As a Buyer, Can’t I Save Money by Approaching the Seller Directly?

Can a home buyer save money by approaching a home seller directly, without a real estate agent? A first time home buyer looking for a starter home in Arcata, CA called the other day, and we had a great discussion about first time home-buying. “Why would I want to use a buyers’ agent,” he asked, “when I can go to the seller, offer to save him the commission for the buyer’s agent, and get a better deal?” I appreciate this client’s honesty and directness! Many buyers and sellers of real estate don’t really understand how the process works!

Typically, when a home owner wants to sell his home, he calls a real estate agent and signs an exclusive right-to-sell listing contract, in which he agrees to pay the agent a commission, 6%, for example, if he successfully sells his home. That real estate agent then enters the home into the local Realtor multiple listing service, or MLS, with on offer to split that commission.

Typically, in Humboldt County, California, that offer is a 50/50 split; both the seller’s and buyer’s real estate agents would get 3% each. Additionally, under California law, a real estate agent can’t split his commission with someone who is not also a licensed real estate agent. So the listing agent will get a 6% commission, no matter who the home is sold to, and he will either split that commission with another agent, or keep it all to himself; he can’t pass it on to a buyer who is not a licensed agent.

So, if the seller is not able to pass any commission “savings” on to the buyer, why would a buyer want to try to represent himself? The seller has agreed to pay a buyer’s agent through his listing agreement; why would the buyer want to turn down professional representation by a Realtor that’s already paid for?

My first-time home buyer has hired me, and we are looking for their first home as we speak!