As a land real estate agent, one of the worst feeling in the world is rejection. I once had a potential customer decline my services. Rejection is never easy or fun, and causes even the most polished pro to have nagging doubts. The customer expressed to me that “he never uses real estate agents because they only look out for themselves.” Unfortunately, this is an opinion I hear quite often. Many people believe the commission structure of the real estate industry is a conflict of interest against the buyer. Fact is, because of the conventions of the real estate industry, buyers and sellers who retain the services of a real estate agent are faced with a dilemma. Hard fact: It can always be argued that an agent has a conflict of interest (competing interest) with their client.
Whether You Are Buying or Selling
When a landowner retains the services of a real estate agent to sell land, the agent is paid only if the property sells. Therefore, the seller can make the argument that the agent may push for a sale even when it is not in the sellers’ best interest. When a land buyer retains an agent to represent him or her in a transaction, the buyer’s agent and the seller’s agent split a commission fee, which is typically paid for by the seller and factored in to how much the sellers lists the land for sale. So, the buyer can argue that their agent is being paid by the very party the buyer seeks protection from. But, if the buyer pays the buyer commission directly, the buyer’s transaction costs go up (the listing agent will gladly take the entire fee paid by the seller).
One important thing to remember is that real estate agents are typically paid a percentage of the commission the listing broker earns on the transaction. The higher the selling price, the more the agent gets paid at closing. Good news for the seller; bad news for the buyer. However, the actual difference in commission an agent gets from a higher or lower price is minimal. If agents were paid an hourly fee, it could be argued that the longer it takes to make it to the closing table, the more money they make; therefore, agents could inflate the amount of time they have invested. Even if agents were paid a flat fee, it can be argued that once they are paid they may stop working hard.
Should I Hire an Agent or Not?
If you’re a purist about all this, I suggest you never use an agent and buy property directly from the owner. But in the real world, agents play a valuable role in helping their clients manage transactions. A LANDTHINK Pulse reveled that 42.9% of buyers were very likely to hire a real estate agent for their next land investment. The best advice for people shopping for rural land for sale is to work with an agent in a way that compliments your abilities, and find an arrangement that contains the fewest conflicts of interest. For example, if you have the skills, contacts and specialized knowledge about land (finding buyers and sellers, understanding timber and land value, contracts & negotiating, etc.), then going about it on your own can work out well. If not, then an experienced agent can make sure you fulfill your goal of selling or buying land with the fewest regrets. Fact is, when it comes to using an agent there is not a right or a wrong. It depends on your abilities. The good news is there are top-notch land brokers in every state and you have options.
Most real estate agents are genuinely interested in helping their clients sell and purchase land at the best possible price and terms. An agent’s ultimate success is dependent on establishing reputation, building relationships and gaining referrals. A good agent will be there for their clients long after closing should any issues arise and will remain in contact with them in the event they need their services in the future.
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