Most sellers use a real estate agent when they list their homes for sale – even though it costs them a commission. Most buyers do not use a real estate agent – even though the service is free to them as buyers. (Why free? Because the seller usually pays the commissions.)
The 2006 Profile of Buyers and Sellers from the National Association of Realtors shows that only 44 percent of all purchasers had a written buyer-brokerage agreement, while 84 percent of all sellers listed with a broker.
Seem odd? It is.
I have been a proponent of the idea that if the seller is represented, then the buyer should be represented too. After all, it seems only fair that both parties have equal representation when making such a large purchase. Why put yourself at a disadvantage?
Let me put it this way: If you were defending yourself in court, would you prefer to be represented by your own attorney, or by the same attorney that is prosecuting you? Easy, right? Why then do so many buyers choose to work with the seller’s own agent?
There may be a couple of reasons:
a.) Buyers are unaware that they can use real estate services at no cost to themselves;
b.) They think that since they can use the internet to find a property they like on their own, they do not need a real estate agent.
Let’s expand on these misconceptions: (a) To recap, the reason that buyer’s don’t pay for a real estate agent’s services is because those services will be paid for by the seller. Unfair? Probably. But when you come to resell that home, you will most likely pay back into the system. It’s a bizarre, broken system; it’s uniquely American, I don’t like it – but that’s the way it is. As a buyer, you have nothing to loose by using your own agent.
Now let’s look at (b): With the advent of websites such as CondoMetropolis.com that offer the ability to browse listings at no charge, some buyers feel that their job is done and the services of a real estate agent are no longer required. Wrong.
This is where, just like trying to sell your own home, there is the potential for a costly error of judgment. Finding a suitable property to purchase is only the first part of buying a new condo, just as finding a buyer is only one part of selling. Then comes the due diligence. And the paperwork. And the math. But let me back up a minute. Just because you’ve found a community online that looks pretty, has a gate, and those cathedral ceilings you wanted, have you really completed your search?
Imagine you’re looking at a condo community. Do you know if the condo in question:
- Will ever reach presale requirements for funding and break ground?
- If construction does start, is it likely to be completed on time using the materials specified in the contract?
- If a condo conversion, will it really convert, or is it about to return to leasing?
- Does the condo community have a reputation for mold or termite problems?
- In both cases, is the developer of good repute and have condo building experience?
- Have closings begun and are condos closing on time, if at all?
- Does the condo have a reputation of having serious construction issues?
- Are the HOA dues about to about to undergo significant price increase?
- Is the HOA about to suffer a Special Assessment?
- Is the current HOA currently embroiled in litigation?
There’s more to buying a condo than just finding one online. What your local agent has to give is the knowledge and experience to help you avoid costly errors. Of course, if you have the local knowledge and experience to answer those questions yourself and you’re comfortable with the paperwork, then you don’t need an agent. Otherwise, wouldn’t you be crazy to turn down those services when it won’t cost you a bean?
As Mr. Humphries used to say in that inimitable British sitcom Are You Being Served: