This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.
Q. Can I save money on the purchase price in lieu of paying a commission to a buyer’s agent when purchasing a home?
A. I’m glad you asked, because there are a lot of misconceptions about how this works. Potential homebuyers often think that they can show up to any property without agent representation and they will be automatically granted a discount equal to whatever commission is being advertised to buyers’ agents. That is not the case.
The listing agreement negotiated between the listing broker and seller will allocate a certain commission rate for the listing. A portion of the commission is designated for the buyer’s agent. If a buyer’s agent does not exist, then the total commission defaults to the listing agent. Of course there are exceptions where the seller and listing broker add language to the listing agreement to specify a different protocol if a buyer is unrepresented, but in this case the discount may default to the seller rather than the buyer.
Even if you submit a written offer that includes a provision to lower the commission to the listing broker, your offer does not have the power to modify the listing agreement or commission structure that is already in place. In a situation where a property is having trouble selling, you may find that the listing broker and seller are willing to consider a reasonable proposal, especially if you are able to demonstrate the ability competently represent yourself. If it is a well priced property that is likely to sell quickly, you will probably have a hard time convincing them to make a special exception for you.
When buying new construction, the price is often non-negotiable whether you have a buyer’s agent or not, so it makes sense to have an expert representing your interests. In cases where the price is negotiable, I’ve always found that I’m able negotiate a better deal for my clients than unrepresented buyers.
You can target for-sale-by-owners. They are tough to find and your pool of options is going to be limited in Arlington, but they do exist. The major question is going to be whether they are willing to provide you a discount or not. They are often trying to save money themselves so you will have to evaluate the situation to decide whether you are actually getting a deal or not.
Though I am happy to answer your question as best I can, I am in no way an advocate of attempting to purchase a home without expert guidance. I feel that the risk far outweighs the potential reward. You may want to check out a past article I wrote about Avoiding Homebuyer Pitfalls.
The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.
