There are many things to consider before you go along with your broker
When buying or selling a home most of us rely on a broker or an agent for their professional knowledge or experience. But depending on whether you are a buyer or a seller, there can be certain advantages and disadvantages. In this section we talk about the pros and cons of using a real estate agent from a buyer and seller’s point of view.
Cons for a seller
• There are not many cons for a seller in Dubai to use a real estate agent. The standard method where the seller would pay 5 per cent (of the total 10 per cent of the agent’s commission) and the buyer would pay other 5 per cent is rapidly becoming the exception rather than the rule. It is now far more common for the parties to agree that the buyer pay the full 10 per cent commission.
• Less flexibility in price (should the seller decide to follow the norm and pay the 5 per cent agents commission).
• The seller also does not get to stage the home as they choose. To a real estate agent, the sale is just a business contract. The seller on the other hand can pick up on the emotional aspects of the buyer and relate therein to their own emotional experiences and gain the upper hand in the bargaining. Without an agent, the seller has far more power at the bargaining table.
• If the seller is liaising directly with the buyer he is cutting out the middleman and in doing so he can ensure that his interests are looked after more so than if a real estate agent was involved who likely just wants to get his commission as soon as possible.
Pros for a seller
• The most obvious one is that the seller’s home will get introduced to a far greater audience than if he was trying to sell it on his own. Sure, there is the internet but realistically when one is looking for a place their first port of call is usually an estate agent so listing your home with an estate agent will garner a much quicker response.
• In line with a quicker response is obviously the time aspect. It takes time and unless the seller is one who stays at home or works from home, they will have to make time to meet the buyers and show their homes which is not always an easy task to comply with and may require time off work or other social activities.
• Another pro of using an agent is that the seller has far less paper work to do. The average person may not be fully aware of all the paper work that is required. A real estate agent knows what must be done and is generally quick in getting it done which is far more efficient.
• An estate agent knows the market and what the seller can reasonably expect to receive as well as can highlight any hidden costs that may be involved in selling the home so that he can take that into account when quoting the price they want.
Cons for a buyer
• First and foremost is the commission the buyer will need to pay. The additional 10 per cent commission over and above the purchase price can be quite a hefty additional cost for the buyer which the buyer will have to pay out in cash. This means that commission payment can be an extra burden on the buyer.
• A buyer may also feel pressured by the agent in that he may feel a level of distrust thinking the agent is looking out more for the seller than him which in turn makes the buyer weary of entering the deal which in reality could be a good deal. On the opposite end of the spectrum, the pressure can cause the buyer to enter a deal in which they don’t really want to due to pressure from the estate agent.
• With the buyer, not being able to talk directly to the seller the buyer may miss out on information that he would otherwise have been able to obtain directly from the seller and which the agent chooses not to disclose unless it is asked.
• The buyer is also far more likely to tell an agent what they are looking for and why and the agent can then relay this information to the seller. But if the buyer is desperate for a certain property or has no shortage of funding, the agent can lead the seller to up the price knowing the buyer will likely still take it.
Pros for a buyer
• As with the pros for the seller, the buyer will receive a much larger market of potential properties to purchase than if they were looking themselves. The buyer would be able to describe to the agent exactly what they were looking for and the agent would be able to direct the buyer to only suitable properties. This is especially true if the buyer is buying from a developer who would only promote their properties and not that of a competitor who could have a better suited property available.
• The agent further likely knows the history of a home and what costs can be expected in the future and warn of any red flags that a property may possess.
• Like the seller, the buyer may not be aware of all the documents that are required nor the regulations that need to be followed. This again will lead to delays in finalizing the transaction and further costs down the line.
• The buyer will also need to sacrifice a lot of time in researching the neighborhood and finding suitable houses than if they simply went to an agent who could inform them what kind of neighbourhood it is and whether it would suit the buyer’s needs.
• Again, as with the seller, agents also know the market. The agents can inform the buyer if the market is a buyers’ market or sellers’ market and prevent the buyer from paying far more for a property than what it is worth. As is a con for the buyer where the agent can relay information to the seller, the agent can likewise do same for the buyer and the buyer can then get a property at a better price.
• Finally, the buyer, not the seller has the upper hand when negotiating through an agent as the middle man can prevent the seller pressuring the buyer and can further ensure that all communication from the buyer to the seller is done in a neutral and helpful manner preventing either party’s emotions becoming involved which can ruin a deal.
It can clearly be seen that there are disadvantages and advantages for both parties in using an agent but in the long term, for both parties, the pros of using an agent outweigh the cons of doing so.
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Collected and published by Arms &McGregor International Realty® editorial team. Get in touched with us at [email protected]