Representing Yourself when Buying a Home
If you simply walk into an open house and work with the agent who is handling the listing -- the seller's agent -- the transaction may go smoothly, but you are dealing with a "conventional agent," and conventional agents always work for the seller.
Smart Investor TipA real estate agent may work with you as a buyer, and you may think they are on your side, but they have a legal obligation to always represent the seller unless they sign a contract to work with you as a "buyer's agent."
Say, for example, you found an agent who showed you available listings in town. You find a home on which you bid, say, $175,000, but tell the agent you would be willing to go as high as $200,000. Because the agent works for the seller, he has a responsibility to look out for the seller's best interest -- even if he has met you and doesn't know the seller at all -- which means that your willingness to go higher also must be communicated, along with your bid.
Chances are, the sellers are not going to settle for the $175,000 once they know you'd pay $200,000.
The fact that an agent works for the seller should not discourage you. For years, conventional agents were the only game in town, and it didn't stop people from buying homes at a fair market price. Indeed, most conventional agents do everything in their power to represent buyers well; it is in their best interest for you to be happy, to find a home you love, to refer other people to them and, perhaps, to someday sell your home through them.
What you should remember if you choose to work with a conventional agent is that he cannot tell you which home to buy (if you are looking at more than one home in the area, he represents both sellers and is not allowed to favor one), how much to offer (his job is to get the seller the listing price) and -- with the exception of hidden defects that, because they are invisible, must be pointed out -- cannot tell you what is wrong with the property (he is not allowed to influence you not to buy). In addition, a conventional agent is not required to provide you with a comparative market analysis -- although many do -- unless you ask for it.
The conflict of a buyer's contact point actually working for the seller is as old as the business itself; if the potential biases worry you, consider a buyer broker.
By Chuck Jaffe