Thinking of buying home from listing agent?
Recently, I was doing an open house for one of my listings, I met with a novice first time buyer. This gentleman asked me if this open house was my own listing. I answered yes and he carried on with his viewing. After he was done seeing this home, I asked him if he liked it and if he wanted more information. He replied that his budget was somewhat lower and asked me to send him some listings in the area that were listed by myself (listing broker).
This surprised me and I was curious to find out the reason why he wanted to buy only my listings. He replied that he thinks that buying a home from a listing agent will save him money. Moreover, since there will only one salesperson representing both the buyer and seller, there could be savings for the seller in terms of commission and the seller will pass some that savings to him (the buyer).
Being in the business for many years now, I understood what was going through the buyer’s mind and politely asked him the following:
“In today’s market, fair market priced homes sell for approx. two percent less than their asking price and in the case of multiple offers, they could sell for much more. If this home was in his price range, and my seller agreed to sell three or four percent below the asking price, would he have bought my listing?”.
He said “Yes, definitely. I would have.”
I then asked him: “What if I tell you that this property is overpriced by more than four per cent over the fair market value?”
He did not see this coming. He was shocked to see how easily he could have fallen into the listing agent’s trap, and have ended up buying a property from the seller’s agent (whose primary allegiance is with the seller.)
This buyer was smart and quickly understood the myth behind buying a property from the listing salesperson and saw benefit in working with a buyer agent. He asked me if I would accept being his buyer agent.
Buying home from listing agent can be risky
A buyer agency establishes a relationship where both my brokerage and myself work for the buyer’s best interest. As a buyer’s salesperson, I will offer him reasons why or why not to buy a particular property. Our real estate industry works for the consumers and have different possible forms of agency relationship: buyer representation, seller representation and customer service.
When working with a REALTOR®, it is important to understand who the REALTOR® works for. To whom is the REALTOR® legally obligated? Working with someone who works in your best interest is the right way to go about when buying or selling real estate in Canada.