Is a buyer’s agent necessary? People that have sold their home are upset that the commission of the buyer’s agent is paid from the sale of the home. Let’s look at this and where it is likely to head.
Currently the way that it works here in Canada is that both commissions for the listing agent and the buyer’s agent are paid from the sale price of the property by the seller. Some sellers are saying that this is unfair and that only the listing agent’s commission should be from the seller while the buyer pays the buyer’s agent’s commission.
In my opinion this is short sighted and maybe even a little greedy. Let me explain…
Currently buyers are already having a hard time saving up enough for a down payment. So much so that the Government has put in many different ways to help first time home buyers save up for that first home. Having to save up enough money to pay for the buyer’s agent is going to make it that much worse.
The easiest thing to do is to tie the buyer’s agent’s commission into their mortgage. You can make it spread out over the life of the mortgage and that would make it so much easier for them. I understand that sellers do not want to pay for the buyer’s agent’s commission so just increase the list price you are offering to cover it. That way the buyer is paying that extra cost. Oh wait, this sounds familiar already…
That is what is happening right now! By forcing the buyer to pay for their agent’s commission you are just transferring the cost ON PAPER to the buyer who is already having a hard time affording it.
Making it harder for a buyer to afford a home is going to force the price down – theoretically. Realistically what it will do is cause a larger divide between those that have and those that have not. If they cannot afford it now, this increase makes it even harder for them. Those that can afford this additional cost will still purchase if the numbers work. So if the property is liked by someone who can afford the buyer’s agent commission, it will sell for more. If not, it will be left to those that cannot afford the commission of the agent and the price of the home will come down.
When a buyer comes to a transaction without a buyer’s agent the listing agent will have to help them as well, affectively “double ending” the deal. You can be sure that any agent worth their salt is going to be charging more for handling both sides of the deal. So is the seller really saving any money? Maybe a little bit, but at what cost?
If only one agent is handling the transaction, then everything is dependent upon them. You better hope that the agent is knowledgeable and experienced. I have seen many transactions where one side overlooks something that the other catches. What about language or cultural barriers that are easily bridged by an agent? Can one agent serve senior citizens or young couples starting a family with the same level of service? To boil it down to its common denominator, not every agent is a good fit for every one and if every agent is looking out for the seller, who is looking out for the buyer?
If that is the direction that we are headed in, then you can bet your bottom dollar that it will not be much longer before a platform such as amazon or ebay comes along. Enter your criteria online and when you find a property you are interested in, add it to your “cart”. Select a day to view it and pay a small fee for the agent to be there to show it to you. If you like it, when you return home you “proceed to checkout”. Maybe you can “Pay For It Now” for more instead of it going into competition.
So, is a buyer’s agent necessary? YES! Someone who can relate to the buyer. Someone who can explain the process to the buyer so they are not making decisions based off limited knowledge. Someone to look out for the buyer’s best interests and not those of the seller. Unfortunately though, buyers may not be able to afford an agent on top of the other costs they will need to pay. I really think this is short sighted and greedy. I wish someone could have explained this to the appropriate people much earlier…
