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Myth: I’ll get the best deal on a Fredericksburg home if I call the agent listed on the For Sale sign
By Jeff Edmisten | March 31, 2008
Myth: I’ll get the best deal on a Fredericksburg home if I call the agent listed on the For Sale sign.
This is a myth that I have heard prospective buyers communicate many times over the years. It is also a myth that is completely unfounded. In fact, the truth is that in many cases, the buyer will actually pay more for a home if they call the agent listed on the sign. Let me illustrate this point.
I now have a buyer client who recently decided she wanted to purchase a home in the Fredericksburg real estate market. She saw a home she liked and called the agent listed on the sign. An appointment was scheduled, and the buyer decided she liked the property. The home had a list price of $119,000. The buyer admittedly knew nothing about the true value of the home, and was prepared to pay the full list price.
She went home, made some calls to a lender, and discussed the home with family and friends. Someone suggested to her that she should have the representation of her own Realtor. This person was wise enough to know that the agent listed on the sign was legally responsible to represent the seller - not the buyer.
So, the buyer called me. We discussed the situation, and she noted that she had not signed any documents with the listing agent, and that she did not want to be in a situation without her own separate representation.
I then contacted the listing agent, and notified her that this buyer did not want to enter this transaction in a dual agency situation. I asked the agent if I could show the property to the buyer, and informed her that she was now represented by my team. The agent understood and agreed to allow me to show this buyer the property.
Once I conducted the research and viewed the property, it was readily apparent the market value of this home did not exceed $100,000 - on it’s best day. But, the day before, the buyer was convinced she need to pay almost $20,000 more for the home - and was prepared to do so. Calling the agent listed on the sign nearly cost her a minimum of $20,000 more.
Calling the listing agent on the sign is a terrible investment strategy. This buyer would have paid at least 17% more than the home was worth. In the Fredericksburg real estate market, that is just beginning to even hint at recovery, that 17% would take a long time to recoup.
There are four terms that a buyer looking for homes in Fredericksburg and the surrounding counties should understand:
- Seller representation - by default, when an agent lists a property they assume a legal and fiduciary responsibility to the seller, and the seller alone. One of the primary reasons sellers choose the agent they do, is because they believe the agent will work to get the highest price possible for their home.
- Buyer representation - an agent who represents the buyer, and the buyer alone. There is a legal and fiduciary responsibility to the buyer only. The agent should perform diligence in understanding the buyer’s situation, and work to find the best home, negotiate the best price, terms and conditions.
- Dual agency representation - this is a situation where the listing agent also represents the buyer of the property. There are many schools of thought on this issue. My personal opinion is that it can almost never be done, without the best interests of one party being at least somewhat compromised.
- Designated representation - The listing agent and the buyer’s agent both work for the same brokerage, but each have legal and fiduciary responsibilities to their own respective clients. I perceive no issues with designated representation.
I have never participated in a dual agency transaction, where I alone represented the seller and the buyer. Primarily because I have never wanted any of my clients to question my dedication to them and representing their best interests.
When I represent a seller, I am working to GET every single penny for that home that I possibly can. When I represent a buyer, I am working to KEEP every single penny in my buyer’s pocket that I possibly can. The two positions, in my mind, simply cannot be married.
So, if you are selling a home in Fredericksburg, or surrounding area, choose a listing agent who will only represent you. If you are buying a home in Fredericksburg, or surrounding area, choose a buyer’s agent who will represent only you.
Note: After writing this, I found an article written by Ardell DellaLoggia on Rain City Guide, that addresses a bit of a similar situation.
Topics: Fredericksburg Real Estate |