I will get better deal if I go directly to the listing agent when buying a house in Arizona
I often hear from prospective buyer said: “We’ll get a better deal on a house if we go directly with the listing agent.” The thought is if they go directly to the listing agent, listing agent will give up part of their commission to make the deal work. So will going directly to the listing agent really a good idea? Can it save you money? The answer to the question is… it is complicated, it all comes down to risk and it depends…
Understanding agency
There are some many parties involve in a real estate transaction. The listing agent who market the home is working for the seller. The listing agent has fiduciary duties and contractually obligated to get the sellers the most money for their home. The listing agent actually works against a buyer’s best interests. That’s why there is Buyer Agent who only represent home buyer.
Read What you need to know about agency relationship when working with Real Estate Agent
Conflict of interest
Listing agent has legal relationship with the seller. The listing agent is responsible for communicating anything and everything they learn about buyer to the seller. This means if they find out what buyer’s bottom-line number is, or level of motivation for buying, they are obligated to disclose it, giving the sellers an advantage in negotiations. The listing agent works for the home seller. In this situation, you basically un-represented and you are on your own.
I heard they’ll give up a portion of their commission
Buyer thinks the listing agent will forgo the buyer’s side of commission if buyer work directly with them. This is not true. When listing agent work with the home seller, both listing agent and seller already agreed on the commission, whether they work directly with the buyer or not. So buyer won’t save anything but the agent will be very happy to make the deal work because their compensation doubles.
What about Dual Agency
Arizona allow dual agency in real estate transaction. Dual agency occurs when an agent to represent BOTH sides of a transaction as a fiduciary. In other words, they are trying to wear two hats, that of the listing agent and the buyer’s agent. Since now the agent has fiduciary to both seller and buyer, the agent will become neutral part who only can give very limited advice and information to either side. This dual agency situation makes the agent more of a facilitator than someone actually representing you and fight for your best interest.
What about New Construction
New construction is a unique situation. Most home builder have a staff of agents that work for them. Buyers need to be aware that the agent at the site building has a fiduciary obligation to represent the builder. They do not represent you.
Do not just stop by the sales office
I can’t tell you how important this is. Once you have visited a new construction site and have signed in with the agents that are onsite, you generally had given up your right to have a free buyer’s agent at the seller’s expense. Once you signed in with their agents, they feel that they have “procured” you as a buyer and are not willing to pay a buyer’s agent. Most buyers think that just a quick look is no harm. But in the case of new construction, is not the case. You can still have your own representation, but you have to pay for your agent’s commission, if the builder does not want to pay. It is potentially a very expensive mistake. This is the case with almost all new construction sites. So beware. I understand that the temptation to take a quick look around can be overwhelming, but please wait for your agent to make an appointment and go with you!
Bottom Line
If you were being sued by someone, would you use the same attorney as the person suing you? Of course not, so, why you want to go directly to the listing agent when making the largest purchase in your life? Get an buyer agent to represent your best interests. The seller already agreed to pay the commission prior their home is on the market for sale. The money you want to save is already contractually obligated to get paid to someone.
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