Your Home Is Your Castle, Treat It That Way

October 25th, 2010

Your home is your castle, truer words have never been spoken. You may own a 1,000 square foot modest townhouse, but it is yours. It may not be fancy, but it provides shelter, memories and a place for family. Then why do people treat a home as if we were buying a coat, chair, couch or some other simple purchase? Why do people look for ways to save money, instead of ways to ensure they are getting the best representation to purchase their castle?

Buying a home is a very complicated process, the sales contract can run to 30 pages, or much more. The number of critical legal clauses and the fact that you have a deposit at risk suggest you make sure you have the best representation you can find. But often times a home buyer thinks they’ll “save money” if they go directly to the agent listing the home for sale to negotiate directly with them, as opposed to having their own Realtor in the transaction. The thought is that maybe the listing agent will agree to reduce the commission since they are getting both sides of the commission, which will result in a lower price for the house. Maybe that will happen. But maybe it won’t. And maybe it’s not worth the money, even if it does. All I can do is cite anecdotal evidence, I have done no lengthy studies to refer you to. I can tell you:

1. After almost 25 years in the mortgage business, when I get a call from a home buyer who tells me they are buying directly from the listing agent without their own Realtor (or even worse are buying directly from the seller!) I cringe. I know that it’s almost impossible for one Realtor to fairly represent a buyer, with no bias, when the seller is the one paying the commission. I cringe because I have done enough of these types of deals to see problems on almost all of them. Without proper representation for all sides bias occurs, and unrealistic requests get made without a professional buffer (i.e. a Realtor).

2. I had a potential client tell me recently that she contracted for a new home directly from a builder, who was willing to pay the fee for the Realtor that she brought to the transaction. But the buyer thought they’d save money if they negotiated without their own Realtor. The Realtor for the builder, in representing the builder, negotiated very favorable terms for the builder, and more importantly, wrote a large $65,000 deposit requirement into the contract, which represented the buyer’s entire down payment. The buyer, not knowing that it is not standard to put up your entire down payment as a deposit, had no problem in doing this. Then the Realtor suggested the buyer use the builder’s preferred mortgage lender (but did not mandate it). Unfortunately the buyer’s credit report did not allow them to get a loan approval, and the builder’s lender referral did not tell the client this quickly enough. All of the contract contingencies had expired, and the buyer being unable to get the loan approved, lost the entire $65,000 deposit. Had the buyer had their own Realtor representation, the contract would have never been written with such a large deposit, and the Realtor would have suggested that the buyer get pre-approved in advance, and to check several sources of lenders, one of which would have certainly uncovered the buyer was unable to get a loan, long before the contingencies expired. They came to me after this mess occurred, and I had no answers for them unfortunately, I was unable to get them any loan with the shape their credit was in, and they lost their deposit.

3. I had another buyer, this one was actually my client from the start, who also thought they’d get a lower purchase price without their own Realtor representation. The process was out of control from the start, the buyer did not feel represented by anyone which caused them to ask for unreasonable requests and attempt to renegotiate the contract as they went along (their own Realtor would have never allowed this), and the Realtor that was supposed to be representing the seller and the buyer (which is called dual agency) was put off by the buyer’s demands and ended up (knowingly or not) backing away from the buyer’s needs and focusing more on the seller. The transaction ended with the buyer withdrawing the offer, having nowhere to live after having already rented out their current home, and having a very bitter taste left about purchasing a home.

4. I know of several Realtor’s who when approached by a buyer who wants to make an offer on one of their listings with no Realtor representation, immediately urges them to go out and find a Realtor to help them, as opposed to taking on the almost impossible task of dual agency. They know that dual agency is difficult, and that representing two parties when one party is paying the commission causes bias, and they refuse to take part in it.

I could go on with the anecdotes, there are numerous ones to cite from my almost 25 years in this business. But suffice it to say that its better to make sure you are fully represented and that your interests are being represented vigorously, as opposed to potentially saving a few percentage points on a very important transaction.


Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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