In the United States, buyer’s agents are a regular part of the home purchase process. That’s not necessarily the norm in other countries where an agent selected by the seller is the one that handles negotiations and closing operations with the seller-appointed attorney. Where single-agent markets persist, home buyers are often vulnerable.
That’s clearly not the case in the American real estate market. According to the National Association of Realtors, 87 percent of buyers work with an agent. That is quite a significant share of the market and one that’s been steadily increasing from a base of 69 percent in 2001.
Why Buyers Work with Agents
Every home is unique. So are the reasons for choosing to work with an agent. But there are a few motives that compel buyers to make that call.
Agents traditionally held the information regarding the home buying process. They had access to listings and lawyers in the days before the Internet. While finding houses is much easier now, buyers still turn towards property professionals. Unlike the seller (FSBO or otherwise) that are concerned with a single home, buyers want to consider as many as possible.
Though lock boxes make it easy for anyone with a code to enter a property, it’s intimidating to view a home with seller’s agent who is working to increase the price of the sale rather than in their interests. No matter how accommodating and realistic that agent – or that FSBO seller may be – the perceptions exist.
And then there is the experience. Home buyers, especially first-time buyers don’t always know what they’re looking for in a property. Without studying the market closely and for many months (or years), it’s difficult to know when to take a closer look at a home or not. Though the opinion of an agent is simply that, the validation backed by experience can tip the scales.
And the Number One Reason?
All of these reasons work together to inform the decision of home buyers to work with an agent – or not. But, the number one motivation is purely financial.
Home buyers don’t need to pay their agents a commission; the seller does. When the seller works with an agent rather than pursuing their FSBO rights, they sign an agreement outlining a commission percentage, and this is split between the selling and buying agents.
If you’re a FSBO seller, you can use this reasoning to your advantage; you can offer a fee to buyer’s agents, enticing them to bring the buyers to your home. It’s not an entirely commission-free process, but you can still count an extra three percent of the profit that would have previously gone to a selling agent.
Of course, it’s up to you whether you want to offer a buyer’s agent commission in your listing (or during negotiations). And maybe one day, the market will move into predominantly flat-fee services and agents on either side will become a thing of the past, or left to foreign markets to deal with.