that I might not know a whole lot about that house.
I’ve had numerous phone calls to other agents asking if they know the configuration of the bedrooms (are the upstairs or downstairs), and they have no idea. No biggie in my opinion, I can go preview the house, but it does show what I’m talking about. Just because you listed the home or investment property, doesn’t mean you know a whole lot about it.
A lot of times when we get a listing, we do an initial walk through, valuation based on current condition or work to be done, and then we hire out signs, photos and fliers. We even hire out open houses.
Again, this doesn’t mean we don’t do a devastatingly great job, but it means our knowledge of the house isn’t by any means “inside information.”