It is a natural misunderstanding for buyers and sellers to think that if they don't have an agent representing them then they will "save" on the commission. Recently, I have a client that spoke with a builder that told them that they have a special program for people who need to sell their home who don't have an agent and the builder will sell their home for them. They offered to give the buyer the 3% commission that they would've made on selling their home and will give them 1% towards closing costs or upgrades on the buying side "if they don't have an agent". When looking at the numbers, the builder undervalued the home that needed to be sold by a minimum of the same amount of the 3% to the listing agent on the sale of their home and the 1% on the purchase could've been negotiated by a minimum of 3% by a buyer's agent in addition to the buyer's agent getting paid 3% commission. So did this really save my client by not having me represent him? No, it would've cost him a minimum of 3% on the buying side and 3-10% on the listing side because I will sell their home for a lot more! Who does this kind of a deal benefit? The builder of course! The "model sitter" is representing the builder and their job is to get the builder as much as possible. They also get the full 6% commission if you don't have an agent representing you, in addition you don't have an agent to negotiate on your behalf so they make it sound like you are getting a "deal" by offering you 1% towards your closing costs because they know that I, as your agent, would negotiate 3% towards your closing costs in your purchase and the 3% they are offering you is the amount that they are making by you not having an agent and you are still paying full price for their home. When you are dealing in percentages, it is very important to have an agent show you the bottom line of what you are paying or netting when selling your home. 3% of $339,000 is not a lot different than 3% of $375,000 but the difference to you between $339,000 and $375,000 is HUGE!!! If I can sell your home for almost 10% more isn't it worth the 3% that they are "saving" you?
This also goes for buyers who are buying a resale home. A lot of people try to negotiate with me on one of my listings if they don't have a buyer to save the 3%. If my seller was willing to take 3% less or already had in mind that they were going to pay 3% towards the buyers closing costs, then is that buyer saving anything by not having an agent to represent them? No, I still get the full 6, 7 or 8% commission that I negotiated with my seller upon listing the home (after all, the commission is not negotiated between the buyer and listing agent, but rather the seller and the listing agent), the seller is still netting at or above their expected bottom line and the buyer thinks they are getting a deal by getting the home for 3% less than the asking price. On the flip side, when I negotiate on my buyers behalf and get paid a 3% commission (or whatever is being offered by the seller) I can still negotiate for my clients to save a minimum of 3%-10% depending on what I know is a fair price for the home and knowing the facts about the market. On the listing side, I am netting my sellers 105% of the list price vs. the average agent 95% or less. Why is this? Because of my marketing, experience and skills.
Before you EVER make a "deal" with a builder or agent, find out about the bottom line and have them show you a breakdown and see what the true savings is for you OR just talk to me and I will show you exactly what the benefit is to you to have me represent you.
