Skipping the buyer’s agent

In addition to buying the cheapest house in a good neighborhood—a smart strategy for all first-time homebuyers—I saved a few thousand dollars on my purchase by forgoing a buyer’s agent and dealing directly with the real-estate agent listing the property. This move can give buyers significant negotiating leverage, especially in a down economy or with a property languishing on the market. As University of Chicago economist Steven D. Levitt’s research (later showcased in his book Freakonomics) made clear, agents tend to sell homes for clients at a cheaper price than what they will hold out for when selling their own house. That’s because churning your home quickly for a couple thousand bucks less than you might ultimately have pocketed costs agents only a few hundred dollars in commissions while freeing them to focus on the next sale. But if real-estate agents don’t have to split the overall commission with a buyer’s agent, they stand to bank several thousand dollars extra—which can give buyers a negotiating edge. In my case, once I told the agent I’d let her handle the deal solo, she secured the sellers’ agreement and lowered her commission rate enough to make my lowball offer palatable to them. I am using a buyer’s agent in my current home search, and I love the knowledgeable service and the fact his loyalties aren’t split. But if I ever buy another property and the situation’s right, I will consider going the dual-agent route again.

—Frank Sennett