Negotiating when Unrepresented

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What's different?

When represented by an agent, your agent typically negotiates on your behalf. That often involves informal back-and-forth communication with the seller's agent to get a sense for what would stick, followed by a formal offer. This service is included in the commission fee that your agent receives at closing; usually about 3% of the purchase price. The average new home price in the US is $350,000, so the average buyer agent commission is $10,500.

When you are unrepresented, you are now responsible for the services that would traditionally be delegated to an agent. Can you do it? The short answer is YES, and Edgewise makes it easier.

But I thought "the seller pays the buyer's agent"?

This is very commonly cited, and extremely misleading. The reality is that the buyer's agent works for the buyer, and therefore it is the buyer who ultimately pays the buyer's agent. It really is that simple. It only gets confusing when tricks are played with the money flow (eg. buyer pays seller for the home, who then pays the seller's agent, who then splits it with the buyer's agent). It's like the old magic trick, where you have to follow the ball (commission) as it moves around between cups until it vanishes. Just remember, it's a magic trick – the ball didn't really vanish, and nothing is free.

So where does the money go?

Since the seller's agent typically splits the commission with the buyer's agent, it is common for the seller's agent to keep the whole comission when the buyer is unrepresented. Afterall, this is the fee that they have charged the seller for selling the home. However, it is increasingly common for sellers and seller's agents to work out a deal for unrepresented buyers where they essentially split it (eg. seller's agent gets 4.5% instead of 3%).

Why don't they give the commission back to the unrepresented buyer?

Good question! You're doing the work of the buyer's agent, and the buyer's agent would have gotten 3%, so why don't you get the 3%?

We are starting to see some of that money going back to buyers in one form or another. One common way is a "rebate" or a "seller's assist". These are essentially credits that are applied at the closing table. This allows the seller to maintain the original listing price (or close to it). Other options are credits towards upgrades, and/or free upgrades.

It isn't very common to see a seller simply discount the sale price, as this impacts comps (comparables); which could inadvertently impact the value of the rest of the homes in the area.

What are my options?

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