Why would a Buyer Agent negotiate for a lower price
Tuesday, February 16, 2010 at 10:57PM 
If a buyer agent negotiates a lower price for a home, it reduces the amount of the buyer agent's commission, so what motive does a buyer agent have to get the buyer a lower price?
Good question. Let's answer it in a round about way that better explains the mindset of an exclusive buyer agent. First, after the commission split, a difference of $10,000 or $20,000 in the price is not going to amount to that much less in commission -- maybe a couple of hundred dollars. But even if it's $300 or $400, it doesn't matter. It's worth it. I want that reputation -- an agent who wants to get the buyer a lower price on the home so I can lose commission money. Crazy, but true.
An exclusive buyer gets business by doing a good job protecting the buyers' interests and doing what he/she says he/she is going to do, including saving money -- word of mouth is the best form of advertising -- so consider that $200, or whatever amount, as advertising costs. If a satisfied buyer refers just one buyer in the future, which most of them do, I consider losing that $200 or so a good investment. The more I lose, the better satisfied is the buyer and the more likely I'll get referrals in the future. That's cheap advertising, because, I don't know about other area, but here in Savannah Ga, magazines and such stick it to agents. I feel like I've saved money and invested it well.
An exclusive buyer agent has to have a mindset that focuses on saving the buyer time, money and hassle. Listing agents get awards based on the dollar amount of their sales based on the total of the prices of the homes they sell. When I first started as an exclusive buyer agent, our company gave awards based on the total amount of dollars we saved buyers in the transaction. My last year with that company I got the highest award by saving buyers more money than anyone else in the company.
It's a different mindset -- it has to be, to be good at it.
Reader Comments (1)
Whoops, I deleted a comment by mistake -- it was talking about Freakanomics and how the author said buyer agents would try to maximize their commission -- I hope my article explained why Freakanomics didn't consider the business reasons for negotiating a lower price. -- whoever posted the comment -- I apologize.