Zillow, Redfin, Trulia and other online real estate databases are a fun way to see what the neighbor’s house is selling for! These platforms are very helpful for home buyers, sellers, and real estate agents because they help everyone find homes for sale and look up past transactions and home descriptions. Considering how much information you can find on Zillow and other services, you might be asking yourself, “Can’t I just Zillow Boulder? Do I really need a real estate agent to buy a home?” This is a buyer beware situation if there ever was one.

You’ve heard the old saying that “If you are not paying for the product, YOU are the product.” Who benefits from using these free real estate sites? Are your best interests protected? Before you tap into online real estate search engines, make sure you understand how these sites make money. Let’s take a look at how Zillow, Redfin, and Trulia are designed to help real estate agents.

What Does Zillow Do?

Zillow is a online real estate company that helps people buy, sell, rent, and finance homes. Zillow has a website and a mobile app and it’s the biggest consumer-facing brand in online real estate. Zillow’s parent company also own Trulia, which is another online real estate database. On Zillow, users can see current listings of home for sale and limited information on past transactions. The site earns revenue not just from the buy, sell, rent, and finance functions, but also from advertising sales.

But one key thing to know about Zillow is that the homes you are see there are listed by seller’s agents. The vast majority of real estate agents are seller’s agents. It is very important to understand how seller’s agents are incentivized: Seller’s agents have been hired by sellers to sell their home for the highest price and best terms.

All Real Estate Agents Seem Nice and Helpful. What’s the Problem?

One of the most common difficulties facing real estate consumers is understanding the legal implications of brokerage relationships. In Colorado, there are three kinds of real estate agents as defined by state law:

• Seller’s Agent: Helps sellers sell homes and is legally required to serve the seller’s best interest. This usually means selling homes at the highest price and the best terms. They are often incentivized to sell quickly.
• Buyer’s Agent: Helps buyers find and purchase homes. Legally required to serve the buyer’s best interest. This usually means helping them find homes that meet their criteria and that have no major inspection or title problems, by making a competitive offer, and by negotiating the most favorable pricing and terms.
• Transaction Broker: Helps with contracts and paperwork to broker deals between seller’s and buyer’s. Often involved in off-market transactions between people who know each other or for sale by owner arrangements.

Which one you choose can have a tremendous impact on the quality of your home buying experience. These relationships are outlined in detail in a standard disclosure provided by the Colorado Real Estate Commission. Real estate agents must provide this disclosure before doing business with you.

I don’t want to use an agent. Do I have to?

In this DIY world, many people believe that they don’t actually need a real estate agent at all. If you feel comfortable with real estate contracts and real estate law, you might be OK. But consider this parallel scenario. You are being sued by your neighbor for a trip-and-fall accident at your home. He has an attorney. You don’t. Who do you think is likely to win? Let’s say you decide you do need a lawyer after all. Would you call you neighbor’s attorney to represent you? If the attorney in question was unethical enough to agree, do you think she could do a good job of representing you both?

I don’t want to sign a contract. Do I have to?

In Colorado, a real estate agent can work with home buyers as either a “buyer’s agent” or a “transaction broker.” The difference is both simple and dramatic. A buyer’s agent commits to representing only you and your interests. A transaction broker “assists the buyer or seller, or both, throughout the real estate transaction, without being an agent or advocate for any of the parties.” A transaction broker is prohibited by law from doing anything that would advance your interests over those of the seller.

When you’re putting an offer together, or negotiating inspection issues, a transaction broker can’t provide any advice without violating their legally mandated neutrality. In Colorado, transaction brokerage is the default position. Agents must work as transaction brokers unless and until they have a signed buyer agency agreement with you.

At Agents for Home Buyers, We are Buyer Representation Experts

Some Colorado real estate seller’s agents will agree to perform the duties as an buyer’s agent even though they accept higher levels of responsibility and liability by doing so. At Agents for Home Buyers, we focus on working with buyers as buyer’s agents. If you’re going to use an agent, doesn’t it make sense to take advantage of all their knowledge and expertise? Why would you hire someone to just unlock doors and fill out papers?

A Buyer Agency Agreement is not just beneficial to the agent, it also protects YOUR interests and assures your agent is actually working for you. But what if you are unsure about committing to an agent on this level? We recommend including a termination clause in your buyer agency agreement. A clause like this will give you the right to terminate the contract at any time if you’re not satisfied with the agent.

Who is the agent in that Zillow listing working for?

The listing agent in the Zillow listing you’re looking at is a seller’s agent and they have a seller agency agreement to represent the seller. They are most certainly not working for you. If it says Listing Agent next to their name, the agent is obligated under to work for the seller’s best interests. They have a moral and legal obligation to market that home to you and buyers like you. You are their customer, not their client. This obligation is in direct conflict with your interests as a buyer.

Do not, under any circumstances, reveal information about yourself or your situation to agents on Zillow, Redfin, Trulia, or other online real estate databases! For example, never tell a listing agent how much you can afford to spend or what your time constraints might be. That information can and probably will be used against you in future negotiations. In fact, we give the same advice to buyers who want to visit an open house or a home they found online. Buyers should never even look at a property with the listing agent because that listing agent is trying to learn as much about you as possible so they can represent the seller’s best interests. If you pull up to the house in a Mercedes or Tesla, what are you revealing to the seller’s agent?

What about those star ratings next to the agent’s name?

For “Premier Agents,” those who have paid to be featured, Zillow provides an enhanced presence on the site. On the surface, this would appear to be a great way to pick an agent. Keep in mind though, that most agents on Zillow, and most agents in general, specialize in listings. They work on the seller’s side of the business.

Exclusive Buyer Agents like us at Agents for Home Buyers have a smaller presence on Zillow and similar search engines. We focus on buyers, not selling properties. As a home buyer, wouldn’t you rather have a buying expert represent you?

Contact us! We can help you find the best home for your needs. More importantly, we will help you purchase that home safely and intelligently in this challenging market, no matter where you find it.