BUYERS RISK!

​Buying a home is most likely one of the most important transactions you will ever make.  Buying a home without a Buyer’s Agent can be financial suicide if you are not careful.

The Risk of Buying a Home Without a Buyer’s Agent
By Pierre Mouchette | Real Property Experts LLC

Are you thinking of buying a home?  Are you questioning if you need the services of a real estate agent in this endeavor?  Trying to buy a home without a real estate agent can carry risks and lead to issues that you may not be aware of.  Did you know that there are real estate agents who only focus on what is best for their ‘clients?’  Yes, the benefits of having a Buyer’s Agent are immeasurable.
Buying a home is most likely one of the most important transactions you will ever make.  Buying a home without a Buyer’s Agent can be financial suicide if you are not careful!
 
The Buyer’s Agent
A buyer’s agent represents your best interests.  The agent owes you, the buyer, undivided loyalty, confidentiality, reasonable care, obedience to lawful instruction, and accountability.  When you purchase a home without a buyer’s agent, you lose all these things. 
 
Buying A “For Sale By Owner” Home Without An Agent
When buying an FSBO without an agent, it’s just you and the seller.  Two people making a deal without real estate ‘professionals.’  What could be simpler?  You think the homeowners are selling on their own to save money, which means that you will also save on the purchase price.  Well, the simplicity of this arrangement is more of an illusion than a reality. 
Potential problems of buying a home without an Agent include:

• No knowledge of the neighborhood – an advantage of using an agent is that they are an expert on the communities in the area you are buying.  The agent is knowledgeable about property values, property taxes, school districts, HOA rules, commutes, etc.
• Overpaying for the home - the price of the FSBO home is set by the owner, who may or may not know what the actual value of the house is.  Homeowners are notorious for overestimating the value of their homes due to emotional attachment.  The owner could set any price, and you will not have any way to verify the validity of that price on your own.  Yes, overpaying is a significant risk of buying a home without a real estate agent.
• Disclosure issues - some states do not require sellers to disclose problems with their homes.  In these states, it is known as Caveat Emptor, or “buyer beware.”  Real Estate Agents are held to much higher standards.  If an agent knows about problems with a home, it must be disclosed!  There are very few instances where a real estate agent can avoid disclosing a condition that would make a buyer think twice about purchasing a home.
• Laws, regulations, and paperwork - real estate law is complex and varies from state to state, county to county, and city to city.  You must obey the letter of the law to avoid potential legal troubles, how to read a contract before you sign it, and how to complete all necessary paperwork correctly, accurately, and submit it by deadlines.  Legal mistakes and missteps can lead to serious, long-term, and expensive headaches.  Having an Agent starts you in the right direction and finishing with an attorney solidifies it.  They are working for you!   
• Inspection problems - a home inspection report can be hard to decipher for the average person since the inspector will list every potential issue and items that are of concern.  Some items may be things to worry about, while others may look like a big deal but are not.  Understanding what inspection requests are reasonable or unreasonable is a service that a buyer’s agent provides.  An Agent sees these reports all the time, and they know how to pick out what to base negotiations on.  Additionally, without an agent, you may not be aware of the different types of inspections that are advisable or how to pick out the right home inspector.
• Appraisal Problems - when you overpay for a property, you can run into appraisal problems.  The bank will not lend on a property that does not have the appraised value for the loan. 

 
Buying From A Seller’s Agent or “Dual Agent.”
Equally as bad as not using a Buyer’s Agent when purchasing a For Sale By Owner is going directly to a Seller’s Agent to buy a home.  Many buyers think they will get some ‘special deal’ or ‘discount’ by going directly to the seller’s agent.

Instead, buyers are dealing directly with someone whose obligation is to the seller.  Having a Dual Agent is no better either because they work for both parties and do not exclusively represent either.  Some potential problems include:

• Dealing with a salesperson - when you have your agent, you are insulated from the persuasiveness of the other agent.  Your Buyer’s Agent knows what you want and need, and they know how to avoid being taken in by salesmanship.
  • Paying too much - unless you are working in the real estate industry in the area you are buying, and it is unlikely that you can determine the value of the homes you are looking at.  With a Buyer’s Agent, you have a pro who can tell you when something costs too much.
• Negotiating – are you a negotiator?  Most people are only ‘good’ at things that they do regularly.  Buyer Agents negotiate for every client they work with, month after month, year after year.  They know factors that influence home values and every pressure point that is likely to deliver a response.

 
Final Thoughts
You DO NOT pay for a Buyer’s Agent to represent you in most circumstances.  The Seller almost always pays for real estate commissions.  Yes, you may run into a “For Sale By Owner” that will not pay a Buyer’s Agent fee!  But, in this instance, you would compensate a Buyer’s Agent when you make your offer considering this.
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The best Buyer’s Agents do a lot for their clients.  Without a Buyer’s Agent, your odds for problems increase incrementally.  Keeping in mind that there are good and bad buyer’s agents, you would be wise to perform a thorough interview of the Buyer’s Agent you are considering hiring.