Should You Buy A House Directly From The Listing Agent?

Sometimes home buyers think they can get a better deal or get a leg up on the competition by dealing directly with the listing agent of the house.  What ends up happening though is the buyer instead ends up overpaying and/or ends up getting a poor deal since they did not have anyone representing their best interests.  The listing agent represents the seller and while it is possible for the listing agent to represent both parties in a transaction by doing so they have to be more neutral in a deal which results in no one really being represented at all.  This article explores further why it is not a good idea for home buyers to go directly to the listing agent when trying to buy a home.

Representation

In the typical home buying transaction a seller will have their own agent and the buyer will have one as well.  Each side being represented by their own agent then have their own best interests brought to the negotiating table.  If a buyer’s agent happens to learn the seller is divorcing and needs to sell their home fast then that is something important that the buyer’s agent should share with the buyer.  On the other hand if one agent is representing both the seller and the buyer they must take a more hands off approach and if that agent knew the seller was getting a divorce and that would factor into negotiations they would not be able to tell the buyer that.  

Maybe the buyer believes they can represent themselves on their own without the need of an agent and use that as the reason for talking directly to the listing agent.  In that case so long as it has been disclosed to both the buyer and the seller the listing agent will only represent the seller.  The buyer is at a disadvantage in that case since most real estate agents have expertise in the field of buying and selling homes.  Generally most buyers may only buy a couple of homes over their lifetime.  Real estate agents on the other hand can be actively working on helping sell and buy a couple homes in a month.  The knowledge and expertise of an active agent will far outweigh the buyer’s knowledge who may have not bought a home in the recent time frame.  The end result is the buyer puts themselves at a disadvantage when they have to negotiate with the professional agent who represents the seller.

Are There Any Discounts Available When Going Direct?

Buyers sometime may think that by going directly to the listing agent they can get a discount on the price of a home since they don’t have their own agent who would get paid upon closing.  In fact the opposite may happen and the buyer may end up spending more than a home is actually worth since they don’t have their own agent who can do a pricing analysis for them.  Just because a home is listed at a certain price does not mean that is the actual value of the home.  A home’s value is based on what a reasonable buyer will pay for it and based on what other homes in the neighborhood are selling for.  A buyer’s agent will not only help a buyer by preparing a comparable market analysis but also by providing negotiating tips that could help the buyer come out of top when other offers are involved.

Just because the buyer does not have an agent who will get paid on closing does not mean the buyer will save any money as a result.  Generally when the listing agreement is drawn up the amount of commission the seller is willing to pay is set within the listing contract and that amount is usually always fixed.  That means if a buyer comes along and makes an offer without an agent the listing agent will be getting the entire listing commission and will not be passing on any savings to the buyer.  The listing agent has no incentive to tell an unrepresented buyer whether to offer a lower amount and is not supposed to be saying that since they represent the seller.  The end result is the buyer puts themselves at a disadvantage during the entire transaction.

Buyers Lose Negotiating Advantages When Going Direct

As noted above one of the best benefits of a buyer having their own agent is that the buyer’s agent will have negotiating tips and tricks for their buyer.  Not only that the buyer’s agent may even have inside knowledge that a normal buyer would not have.  In the case where the buyer’s agent has represented other buyers and have been through the same home’s multiple times they know what the issues are in particular homes.  The buyer’s agent may have discovered something through their interactions with the listing agent who might not normally release that type of information to the buyer directly.   Buyer’s agent who have been in the business for some time also may have worked with the same listing agent in the past and know how they operate which could be helpful for the buyer.

One of the big services real estate agents provide to both buyers and sellers is to act as the go between.  When making such a large purchase emotions can run high and feelings can get in the way of what could be a straightforward deal.  Real estate agents act as the filter to remove the emotions from the equation to just make sure it is all about the process to get a home bought or sold.  Effective real estate agents keep their clients informed and engaged but also insulate them from the minor hiccups that need to be addressed.

Self Navigating The Process Is Required

A buyer representing themselves while working with the listing agent is responsible for meeting all their timelines.  Some listing agents may have someone (or they themselves will) who will give a list of timelines whereas on the other hand agents leave that responsibility for the buyer.  Miss getting the inspection before the deadline means the buyer will not be able to negotiate any repairs nor ask for any price reductions based on the condition of the home.  Basically in that situation the buyer will be taking the home as is.  

If there are inspection issues to negotiate the buyer then again is relying on themselves to do the negotiations.  While any repairs can be asked for, asking for too much or asking for the wrong thing can result in the sellers saying no to any concessions.  The seller’s agent will be guiding the seller in what is ok to agree on for repairs and knowing that they are negotiating with the buyer directly they may be more apt to push back on repair requests.

Bottom Line

Home buyers going directly to the listing agent in hopes of saving money when making an offer are more likely to end up spending more money than if they had their own real estate agent.  Real estate listing contracts specify up front the amount the real estate agents will get paid regardless of how many agents are involved.  Home buyers put themselves in a negotiating disadvantage as well since they may not be familiar with the day to day process of buying a home as an experienced agent would be.

Additional Resources

• Should You Hire A Buyer's Agent? - This article looks at the benefits of having a buyer agent to represent on during the purchase of a home.
• How Not To Make An Offer When Buying A Home - This article looks at some of the not so great ways of making an offer on a home and how it can hurt a buyer in the long run.
• Common Home Buyer Mistakes - Review some of the common home buyer mistakes so that you can avoid making them during your purchase.
• Should You Buy Without A Realtor? - Learn about when it may make sense to buy a home with and without a Realtor.

About the author: The above article “Should You Buy A House Directly From The Listing Agent?” was provided by Luxury Real Estate Specialist Paul Sian. Paul can be reached at paul@CinciNKYRealEstate.com or by phone at 513-560-8002. If you’re thinking of selling or buying your investment or commercial business property I would love to share my marketing knowledge and expertise to help you.  Contact me today!

I work in the following Greater Cincinnati, OH and Northern KY areas: Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde Park, Indian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.