We have encountered much mis-information about buy-side representation: the costs and benefits of using a buyer’s broker. As always, we want to empower our readers with facts and help them make the best decisions. As such, we present the myths and realities behind using a buyer’s broker.
Myth #1: I’m bound to get a better deal on my own.
Reality: Studies have shown consistently that we negotiate much better on behalf of someone else than we do for ourselves. Why? Because when we negotiate for something we personally care about, we’re emotionally involved, sometimes attached to the outcome, which diminishes our objectivity and allows for our ego to get in the way.
This is why institutional investors always outperform individual investors; it’s the objective, methodical and disciplined way with which you approach the trade. The same applies to real estate, and the same applies to any inefficient market. An objective third party can provide the necessary space between the deal and your desires, and can inject reasoning in an otherwise highly charged exchange.
In addition, there is real value to one agent discussing true market comps and building activity with another agent, and using that data objectively to help negotiate the price. Selling agents know that a buyer’s agent understands the sales process and therefore often share information that can give buyers a distinct advantage over those who represent themselves.
Lastly, keep in mind that when you see a property and attend an open house, the agent with whom you’re dealing is representing the seller; that agent’s fiduciary duty is to get the seller the best price possible, plain and simple. Who do you have on your side making sure your interests are represented? It’s akin to showing up to court with your representing yourself and the opposition having a full legal team on deck. At the very least, you want to be on equal footing when entering negotiations, which is why having legally-bound representation is critical.
