Two Thoughts for Buyers Going Directly to a Listing Agent

There is a thought floating around that says-

Buyers should skip using a Buyer’s real estate agent and go directly to the Listing Agent (Seller’s Agent) if they want to buy a specific house.

The logic behind the thought is that the buyer will get a better price because the seller will discount the house an additional 3% because they don’t have to pay two agents and instead only have to pay one (the Listing Agent).

Here are two things to think about when employing this particular tactic-

1) Legally, the Listing Agent controls both commissions. Here’s why-

THE LANGUAGE IN A LISTING AGREEMENT (NORTHWEST MULTIPLE LISTING SERVICE)

***If Broker procures a buyer on the terms in this Agreement, or on other terms acceptable to the Seller; or Seller directly or indirectly or through any person or entity other than Broker, during the term hereof, sells the Property; Seller will pay Broker a commission of “(typically) 6%” of the sales price. From Broker’s commission, Broker will offer a cooperating member of the MLS representing a buyer a commission of “(typically) 3%” of the sales price.***

The Listing Agent has legal right to take the entire 6%. They have only agreed to pay A COOPERATING MEMBER OF THE MLS the 3% buyer’s commission if that cooperating agent brings a buyer. If there is no Buyer’s Agent than they can keep that 3% on top of their 3% fee for Listing the property. The agent may choose to write the deal up for the unrepresented buyer for 2%. Personally, I would not write it up for 1% as there is too much legal liability in these types of deals and 1% makes it not worth the risk. The agent does not have to write up the deal for 0%, 1%, or 2% by law and can exercise their legal right to the full commission. They are legally entitled to the full 3% in a court of law.

The Seller can ask the agent to discount part or all of that 3%- but the Listing Agent has legal right to the whole thing.

2) Buyer has no Representation.
If you were getting a divorce- would you go to your soon-to-be-ex-spouse’s attorney for advice? The Listing Agent represents the Seller. There is an agency agreement in place. The Listing Agent is required by law to represent the best interest of the Seller and not the Buyer. They have an obligation to expose everything about the buyer possible.

Anything you say CAN and WILL be used against you in a negotiation (Lloyd A Ball)

If you choose not to get representation than you are choosing to basically “go to court” without an attorney and represent yourself. You may do ok - but just know that the other side has representation and you do not.

Dual agency is difficult to do- whether an Agent is being compensated or not- as there is an inherent conflict of interest. When a buyer comes to one of my listings I find it difficult to represent their best interests and my Seller’s best interests so typically I end up representing the Seller only.

Two things you should be aware of before approaching a Listing Agent directly.