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).


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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{ 5 comments… read them below or add one }

1 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!

2 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.

3 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.

4 Teresa

I am so tired of hearing Realtors complain that they spend their own money on gas, lunches, time, etc. to show homes. In the end realtors get paid 2 1/5 to 3% commission on either end of the sale. The number of hours that you put in to sell the home or buy the home is not equal to the hourly rate you would be paid. Realtors will not spend 160 hours per month selling a home for 1 client. The hourly rate of realtors works out to be in most cases $1000 per hour. Sure you have some expenses but they are business tax deductible expenses. The rest of the working class pay our car expenses without a tax relief. Give me a break with your whining.

5 Paloma San Basilio

Most people who disagreed with article are -real estate agents. Figures!

And to the sellers that say he/she gets insulted by low offers because “that it’s my home”…well…it is YOUR home..but once you put your HOUSE ( an architectural structure for buyers) for sale, is only — BUSINESS. Nobody cares ( except you) how attached you are to your home or “how many memories you’ve created it in it” ( my kids grew up there, my daughter got married there, my dog died there and it’s buried in the backyard)
Boo-hoo hoo. Bring me out the violin !
Do you want to sell the structure ( house) or not?
In a business negotiation you have to omit your emotional feelings and either sell or not sell. If you get “offended” by what you consider low offers you are not ready to sell. Stay in the house and die there of old age. In the end, it’s just bricks and mortar to a buyer and the real estate agent. After you are dead whomever inherits it will sell it without consulting your “ghost” and will not care about “the memories you made there”.
There are still selling homes built in the 1770’s in the USA you think anywhere cares what the “ghosts” of the original owners think?
Wake up!—it’s a business deal. Not your kidneys for sale.

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