Buying a home without an agent

[JT94]

I'm confused about buying a home without an agent. The seller's agent says that he will act in "multiple representation" form. What do this mean for me (the buyer)? Will I be paying commission? The fact that he is (at least partially) representing me, sounds like I will indeed be paying commission on the offer price. What about the seller? Is there any incentive for the seller to sell at a reduced price? Will the seller be paying less commission?

[mork]

you don't pay anything above your offer, but the agent will take commission from it. Usually 2 agents split the commission, in cases where 1 agent is representing both sides he could potentially be doubling his income, so it is not unheard of to get him to accept a reduced commission and reduce the sale price by as much (i.e. he is kind of giving it to you, the buyer, to make the deal happen).

If he wants full commission then I would get your own agent. It will cost you nothing and you'll have someone working for YOU and YOUR interests. an agent on both sides of the deal is an obvious conflict of interest in my opinion and unless you are going to save money by using the listing agent, then there is no incentive to do so.

[Dustbunny]

I agree, get your own agent. Yes you might save a % or 2 (maybe, and only maybe) but you lose some of your negotiating power because you have an agent who is trying to please both seller and buyer and their main concern is really to get the sale (commission) as fast as possible. When you have your own agent you have someone who can work on just your behalf a little better and who is more likely to warn you of any issues/problems they may see and be willing to try some strategies to get you a lower price.

[JT94]

Thanks for the replies! Will the commission be documented on an offer contract?

When I brought up the topic of him representing me to sell my home, he seemed a little irritated. I told him that the standard rate is 2.5%, and he went on and on about there being no standard rate and that he's not involved in price fixing. That somewhat implied that he charges more than the standard. What's a reasonable maximum agents would charge?

[Chigu]

Did you find the house on your own, and this is the sellers agent who is asking you to sign with him??

If you found the home on your own tell the other agent you don't want him or any other agent representing you. He/She is just trying to get the extra 2% commission for doing absolutely nothing for you!!! Did he take you to go see the house? Do any legwork for you? NO!!!
The way it works is when an agent lists the home on MLS they usually state about a 2 - 2.5% commission for other agents. Therefore the seller's agent gets 2.5% and the buyers agent gets 2 - 2.5%, thus a total commission of about 5%. If you are buying a home without an agent, the seller doesn't have to pay the buyer's agent commission, so you can basically knock 2.5% off the purchase price of the home right away (in the homeowner's eyes, they are getting the exact same net amount). I wouldn't recommend an agent working for both sides UNLESS his commission is below 4% in total.

[sleepyguy]

When buying, you mind as well get an agent working for you unless you are buying from someone selling privately (FSBO). DO NOT buy privately and signon with the selling agent, they would get both commissions and who's interest would they be working in. ZERO negotiations and such.

Scenarios

Buyer + Seller FSBO = no agent a-ok, quite an easy process to be honest

Buyer + Seller with Selling Agent = get an agent (not the same agent) to work with you.

Don't get "forced into" buying properties (I have numberous stories of friends suckered). Take your time and make that agent work for his commission

[knapper]

The way it works is when an agent lists the home on MLS they usually state about a 2 - 2.5% commission for other agents. Therefore the seller's agent gets 2.5% and the buyers agent gets 2 - 2.5%, thus a total commission of about 5%. If you are buying a home without an agent, the seller doesn't have to pay the buyer's agent commission, so you can basically knock 2.5% off the purchase price of the home right away (in the homeowner's eyes, they are getting the exact same net amount). I wouldn't recommend an agent working for both sides UNLESS his commission is below 4% in total.

I don't believe that is the case, at least not when I sold. My contract only included the full commission rate (5%) and it was my agent's responsibility to share that with the buying agent. This buyer's commission is included on the mls listing, but is only accessible by agents (e.g. not shown to public or seller).

NOTE: My contract did have a provision that stated the commission was only 4% if my agent represented the buyer also.

[clax66]

Get your own agent. The agent's first priority is to the seller than the buyer. I have been on both ends of this and love it when i am the seller. After seeing what i saw as the seller with the agent double ending it i would NEVER use the agent as a buyer.

[monomono]

You don't need your own agent. You can sign a "customer service agreement" with the selling agent which means they provide you service but are not representing your interests (nor getting any commission). The selling agent will beg you to sign a full representation agreement so they can get their 2.5% but there is little in it for you. Instead you can confidently knock 2.5% off the price you are willing to pay. And as always, be ready to walk away from the deal.

There is an old thread somewhere where this was discussed in depth.