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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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It is apparent that the author of this book did not find a reputable trustworthy Realtor with whom to work. To bad. There are many who are, and I dare say the most successful Realtors did not get there by being dishonest. Anyone in business knows the deal of the moment is not the ONE that determines their success. It is honesty over time in each deal resulting in many deals. I am a Realtor. I do work by a code of ethics, and I do have my clients best interests in mind when working with them. This includes telling a seller the absolute truth about the value of their home, and telling a buyer to start a bit low, to not leave any of their money on the table. When I am working with a buyer I let them know it is prudent to get a home inspection so their are not any hidden defects that would be deal breakers. I have had many a buyer walk away from a home after the inspection shows a hidden problem, like moisture in basement, that a seller will not repair. I also have negotiated hard for my sellers, to bring prices into a realm of reasonable, so they can sell their house for the true value, rather than let it go for below value. It is because I am honest, and I do work for my clients, rather than against them, that I am so busy the loss of a deal because of defects, or prices not reaching a point that both parties can agree on, does not affect me. I am doing just fine. – The buyer I am working with respects me, and will find another house. The seller I am working with respects me, and knows another buyer will come along that is reasonable. Honesty and Integrity go far in this business. I work by the standard of treating others as I would want to be treated in the same situation. It has brought me far. The loss of deals because of honesty and integrity only ingrain in my clients a larger amount of loyalty as they understand more deeply that I am indeed working for thier best interests.
So.. the author of the book has had a negative experience with Realtors.. I am sorry he has. I have been able to find my clients a better house for a price they can afford than they originally thought… I have been able to negotiate the price up into an acceptable range for my sellers. I hired an assistant years ago to help me with the flood of business I have. Loss of deals because of uprightness and integrity have only made my business strong, and flourish. My clients do not go away.. they stick with me through out their lifetime.
Kindest Regards,
Hi,
I’ll tell you my bad experience with my Real Estate Agent Tania Menicucci.
She referred an Inspector to inspect the house we were purchasing and we were told the house was in good condition, except for some minor things. I don’t know if I should have trusted either of them because of the conflict of interest they both had. I should not have trusted either of them because we later found out a burried pool existed in the property which the Inspector never disclosed to us and which we are now having problems because it was not disposed of properly.
Is it legal for a realtor to offer a sum of money to buyer to buy a home?
Everyone complaining,
If you are here to tell the one bad time something happened to you and a Realtor than stop. If it was so bad you should of fired your Realtor. You should of went to the police and local Realtors board to file a case. These 2 steps would of stopped the bad transaction and you probably would of come out smelling like roses because everyone else would of started offering you something to continue the transaction regardless of if you were right or wrong. But you did nothing. So stop complaining.
Mike,
It is illegal for an agent to offer a sum of money to a buyer. However, there are many things you can offer besides money. There are gift cards, appliances, services (not sexual services, I knew what you were thinking, but cleaning services, handyman services, etc.). These things are perfectly legal where I am at. Buyers do it all the time. They get right at closing than get cold feet and say they are going to back out the day before closing. So seller’s or agents usually have to give something to them. Buyer’s I think are crazy to buy a certain home because of some small compensation though.
Not sure which is more shady, your story or slandering someone to sell your book. Shame on you. I have worked in Real Estate for over 15 years and although you may find a bad apple from time to time it does not mean the all the fruit of the tree is bad. Slander for your own profit……well that my friend is bad fruit.
I agree with this BLOG. EVERY agent I have met (with the exception of one) has been shady. Even the guy who first sold me my house and whom I thought was nice, thorough, and completely comptent.
Their interest is closing the deal and making as much cash as possible as soon as possible regardless of how you fare in the process. They will push hard and engage in all sorts of unscrupulous actions to that end.
As for the agenda who say most are great and there are a few bad apples in any bunch–not true. Most agents probably rationalize their own behavior and are not self aware enough to realize how predatory/opportunistic they actually are.
I feel my agent is my enemy as well-and am almost of the view that they should only be used to sell homes…Otherwise hire an attorney to oversee the deal. You’ll pay far less and your intersts will be protected.
I believe in the Charter of Human Rights and Freedom of Expression. I think that it is sad when people are discouraged from speaking out due to claims of slander. Do we live within a democracy? Or must we muffle our opinions and beliefs?
My opinion is that Mr. Holman is correct; my experience has been that realtors only care about their commission. After all, a realtor’s commission is their bread and butter. It should be up to the customers and clients to determine if they are satisfied with the real estate service. It does not reassure me when a realtor defends his own profession.
I just experienced what this article is talking about. The moral of the story is bid what you want to bid and not a single dollar more, bc whether it is greed or pure stupidity your agent will prompt you to over bid for the sake of “getting you in that home.” As long as your deal isnt an insult, they will counteroffer if the amount isnt agreeable. And if they dont counter and go with another bid, you can be assured someone probably was willing to pay more and you were never going to get it anyway.
I also… just experienced what this article is talking about to a tee! Today was the last straw. I know what the homes in my area, that have recently sold… sold for. And I know what the asking price was. She did not like what I had to say. She is definitely getting tried of my low offers. But, the thing is many of the houses I refused to go higher on… actually sold for lower than I WOULD have offered, if she hadn’t not, told me it would be an insult for me to offer so little. This is the case in about 5 or 6 homes over the past 2 months.
I always provide the buyers that I represent a buyers CMA. That is a printout of ALL of the homes sold in last 6 months, pending & for sale. I will go over that report with my buyers. That being said every agent that shows you a home does not “represent” you. Representation is only guaranteed through a Buyer’s representation agreement signed by both parties to the transaction. If that agreement is not signed any agent is working for the Seller. As a REALTOR our ethics and directives are clear but some of the expectations stated above are ludicrous. How would the agent or the inspector know there was a prior pool? It is not common practice or in the scope of duty to dig around your entire back yard? The Sellers disclosure also does not ask for that information so you would have to ask the Seller specifically if they ever had a pool.
Interview your agent and ask them questions about their prior clients, set up your expectations etc. This is the largest purchase of most people’s lives and typically they just call the listing agent and have them show the home or worse yet call in and have ANY agent in the office show them a home and represent them. Take a little time on the front end and you will have a better experience overall. There are good and bad agents just like every other profession. Most of my clients are by referral because I live in the areas I sell and I believe in doing the right thing. I do not however have huge billboards, a huge team to advertise so you won’t find my name on a bench or shopping cart. You would find me via referral and I would also interview you before taking you on as a client. I will show homes “on floor calls” however I will only sign a one home agreement with you until we have had a chance to talk about your other expectations to make sure we are a good fit. That is what you need to look for in an agent. If they are willing to give away all their commissions in order to work with you, how good of a negotiator do you really think they are?
Best of luck in all of your endeavours! :0)
This is the most ridiculous and offensive article I have ever read. To suggest that all Realtors are self-serving and at odds with what is in the best interest of the client is an opinion lacking in facts. Buyers and sellers more likely than not need to guided by those who are experienced and knowledgeable regarding current markets and trends in various regions. I have no doubt there are professionals in every arena, even journalists, with alternative motives. Fortunately, I know of very few Realtors who fit into the category of that being suggested by a less than informed writer. Shame on you.
You know what Realtor…clearly Mike hit a nerve here because this post was published quite a while ago and continues to get comments from realtors incredulous that someone would say this kind of thing about their illustrious profession. I also continues to attract posters of a different variety:buyers and sellers of real estate that have been burned or misled by real estate agents.
I’m totally amazed that a post this old keeps getting comments. It’s far from misinformed.
I am a realtor and I mainly agree with this post. Except the list price is not arbitrary. It is as low as a realtor can convince a seller to go based on market data they present to the seller in a down market. But sometimes lower than the market data suggests because a seller wants out fast. It is not arbitrary, but ballpark would be an apt description. Just like an offer is. I will say that a seller or buyer needs to be able to trust that the realtor is presenting accurate data because it can be edited–sometimes to eliminate distressed property from the mix but possibly to justify a selling price, both on the buy side or the sell side. It is like Freakonomics claims: unequal information creates power. Some states have sales information on the property tax sites, other states have closed record laws and consumers are in the dark completely.
The funny thing is, I’ve heard some of the quotes posted above on the house hunting shows you see on television. Hmm…
Realtors are coming on here and being goofs of course – like always. I have never met a Realtor who didnt play the same silly games. They all say they won’t and then they pull out the same tired old lines. I have always been very upfront with realtors regarding the fact I very likely have had all, if not more the same sales training they have. I know all the cheese and it’s going to waste BOTH our time. They always agree and try to be my pal saying how refreshing it is to have a client like me etc etc. Then they pull the same BS every other dime store realtor does – including emailing me lists of houses that don’t even resemble what we discussed. The “spaghetti on the wall” method of real estate sales.
The fact of the matter is real estate agent is an extremely low barrier to entry carreer. 99.9% are not too intelligent and are spoon fed their “information” by the broker. This is all crap. But these boneheads actually believe it. They simply are not too bright and even when it cuts their own throats they play the same old games, same old lines, tired old pitches ….. and chase away their own commissions doing so.
Real estate agents and their brokers look at their clients like saps to be milked. They think they can “sell us”. What they never comprehend is that many of us “saps” are much brighter then they are.
Just like the retarded kid doesn’t understand he’s retarded, the crazy person doesn’t know they are crazy, the realtor doesn’t know they are dim.
The fact realtors are getting offended by the article proves the article’s validity. Only valid truth hits nerves and provokes such emotional response. But once again the realtors are too dim to realize they themselves have proven the articles very point.
DAVID: Maybe those of us who are offended are honest people who work hard for our clients. I would never begrudge someone who is knowledgeable enough when it comes to the ever changing real estate market. With the attitude “Caveat Emptor”, you are lucky you haven’t ended up in a law suit.
RACHEL: You bet it hits a nerve. It’s irrelevant to me how old this post may be if this is the first time I’ve read it. Please state the facts that support the suggestion that Realtors are contraindicated to an honest transaction.
TIM: “It is better to remain silent and be thought a fool than to speak out and remove all doubt”. I’d like to take credit for a quote that so aptly addresses your ignorant and opinion based comments, but as I’m only a Realtor with a low level of intelligence, I’ve deferred to Abraham Lincoln.
@Realtor —– that shut them up! To every person talking negatively about Realtors, you have to remember there are bad seeds in EVERY profession. To Tim (aka the guy who has all the ‘sales’ training) — it sounds like you may be the bad seed in your profession (just a guess).
I’ve dealt with many a realtor, and many of them have treated me like walking dollar bills. They do not treat you as a human being, but a non-entity. The realtor only sees dollar signs $$$. I’ve been SCREWED, lied to, and money taken from me by realtors. Like one good decent realtor informed me – there are 85% BAD REALTORS and 15% GOOD REALTORS. I agree, wholeheartedly
This is very disturbing, you obviously want to sell you book and have not done your research about the high standards of a REALTOR must follow to belong to the association and how easy is for a REALTOR to lose his license for malpractice.
If people believe everything they read in the web and do not seek for a professional to represent them in a real estate transaction, we would have more consumer taking advantage when purchasing their homes. A buyer representation in most estates and for the most cases is FREE to the buyer. Advising someone not to use a professional REALTOR in a real estate transaction is as bad advice as telling people go to court without a lawyer because lawyers are no good in court. Wow!
Sorry about your loss.
I agree with Hystat – you didn’t do your due diligence. Condos are known for having relatively easy comparables. Big buildings have units selling on a regular basis and the differences between the units aren’t usually that major (or the differences can be easily priced).
The agent’s job is to facilitate real estate deals in order to get the commission. It’s really not her problem if you overpaid or are otherwise unhappy. On the other hand she got an above market price for her other client.
It’s too late now, but you might want to read my article about why you shouldn’t trust real estate agents.
http://www.moneysmartsblog.com/why-you-cant-trust-real-estate-agents-when-buying-a-house/
Note that I’m not saying they aren’t trustyworthy people or that you shouldn’t use an agent – just don’t trust anything they say when you are discussing real estate with them. This advice also applies to any other commissioned salesperson.
Commissioned salespeople are not on your side ever.
There is a class of people that is anti-realtor. There is nothing wrong with that. Indeed one really doesn’t need a realtor to buy or sell a home, anymore than one absolutely needs a mechanic to fix their car or a plumber to fix a leak. However, in terms of trust, none of us should put ourselves on a pedestal. The buyer and seller and the realtors involved are all looking out for their own self interests. In the end every human being only truly cares about themselves. Does a buyer really care that his realtor gets a commission? Does a seller really care about the buyers agent or even his own broker? No..the seller only cares how much money he can pocket, and the buyer only cares about getting the deal they perceive to be in their best interests. I have been selling real estate for 10 years…and in that time I can tell you that everybody listens to one radio station WIFM. What’s In it For Me.
So I don’t hold it against somebody when they lie to me and try to go around me for deals. Lie to me about their ability to purchase. Or if a seller fails to reveal issues about their home or pending litigation or assessments. If one is incapable of accepting human nature, one shouldn’t be in sales of any form. This business has a tendency to reveal many ugly truths about human beings.
There was one comment about realtors being morons. Let me touch on that. There are certainly agents that are idiots, however those are the ones who don’t make any money. Indeed about 15% of the agents make about 90% of the money. The barrier for entry is low for sure, however many people come into the business from all walks of life because they can’t make enough money in their chosen profession. I’ve seen attorneys, dentists, PhD’s, MBAs, drug addicts, prostitutes, teachers, waiters, and business execs lured into the business by the promise of big commissions and a self-determinate lifestyle. There is no guarantee of success in this business, no matter what level of education or intelligence.
I know of one gentleman that was a retired CEO from a huge company in India. He had all the degrees and his resume was surreal. He sat in the office and sold no homes. He wanted to do it. He took the time to get the license. He couldn’t solve the riddle. There is no class that you can take that will teach you to succeed in this business. A degree from Harvard is a guarantee for success for everywhere in the world, except in general real estate. Imagine how he felt when a girl half his age in our office with a high school education was giving him leads that she didn’t want to work. He could run circles around everybody on an IQ test, but he couldn’t make a living for himself in real estate.
Back to the point. So can a realtor be trusted? Yes. They most likely won’t do anything to jeopardize their license or freedom, because that wouldn’t act in their own self interests. So fradulent behavior is unlikely to be encountered. Can an agent be trusted in negotiation of a deal? This begs the question: Can an agent act on behalf of a client in the first place? No…the client is the ultimate decision maker. In reality the agent on the buying side can only present an offer to the seller. The seller will then base a yes/no or a counter decision on the merits of the offer. However if a buyer is getting a loan…the bank then becomes the ultimate decision maker (at least for the buyer). They will make a loan based on what they feel the home is worth (appraised value), and they will require an inspection, and they might even require some repairs that were never part of the deal in the first place. Can an agent be trusted to want to get a deal done for a commission? Of course….who likes to work for free. Imagine a world where agents were on salary to get homes sold. Homes would sit, deadlines would come and go, buyers would be eager to look at homes but not during lunch cause that’s when the agent wouldn’t be available. Never on the weekends nor at night. Memorial day? Forget about it that’s a holiday. Want information on properties? Want to talk about the latest trends in the area? In the salaried world of home sales how good would that information be? Instead of staying abreast of the best deals in the area, they would be busy chatting on MSN, Facebooking, or hanging out by the water cooler. So I suppose the business has evolved as it has for a reason. The process of unlocking the equity in a home allowing the seller to move and pursue other interests has value. The process of helping a person foreign to a new environment find a home to suit their needs has value. One person has the home, the other has the money, and in between are the agents that really are the lubricant for the deal and the two sometimes irrational parties. Sometimes the opposing interests are close enough to get a deal done, sometimes the interests are too far apart and the deal doesn’t get done. This value is paid for in the form of a commission. The commission is earned throughout the process, put only paid at closing.
Some agents utilize certain “canned” arguments to get their clients past their own greed or irrational sense of competition. For example: If a deal is stuck over a $200k house because my buyer and seller are $500 apart (yes this nonsense happens all the time), would I be considered untrustworthy because I try to convince my client to pay $500 more? Or split the difference $250? Or four ways at $125 (me and the seller’s agent would kick in)?Why is the last $500 all the money in the world? That’s irrational and that is how deals come together or fall apart. So if I try to get my client to see the big picture and pay a little more (.25% more in this case) and this make me untrustworthy, then in this instance I am guilty as charged.
In the end there is more to life than looking for houses and buying real estate. It’s important to realize this. Most of us have completely forgot about the $2000 spent 8 years ago. So if somebody pays $150k as opposed to $145k, on a cosmic scale will it really matter? Or likewise if I sell my house for $145k and I wanted $150k, will I really care 40 years from now when I am sitting in a nursing home drooling?
Most people understand this concept and they are easy to work with, however a small minority are greedy self centered and short sighted. They are pain in the ass. Yet do I indict the entire human race because of these fools? No…I let it go.
By the same token most agents are honest hardworking people, no better or worse than anyone in any other profession. However a small minority are greedy, self centered, and short sighted. So it is wrong to indict an entire profession because of these fools.
I am having a nightmare with the sell of my home. I bought this home which is a manufactured home on 3 acres of land. From a bank , It had gone into foreclourse (In Michigan) I have a buyer and we are under contract. I bought it with cash and paid a title Co to do a search. Now I find out there is liens against it from the owners (that were forecloursed on) Had nothing to do with the sell of my home. I did not know about the way these home are titled .My Realestate agent at that time (who is one of the largest in my area) claims he had no idea there would be any trouble with this down the road. There have been 2 different liens on this. This home was quick deeded to another Co which is the one I bought it from. I feel I need to go after the title Co however they say they did not know there was a home on the land so they think they are off the hook. They claim they only did the search on the land. This is a good size home and I don’t see how this could have happened. Does anyone out there know how to fix this. If I loose this sale I will not have any money to live on. I thought I was taking care of myself.
Please Help
You are in a pickle. Unfortunately this is not quite as rare as you think. My opinion is the title co is at fault and if you find something with a document on it that one of there representatives signed saying home and land then you got them. Never the less I hope you bought the title insurance. Now would be a good time to call them and see if you can get some money out of this. This process takes time but can be fixed. Let your buyer know it can be a month or two and beg them to go thru it with you. Good luck!
I am a Realtor. I’m very successful, sell 8-10 homes a month, and make great money. I’m honest, civil, I service my clients, and I treat them like family. The author of this article is a simpleton, a moron. He had a bad experience and he’s crying like a baby to the whole world. Boohoo! Grow some balls you idiotic child. Not every Realtor is a putz like you’re describing. People always downplay the value of a Realtor, our commissions, etc. If you only saw what we have to go through on a daily basis, you’ll be asking why we don’t charge 25% commissions.
I have been a Licensed Real Estate Agent since 2006 and this has to be the worst article I’ve ever read! It’s sad to see what some people are willing to write in order to sell a book. In every industry you have the bad and the good. Of course you need to sell to make your commission, but a good agent will show you current market conditions and recent sales in order to help you make a wise decision. “I haven’t been successful with an amazing track record by being dishonest.”
This is so poorly written it’s laughable (logic is obviously not his strong suit). I can’t even get myself upset over this generalization and slander of EVERY Realtor out there because frankly this guy deserves pity. Such a sad, pathetic, angry person. Bless his heart.
Our realtor makes his living off word-of-mouth (as I believe most do). His business lives or dies by the recommendations of others. I have a hard time believing they could all be as bad as this article suggests and still get clients.
I think what is more likely is that people believe that their viewing of some HGTV show or a conversation with a neighbor about some guy down the street who sold his house for major $ makes them an expert in the field. I have met way too many people with totally unrealistic ideas about the worth of their house or the value of a house they are interested in…then it becomes the realtor’s job to make the clients understand reality. But this article makes it seem like this is downfall to a realtor; I believe that this is their responsibility as the person you’ve hired to guide you through the process.
Wow, cranky realtors pulling out the cheap shots here! I like my realtor, but I don’t for a second think that he would put my interests before his. Despite the word “trust” in the title, the article isn’t really about realtors being dishonest… it’s about the fact that they benefit more from a completed sale than from the buyer getting the absolute best deal (the realtor who mentioned the Freakonomics bit seems to get this). There’s a saying, something about “don’t ask a car salesman how much car you need”, that seems relevant here — somebody making a profit selling you something is not primarily motivated by encouraging you to not buy, or to buy less.
That said, I completely understand that many of us clients (including maybe some posting here) are clueless, entitled, or hate-filled, and it must be a drag to deal with us.
Don’t trust an agent….who won’t answers yours questions. I just fired mine, John Chisholm for exactly that reason. He told me today that his
focus is on the buyer because that is what pays and since he is my listing agent I was horriffied. His advice for me when I ask what is the right list price for my property ” we won’t know until it sells, just keep dropping the price every 2 weeks until it sells”. Are you kidding? If I want to sell I need to be prepared to lose money and lots of it. What exactly does a person need a real estate agent for if your being told to sell at a huge lose? Come on people why would you lose even more paying an agent to do this for you?
What an excellent post. Our current buying agent did every one of those things today and (as of tomorrow) he will no longer be our agent. But in another country even before the internet was invented, we had another house buying crisis when I was pregnant. House prices were zooming and deal after deal fell through with gazumping while in the meantime, I had already agreed a selling price for my flat. That agent came to the rescue and when something unexpectedly came up we viewed and offered the asking price the same day. I agreed to stick to my original sale price, the house we bought has increased in value 400% over 10 years, the agent who sold my flat and bought us the new one has been managing the now rented-out property ever since and done very nicely out of the commission. We currently want to view a lot of properties. We are willing to pay above the market rate in terms of commission because of that. But an agent who wants to squeeze a higher rate of commission out of a lower rate of service. meh.
To say that all agents are like this is grossly unfair. I am currently a buyer, and our buying agent has been beyond helpful. We have been through two offer processes, neither of which panned out, and at no point did she encourage us to do anything to keep a bad deal going. I feel bad that we are spending so much of her time looking at houses and making these offers, but her absolutely willingness to work for us, is apparent. Does she want us to buy a house so she gets a commission? Of course, and we want her to get a commission. I don’t feel at all pushed to buy a house I don’t want, and in return I will easily recommend her to all of my friends, many of whom want to buy a house in the coming year. That’s how good people do business.
No, don’t trust someone who has spent thousands of dollars and literally hundreds of hours of classroom education, plus hundreds or maybe thousands of hours of research and even more time, money and resources trying to find just the right property for buyers or find a ready, willing and able buyer for a Seller’s house. No, don’t trust those people. Trust some guy who writes a blog on the internet. Give me a break. It’s easy to bloviate about how agents are only in it for themselves and perpetuate an antiquated stereotype in an attempt to appeal to the lowest common denominator. Fear mongering and conspiracies certainly appeal to some. But the fact is real estate agents are so dependent on their reputation to make a living and so heavily regulated and policed that only an idiot would consciously defraud or mislead a client. Your piece clearly indicates that you have little more than a tenuous grasp of how the real estate industry actually works and yet you take it upon yourself to grossly mislead your readers with your posturing. You do your readers a disservice by leading them to believe that all agents are dishonest and self serving. That’s like saying all bloggers are hacks, incapable of securing legitimate writing assignments when in fact that might only be true of a small percentage of them. Present company excluded of course.
I had a bad experience buying my first home. The realtor was super nice and friendly but when it came down to it, pressured us into offering full price. She had a million reasons…no other home like it, might be gone soon, don’t want to get into a huge negotiation or bidding war, blah blah blah. The house was a foreclosure and had been on the market for over a year so in retrospect I know we could have gotten it for at least 10,000 less. We were stupid first time home buyers and didn’t know any better. Our fault for not becoming educated on the process and also our fault for trusting our realtor to give us good advice. 3 years later, we are trying to sell our house and hoping to just break even. Needless to say, we are not using the same realtor.
Joe Owens,
Wow, *literary hundreds of hours* sounds impressive!
California sales person license, for example, requires to take 3 standard semester length (45 hours) courses; or 135 formal hours total. It makes the whole education a part time study for 1 semester. The courses are offered to take online, no tedious assignments, read at your own pace (I can bet some people could take just a few weekends to complete). There are offers $99 per course ($300 total). Anybody, who’s not too-too lazy or too-too poor, can get this license.
California broker license requires in addition to it to have 2 years staying with a broker, and to take 5 more courses. This would make 225 hours more, or part time study for 2 semesters, or more weekends reading online.
For comparison, a 4 year Computer Science degree (how to do some trivial things like writing code) takes 1800 hours. Sure, I would be hesitant to trust a professional education that requires only 135 formal hours or a few weekends to complete it.
Julia,
If it’s so simple that anyone can do it, why isn’t everyone? Just because the initial education is shorter than a four-year CS degree doesn’t mean it’s less relevant to the field, and to insinuate such is simply ridiculous. Sure, it’s a couple hundred hours (which, as the man you attacked in your post stated, =/= “hundreds”), but guess what? Once you’re out, you don’t get a steady paycheck like that CS grad does when they get a job.
Realtors have to spend their own money and time, investing in their own business, to get anywhere. You have to look at marketing costs, such as advertisement, business cards, flyers, website hosting, etc. etc. etc. Likewise, it seems like you’re under the impression that once a realtor takes those classes, that’s it. Totally incorrect. The classes you mention are pretty much completely based on real estate law, and have NOTHING to do with actually learning to the ropes of the career once you get your license. For that, yet again, the licensee is on their own. Some agents are smart enough to seek out a mentorship or training program that will guide them through this, sometimes paid for out of pocket, and always unpaid.
To get that broker’s license, you can’t just get your sales license and then jump into the broker’s license. You need years of experience first.
For the sake of argument, let’s look at other professions with short entry requirements. Here’s one, how about engineering technicians? They’re obviously what you’d consider “educated”, but the courses required can be done in a matter of months. Still admittedly longer to do schoolwise, but guess what? Once they get that first job out of school, they’re guaranteed to be paid. That’s not the case with agents. You’re looking at up to 6 months without making ANY money, but still PAYING money.
If you think a lazy person that gets their license will succeed in real estate in any way, you’re ridiculous. The hours and work required to complete a sale is much more than most people realize, and it’s all gratis until the sale goes through, IF it goes through.
I’d love to hear another example of a career that requires so much self-motivation, and that’s completely commission-based, that takes longer to get into than real estate does. Good agents earn their money, and bad ones are weeded out due to lack of referrals.
We were looking to buy a new home last year. We came upon a nice house listed for 239K and decided to make an offer at $226k. Our agent submitted our offer and later told us that the seller counter-offer and wanted to bump up to $234K and that is as low as they can go. We told him that we would go as high as $228K. It turned out that we lost that offer. Four months later, we found out that the house was sold for $220K. We decided to let our agent go.
I would guess that everyone who has posted here about the fact that agents are dishonest and unscrupulous are simply projecting their own lack of character onto the agents they have dealt with. I am certain these people who are critical of agents are themselves dishonest, liars, and cheats with no code of ethics whatsoever. They cannot be trusted and I would caution any real estate agent not to work with them as they will steal from you at every opportunity. So how does that feel haters? Does it feel good to have someone who doesn’t know you at all make a gross generalization about your character? I didn’t think so? To the author, you are doing nothing more than bashing a group to sell books. Good authors don’t need to do that which explains why you do. To the haters, if you don’t denigrate an entire profession practiced by a lot of hard working, honest people to sound clever here on the internet. There are enough trolls. And one last thought, of you don’t like agents, next time you buy or sell a house, don’t use one. And good luck with that.
Some realtors may be like this. Most are not. As an ex-realtor I can tell you it is largely a thankless 24 hour seven days a week job. I always acted in my clients best interest which often meant showing them 35 houses and submitting and negotiating up to 5 unsuccessfull low ball offers per buyer client (not all -some clients were well educated and knew what they wanted) until they finally accepted market reality. Also spending long hours counseling a seller who needs to sell but cant accept our falling market either.
The problem is how agents are paid . If you need assistance in cleaning your house, or medical or legal care you pay for it. Agents provide property services in regards to finding or dispersing of your home. They should be paid on an hourly basis or by specific events. Ex.$35.00/showing,$200/submitted offer and subsequent negotiation with an addition $200.00 if its succesfull, etc. Then it would eliminate this kind of unkind suspicion of an agents motives. It would be fairer to all agents. Apparently , if what you say is true this would be the remedy for that too.
As a Realtor of 10 plus years I can confirm this author is 100% correct. Come on fellow Realtors, you know it is true. We play this game because it works and we get paid big bucks. Great article exposing us but it won’t make a difference.
So what if the agent has their own interest in mind? Every potential buyer or seller should understand that and remember that only YOU can have your best interest in mind. The problem is when agents do this at the expense of the buyer or seller. I think different states have some laws to protect clients, but for me, I vote for http://www.forsalebyowner.com with an mls listing. I was in control the entire time. It was more of a headache to schedule showings, but I saved more money and had the peace of mind of knowing we did everything to sell the house. It did sell at full price…over $20K more than the agent we interviewed suggest we list it for.
Funny, sounds like my agent. Wanting to hurry things up try to convince me to close a deal that I don’t want.
I am not really a Realtor. Just someone posing as one because I like to troll the internets.
I totally agree with this article. My agent tried all the aforementioned tricks to get us to raise our offers and speed us up. Personally, she’s a nice lady however, she does have to make a buck. I’m certainly glad that as a first time home buyer, I wasn’t sucked into the subtle manipulations. When our agents said, come on, raise your offer 1000k (and this is on a 429000 offer, I was enraged to say, shouldn’t you be saying that the seller! Don’t try and talk me into spending more, talk them into taking a realistic value. Their house was over valued to begin with. I think the whole real estate system is flawed. I’m in search now of a better way to do it. Perhaps BO. I also think it’s strange that houses are appraised after everyone agrees to a price. Why not just have an appraisal and get rid of the middlemen across the board. Why would you bid and guess the worth of something that is later going to be appraised anyway. It makes no sense.
I’m assuming you mean 100k, not 1000k (which is a million, by the way). Either way, you obviously had a bad agent. The thing is, you can’t judge an entire profession based on a few bad apples.
I don’t know how the real estate industry is run in other states than where I am, but here agents have legal fiduciary duties to their principal. Seller’s agents work to get the seller the most money possible, but a good agent wouldn’t advise their principal to post listings at a value high above market. This would just result in a listing sitting for months or years without so much as a single look from prospective buyers.
I think the real issue here is that the naysayers speaking of bad agents didn’t do THEIR due diligence in researching the agents they’d be negotiating huge sums of money through. This is why agents’ reputations are so important to their success-a bad agent will be known as such rather quickly.
If you want to sell by owner, go for it. But I can guarantee you won’t have the success a GOOD agent would in listing and selling your property. Not to mention your lack of access to the MLS, which shows properties for sale much more quickly. You could always go and try to sell it through an open listing with a broker, but good luck getting them to agree to something that’s obviously not in their best interest.
By the way, you don’t have to wait until the price is agreed upon to have an appraisal, so I’m not sure where you’re getting your “information”. You can pay yourself to have your property appraised, and use that as a selling price if you wish.
Its funny how the realtors respond in their defense as if they were personally attacked. I consider the author’s message excellent advice for anyone who is buying a house. If they happen to have a trustworthy agent then thats great, but its not always the case.
I bought a house that the seller stated was built in 1998, a few weeks ago I found out a high school buddy use to live in the house when he was younger. However, we graduated high school in 1997. So this wouldn’t add up. Trying to see if we would have a case against the seller for fraud. I think this would affect the house of the house and or property taxes as the house would be much older than what the seller sold the house for.
WARNING:
BEFORE you sign a Realtors Contract ( OR *any* contract they give you) CONTACT a Real Estate attorney. DO NOT SIGN until your attorney has looked over it & gives you the okay.
DO NOT let realtors recommend you an attorney, an inspector, a contractor/construction worker , an appraiser…. *Do you understand???*
GET YOUR OWN!
These realtors will sneak in broker’s fees & the Devil knows what else! and you’ll end up paying.
As you can see by their posts these people are not to be trifled with.
They are one nasty greedy little bunch of bad spellers among many other things & many of them made plenty of money with their lying speculations that they fed their ‘clients’ before the housing bubble explosion!
And still they are at it & will be it at it at full force .
Realtors are STARVING SHARKS . Makes no difference if you’re a seller or a buyer they smell your blood & go for the kill.
They are conniving, tricksters that will say & do anything to get your money.
I should know I’ve dealt with plenty of them.
And no lazy they’re not, but then, NOR is the devil!
Know this : speculation in the 17th century was a crime. Speculators were hanged. Today they run the state and the financial markets.
“What does it matter now if men believe or no?
What is to come will come. And soon you too will stand aside,
To murmur in pity that my words were true”
(Cassandra & Agamemnon by Aeschylus)
Courtesy of Yahoo! Finance:
http://finance.yahoo.com/education/real_estate/article/101456/10_Things_Your_Real_Estate_Broker_Wont_Tell_You
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