One drawback is that a buyer’s broker will add expenses to your transaction because you will have to pay him or her.
Otherwise, the question comes up in the context of postforeclosure sales. Usually, the listing agent will have a contract with the owner, in which the owner agrees to pay a commission upon sale. Let us assume that commission is 6% of the sales price.
Most often, the listing agent will not find the buyer. The buyer will generally be working with another agent in town, looking at many different properties listed with many different agents.
Whether that agent is a buyer’s broker, a transaction broker, or an additional agent of the seller, the listing agent will usually split his or her commission fifty-fifty with that broker. Mentally, the listing agent has already given up 50% of the commission.
If you are working without an agent, you can use this knowledge to your advantage. You can say, “I offer to pay $117,000, contingent on the listing broker accepting only a 3% commission instead of a 6% commission.” Accepting the offer would net $113,490 to the lender, not counting closing expenses. To net the same amount after paying a full 6% commission, the lender would have to demand $121,212 from you.
Your offer gives the real estate broker the 3% commission he or she would probably have earned anyway. It gives the lender the $113,490 it would net anyway. But it saves you almost $2,400! That is the advantage of working without an agent.