Time and time again I hear buyers say, why should I bother finding an agent to purchase my new home when I can just use the agent that lists the home?  The main problem with this scenario is that many buyers don’t realize that the listing agent’s first priority is to their seller, not the buyer.

When it comes to negotiating for terms and price, the listing agent is going to keep certain confidential information to them about the seller’s situation and this may not only harm the buyer but could cost them as well.

This is best described in two scenarios below:

Scenario A:  Bob and Pat go to look at houses. They don’t have a buyer’s agent because they don’t want to feel pressured into buying a house. They just want to look on their own and when the time is right, they will buy it from the agent listing the house. They find a cute little bungalow for $300,000 at an open house on Camano Island and love it so much they want to put an offer down.

The listing agent sitting the open house asks if they have been pre-approved for a home loan. They say no, so the listing agent sets them up with a lender that gets them pre-approved for $320,000. The house has been on the market for 4 months though and will need a little work so Bob and Pat want to put in an offer for $275,000. The listing agent mentions that the seller is already about as low as they can go, but Bob and Pat stick to their guns even though they love the house and proceed with their offer of $275,000.

The listing agent then takes the offer to the seller with the added knowledge that Bob and Pat love the house and can actually afford well over the asking price. He recommends to the seller to put in a little of the work needed and come back with a higher offer. The sellers counter at $295,000.

The listing agent then presents this counteroffer to Bob and Pat stating the seller will fix some of the issues but can’t go any lower. Bob and Pat do not know this for sure and don’t know if the seller is entertaining any other offers. They concede and agree to $295,000.

Scenario B: Now flip this scenario as if Bob and Pat had their own buyer’s agent before stepping foot into a home. They can still tour homes by themselves if they wish but the pressure from the listing agent is now off of them. Their buyer’s agent has already encouraged them to get pre-approved before looking at home so they are not disappointed in finding a home they cannot afford. They stumble upon the same home for $300,000. They ask questions but don’t seem that interested (at least to the listing agent).

They then proceed to talk to their buyer’s agent about the home and how much they love it! They would pay the $300,000 if they had to but since it has been on the market a long time they want to offer $275,000. The buyer’s agent presents this offer to the listing agent with a letter of pre-approval for the EXACT amount they are offering. Not a penny more. Now the listing agent doesn’t know if Bob and Pat can even afford anymore.

The buyer’s agent also doesn’t mention anything about how much Bob and Pat love the home but states they have seen a lot of properties recently and this one appeals to them.

The buyer’s agent gives no indication that Bob and Pat are in love with the home. The listing agent then presents the offer to the seller with this information.

The seller now does not know whether or not the buyers can afford any more or if they love the house enough to come up on their offer. The seller is motivated and doesn’t want to lose the deal so the seller agrees to counter offer at $280,000. This counteroffer is presented to the buyer and they accept.

Because Bob and Pat used a  buyer’s agent, they have just agent saved $15,000 ($20,000 over the original asking price)! Now, this is just one example of how a  buyer’s agent can help out buyers. There are loads of reasons and examples where having the buyer’s agent handle all the details can really make sense.

There is nothing unethical or illegal about this, it is simply a matter of leverage. Who’s holding all the cards and when to show them can really be a skill in the negotiating process.

Read More: Sellers Know that Pre-Approved Letters Mean a Qualified Buyer

Related Resources:

How to Get a Discount on Your Next Home Purchase

How to Make the Move from Renting to Buying