Real Estate Myth

Many consumers have long believed they will save money if they go directly to the listing agent of a property they wish to purchase. This is a myth. 

Before August 2024, sellers were expected to compensate the buyer’s broker, and commission rates were listed in the Multiple Listing Service. Since August 2024, there have been fewer expectations that sellers will offer to compensate the buyer’s broker. Brokers working with buyers are also now REQUIRED to sign a brokerage agreement with buyers that makes the buyer responsible for compensating their broker if the seller chooses not to offer compensation.

Sellers sign a listing agreement that states what compensation the seller will pay their broker and how much compensation, if any, the seller agrees to compensate the buyer’s broker. Many consumers believe that if they go directly to the listing agent of a property, the seller will be more willing to negotiate because they are only paying one commission. Here is why that is incorrect:

If the listing agent shows you the property or writes the offer for you, they MUST have you sign a brokerage agreement, which includes compensation for them to assist you with the purchase. In this case, either you will be responsible for the compensation, or the seller will be responsible if the listing agreement includes compensation for the buyer’s broker. The listing agent will be compensated for both sides of the transaction. Whether you use a buyer’s agent or not, compensation will be paid on both sides of the transaction. If you go to the listing agent directly, you don’t save money and potentially have inferior representation. 

Doesn’t it make more sense to interview brokers to work with you on the buyer side of the transaction rather than relying on the listing agent, who likely has a stronger alliance with the seller? You are likely to invest hundreds of thousands of dollars in your purchase. Don’t underestimate the need for representation.