Most first time home buyers think they don't need a separate agent to help them choose a home. It may even seem silly to have someone else find and buy a home for them and they also assume they have to pay a person for this. But this is a mistake. Having an buyers broker can actually save the buyer hundreds if not thousands of dollars when buying a home. Here's why.
Let's lay down a scenario with a buyers broker and without:
A potential buyer is out looking for homes and finds an open house to tour. They have already been pre-approved by their lender for a $200,000 loan. So they know to keep the price range within this cost. They find a home for $190,000 and the listing agent is sitting the open house and greets the potential buyer. They tour the home and the buyer decides on placing an offer. The buyer knows the house has been on the market a while and noticed some work to be done. The listing broker asks the buyer if they have already talked to a lender and the buyer informs the listing broker they have a pre-approval letter for $200,000 ready to go. The buyer informs the broker how much they love the house but knows it will need some work so the buyer offers $160,000 for the home. The listing broker is well aware of the financial situation of the seller and knows the seller needs almost full price to break even but keeps this information private.
The listing broker then takes the offer to the seller and informs the seller (who was the broker's first client) that the buyer is approved for well over the purchase price and really loves the home. The broker recommends to the seller to ask for the full price with a condition to fix some issues. The seller agrees and the counter offer is returned to the buyer. The broker then informs the buyer that the seller will gladly repair any issues but is in great need of a full price or the offer will get turned down. The buyer can only assume this is correct and agrees to the counter offer now paying $30,000 more than originally offered.
Now let's put this in the perspective if the buyer had their own broker.
If the buyer entered the open house on their own but with a buyer's broker the listing broker would have to ask about this and when informed of the presence of a buyer's broker, needs to back off from the buyer. If the buyer liked the home, they would have the buyer's broker write up the offer with a custom pre-approval letter from the lender stating the buyer is approved for just the amount offered. Nothing more. This is legal and it keeps the cards close to the buyer's hand by not letting the sellers know the buyer can actually afford more.
When the offer is presented at $30,000 less than asking price the seller knows the home needs work and has been on the market a while. They also don't know how well the buyer likes the home and may back out at any time. The seller then agrees to the lower price and the buyer has just saved $30,000!
This is a simple example but most situations are similar. The information that is not required to be divulged, isn't. The buyer's broker keeps the information on the buyer confidential unless required. This is a great negotiating skill and really helps the buyer find the right house at the right price.
PLUS - The biggest benefit is that the buyer pays nothing to the broker for their services. The buyer's broker gets paid from the commission on the house sold. The broker only wants what the buyer wants because they will get paid from the seller of whichever home the buyer chooses. It really is no loss to the buyer.
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