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?
588 replies on “Why You Can’t Trust Real Estate Agents When Buying A House”
Hi Brenda,
You are correct. I am an agent who has made some typos in this blog. I am a detailed agent though. I am very causious when it comes to the contract. I do not want to write something up and the next day find something that I should of put in the contract and the blame is me. Never the less, I am not saying things do not come up and we just can not think of everything. Or if we did the contract would be a book. Brenda is right though the bad does outweigh the good honest agents. It is like that with everything in life though. The poor outweigh the rich 9 to 1. The smart business owners are outweighed by the average employee at least 9 to 1. This is why the 1 good one in anything usually makes a fortune in whatever they are doing. I know agents who make a million dollars a year. They are worth every penny and there clients will tell you the same. I also know many agents that make $4000 a year. There client will also tell you they are not worth even a tenth of that.
Also Brenda said the best thing about this blog and it eliminates all arguments. IF YOU DO NOT LIKE YOUR AGENT THAN FIRE THEM AND GET A NEW ONE.
Real estate agents are extremely useful to buyers and sellers alike if you find the right ones. That’s the catch, the good ones. If their just in it for the money then their merely servicing themselves. It’s extremely important for the consumer to do their homework first to make sure they’re getting the right realtor who’s business is to understand and work diligently for their clients. If they do find that realtor, then all the comments above are the pitfalls you’ll avoid during your home sale or purchase.
With today’s resources at everyone’s disposal, real estate is changing from relying on your agent to do all the work. With sites like Zillow, Trulia, Realtor.com and others. The consumers are able to do much more research and in some cases, be their own realtor. There’s also sites like Sundaybell for instance that gives the consumers the choice to ask all the tough questions like whats on this blog that’s related to the services, commissions, experience, etc….. It’s all done anonymously so you can make the tough questions simple and start the process on a better foot…for free.
Great blog, points taken and points taken away. But for the most part, the public needs better service then just being sold to the highest bidder. You all have options and this blog points you to some pitfalls that can be avoided thanks to blogs like this…well done Mike. So do your research, find your realtor and make your experiences good ones since we’re all in real estate and it’s not small numbers we’re working with here….it’s your big investment of your lifetime…so do your homework its all out their at your disposal.
Lets not be naive. I have found that in every profession you will find honest and dishonest individuals. It is not right to trash all Realtors because you found a few bad apples. You should enter all negotiations backed up with good research. Buyers and sellers should interview the agent that they want to use. they are hiring them to do a job for them. Stop using aunt Betty or a friend as your agent. I can’t tell you how many times I have seen buyers using family and friends that are clue less to represent them.
The spelling issues throughout this entire set of responses is indicative of the reason the US is such a terrible mess. Any moron can take a Learning Annex class and become a real estate agent. Especially if he/she lives at home with mommy and daddy and doesn’t have to rely on an income. Wow.
Ol Steve,
Any moron can take a Learning Annex class and become a real estate agent. Especially if he/she lives at home with mommy and daddy and doesn’t have to rely on an income.
Let me tell you Steve. I am a real estate agent. I do not live at home with my mommy and daddy. I bought my first house at age 19 while I was making 2 car payments and paying to put my girlfriend (wife now) thru college. I did this on my own. Real estate agent is a tough business and until you do it you have no idea what it is like. The class to get your license is a hard 6 month course and I know it is not going to get your Phd degree or anything. But the license part is a joke compared to what it is like in the business world.
Imagine every day you get to wake up and call people only for them to scream and act like babies when you tell them you are a salesman. A manager behind you saying you need to be doing more business. A family at home you never get to see because you work around the clock. Only getting paid a small portion for your effort. This is why we are % based and not hourly. Then you could not afford us. On top of all of this people everyday think you have a cake job and they write blogs about you saying how easy it is and that your all a joke. Steve let me guess what you do. Your probably a burger flipper (ya that’s a real job). Come on Steve you can do better than just call us a moron. Try harder.
Brian you hit the nail on the head. Everyone stop complaining and it is easy. If you do not like your agent or they are not giving you the service you feel you deserve than FIRE them and get another one. Simple fix but this blog has went on forever because people just want to complain instead of understand that one sentence.
This article is a huge ignorant stereotype. All people are different therefore all REALTORS® are different. To turn this around, “all financial advisors are only looking out for their own best interest, and don’t care about their clients needs or best interests. They will sell you on the investments and insurance that they will make the most money off of. They will lie to you, with their own best interests in mind. They are only concerned about how much money they themselves make.” I really don’t think this, but it is just as ignorant as saying the same about a real estate agent. What a ridiculous article.
Mike- seriously- it really sounds as if you have a major thorn up your ass that has very little to do with reality, but you sure do want to apply a broad brush. You should not- It makes you look like you have some sort of an agenda that is falsely driven as it applies to the majority of professionals.
Your blanket statements really make you look very, very bad! Actually worse!!
Hey Ron seriously, it sounds like you have a major thorn up your ass about posts that urge people not to blindly trust their real estate agent.
It doesn’t make him look bad it makes him look like he’s concerned about people. Something real estate agents I have met know very little about after they cash that commission check.
I’ve been in the property management game for 15 years now, and there are two people who still owe me money. One is a Broker and the other is also an agent. I actually refuse to do business with most of them.
In fact anyone who is thinking of having any dealings in real estate whatsoever should read this page about Real Estate Artist B.S. Detector. http://www.johntreed.com/BSchecklist.html He is talking about real estate gurus in this list but item 20 list words that shady creeps use to part you from your money.
I think you’re just pissed because Mike has exposed your best lines as a complete fabrication.
Rachelle,
You have been in the “property management game for 15 years now”. Then you should know that this is a business you are running and in any business there is always going to be someone that owes you money and does not pay. Example: look at the banks right now. Why are they having so many foreclosures. Because people are not paying. If you have been in business for 15 years and only have 2 people that owe you money that is great. I have had people owe me money since the first year I was in business. Had about 3 or 4 by my second year in. And the article you put in your blog is trash. If I were going to take your money there would not be a list of words I would use to do it. It would be a more case by case basis. I would find out what someone’s wants and desires are and use that like bait. So it would be different for everyone. This does not go on either. If it did I have one simple solution that would solve it everytime. It is called turn that agent into the local realtors association. The realtors association has it’s own court that is free. Any complaint they get they have to try and solve. The good part is if you are not a realtor and your complaining about one than the realtors association can’t make you do anything if they determine you were in the wrong. But if we the agent was in the wrong they can hold our feet to the fire just like a real court system. That would solve any issues on a realtor taking money from someone. And I know what your thinking, it’s the realtors association they are going to take up for the agent most of the time. No they do not. We agents loose most of the time. The realtors association does not want a bad name and so most of the time they are in favor of the client. So it is pretty much a win win for the client. The client can not be held to act if the realtors association finds them in the wrong, they do not have to pay money to have this done and if they win the realtor is held to comply like it is the court system. Problem solved! The end, what issue next?
I’m a commercial broker. All this catty banter is exactly why I chose not to become a residential broker. 90 percent of the residential folks I’ve met and or dealt with are childish, disrespectful, and unprofessional. These posts are perfect examples.
Definitely an entertaining read though, ha.
Commercial Guy,
Your right. We are all those things. But we only have 2 choices. Either we ignore it and keep going about our business or we nip it in the butt and face it. I have ignored it for a while and am tired of doing that. So I choose to nip it in the butt. I will continue to do so.
I know a lot of commercial guys that are what you call us residential agents also. Almost every commercial I have meet is shady as well. The famous saying in my area for commercial agents is “send your buyers on over to my office and if they buy I will buy you lunch”. Every time I have had a commercial buyer I call and ask if they will cooperate with me they tell me the famous saying. Like I am going to take lunch instead of a $20,000 payday. Ya that sounds equal. Anyone ever had a $20,000 lunch. It taste the same as a $10 lunch. Commercial has the same kind of agents as residential. Good ones and bad ones. Good ones stay bad ones get out of business.
I don’t mean shady – I mean bad business people, people that will make you look bad as a professional for being associated with them. The only bad commercial agents I’ve dealt with, are residential agents ‘trying’ to be commercial agents. Any of the worthwhile commercial firms (CBRE, NAI Global, Colliers International, Grubb & Ellis, etc) are not easy places to get hired.
Lunch or a referral fee is generally the offer because most folks are clueless about the complexities of commercial transactions. It’s a completely different animal. In most cases, it’s in the buyer’s best interest and by no means a shady situation. I’ve taken many a buyer off a friend’s hands for a referral fee and it’s never been a shady situation, it’s somebody accepting the fact that they don’t have the knowledge to truely do a good job for the client. You mentioning the $20,000 payday shows that you are placing your needs before your clients (assuming you aren’t experienced in commercial – which now I’m sure you’d say you are, even if you aren’t) I for example, have referred a number of home buyers to residential agents – because I’m clueless when it comes to buying a home. I used an agent to buy my own house rather than doing it myself.
If lunch is the first offer you get, I’d say that’s just a jerk seeing if you’re stupid enough to accept it – or he’s just giving you a hard time. When you’re working on assignments like a $35 million dollar 200,000 square foot office listing(or something comparable), your ego tends to get inflated.
Interesting on how much attention is made on detail here but the same poster dont realy add to substance on the subject. Well like some other poster in here i am french but i make tons of writing and spelling errors. Maybe substance in the US is what was lacking and not the spelling errors. Fortunately enough there overhauling the whole financial system and in the end there will be more substance to the consumer where it counts…
For the priest in here well you assume to much and are totaly clueless to what my work transpires. But you kinda get in a certain sense why you should take time to chose your realtor carefully. I for one always have my clients best interest at heart. The result in not necesarly rewarding for me but is always the best thing for my clients. Ive even lost buyers because of being honest, they whant it now and convincing them to let go a home they love because i know it will ruin them financialy a few years down the road. A week later they called upon another realtor to close the deal on another great home i found for them. These sort of things happen all the time in this busines. Did i deserve such tratement, most defenitely not but like they say, win some lose some and in the end it equals out. Some people expect from us to be saints but where just normal human beings and i can why sometime realtors tend to lose sight of their passion for this profession when the are treated in such a way.
I have alot to offer to buyers and sellers and what transpires from my work is a high quality service. This is why i have alot of sucess in this business. I dont make giving the best service to my clients an exam, i make it a competition. Clients generaly see the difference i make and that is personnaly rewarding for me. Advice that saves them time, effort and money usualy speak for itself…
Commercial Guy,
You just proved my point. “When you’re working on assignments like a $35 million dollar 200,000 square foot office listing(or something comparable), your ego tends to get inflated.” Commercial guys have an ego a lot of the time. And you talking about the guy was a jerk to see if I would just take the free lunch instead of the payday. Thanks for helping me prove my point.
Second, no I do not put my interest first. In talking about losing a $20,000 payday. I never said I was the cause of my buyer not buying the commercial property. I just said I lost out on a $20,000 payday. There is a difference there.
Third, I do understand commercial. Not as good as I do understand residential. I know commercial and residential have as about as much similar as a boy and a girl. I get that. And I do not know where you are from but where I am at if you have a license then all the real estate companies fight over you. There are very few companies that would be so elite that they want to put hoops for you to jump thru.
Lastly, it is not that hard to get your commercial or residential license. Here it is a very tough, stressful 6 month class for commercial or residential. It is very tough and stressful but it is only 6 months long and cost around $600 or so. So this tells me that is is rather easy for anyone to get a license. And commercial guy if you know business than you should know the 90/10 rule. 10% of the agents make 90% of the money. 10% are thriving and 90% are starving. 10% are great agents and 90% are crap. This is the rule of thumb for every business not just real estate. Now with that rule and the 6 month class to get your license would you expect there to be a lot of smart agents out there? I would not. I would expect 10% to be good. I have mentioned this rule over and over in this blog to the point I feel like the repeating parrot. Why do you expect real estate business to be any different than others?
Ol one more thing commercial guy. Why do you hide behind the commercial guy name? You are wasting time if you post on a blog in the day and are not putting your name out there so people can find you. You are not making hay while the sun is shining so to speak. This is also a residential blog so it’s another sign of you wasting time in the day. I put mine out there and encourage anyone to call me and lets discuss real estate. It is in this blog. I do not hide. The ball is back in your court, commercial guy.
This is 100% true.
In fact, one of my co-worker sold his property privately and buyer brought an agent.
1. The agent decided to deal privately by cutting off his brokerage.
2. Seller disclosed ‘major’ issues to the buyer’s agent. The agent told him that if I were you I wouldn’t disclose.
All he cared about was his tax-free commission.
I can always count on responses to this blog brightening my day… have any of you considered getting an e-meter?
Raj
I do not know where you get the idea of it is a tax-free commission. Any commission must be passed thru the real estate company and that is where it is documented and split between company and agent. If the agent also told you not to disclose something than turn him/her into the real estate commission. It is that simple. If they determined this is true and if he/she took the commission and did not run it thru the company for tax purposes, well they are in big trouble and you win. It is that simple. All these problems are so easy fixed and yet everyone is acting like there hands are tied and they have been shafted. This is an exact reason everyone needs a good agent.
Chris,
No matter how desperate I become I will never steal your e-meter.
Raj,
Yeah I guess the owner should immediately call the Real Estate Board, and complain except, he got a least 13% off the bill for HST and possible a sizable discount for paying cash. I’m sure he’ll get right on that.
R
Rachelle,
Not the owner. Raj should call.
Chris,
You know that the guy who invented the e meter also thought that with that devise he could prove that tomato’s screamed when they were sliced. I am not saying he was crazy or anything. I’m just saying.
This is the second time we wanted to buy a house that has been sitting for over a year. We we’re told both times, no one has bid, and the house has gone down in price… HOWEVER, when we put the bid in almost the next day we would get a call from the realtor saying someone else has placed a bid and out bid you???? We went from no one looking to no bids to out bids all in less then 48 hours. Am i to assume there is BS going on here. This happened to my cousin as well in another state. Something tells me there are games going on here.
I’m not an agent, nor do i know much about real estate. i’m a first time buyer.
can someone help me please or is this a game all agents play?
“You should get a bid in quickly before someone else puts a bid in” – in the world of REO’s, this is true. If the home doesn’t need a ton of work and it’s priced right, there will be offers and quickly. Other times, the REO agents are waiting for their investors to make a move and get to keep the entire commission. And it is appropriate if the house has been on the market a month and had a price reduction recently. These properties sell fast in my area of Long Island. I never tell a buyer lies just to make a sale. I educate my buyers so thoroughly and guide them properly to the point where they are not looking at homes for 3 months or more.
This entire article is agent bashing and if you are an agent, you better watch your COE behavior. And since you are so well-versed with the above “tactics”, obviously you have used them yourself. Just like other professions, most agents are honest and are not out to make a quick buck. We are to point out obvious things that buyers and sellers aren’t seeing. We let them make the decision by offering our professional advice based on past experiences with past clients and customers.
I have a 100% customer service rating. My office has a 98% customer service rating. Those ratings come from the people we work with. That speaks volumes. If we weren’t honest, those ratings would be poor.
You do realize that you make yourself look very bad to consumers. Do you really think they are all agreeing with you? No. They will stay far away from you.
Was only kidding about the e-meter thing… thought it was worth a laugh. I am really enjoying the back and forth in this blog though.
Cre8tivecat,
I know this is frustrating. It does happen all the time and to a first time home buyer it makes you want to pull your hair out. I do a lot of foreclosures and here is what is more than likely happening on the back end that you are not seeing. The saying goes “nothing sells like a sold house”. When I put an under contract sign on a house it never fails that I get 15 buyers call me and say ol man I wanted that house. That is why I put the sign out there. I don’t really care to tell the world it is under contract. Anyway on to what is happening. What is happening to you is called shopping the offer. With houses that have been on the market for a while. They have probably had a lot of people look at the house. If you have 100 people look at a house there is bound to be 5 or 8 that like it and just have not wrote an offer for some reason. So when you write an offer and the listing agent gets it. The first thing he does is call those 5 to 8 that had interest and just have not wrote an offer. Well when nothing sells like a sold house this puts fire under them sometimes and makes them think I got to get that house. So another offer shows up out of the blue. This is called shopping the offer. The why some agents do this is because if you have more than one offer on a property there is only one thing that happens. The price goes up.
Now on how to fix this. If you have a smart buyer’s agent they should know to do this to prevent shopping the offer. The first thing you have to do is have a check up from the neck up and get your mind right. Do not in no way shape or form be emotionally attached yet. Do not fall in love with the house at this early stage. Have your buyer’s agent write the offer. Attach a deadline with the offer. A time is of the essence so to speak. Make the offer where it is delivered at say 11am or 12am and the seller has til 5pm or 8 or 9am the next day to respond to your offer. Have your agent in front of you not away from you (depends on if you trust them) call the other agent and say (I am sending you an offer right now but I wanted to let you know 1 thing on this offer. It expires (whenever your deadline is). The reason we added this in is because my buyer has 2 other houses they really like better than this one but they did not want to count this one out before they moved on to the other 2. My buyer is highly motivated and we need to know an answer quick so that if this does not work out we need to move on). This does 2 things. The purpose of the deadline is to try to not give the list agent time to shop the offer. List agent will still try of course but the one that usually drops the ball is the other buyer because if they hear that the house has an offer and they want to move it usually does not give them enough time to come up with a game plan, talk to the bank to verify any questions they may have, and meet there agent and sign an offer as well. Even if they get it together it rushes them and sometimes they think this is to rushed and they are making a mistake. The other thing it does is make the seller think you are looking at 2 other houses and that if they do not work with you on this one you will walk away in a heartbeat. So you are more likely to get your way in negotiation. This is why you can not be emotionally attached yet. Because if it does not light a fire under the seller, you have to walk away. Now sometimes my buyer’s came back the next day and said ok were gonna give you 1 more chance. But if you cry wolf to much and do not do what you say sellers tend to catch on you bark a lot and no bite.
This does not work sometimes with the banks. Banks respond when they feel like it most of the time. So if a deadline is there they will usually ignore it. If you walk they will not care. If it is a small local bank then sometimes this works. Big national banks with tons of foreclosures and offers daily, forget it, they will not even notice it was in the contract. It may take up to a week or 2 to hear back from those offers.
Hope this helps Cre8tivecat. Hay your the first one on this blog that has not complained about agents either. Let me know if you need other help. Thanks,
Chris,
I figured you were only kidding. The guy that did invent that really did think tomatoes screamed when sliced and he really felt that machine could prove it.
This blog is all about hating agents so I am bluntly honest here instead of my usual nice smiley agent self. This is where I get to prove the crazy people wrong and I get to do it in front of an audience.
I might start selling tickets for everyone to step up and try to prove me wrong on real estate.
In many ways the articles is fear mongering and not giving proper information and ca be giving false information in some situations. The problem is, a Realtor can only deal what they have available to work with. Also, Buyers and Sellers have to be realistic with the market situations, property particulars and condition of the specific property, location and market factors effecting the immediate neighbourhood, not the factors affecting other neighbourhoods or regions in the province, State, or country. What goes on with one property is not always the same with another. Factors such as heating system, time of year, type of property, comparable sales in the neighbourhood and region all have varying factors affecting what is done in a offer process and how one deals with timing and making up an offer. Furthermore what goes on in one market place is not he same as in another area, region or part of the same city, neighbourhood etc…. I dislike it when people generalize and make one situation fit all situations. Firstly this is wrong and does not suit all people situations and properties. When looking at the time of the year and market situations what happens in March, June or in the middle of the winter varies greatly. Also based on property type and location prices, conditions and urgency may vary greatly. A generalized comment is simply being ignorant and breeds more ignorance for the reader if not educated with the proper information.
I have never knowingly forced or coheres a client into doing something that I sensed was the wrong move for them. I should also add to this, that in some markets and times of the year a client may feel that the market is moving too fast and they are feeling pressured into doing something quicker than they would like to do things. If left up to the client, they may have to lose a couple sales and prospective properties before they may be able to buy something. This is out of my control but is based on the competitive nature of the market and who is the competition.
Real estate is not as you know anything like buying investments and should not in all situations and circumstances be looked at in the same way. However, I am not saying that one cannot use real estate as an investment vehicle. The factors are different and cannot be generalized as you would =also not do with all investment options.
What a Real Estate Agent or Realtor does under specific situations may vary and justification is based on specifics of the Buyer / Agent relationship. If under a Buyer Agency agreement contract the Realtor is to protect the interests of their client firstly. In doing this the Realtor has a fiduciary duty and role to play to represent his client. At no place in the article is this ever mentioned, also it does not mention who the Realtor is working for, Buyer or Seller. When the Buyer states they do not want to be represented by a Realtor, the Realtor is legally bound to represent the Seller, something that was also not mentioned in this article and is poor advise and a significant fact that was conveniently missing. Simply fear mongering and use of scare tactics are being expressed throughout the article with care, prudence and alternative legal council should be recommended in situations such as this.. As a licensed Realtor, I could not say what the writer of the article is saying because I would be in serious breach of my responsibility to my client and as well to the prospective customer whom is at the other side of the transaction.
My parting comment to readers is to due your due diligence and find a Realtor that you can work with and ask many questions, know the market situations and what to expect before going out and understand what situations you are going into when looking for specific properties before signing a Buyer’s Agency agreement. However, also be aware that not signing an Agency agreement with a Realtor can also place the Buyer is a place that the Realtor is not representing your interests but that of the Sellers.
I have to agree with everything you say John except the part about the representation of sellers and buyers. Where I am at if you have agency with someone and the other party does not want to be represented. Then you represent the one with the agency paperwork with you. So if the other party wants to do something stupid. You just look at them with big eyes and say please sign the contract.
The part about every market being different and each case can need different things is dead on the head of the nail though. Now if we can just get everyone else on here to understand that.
This post is very one sided and applies to any sales activity, ie:buying a car or a new appliance. Yes, sales people are paid when they make a sale but to suggest that all licensed and professional realtors want to rush the buyer through the deal just to make the sale is naive.
I have been a real estate agent for two years now in AZ. Now in 2006, I graduated with a MBA from Thunderbird down in Glendale, AZ. A lot of Realtors I know have a high school diploma and that is it. Does that make them less of an agent? Absolutely not. So, what makes a good agent? I believe a good agent is one who shares not some, but all available market information with their client.
The area I live in, the market is changing fast. Two years ago total supply for homes on market was around 4000. Today, homes on market are around 1800. That is an incredible drop! Again two years ago it was pretty easy to negotiate price. Today, not so much. It is a lot more competitive. Multiple offers on properties are becoming the norm and that can be a very frustrating experience for buyers (especially if they are first time buyers).
In a competitive market a good agent with the necessary experience is critical. If buying or selling real estate, make sure to interview many agents. Information is key. Ask questions. Put the agent on the hot seat. Ask them how they make their money? Their process for property comps? Experience in the market?
When it comes to putting in an offer, I personally cringe when a client asks me how much they should pay. It is the clients money, and I don’t like mess’n with other people’s money. It also says I am not doing my job correctly. Again, if all known market data is shared with the buyer then the question of “how much I should pay for this home,” would not be asked.
I would please like to know the truth about the bidding process. On the open market, not at an auction: Once a bid has been placed – can another individual place a bid too? Or is that property taken off of the market until the bid has been resolved. Like the property sold, or the bid has been denied, or even the buyer cannot come up with the money. I was recently drawn into a bid, one that I was anticipating anyway… But was still wanting to look at a couple of other properties yet. Then I receive a call from my agent, saying, “there has been a bid placed on that property 2 days ago, and now there is a counter-offer. Would you be interested in placing a bid on that property before someone else gets it?” So, I took the bait. I was going to bid anyway, but I was going to start at $25,000 – they were asking $34,400. After she told me that I thought that I should bid higher so I bid 28,000 instead, and there was no counter offer, I got the house. I can still pull out until i close, and i do want the house. I am just checking my agents ethics.
Thank You For Your Time!
Chad Lynch
Let it be said that there are good and bad real estate agents as there are good and bad doctors, lawyers and dentist. Every real estate agent is not out to take advantage of you and manipulate you to make poor decisions. Most every of the point you’ve made about real estate agents can be applied to almost every profession. Whether you’re a buyer or seller the real estate agents job is to get you from point A to point B. Develop a plan with your agent, revisit and revise the plan as necessary then work together to achieve your objective.
Ethics question: My wife and I were potential buyers in a multiple offer situation. Our first offer was rejected and the seller started negotiating with the other potential buyer. No big deal the other offer must have been better so I can see why our offer was not considered. A few days later the listing agent contacted our agent to say the other deal blew up and we should put in another offer. Thinking we had another chance, we increased our previous offer by 10% and submitted again. A day later the listing agent said the previous deal was back on and our second offer was rejected. This same scenario happened a third time and then the property went under contract with the other party. We feel the listing agent was using us to help push the other deal through as they were negotiating over inspection items the whole time. Is this an ethical practice?
Amazing. Everything you said happened to me, only My realtor’s lies have gotten me in a big legal mess. I had a condition in my offer that stated I would only buy this property IF I accepted the inspection report. But somehow when My realtor typed up the purchase agreement, she left that part out and I believed it still existed. The house was listed as All repairs done and move in ready. The inspection found 12 items that needed repair and one “DEFECT” (as described in Indiana Codes). So I told my realtor I did not accept the inspection and she told me I had to take the house because the seller accepted my bid. Now the lawyers are fighting it out and it’s costing me a lot of money. To get out of this deal, I have to pay the seller $4000 plus my legal fees and probably hers. I don’t know what to do.
Don’t buy a house in Indiana. There is nothing to protect the buyer.
This article is garbage. I’m a newer agent in the market and I can tell you that for someone who loves to sell real estate it is NEVER about the commission check. Most agents like myself work the first 1-3 years of their business basically for free. We meet tons of prospective buyers that don’t buy a home or were just looking. I have been on both sides of the negotiations and BOTH agents are working for their clients, especially when the client wants to close RIGHT NOW but doesn’t want to change their bottom lines. That kind of work is tough but it’s our job to educate both buyers and sellers of where they stand and what is coming from the other party. This article is what is the exact reason people don’t trust Realtors, because they are being pumped full of garbage.
Also in response to kay’s post. There is no way an offer could have been put in without your signiture I’m not saying that maybe your agent wasn’t at fault but you should always read through any paperwork that your agent fills out before signing it. It is never a good idea to sign on good faith!
and WP, your probably right it sounds like the listing agent was using you to make it look like there was a bidding war. I don’t know your state but I would suggest speaking with a lawyer because I know where I am from that is NOT ETHICAL
Shouldn’t your real estate agent fight for you? I am so disheartened right now. We put two bids in on a house that is with a relo company and had been on the market for over 210 days and there have been ZERO offers. We totally low balled it, but feel like it was around where we needed it to be. We are military and using our VA, but we are already fully funded and just waiting for a contract to be signed.
I feel that the real estate agent we have was not fighting for us because the seller agent is in the same office. We told her SEVERAL times why we couldn’t close before the end of the year. We would rather January. She did not listen and is also hell bent on the fact that the house should go for full price. TOTALLY NOT TRUE!
So, we got countered twice and then we turned them down. She then called 2 hours later to say that another offer came in. Sounds like a trick to me.
We did NOT sign a contract with her, but was wondering if we could cut ties with her (which there were never ties to start with) and go with another agent with another company and re-try. Is that ok to do? This woman does NOT deserve ONE penny from anyone. She has been a waste.
Please advise.
Thanks
Chad,
I am in North Carolina. The way offers work here is that a house is not off the market when an offer is submitted. It is still on for other offers to come in and be taken right from under you. This is a buyer incentive to stop joking around with low bids and get serious. Even under the beginning some homes that go under contract can be declined at the beginning from the seller.
Disheartened,
You are in a normal case. Banks are crazy and you are seeing this. I do agree with you about not paying full price. A foreclosure usually means that buyers should get a little price break on price. I will tell you that when the market was booming it seemed like banks were letting go of homes and negotiating a little more on price. Now that the market is booming in foreclosures and it is the #1 market banks are not letting them go at the same price break at they were in 2005. Never the less, the market has deflated and price should show this deflation.
Also, there is a thing called shopping the offer. This happens quite often. When an agent puts a house on the market and they get showings. They usually get buyers that hate it as well as buyers that are on the fence with the property. These are buyers that say I love it but I want to look at more homes. So when a buyer comes a long and writes an offer the listing agent will take that offer and call all of the buyers agents and buyers that said I love it but I want to look at a few more houses. When these buyers hear there is an offer they panic and hurry up and make an offer as well. Nothing sells like a sold house. My best advertisement on a house was the under contract sign. I picked up more serious buyers calling to see if the house is really gone. Hope you see why this is called shopping the offer. This is how a house can sit on the market for 300 days without an offer and then when you write an offer all of a sudden there is a multiple offer situation. The only thing that happens in a multiple offer situation is the buyers have to write a higher price offer to try to out do each other.
I agree with you on getting an agent in a different office. This is called dual agency. Some agents are very good at it. Most are not. I do dual agency once and a while but the conditions have got to be perfect. I have to have a seller and a buyer that are very easy to work with. It almost has to be cash and nothing needed to be done except to go to the closing table. If I get these clients usually it is a disservice to have a transaction like this. In California I think dual agency is illegal. In North Carolina it is not but we have groups who are working to make it illegal. I think a smart buyer or seller would say no to dual agency.
Disheartened,
Ol by the way if you never signed an agency contract before you wrote an offer then yes this is illegal and she can not bind you to stay with her. So find you a better agent and go get it. Interview a few agents. This will show you just how much you can really get from a good agent. Tell them you are interviewing also so they will bring out the a game.
What a crock and what an insult your article is! There are MANY trustworthy Realtors working very hard to find their clients wonderful homes. Just because you may have had a bad experience with a Realtor doesn’t mean that everyone has the same bad experience. I have been a Realtor for 20 years, and I have NEVER had a dissatisfied client! I work extremely hard to find exactly the home each of my buyers wants. If I show my buyers a property and they don’t like it, then we move on to the next one, and the one after that, etc. until we find one that they want. And THEN my job really starts – I advocate, negotiate, and pretty much stand on my left eyebrow to get my buyers the property that they’re bidding on.
I NEVER try to talk a buyer into purchasing a property. All that will happen is that they’ll back out of the transaction and we’ll have to start over. I go overboard to make sure that not a single one of my buyers gets what is known in the real estate industry as “buyers’ remorse.” If they buyer really doesn’t like the property – move on! It’s a huge waste of my time and theirs to talk them into making an offer on a property they’re not satisfied with.
As far as your comment goes about Realtors telling the buyers to get an offer in quickly – in this market, MANY of the lower-priced houses have a plethora of bidders. As a conscientious Realtor, I am obligated to let my buyers know that there are multiple offers on a property. Many of my buyers have lost bids on houses because they hesitated or were outbid by cash buyers (usually investors).
Your other “examples” are SUCH garbage that it’s not even worth responding to them. It’s extremely obvious that all YOU want to do is sell your book – and I’ll bet it’s just chock full of garbage – just like your article!
That’s an interesting article I found. I would be curious if somebody also comments on agent-to-agent business relationships and also why the easiest buyers are the most abused.
So, we came to another state for a few days to buy a house with an agent recommended to us. This was certain that we were relocating, and needed a place to live. Also, cash buyers, can buy quickly. Also, buyer’s market.
We prepared house lists ourselves, the agent just showed for 2 days (late morning – early afternoon). In the end we selected a few houses, and wanted to start from one offer and make more if needed, as we told him. The first offer seller team happened to be in some kind of business relationship with our agent (like they used to be the same agency or something). Moreover, the house was owned by another real estate agent. Figured it out later, as nobody would tell us. So, our agent played along with the seller and convinced us (skewed comps and such) that the market price was higher then it was. As it wasn’t enough, they played a game as having multiple offers while they had none, and our agent pushed us to resubmit the offer for a higher price and shorter closing, and we did. As we checked the comparative sales independently, we canceled the offer right away. Only to watch that they didn’t have multiple offers. And then we let our agent go. He was quite guaranteed that if we don’t buy this house, we buy another one. And yet preferred helping out his seller friends, with a risk we walk away and launch complains. Nice!
As a recommendation for buyers, check comparative sales independently (plenty of resources on the internet). Some agents would handpick the highest priced sales to drive the price up.
Derek, dual agency is legal in California. But, for the record, it’s illegal where we shopped, and the agencies had different names (had to research quite a bit to figure out that our agency went also with a different name, and the other guy worked for this different name at some point, but not anymore).
Ugh, this whole post as well many of the comments just make me sick. I am so tired of people that are so bitter about their experiences that they generalize and stereotype the whole industry.
I’m sorry but it really reminds me of people that complain about lawyers and how they are all snakes. Or women that have an opinion that all men are cheaters and ass holes.
Because really, what is the difference?… You have one or couple more experiences or heard of them from some friends or read about them and now it is all you believe and all you can see! What you focus on – grows.
I completely understand that there are unethical agents out there. I know this simply because I’ve met them! But what about unethical lawyers, teachers and even priests!.. Give me a break. If they were so unethical most probably they are out of the business now! Especially in this market! Word of mouth is everything for us realtors and if we don’t perform well we simply do not develop and grow our business.
I consider myself a great agent and most of the agents in my network are awesome people and true professionals.
And lastly, to Rachelle, and others that complains so much about spelling. Are you serious?.. Do you really think that spelling is that vital nowadays especially in a blog??? I can give you a bunch of examples of people that are accomplished and famous and they have Dyslexia, or even regular people that constantly use autospell, etc. Plus it is a blog, and OF COURSE we pay so much more attention when we fill out legal document, etc.
Conclusion: People will aways believe what they want to believe. I will work very hard and be the best agent I can be for my loyal clients. The ones that have opinions of the article above, I simple won’t work with.
Yes I’m serious and so would you if you knew that:
a) the internet is forever, the wayback machine is watching
b) if you are commenting on a blog and claiming you are professional and your post is absolutely riddled with spelling errors, then you look like an idiot. This is a public forum.
c) blogs are the new news for people with an allergy to talking heads. Would you go on TV with a housecoat on representing your profession?
P.S. It just goes to prove my point the real estate agents are not professionals, they are people who took a few correspondence courses with a at most a week of in class component. Real professionals go to school for years and years, during that time, they learn to use spell check or learn to spell. BTW these are not typos but rather egregious and flagrant mistakes. No excuse.
Even from the standpoint of being an agent, I cannot refute your observations.
Further examinations would have revealed an even worse conflict of interest; the commission that the agents get is directly reduced by a half, if the buyer were to get the property at half the asking price.
The way I resolve this problem is to tie the commission to the asking price, which turns the commission into a flat fee; removing the temptation for the agent to keep the price high and the buyer’s suspicion that it is being done.
One more condition your blog may cover is that the buyer ought to pick a buyer’s agent other than the agent who listed the property, since the STATE warns buyers that it is absolutely not possible for an agent to split the STATE required allegiance to the seller…
This article is right on the money. I know because I had an experience with a real estate agent who had the characteristics of every point this article makes. I was a first-time homebuyer looking for a condo, and we’d visited about three or four different complexes before I found a nice “fixer-upper” unit that I was ready to put an offer on. The unit was priced way above the average sales price for other units in that complex and was in need of some repairs and upgrades. My real estate agent and I put together an offer that was about $3000 below what the seller wanted but included requested repairs and upgrades. Since the unit had just entered the market, the seller, of course, counter-offered with a price that was in between but with absolutely no repairs or upgrades. In my eyes, the counter-price was not low enough to justify me having to pay for all the upgrades and repairs the place needed out of pocket, so I told my agent to politely say, “Thank you, but no thanks,” and walk away. We’d continue to look for other units, and if the place was still on the market about a month later, we’d try again.
She lost it. Not only did she try to pressure me to reconsider, but when I wouldn’t balk, she went back to the seller without my permission and tried to negotiate again on the price. She came back with a higher price, but it came with a stipend to get new appliances for the kitchen, and the figure they came up with for the stipend had been hastily “researched” by checking the Sears website. She was convinced the only thing holding me back was new appliances for the kitchen, when in reality, while the place was in a great location (nice urban area, close to my job), in nice condition for an older complex, and was in my price range, it still needed some important upgrades to the bathroom, living room and the kitchen (money for new appliances wasn’t going to cut it). But since she’d worked to save the sale for me, I figured I’d give it another shot.
I gave her an even lower number to submit to the seller (which amounted to 10% off the seller’s price) with an agreement that I would foot the bill for all the upgrades and repairs I wanted to make to the place myself. My real estate agent sent me a polite but slightly condescending email saying that she didn’t understand why I had reduced my offer price to so low (translation: why are you low-balling this place?) and that she (not the seller) felt that my offer was too far below market price. After fuming for a few hours asking myself, “Just who is this woman working for?” I finally calmed down and politely wrote back, explaining all of my reasons for reducing my asking price and said, “If you don’t feel this is not a reasonable offer, simply do not make it.” Then I made it clear I had no problem walking away.
To make a long story short, she went and made the offer. The seller rejected it, and the place sat for about a month on the market (as I expected it would). When checking the MLS listings, I saw that the sellers had reduced their original asking price, so I told my real estate agent to go back and make my offer again. The sellers accepted. And to only add further justification to my instincts, the financial appraiser who later went in to inspect the unit valued it at the exact amount I had come to in my “low-ball” offer.
Looking back on it now, I don’t think my real estate agent realized just how much research of the current market and on the selling prices for other units in that complex I’d done. I think I did more research than she did, and I had the advice of my father, who had recently bought a bigger house for our family and is a master negotiator. I think she thought I was a naive first-time homebuyer who didn’t know what she was doing. And I don’t think it was so much the commission that was her motivation in second-guessing me and pressuring me (seriously, we’re not even talking about $10,000 off this sale) so much as it was her working in the real estate market for so long. I think there are agents out there who have been in the business for so long, they think they know how it works so much so that they’re willing to undermine their buyers and put undue pressure on them when they think they’re right. She also probably thought I wasn’t being serious enough about buying a condo.
That’s why I think it is extremely important that real estate agents do upfront preliminary interviews with their customers before they agree to do business. Buyers need to discuss exactly what it is they’re looking for in a home, what their intentions are, when they intend to buy – pretty much the whole shabangabang. And buyers also need to be willing to research their real estate agent and ask questions beforehand to determine if that person will be a good fit for their personality and their motivations. If I could go back and do things over, I would have asked for a preliminary interview with my agent. And I realize now that I’m partially to blame because I didn’t communicate well enough with her the amount of work I wanted to put into this unit. I’m just glad that in the end, I got a good place for a good price, and she’s happy she got a sale. In the end, we parted on good terms and a mutual respect for each other for when it comes time for us to do business again (and I most likely will do business with her again when I’m ready to buy a house).
Well, I read comments “interview your agent”, “you should trust your agent” and what? HOW? I obviously cannot ask questions “are you honest” because the answer will be always “yes”. And I’m not somebody to spend weekend after weekend just to study the agent’s behavior, if they slip. I want to buy a house.
We already had FOUR agents (interviewed more), 3 of which had severe ethics problems (lying, cheating, even stalking). We lost the fourth one (she was #3) for unrelated reasons after viewing houses for 1 week, and she introduced us to the next agent (the one who tampered with comps). She wouldn’t talk to us after we told her what he did. Like, she was more interested in helping a colleague, then us. We also encountered a lot of ethics problems from the seller side. What kind of odds are that? I would subscribe right away for an agent who doesn’t go further then the things described in the article. And we are labeled as hard to please clients, who cannot put up with BS.
Now we’re shopping for a new one. No any other business puts so many fake positive/irrelevant reviews on the internet, either shamelessly pretending to be a client, or asking friends/business partners to write positive reviews or tampering with client feedback in some other way. BTW, I talked to an agent who seemed to be straightforward and honest… but doesn’t work as an agent. I would be happy to go with somebody who’s straightforward about all the agent tricks (buyers don’t choose sellers’ agents, right?), then polishing their records like all sales people do.
The article is right about one thing, you can trust no one who might have an incentive to cheat. People cannot predict the future, and cannot read minds. Real estate agents don’t have ongoing customer relationships with the majority of their clients, like doctors and mechanics do. Buying/selling a house is a rare event for the majority of people, once they are through the transaction, who cares if they were happy with the agent, it’s done. Relationships with other agents (seller agents, or agents who flip houses) would be more important. I believe there is a number of people who love real estate, but how many of them love their clients? I’ve seen agents that serve themselves, flipping houses and/or buying as an investment and rent. I didn’t see a doctor in my life who would make money by serving their own family.
This article is very silly. To say that all agents are in for themselves is silly. I guess in any profession there are bad people.
Agents do care about their clients happiness. Without it the job isn’t fulfilling and the agent won’t be in business for long!
Do not lump all agents in this basket.
If you don’t offer a good price, then you have a disappointed buyer who wished they did listen to you.
There is a point where a low ball offer is a waste of time. This is why you use market data to show the buyer whats selling, not your opinion.
And you are right, agents don’t want to be showing a buyer homes for a year. If so, that’s a problem. It means the buyer doesn’t know what they want or has unrealistic expectation. Why waste everyones time??
Please get your facts straight and not lump all agents in to one category.
I like that saying from H. “Do not lump all agents into the same basket.” Very well put. For anyone who thought I was gone. I am still here.
I was working with my parents to buy another house and found a fabulous one. Long story short no bids in and we put our offer in with the realstate lady I used to buy my house. That day the price dropped she called saying put your best offer etc. 3 offerers sight un seen, we held and house sold for 3000.00 more then our offer. Now I see a construction crew and I think it may be her husband who does this kind of work. He was contracted on my house to do final work for the bank before. How can I find out if she had anything to do with that sale? Is there laws against this?
Hi, Please help!
I fell in love with a house, on foreclosure, the agent over the phone “that I can’t trust” called us after 10 days of negociations, with an offer ‘not in writing’ , and said “Are they kidding me they could give $25.000 more, then my husband with this finnally said” give me the best deal and I’ll sign it” following her suggestions. then disappeared for 3 days not answering phone no email, and came back:’ tha bank doesn’t want to deal with you, even the other deal she refused it they will sell it for more they have activities’
Now she’s suggesting other houses that we already told her we didn’t like because she is at the same time the selling agent, whenever we ask her about the house she doesn’t say a word about it or the other deal because the house we wanted to buy is for $350 000 and needs some TLC, she is offering her houses that sell for $500 000. But we still want to buy the first house.
Can I call the bank or the other agent or not, I feel that it’s not what really happened.
Please advise!
Thank you very much
I find it funny that the vast majority of comments are from greedy real estate agents who are “offended”. I have bought and sold many houses over the years and have never used an agent, thus saving a uge amount of money. Caveat emptor – Let the buyer beware!