Do Condo Buyers Need An Agent?

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.)

Life without a real estate agentThe 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. John InmanWhat 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:

“I’m free!”

2 Comments

  1. Great Post Marcus; As some one who has worked ‘on site’ selling condos for developers for some time now. I would estimate at least 90% if not 95% of buyer’s who visit condominium sales offices do not come with a Realtor. This was always puzzling to me. Of course since I work for the developer I cannot tell my buyers “Hey, go get a Realtor”, but I am glad some one is saying it.
    Some common Misconceptions I have picked up along the way are:

    People may feel if they bring an agent they may be pressured to buy.
    This is absolutely false; in fact more often than not, bringing your own Realtor will alleviate some pressure. I have always preached and practiced no pressure sales techniques, but there are other developments that do not. Think of it this way. An onsite agent gets paid only if you buy at their community. Your Realtor gets paid whether you buy from us, our competitors, or a resale.

    Some people think that we will lower the price of a unit if we don’t have to pay an outside Realtor.
    This is a question I have been asked a number of times. The answer is always and absolutely “No” Outside agents are a large part of Developer’s business, and they would never risk that relationship by circumventing an agent. Also developers cannot drop prices for some and raise them back up for others. They need to keep prices as consistent as possible or they will run into problems with appraisers and lenders. Once that happens, it is game over. No credible developer will ever lower a price because you come without an agent. And as Marcus has thoroughly discussed in other Blogs, it is very important to buy from a credible developer.

    People think that they will bother an agent by asking them to show a few communities.
    Right now there are scores of talented Real Estate Pros doing everything they can to find a serious buyer. If you are a serious buyer, a Realtor will be happy to help you. And if you do work with an agent, find a good one. Top level professionals that may not have been available a few years back are now taking on new clients because of the slow market. With hundreds of central Florida projects, dozens of which are closing their doors, dozens of which are considered by main stream lenders as un-finance able, all with different floor plans, community features, construction types and buyer incentives; the Orlando condo biz is not a game for your brother in law who just got his license. You need to talk to someone who really knows our condo market.

    Keep up the Great work Marcus, and The Great Blog

    John Kurtz
    Sales Manager
    Classic Condos by Keller Williams

    http://www.regentpark.us

    http://www.solarismetrowest.com

Leave a Reply

Your email address will not be published. Required fields are marked *