Avoid Buying a House in Connecticut with the Default Agent
March 3rd, 2009 categories: Home Buyers, Real Estate Industry
When you’ve purchased a new computer or cell phone, what’s one of the first things you do after taking it out of the box?
Personalize.
You change the screen saver from the default. Upload a new background photo to replace the default. Change the ringtone from the default. All before doing any bit of work.
So, why on earth would you buy a house with the default real estate agent when you can choose your own buyer’s agent?
Who is the the default real estate agent?
The default real estate agent is the agent whose number you call on the sign.
The default real estate agent has their photo next to the listing on that Realtor.com ad.
The default real estate agent is sitting at the open house and is very happy to talk with you.
The default real estate is the listing agent on any home you’re interested in buying when you do not already have a signed buyer’s agency agreement.
Why not use the default real estate agent?
For the same reason you add your kid’s photo to your desktop - you want the power to choose. Make the purchase your own. Be in the driver’s seat.
If the only ringtone available on your cell phone was some annoying techno anthem, would you ever take your phone off vibrate?
By using the default real estate agent, you just handed control over your home’s purchase to someone you chose solely because they happen to be the listing agent for the house you want to see.
OK, so by calling the listing agent on a house and asking to see it doesn’t mean that you are going to buy the house. But what if you see it, and fall in love with the house? What then?
You don’t get a do-over. When the listing agent shows you the house and you don’t already have a buyer agency agreement in place with your own buyer’s agent, guess what? You don’t now get to pick your own agent to negotiate the deal for you. You get the default real estate agent.
Does it really matter if I don’t pick my own real estate agent?
It doesn’t matter if you don’t care how much you’re paying, whether the house will pass inspection or that the listing agent is representing only the seller in the transaction and still collecting a commission off of you.
And even if the listing agent has another agent in their office work with you (a designated agent), then you still didn’t get to choose your own representation now, did you?
But don’t I get to save heaps of money on the real estate commission by dealing with the listing agent directly?
Unlikely.
If you put in an offer with the listing agent, he/she, per their agreement with the seller, may agree to kick back some money to you. Then again, they may not. You won’t find this out until they’ve showed you the house and you’ve wasted your chance at bringing in your own buyer’s agent.
What is certain is that by using the listing agent, you’re actually getting a dual agent. An agent acting as a dual agent can only act as a “facilitator” and won’t give you or the seller any information that could benefit either side.
And if you’re assigned a dual agent (designated) who will actually represent you, then you’re still using a buyer’s agent but one you didn’t get to choose.
The best that can happen by using the default agent is that the agent may kick back 1% of the sales price to you. But a buyer’s agent through due diligence (comparables, inspection costs, research and intuition) can also save you that money or more. Plus a buyer’s agent works for you, all the time.
Skip the default agent and always hire a buyer’s agent BEFORE looking at any homes.
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The one thing about working with a real estate agent I have enjoyed the least is the agreement to work with them exclusively for a period of time (not sure what it’s called). Unless you know the agent already, it’s hard to know what/who you are dealing with. If you get an agent who turns out to be difficult, less than forthcoming, hard to contact, or whatever other shortcoming- you’re stuck with them until that contract expires.
Maybe the real estate bust will fleece the ranks a bit…
I hope the herd is thinned a bit, too.
The buyer agency agreement comes with risks and rewards. I advise prospective buyers to interview me, and if they’re still hesitant, I will sign a one day or one house agreement so they can get to know me. By then, buyers know that I return calls, answer e-mail, am on time and know what I’m talking about. The law says you have to either see a property with the listing agent (or an agent in their office) or with an agent with whom you have a contract, so even if agents wanted to get around it, they really can’t.