Why You Can’t Trust Real Estate Agents When Buying A House

by Mike Holman

Most prospective house hunters or sellers think they have a “good” agent. Either it’s someone who they previously worked with or perhaps a referral from a friend or a co-worker. One of the big reasons for having confidence in their agent is a belief that the agent is “on their side” and “honest” etc etc. I would suggest however that by a certain point in the process, your agent is your enemy and you are negotiating against them more than the other party. This post deals with the buy side of the house buying game. The next post will deal with the sell side.

In the beginning: happy friends

When a house buyer first signs up with an agent, things are usually pretty rosy, the agent assures the person that they can find an appropriate house for a price you can afford and everything will be great. The agent has “lots” of experience and knows the area inside out. At this stage of the game, you and your agent are mostly on the same page. You want to buy a house and they want you to buy a house. Your agent will most certainly want to get the process over with sooner rather than later, but that’s usually the case with the buyer as well.

During the search: uneasy allies

Agents know that they need to spend a fair bit of time with a buyer, especially ones who want to look at a lot of houses. After a while however it’s not worth it for an agent to continue a long search especially if their contract is running out. This is the time when the agent will start trying to convince the buyer to lower their standards and raise their prices. Sometimes this is educational if the buyer has unrealistic expectation, but mainly this is to speed up the process so the agent can get paid. I should point out however that real agents are normally quite useful during the search since they often know more than you do about the general real estate and can get you access to private showings. The other big benefit is their access to sale price information for similar houses.

Related – How to win a house bidding war

Thinking about putting in an offer?  Trust no one!

The point when the buyer submits a offer on a house is a time when a lot of house buyers, particularly first timers feel out of their element and defer to their agent for advice. This is the worst thing you can do. Your agent gets paid when the deal gets done and only when it gets done.

This is a time when knowledge of the real estate market should be a big help in determining how much negotiation should be done. As well, if the buyer is not in a hurry to buy then that sets up a great negotiation opportunity. However if there is one thing that real estate agents don’t like it’s clients who negotiate hard – why? Because the only way to negotiate properly in a deal is to be able to walk away if the price you want isn’t met. The way an agent sees this type of situation is that if a deal falls through, they have to spend a lot more time looking at houses with you before they get paid.

Things that your agent might say (and you should ignore) when you are about to put in a bid are:

  • “Don’t bid too low or you will offend the sellers”. This is garbage – if the sellers can’t handle a low ball bid then they are unrealistic. And what exactly is a bid that is “too low”? I’m not saying put in an unrealistic bid, but don’t be afraid to start low and work your way up.  It’s important to know the market so that you don’t have to rely on the asking price or your agent to tell you the proper market value of the house.
  • “Don’t bid too low or you might offend the selling agent and might I have to work with them in the future”. This stunning example of gall and self-interest was actually told to Mr. Cheap. I don’t think this one needs any further comments. :)
  • “You should get a bid in quickly before someone else puts a bid in”. This is a favourite of my agent – create a sense of false urgency, get the deal in motion and get it done ASAP. Sometimes this is good advice, but other times – such as when the house has been sitting on the market for a month or longer then it’s just not appropriate.
  • “Someone else is looking at the house later today and they are really interested”. This lie usually originates with the selling agent, but smart buying agents are usually more than willing to play along because it will increase the chances of their buyer putting in an offer in that day.

Negotiation – don’t listen to a word your agent has to say.

At this point you are potentially pretty close to buying a house. You want to buy the house at the lowest price, the seller wants to sell the house to you at the highest price and your agent wants you to buy the house and doesn’t care at all what price you pay because they just want the deal done right now. Since paying a higher price will get the deal done quicker, a lot of agents will encourage you to bid higher which basically means that you are negotiating against them as well as the seller.

Things that your agent might say (and you should ignore) when you are negotiating are:

  • “Meet them halfway or in the middle”. This sounds quite reasonable at first- if the asking price of a house is $500,000 and you bid $460,000 and they come back with $490,000 then isn’t splitting the difference at $475,000 quite reasonable? Not if you can get the house for $470,000 or $465k,000 The fact is that the asking price of the house and your first bid are very arbitrary numbers and splitting the difference between the two might end up in a price that is not market value.
  • “Are you willing to lose this house for $2,000?” (or $5,000, $8,000) This is a tough one – on the one hand it seems silly to not buy a house and be only a half of a percent away from a deal, but on the other hand shouldn’t your agent be asking this question to the seller? Ie – “We are going to walk, do you really want to lose this deal for $2,000?”
  • “Are you willing to lose this house for $12 a month?”  This is part two of the previous point which is applied if you don’t bite on the first attempt. It’s also a more useful gambit if the “separation” is a bit greater. If you and the seller are $12,000 apart, that sounds pretty significant, but what if you are only $75 a month apart (for 25 years) or even better what if you are only $63/month apart (over 40 years). That doesn’t sound like much (even if it is).

Conclusion

The more you educate yourself about the real estate market you are looking in and how real estate agents operate, the better off you will be when buying a house. Real estate agents are quite useful because they can get you access to houses for sale and will often drive you around to look at them plus they have access to the sale price of other houses. Whatever you do, never forget that they get paid when the deal gets done and only then. They don’t get paid for showing you more houses or walking away from close deals.

Tune in tomorrow when we take a look at the trustworthiness of real estate agents when selling a house.

Take a look at another perspective on real estate agents that Mr. Cheap wrote.

Do you have any good “lines” that you were told when buying a house?

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{ 432 comments… read them below or add one }

401 Leslie

An excellent diatribe of opinion based on anecdotal lore. I imagine the author published here as any reputable site would require facts, statistics & citations.

402 John

Love it, don’t use a buyers agent… As the sellers agent I love negotiating with buyers not represented.. I will squeeze every penny out of them, make my clients happy and make more money.. There are 20 moving parts to a deal that involve MONEY, yet all the buyer even thinks about is the PRICE which is one out of the twenty..

403 Becky Skehan-Passie

I’m always happy to dispel notions like these when I work with clients. They seem confused when I protect them and tell me how they were so afraid to seek someone out since we’re apparently soulless in some public perception. Yes, I actually do exactly for someone what I would do for myself and my family. My reputation is important to me because that’s what makes my business and i want my clients to work with me for life. I’ve worked with some for months or years to find a place. If I’m just in it to make a quick buck, how did that benefit me? I advise people heavily on resale and sometimes have to be the wet blanket to a house they’re exited about because it’s not a good buy. Again, how does that benefit me? It’s important to me years down the road when these people come back to me to sell their house, because I never want to be the agent that sold someone a house too high that they can’t get their money out of. I am not wealthy by any stretch of the imagination and yet I still have my values, but I guess if you’re ignorant about the reality of something you can say whatever you want and have it be “truth.” Are there some crappy real estate agents? Of course, as with any field. There’s some houses that my clients want to see and I see the agent and even I say, “ugh,” but the vast majority are not how you are portraying them here, but the fact that you’re eviscerating me in the abstract will not affect me because they learn the truth when they know me.

404 Debbie

This is evidently is written by someone who does not know about real estate, you do comps before you ever submit an offer on anything. If you can’t comp it out, neither can an appraiser. And yes, if you offer $50K to $60k below asking, unless that is what it is really worth or it is a mega million dollar listing, you usually do not get a response back. The other thing, if it is is an REO (bank owned property) they will not come off their price much. Last thing, when you go to the house, look and see if there are other Realtors business cards about somewhere. That is a good indicator how active the home is.

405 Lynne Griffin

Mike Holman how dare you stereotype an entire group. Please enlighten us as to what makes you an expert on Realtors. My job is to serve my clients. Non of your nonsense tactics required.
For most of my career I have been a buyers agent. Worked with many clients for over a year searching for that perfect home. It is my job to advise my clients and obey their wishes. Never have I used the term the seller might be offended or the agent might be offended. Don’t care. Don’t work for them. If I tell a client someone looked at a home that day; than someone had. It is to give them an idea of interest not to feed my pocket.
There are more Realtors like me than the ones you describe in this article.

406 Rosemarie

After I read this I laughed for about 20 minutes perhaps you wrote it for my clients… FYI you are so off base it is really disturbing and as a matter of fact I am going to send this article to them…hoping they respond… I had an client whose offer was exactly was 2000..short. Everything you stated here is exactly what I told them… the difference is …someone came along 3 weeks later gave the seller the extra 2,000 and closed 5 weeks later… They then made minor improvements perhaps 10,000 worth and staged the house and 6 months later put it back on the market and closed for 125,000 more then they paid for it… My buyers are still crying 2 years later and still can not find a house around for that price in that condition… So take your information and shove it because you just might cost someone else the house of their dreams… do to your negativity ……..Sorry you must have had a bad experience…

407 Constance Smith

This information is totally inaccurate and dangerous for many buyers to follow. Yes, you can get an unscrupulous agent but you can also get a blogger who wants to give value to his blog by writing about things he really doesn’t know much about. Whether you need to jump or wade into the market depends on one thing — the market. Is it hot or not? Right now, ours is hot. Last year, it was not so much. A better article would be a list of questions to ask a potential agent and the pros and cons of certain replies. I’ve been an agent for ten years and no two deals are alike. No two agents are completely alike either. This blogger is correct that an agent does not get paid until a deal closes. How many of you want to work for free? Raise your hand! No hands? Not surprised. That doesn’t mean that the agent is in a hurry for the client to buy. We work with multiple clients, some for a longer period than others. I’ve worked with clients for two years before they’ve bought and I’ve also worked with many that didn’t buy for one reason or another. One thing I can say…it was NOT because they thought I didn’t have their interest at heart. Normally their circumstances change…job loss…divorce and even in one case…arrest. Do all of your readers a favor and don’t color your articles by they lousy experiences of a self described “Mr. Cheap,” but by honest research. What a concept.

408 Christina Asbury

I am a REALTOR in NC that has been in this industry over a decade. I am the President of my local REALTOR Association. I have worked with anyone who’s anybody in our market, for the most part. I must admit, I am ashamed at most of my fellow REALTORs and their lack of service to consumers. I will not make excuses for them… in fact, I wish there were a way that we, as REALTORs, could ‘pull’ another brokers REALTOR card. The only way to have this change can be done by YOU all, the CONSUMERS! Please, please, please contact your local Association of REALTORs and file an ethics complaint against these REALTORs. You have 180 days from the time the alleged violation took place to file the complaint. I know the Code of Ethics is not an easy document to interpret, so ASK them for you to have a REALTOR familiar with the process to assist you in doing the paperwork and having your case heard. This process works, and the REALTOR nation is working hard to bring up our image to the public. Help us help YOU by weeding out the bad ones! I’m sorry for those of you who have had downright wrong things happen to you in your experience with a REALTOR. Not all of us are bad.

409 Mag

You say:
“Commissioned salespeople are not on your side ever.”

You’ve insulted more than real estate agents, pal.

410 jen

Wow! You are the first person who has spelled it out clearly. We hear from so many people how wonderful their agent is and we try to choke back the laughter as to not laugh in their faces. We bought our house without an agent because it was a great price and there were other couples at the open house putting in bids with an agent. Listen carefully, we told the real estate agent who was listing the house we did not have an agent and she offered to serve as a dual agent and also said the Victorian home was really the best fit for us out of all the bidders – Why? because she would receive a higher commission, so she went with us – period!!! The poor smucks who used and a “buyers agent” got screwed because she went with us do to the dual commission. A buyers agent is just someone you give $3,000 dollars to for 5 minutes of their time and I am convinced they do nothing for you but instill panic.

411 Greg

The title should read,” Why You Should Never Trust A Blogger”. Bloggers are the worst and I laugh that this blogger thinks anyone would listen to their advice. This article is so far fetched that anyone that takes it for more then a rant is a moron. If anyone knows how blogging works then they would know that it is just a matter of opinion and not based off of facts 90% of the time.
GOOD LUCK WITH THIS GARBAGE!!!

412 Rich

All realtors and agents are bound by ethical standards. If you believe an ethical standard has been broken, you can consult with the state board. Other than that, remember an agent is not a tour guide.
1. Set expectations with your realtor regarding the features you want.
2. Understand certain price ranges have similar qualities of houses. You won’t always find the quality you want in the price range you want.
3. As so many of you stated, your agent gets paid when the sale is done. That means if you see 30 housesX1 hour apiece – +1/2 hour for paper work and phone time – That’s 45 hours He/she is working for Free. Now, throw in gas, lunches, possibly baby sitting etc. – Wow.

I don’t mean money deferred because there is no guarantee you will buy. I mean she is SERVING you for FREE – 30-45 hours. Don’t get too upset if she wants paid eventually.
Her job is to sell houses. Not be your friend or tour guide. That’s how they get paid, selling houses. Cmon!

413 madhu baker

Very disappointed with the tone. I take pride in representing my clients. We have to follow a lot of guidelines and legal and ethical requirements. After reading this article I am wondering about everything you as a blogger have written. I came to this site looking for information on other things. It is not very often I write on these sites but this one I find very offensive.
I hope you will take a day or a week and find a good realtor and follow them around and find out how many hats we ware and how much our lives are effected by our clients.
Good Luck

414 sharon lewis

…oh don’t forget, don’t trust journalists, teachers, doctors, etc…..
Honestly, this is just a terrible article. My brother is a top journalist, , my best friend is an amazing teacher, etc
You cannot lump ALL Realtors in the same group,same as you cannot do that to any profession,there are amazing and bad in each profession.
There are many Realtors, like me who practice honestly, ethically and truly care about our clients money and the transaction.
Ask our previous clients.
And in a seller’s market there are reasons to get the offer in quickly and to go for the highest and best etc.
I don’t usually respond to stupidity, but this article is just so asinine.

415 Jim

“Are you really going to lose this house for $2,000?”

This response tells you EXACTLY who the agent is working for. If $2,000 is such a small amount, why don’t the buyer/seller agents get together and agree to lower their commissions by $2,000? That rarely happens. Agents are quick to recommend terms that take money out of the buyer/seller’s pocket, but they rarely, if ever, do the same for themselves.

Tell your realtor not to take money from your pocket unless they are willing to do the same! Commissions are ALWAYS negotiable.

416 Sue

Completely agree, there is always a side that the agent will pick, client vs builder/developer who will eventually pay the commission. There would be hardly any objectivity especially towards the deadline of construction and/or closing. Use your gut, agent is NOT your ally, they provide navigation as long as the deal closes to collect the commission. Keep that in mind, that’s their end game. Buyer has more at stakes, your financial risks, future cash outflow, a lemon home that could turn around your life into one never ending nightmare.

During home search, be proactive combing on listings in Zillow etc, the area of your choice, new development.. in fact give critics in every home an agent is showing you, see if they really listen to your request or not. Go visiting the recommended homes on your own, most agent only looks at paper listing, not the physical home. Decide on your own should you go for bidding or give an offer, compare w similar neighborhood, yes you have to spend more time to do the homework..

During the search of mortgage, don’t share too many info of your finance, pick your own lender, train yourself to make an informed decision.

I would advise a month before closing, please educate yourself in every step of the way, gather critical info you need to know on your own, make a list of actions, memorize the GFE or have it handy, take a driver seat to interview and hire your own home inspector, stay in contact with lender, title search officer, set up builder punch list and follows up, option of final negotiation if things go south etc.. Don’t let your biggest investment gets too dependable to an agent’s say, remember your end game (risk) barely crosses one bit of an agent’s and will disappear once you sign the dotted line. The most manipulative profession one could play.

Use agent when your time is strictly limited or a significant distance is involved, use agent mostly to bridge the discussion with builder/developer in terms of progress. When it’s time to sell, do it without an agent.

417 Michelle F

We recently sold our house. My question/comment has to do with a realtor who is quite active in our community (and who happened to be the listing agent when we bought our home 8 years ago). We ran into him a few days ago at a neighbor’s open house. He asked how much we sold our house for since we are still in escrow. We told him the truth, that one day after our open house, we got 1 offer. It was a solid, full price offer. This agent proceeded to tell us that he “has never, ever not gotten multiple offers” when he sells a house. Then he said he achieves this by using a vast network of “investors” (aka flippers) because as long as he has one solid offer, he can get his investors to make low ball offers, and it forces a multiple offer situation for the one true buyer. Doesn’t this border on being illegal? At the very least, it seems incredibly unethical.
I was very upset because I clearly remember when we bought our house from him, the house had been sitting on the market for months. He had reduced the price and that is when we put in an offer. Sure enough, he told our agent that he had just received another offer that day. We came in at our highest and best because of this. Now that I know his method, I think anyone considering buying a house where he is the listing should be aware of his borderline unethical approach. It’s completely disingenuous at the very least. Of note, our house is currently the highest price per square foot that has ever sold in our neighborhood. My agent didn’t have to create some fake bidding war to achieve this.

I would like to know if this is a common tactic or a poor practice? This is in CA. Is there any way to report his practice or am I limited to Yelp or some other social media site to out him?

418 Jill

As a current seller, I find this article problematic. We have received a very, very low ball offer in addition to them asking for additional appliances, full closing cost, a home warranty on a 2 year old house….all on top of the fact they are not pre-qualified for a loan! So yes, the seller in this case is quite insulted…and the hours and hours of showing and staging prep was not to receive an offer less than what we paid for the home prior to adding a privacy fence.

So buyers…Listen to your agents. Let them help and guide you. If you’re not happy, they don’t get paid. Don’t waste our time with showings and offers if you’re not pre-qualified for a loan or qualified for a lower amount than our asking price. We are already in a stressful situation. Emotions are high. Manners, respect, education all come into play with EVERYONE involved.

YES. WE DO BECOME INSULTED WITH LOW BALL OFFERS AND LACK OF RESPECT. AND LIKE IT OR NOT, WE DO TAKE THIS PARTICULAR BUSINESS PERSONALLY. THIS IS MORE THAN A PURCHASE…THIS IS OUR HOME.

419 Micky G

To condense this in the shortest possible I will state what personally happened to me by a reputable agencies top agent. He screwed me over THREE TIMES and then he screwed over a mobbed up builder. He no longer holds a license. The mobbed up builder did very nasty things to him. I made sure he lost his license.
I hired him as a buyers agent. I found all the properties and did all of the work. He did nothing but screw me over. I’m not dumb so on the third one I finally figured it out.
We looked at about 25 houses and three were nice. I had to drive an hour because I was relocating. His office was in the neighborhood. He was their top producer, he got deals done. No, he made as much as possible and had to kick back some of that to the agency.
Lets take this in order:
First house – He put down the wrong address on the contract and someone else got the house. He told me the seller would not accept a higher offer, that it was a done deal. – Believable
Second house – On the market for six months, pictures made it look pretty bad but it was a nice house. Owner was home, left so we could look at the house and came back early. Talked directly to the seller and asked if he would accept a certain offer, he said yes, we shook on it and I went back to my agents office to write up a contract. Figured the seller would accept the contract, he was happy about the terms and the fact of the matter was that he only had two perspective buyers in almost 6 months. Called the agent the next day and was told that there were three other offers. The house had no offers in six months and the day after I looked at it three people came out of nowhere? Two had mortgage contingencies so those were out but the third was a higher offer then mine which was accepted. I wanted to go back to the house because there was a time when a handshake meant something.
Same thing, the seller was happy with the price, a contract was signed and was not interested in a higher offer. I was like even though the guy had a higher offer he wouldn’t even consider a higher one from me? Was told that in my State that it was a different process. In the other State once a contract was accepted, that was it. – Getting very suspicious.
Third and final house – Was on the MLS, wrote a contract for about 10% under asking, was told the house went to an auction house and that I would have to go to an auction which actually would have been to my advantage because I might get it for much less. I said wait a minute, the bank has my offer at 10% under asking on a desk and wouldn’t accept that? It was beginning to be a sick game at this point. The house goes to auction, I show up and the auction house has Shills who get into a bidding war with me. I had figured out what my top offer was going to be with the auction fee and was going to stop there. I did and the Shills had this look on their face. I turn around and there’s my agent! I get the whole your going to let them beat you? You won’t go $1000 more? No because with the auction commission that was over the listing price! The Shills tried to back out, the whole thing was one huge set-up. My agent was like well there you won. I said no they won and they can keep the house. The auction started at 40K under the listing price and the Shills bid me up to over asking. I said in no uncertain terms that it was their house. I even congratulated them. My agent was howling you should reconsider, you can have it for a little more then you offered. – Sure I was played
I was mad. I ended up talking to a guy that I knew was a builder and brought up the agents name. He said that scumbag? Let me tell you what he did to me and my brother. They had built ten townhomes. They were sure they were priced right and would sell. They sat. When they were doing little upgrades a car pulled into the driveway. A couple were very interested in their townhouses. Their exclusive agent was the same scumbag who played me. He was told to start at a certain price BUT they wanted them to move so he could go down 20K if he really needed to. They just wanted to recoup their money. A few months goes buy and they are driving past some other townhouses that someone else had built a few miles away and saw the car that the couple were driving in one of they driveways. They stopped and rang the doorbell. The couple was home and invited them in. It was supposedly a very friendly chat. They asked if the couple had bought the townhouse. They said yes, it was a toss up between yours and this one. Why did you choose this one? What was the main factor? The price. Your agent would not come down a cent and this townhouse while not as nice as yours was 10K cheaper and was all we could afford. The guy and his brother were livid. He told me some of the nasty things they did to the guy, I asked does he still have license? I think so. I said lets team up and go after his license which is what we did. You had a buyer and seller who both screwed over by this guy. I looked up who to talk to, there was a meeting with the regulatory board over this guys ethics and all three of us presented our cases. I had copies of contracts and returned escrow checks, the builders had a notarized statement from the couple and in the end he lost his license. He now owns a hotdog joint. Someone keeps vandalizing it.
It isn’t me.
In the end I was transferred back to my original State and for a while I owned two houses. I kept this one and rented it to my nephew. That is something I advise against, renting to relatives but that’s a whole different story. Buying and selling the house that I eventually bought through a different agent were much easier. I’m back in my original house and am looking for a house closer to work, about 20 minutes away. I am working with a buyers agent again and have little trust in her. She seems to want to sell me what she wants to sell me, not want I want. I never did tell her about my experience in the other State but she is really getting on my nerves. She is either extremely stupid or as sly as a fox. I suspect both. An example of the latest BS: She was all bothered by the trim inside in a house we looked at. I said I don’t care about the trim, I’m a bit more concerned with some of the rot on the garage that they painted over and the drywall screws that were popped in the ceiling. To my understanding there is not enough insulation and in the summer when they A/C is on and it’s nice in the house its too hot in the attic. That’s what my painter told me. She was just going on and on about the trim. I was like forget about the trim, lets concentrate on the rot on the garage and the screws popping. It might be time to get a different agent.
Like many others I have seen the good and bad. I would expect most to be good but in all honesty I look at all them like they are crack dealers. Some of them will screw you over for a few hundred dollars in commission. They are basically thought of as glorified used car salesmen and rightfully so in some cases. For instance Michele REMAX, look it’s my money, I worked hard to make it and you get a 6% commission in my State. I have CASH. I don’t have to get preapproved, I have a letter from my bank that I have X amount of funds. All you have to do is show me the house I want, my attorney will look over the contract, I will never use an inspector that you want me to and most importantly it doesn’t take a rocket scientist to do comps. If the same style houses are closing at a certain price in the same area then why do you think this one is priced at 25K more? Gold in the studs? You are going to try and sell me one that you are the listing agent for so you don’t have to split commissions. Then you are going to present an offer to the seller and try and encourage them to take less then what the house is worth so you get the whole 6%. In the end you will try and screw the buyer and seller over. You are the perfect example of the crack dealer agent. BTW I don’t sit at a desk, You sleep peaceably in your bed at night only because rough men like me stand ready to do violence on your behalf.
I don’t work on commission and never know when I might get killed on the job. Tell me again how hard it is to miss a soccer game.

420 Shelly

Thank you STEVE for you quick response to such an ill advised article. This article and articles like it are the reason why REALTORS(R) are not respected in their profession. REALTORS(R) are one of the few professions where we do not get paid until the transaction is complete. We don’t get paid for our time, gas, or expertise until the client closes on a property–IF they close on the property at all. Then to find articles like this one, it just makes no sense. Mr. Holman has obviously had a bad experience with a real estate agent–and for all of you out there who have had bad experiences–let me apologize. Unfortunately there are bad people out there in EVERY profession. However there are lots of good, law abiding, professional, REALTORS(R) out there who know their market and a smart buyer who is inexperienced in Real Estate should take their advice into consideration.

421 Shelly

I meant thank you STEVEN.

422 Jennifer

This is such an irresponsible post. Most agents really DO want to help their clients. Most clients know next to NOTHING about real estate markets, processes, or negotiations. Yes, we want you to buy a home in a reasonable amount of time. If you are an average buyer, there is no reason you should look at 30 or 40 houses. If you do, you are either in a very competitive market and have lost out on offers you’ve put in, your agent doesn’t really know what you are looking for, or you are not a serious buyer. And serious lowballing is a mistake in most cases. I’m not going to touch on all your points, but honestly, this is a moronic post. When we become Realtors, we are held to high ethical standards. Our job is to help people through the largest financial transactions of their lives. We deserve a lot more respect than this post gives.

423 Laura

We made a backup offer on a BOA REO. The offer was excepted at $45,000. The other party did not respond. We gave a $5,000 good faith cashiers check to our new/and the listing realtor. Should only have been 1 to 3%. We received paperwork along with the contract that said there was a HUD 1 statement and they needed 30 days to close. This is a cash sale and I don’t know what the cost are yet. They put the $5,000 in a trust account not an escrow.
When I asked for more info on the close This was the reply; Once we receive the ok to close from the seller’s title company than they will put together the HUD1 statement. This will tell us the amount you will need to wire. You also get credit on the HUD for your earnest money deposit, that will come off your final total. Also after we get the ok to close from the title company, they will send me more closing information, like the wiring instructions for your funds, along with wanting to know when and where they will you would like to sign the closing documents.
I was thinking that you could sign at my office when we close?

I’m hoping we didn’t step into a lion’s den.

424 Laurie

Your article reveals a disdain for Real Estate agents, but it doesn’t inform potential buyers and sellers about the nature of a real estate deal. Your conclusions seem to me uninformed and overreaching.

Here’s an idea for a better article. If you’re not an agent, do a deal on your own and then educate everyone on what it took to get it done, and tell us why you would or wouldn’t do it again. Talk about your dealings with the agent on the other end of the deal, what you liked, what you didn’t like. If you’re an agent, let people know what they should look for in an agent, and what they should avoid.

425 Shawn

For the most part, this article is spot on. Most of the negative comments on the article are from real estate agents/brokers. I own both apartment buildings and single family homes and because of the types of things described in the article, avoid using agents whenever possible. I avoid using a buyers agent but I will squeeze every bit of information from the sellers agent. I do not really have to squeeze to be honest.

I will offer some suggestions for buyers:

First, if you are going to low ball, know your market and backup your offer with facts. Find comps in the area based upon overall price, price per square foot and if you cant do that, explain that your offer takes into consideration all of the work that needs to be done, traffic in the area, sub-standard school systems, whatever. You goal is to avoid the low-ball offer being the “I am trying to just screw you”.

Second, your agent is not your friend, do not treat them like one. Your agent wants you to buy a house, your agent does not make any money unless you do. Assume that whatever you tell your agent, they will share this with the seller’s agent. I have seen it too many times, buyers and sellers agents talk, a lot. Never tell them how much you are willing to pay, EVER. Again, assume your agent will convey this information to the seller’s agent. Agents need deals to get done to get paid.

Third, do your own homework, do not expect or trust your agent to do it. First, agents are limited to what they can tell you and second, they don’t want to give you the bad side anyway. Research crime rate, historic housing prices, schools and the 10 other things you want to know.

426 Rachel LaMar

I completely agree with Sharon. I am a broker and also an attorney. I never focus on the “deal” – in fact, I have counseled many clients more times than I can count NOT to purchase a home. People say bad things about every profession – when I used to actively practice law I was a good attorney, but knew many bad ones as well. To lump an entire group of people together is simply stupid. Each individual must be judged on his or her own character – if we lumped them all together as being a horrible class nothing in this world would ever get done!

427 Chris

I think the truth lies somewhere in the middle. I doubt Realtors prey upon unwitting home buyers, but if they work to earn money by selling hoses, you will find their greatest interest there, even if they claim and believe otherwise.

Capitalism works because it operates on the fundamental principal that most human act in their own self interest. To an extent, a realtor won’t hurt you to badly on any deal because a decent reputation ensure the next deal, but they will push the line as much as possible in order to maximize and expedite the closure of the current deal.

As long as you know and recognize those facts working with a realtor poses much less risk. Trust their knowledge, but do not allow pressure to persuade your position. If you really want to risk losing a deal over 2K, you may exercise that right, and the realtor should honor your request, albeit with protest, but don’t cry when the deal falls through, as you decided in advance you don’t want the house for that price.

Lastly, in regard to the many arguments I read about Realtor “working for free” unless they sell. I don’t feel sorry for them, they work on system of averages in a career they elected. On person even tried to break down the numbers and costs on a 3K commission (which represents a cheep house in our market). Even if he or she used $500 for lunches, gas and babysitting while taking you to see houses, plus 40 hours of time and office labor. they still make 2.5K for a work week, which beats my pay as a 13 year experienced teacher at about 1.5K for a week with a lot more hours spent.

My aunt spent several years in realty and performed well, making far more than she did as a teacher. Many deals fell through, and many deals didn’t, but the average value of those that did greatly made up the difference for the time spent on those that didn’t. She never sold a house for more that the buyer wanted to pay, because capitalism simply works that way.

428 Chris

Please pardon the roughly 10 grammatical typos in my previous post; a lot of words lost “e”s and “s”s and a few commas lost their way.

I didn’t proof it, because I typically proof immediately after publishing, as you can do in Facebook. I believe all of you possess the intelligence to fill them in where needed.

Once again, please forgive this teacher’s egregious error, in not proofing before publishing.

429 Kevin

Great read. I’m currently a buyer and I think the truth depends on the agent you’re using and it’s too hard to tell the difference between a reputable agent that is representing you and one that has their best interest above yours.

I’m looking at a $320k home in the Orlando area. Allow me to list the points that led me to believe that she only wants to make the sale and could care less about my finances.

1. She told me not to ask too many questions about the home prior to making an offer. Wait until after they accepted so they are more willing to tell the truth about the home.
2. She provided me with a comp report proving the house is worth the current list price of $330k, although the home has been on the market for 6 months (over a month and the current list) and I found 3 other homes on the street sold within the last three months that weren’t short sales or foreclosures which didn’t make it to her report. If they were on it, her valuation would have been much lower.
3. While negotiating she keep grilling me for my walk away number. I caved and guess what, that’s what the seller’s last concession came in at. I know she and the listing agent are just looking to close the deal and get rid of both of us (buyer and seller).
4. She pushed us to use her inspector and didn’t want us present for the inspection although I’m paying for it. She just wanted us there at the end of the inspection.
5. She brought another buyers agent “in training” with her to the inspection to talk our ears off so we couldn’t interact with the inspector.
6. When the inspector said the pool heater is so rusted that he can’t test it or identify the make, model and size so quickly said it was known before we made the offer. It wasn’t I just checked the disclosure and the listing.
7. So then she said don’t make the pool heater an inspection negotiating point because the seller will consider it of all things “cosmetic”. My reply was if they advertised a hot tub and it’s not hot, it’s a cold tub and it will cost me nearly $4000 to replace the heater to make it a hot tub again.

Even though the author is stereotyping an entire industry, I believe he is spot on due to the conflict of interest created by the nature of their compensation. The seller’s agent doesn’t care about how much the seller gets for their home, the seller’s agent will just work the seller to come down as far as they will go to meet the buyer. And conversely that’s the buyer’s agent MO as well. They need sales on the books to get paid and $10k delta in the sale of one home doesn’t affect them as much as zero sales. This is my third home buying experience and I’m batting a 1000 on sleazy self serving agents. I believe there is a possibility there are good agents out there but I think they eventually get pushed out of the industry due lack of sales correlated to their honesty.

430 Wright

If you are a home buyer and you are sincerely worried about the points made in this article, there is one way you can avoid all of negatives.

Simply hire a real estate agent as your Buyer’s Agent and pay the real estate agent for their time, effort, and professional services.

The amount of money you pay them is negotiable and it’s a value-for-value type of relationship.

The real estate agent is not working for free if you don’t buy anything and you can submit as many low-ball offers as your heart desires.

You can look at as many properties as you wish…10, 25, or 97 different properties.

Everyone is happy if it is a value-for-value type of relationship.

Why would anyone expect someone to work overtime for free?

The best thing to do is have a real estate agent show you a simple Buyer’s Agent agreement. You won’t be disappointed!

431 Renee

I had buyer’s agents for my first two home purchases and they might as well have been working for the seller. They did nothing to help me figure out the best price to offer and in fact pushed me to offer as close to list as possible, and balked when I asked them to ask the seller for any repairs. Told me I wouldn’t want to upset the sellers. For the second house, I was looking at possible home inspectors and the agent went ahead and brought in an inspector without my consent (of course, I had to pay him) who completely missed a huge plumbing problem that I had to pay to have fixed the day I moved in. And of course the agent did nothing to try to help me recoup the cost from the seller.

I’m looking at houses now for sale and I’m just calling the agent myself.

432 Anonymous

Mr. Holman, you should really check your facts and stop generalizing when it comes to an entire professional industry. I am realtor who takes great pride in helping my clients find the right home for their needs. I often tell my clients to keep looking if they are not sure about the homes they have seen and I am always honest in giving them advice. If this means they take a little longer to find the right home, then so be it. Don’t assume that all homebuyers have done their math or know what they should do in an offer situation. Many don’t know what to do and would be lost without a realtor to represent their interests. You should be ashamed for writing an article that attempts to tarnish the reputation of an entire industry. We should do the same for bloggers.

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