Common misconception: Often buyers believe that by choosing to purchase a home without a real estate broker they are in a better position to negotiate on price. It is often believed that since they are not utilizing the skills of a real estate broker, they can easily reduce the price of the home by the amount that would have otherwise gone to their real estate broker.
This is simply not the case. Real estate broker fees are paid by the seller, not the buyer. Real estate brokers have access to industry data that proves not only valuable, but crucial in negotiations. When only the seller has access to this information, the scales are tipped in the seller’s favor right from the start. The seller has a broker representing the seller’s best interests; Buyers are at a disadvantage if they don’t have a broker representing their best interests. For more information, see our page on Buyer Agency.
Here is how it works: When entering the property into the MLS (Multiple Listing Service), the seller’s broker agrees that a portion of those contracted fees will be shared with any broker representing the buyer in the transaction. The commission paid to the buyer’s broker is collected from the seller at closing. If there is no broker representing the buyer, the seller’s broker retains the entire amount. Remember representation doesn’t cost you, the buyer, anything. But not being represented can cost you more than you realize.