Why Shouldn’t I Buy Privately?

A friend from Palo Alto recently phoned me to say that she and her husband may have the opportunity to buy a property privately. After working with an agent on and off for the past three years, she wanted to know whether or not she should pull her agent in or cut her out. In this instance, it would mean that the buyers would be paying their agent the commission instead of the sellers.

As an agent, I am obviously biased, but I think one should always work with a Realtor, whether or not one has an opportunity to buy a property privately. While previewing and showing our clients is a large part (and a time-consuming part) of our job, ultimately it is the least important aspect of what we do. With Sunday Opens and immediate access to the Internet – where over 80% of buyers now begin their search – it is very common for a client to e-mail me about a property before I have called them. This makes sense when one understands that I am typically looking for half a dozen clients at any one time, while each buyer is intent on finding their one perfect home. The Buyer and the agent work as a team and the more eyes on the market at any given time, the better your chances of finding the ideal property.

In the end, it is our experience that brings real value to to the process. It is our education and familiarity with the contract, with protecting the buyer and the seller in the transaction, with full disclosure, with negotiating back any credits that might be necessary to overcome obstacles, and with knowing all of the players involved, from agents to inspectors to appraisers, that makes us a valuable commodity in any real estate transaction. And while buyers are often very knowledgable about pricing within their given search neighborhood, your Realtor should quickly be able to compile a list of recent home sales that help determine true value.

A private transaction almost always results in one of two outcomes: either the buyer is overpaying, or the seller is underselling. Since the market has been bypassed, determining a fair value can be extremely tough without an objective third party. (Buying or selling a home is probably the least objective thing we do, save for falling in love!)

So before you abandon your Realtor for a “perceived” savings on commission, ask yourself what you are really saving. With homes in the hundreds of thousand of dollars, and in my friends case, the millions, isn’t it worth a relatively small commission to know that all of the i’s have been dotted and the t’s crossed? Isn’t it worth it to know that you’ve inspected the home and are well informed as to what you are purchasing? Isn’t it worth it to have a representative that is truly interested and motivated to protect your rights as the buyer? (Did you even know you have legally mandated rights as the buyer?) You do.

Yes, a good Realtor can make a handsome living, but we carry a lot of responsibility throughout the process and we should, and do take our duties seriously (I have personally spent more than a few nights awake worrying about the details.) A good Realtor brings value to a transaction and a great Realtor is worth her weight in gold. So while foregoing a Realtor may seem penny-wise, it could prove to be incredibly pound-foolish. Rethink the idea of abandoning your Realtor – especially in a private transaction. There is simply too much at stake.