During the course of my work I’m sometimes asked why a buyer needs a real estate agent, when they can find a home by themselves on the internet and have a lawyer prepare all the contracts. Why do house buyers need a real estate agent?
My question to buyers is, why would you decline a service that will ensure your interests are protected AND will cost you nothing? (In practically all transactions, the selling agent’s brokerage pays the buying agent’s commission.)
I’d like to give you an example of a recent house purchase in The Annex, Toronto, where the buyer would have saved almost $71,000 had he hired a real estate agent.
The house had been sitting on the market for 25 days, with an offer date come and gone. The asking price was $1,289,000 for a beautiful, move-in ready, four bedroom, four bathroom home, “with parking”.
One non-represented, well-to-do buyer thought this would be his opportunity to get a “good deal”. He believed that if he approached the listing agent directly, he’d be able to convince the seller to lower his price (by not having to pay a “buyer realtor’s” commission of 2.5%). The end result? This “good deal” was a very good deal …for the seller!
Here’s why:
In the current Toronto Real Estate market, information is king. Doing your research, knowing which questions to ask and ‘where’ to look is key.
Issue #1:
Parking! Or it’s potential lack thereof. After some digging it became apparent that the existence of a “subservient right-of-way” would negate the current parking arrangement. There were clues, which led to questions, which led to a conversation with the “dominant right-of-way” land owner.
The Result: There was no parking!
Issue #2:
Recently sold, comparable properties- vital information! There was a house sold recently which could be relied upon as a comparable for this house…and it was perfect. It was a mirror image of the listing, except it HAD parking. More than that, it was the semi-detached attached to the listed house! On top of that, it had sold just 3 weeks prior…for $1,258,888.
The Result: A non-represented buyer essentially making a blind offer.
The “non-represented deal seeker” did not have access to vital information, and ended up paying $1,280,000 for this house.
An experienced real estate agent would not have let this happen. A good real estate agent would have done the research and known the value of the property. This information would have provided leverage to negotiate a much better deal, saving the buyer almost $72,000.
Buyers need someone experienced and knowledgeable working to protect their interests.
Buyers need an advisor throughout the buying process, someone who has a fiduciary responsibility to advocate on their behalf. Most importantly, buyers need a representative that can obtain all the relevant information to ensure they don’t regret the biggest investment of their lives.