Most people, not in the real estate industry, do not realize that until recently the one person who controlled the residential real estate market was the buyer’s agent. Not the seller’s agent, and certainly not the buyer or seller. Until sites like Zillow, Trulia and Redfin came along and liberated the information previously restricted to the Multiple Listing Services (MLS), it was the buyer’s agents who determined which homes the buyers saw, and ultimately which homes sold.
Consequently, by steering buyers away from For Sale By Owner (FSBO) homes and other low commission homes, the buyer’s agent had the power to force these other home sellers to capitulate to the more lofty commissions enjoyed by the residential real estate industry, if they wanted buyers to see their homes. Now real estate agents pledge an oath of conduct, which includes doing what is in the best interest of their client, of which this behavior is certainly a violation. Nevertheless, most agents will admit, at least in private, that while it might be unethical to steer buyers away from low commission homes for sale, it is/was not an uncommon practice. And when a buyer’s agent steers a buyer away from a low commission home, what they are saying, in essence, is that their number one priority is maximizing their commission, and not finding the buyer their ideal home.
Of course it is far more difficult to do that today. According to a study by Google and the National Association of Realtors, 90% of home buyers search online to find their home. All this means is that it is now more difficult for the buyer’s agent to steer buyers away from low commission homes. Buyers do not care about the agent’s commission, they just want to buy their dream home. But it still happens. And if it happens to you, you need to fire your buyer’s agent immediately.
What can you do to make sure your buyer’s agent is working in your best interest? First, when you are interviewing them as your potential buyer’s agent, ask them if they will be showing you homes independent of the commission offered, which even includes For Sale By Owners (FSBO). If they hesitate at all, or try and explain why FSBOs and other low commission homes are a bad deal for you, find yourself another agent.
The second thing you can do is give them a test. Tell them what you are looking for in a home, then set up the same exact search with one of (or all of) the online services mentioned above, and make sure your search includes FSBOs. Then, when a FSBO comes up that meets your search criteria, see if the agent voluntarily offers to show it to you.
A final thing you can do, if you really want to get the buyer’s agent on your side, is to offer them an upfront fee, refundable to you upon your purchasing a home with them. If you purchase a home with that agent, the upfront fee costs you nothing because you get it back at closing. But it acts as a powerful incentive for the buyer’s agent. First, they know they are not working for free, but more importantly, you two now have a formal business relationship, cemented by cold hard cash. And the buyer’s agent will undoubtedly feel a stronger sense of allegiance to you, now that you are a paying customer.
To learn how ReaListing is changing the way homes are bought and sold, click here.