Why Not To Buy Through The Listing Agent
Most real estate transactions involve two different agents. The Listing Agent markets the house and represents the Seller. The Buyer Agent represents the Buyer. The Seller pays the real estate commissions to both agents.
If you were being sued by someone, would you use the same attorney as the person suing you? Of course not. So why would you use the seller’s agent when you are buying a property? It’s like asking your mother-in-law to take your side in a dispute with your spouse – usually not a good move!
Why work with a Buyer Agent instead of the Listing Agent selling the home?
Some buyers diligently search realtor.ca for properties they like and make appointments for the properties they want to see directly with the Listing Agents. When it’s time to make an offer, they work with the Listing Agent, who represents both the Buyer and the Seller.
First of all, the list price is not necessarily the sale price – or fair market value, for that matter. Who sets the list price? The Listing Agent. Inherently, a buyer’s and seller’s interests differ in that the Seller wants to get as much as possible for their property, while the Buyer wants to pay the least amount possible. A Seller’s Agent can’t effectively represent both Buyer and Seller in negotiations on price.
Secondly, the Listing Agent’s goal isn’t to get you the RIGHT house, it’s to get you to buy THIS house. A Buyer’s Agent works to help you find the right home, in the neighbourhood you want, at a price you can afford.
There is a common misconception that you can buy a house for less if you work with the Listing Agent. This is under the assumption that the Listing Agent has agreed to lower the total commission to be paid by the Seller if the Listing Agent represents both Buyer and Seller. While the Seller may save some money if the Listing Agent brings a Buyer themselves, that’s cash in the Seller’s pocket, not the Buyer’s.
Not only does the Seller not want to hand over their savings to the Buyer in the form of a lower sale price, but both the Seller and his or her agent want the reported final sale price to reflect fair market value in comparison to recent neighbourhood sales. Anything less than that makes it appear that the Seller’s Agent is incompetent or that the Seller was desperate.
Besides being fierce advocates for their buyer clients, what else do Buyer Agents do?
- Provide sales data from MLS
- Carry out an examination of the prices at which similar properties in the same area recently sold.
- Suggest pricing strategy.
- Pull property profiles reflecting sales history, property data, demographics and neighborhood services.
- Calculate annual facts and trends about an area.
- Navigate the home buying process and paperwork from start to finish, ensuring everything flows smoothly without any surprises.
- Plan for closing costs and other related expenses.
- Find out if you are eligible for government home-ownership incentive programs.
- Negotiate purchase price and contract terms, such as date of possession, required repairs, included equipment.
- Direct you through complex contracts.
- Refer qualified industry professionals, such as real estate lawyers, mortgage specialists, and home inspectors.
- Offer VIP, first in line access to up and coming new builds.
- Analyze cost versus return on potential investment properties.
In January 2017, the Real Estate Council of Ontario (RECO) provided the provincial government with preliminary recommendations to enhance consumer protection in the rules about multiple representation (one agent representing both parties in the same transaction). Yes, that means RECO supports stricter rules for multiple representation to better protect Ontario’s consumers. As do I!
Before new rules are put in place, there is much work ahead to consult with the public and draft detailed regulations. As such, the government does not expect these changes to be in place before 2019.
In the meantime, protect yourself and hire a Buyer Agent when buying a property.