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

by Mike Holman

Check out the first part of this series “Why You Can’t Trust Real Estate Agents When Buying A House“.

Yesterday, we discussed how your agent and you will have similar goals when starting a house search but your interests will diverge the closer you get to a deal. When selling a house, the same phenomenon happens but usually a lot quicker.

In the beginning: buddies

Usually when you agree to list your house with an agent they will make you sign a contract with them which ensures that you don’t turn around and sell the house with another agent after they have done some work. In my experience, the agent will pull various comparable houses in the area and together you will figure out an asking price. Another step that normally takes place is for the agent to do a walk through and advise the client of possible improvements they can do to the house to make it sell easier.

The asking price is usually the first potential source of conflict – the seller wants a high price and is often unrealistic about what their house is worth. The agent knows that if the house is listed too high that it will sit for a while and any effort the agent makes to sell the house will be a waste of time. Agents make more money by selling more houses rather than getting a high price for each house so they want to make sure that the house is listed at a reasonable market value or lower. This is why pricing a house low for auction is so popular because it’s the best situation for the agent. Another situation is if a client wants to price the house high – then the agent has to bide their time and work on the client to lower their price so it will move.

Thinking about accepting an offer – Trust no one!

Things that your agent might say (and you should ignore) when you are selling a house:

  • “Since I get paid on commission – the more you get for your house, the more I get paid so we both want the same thing”. This is one of the biggest lies in real estate. Yes, mathematically an agent will get more commission if your house is sold for a higher price but the problem is the amount of time it might take to get that higher price is not worth the extra commission. For example if your house has a market value of $400,000 then your agent’s cut might be 2.5% or $10,000. If you are patient and wait for someone to come along who will pay $410,000 then the agent will make $10,250 for an extra $250. To get this $250 they might have to do several open houses and wait quite a while. Clearly they are better off just selling the house for $400k (or even less) and taking their $10,000. The problem is that the difference in selling price to the agent is pocket change but the difference to the homeowner is huge since we are talking about a $10k difference.

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

At this point you are potentially pretty close to selling your house. You want to sell the house at the highest price, the buyer wants to buy the house at the lowest price and your agent just wants you to sell the house and doesn’t care at all what price you sell it for because they just want the deal done right now. Since selling at a lower price will get the deal done quicker a lot of agents will encourage you to counter lower 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:

  • “Don’t counter offer too high or the buyer might walk”. If the buyer has put in an offer then it’s up to the seller to accept the offer or reject it with a counter offer. It’s true that a high counter offer might scare off the buyer but isn’t that part of the negotiation?
  • “Your first offer is often the best offer”. Another way an agent might phrase this one is “We have an offer which means if I can get you to accept it by any means possible then I get paid very soon”.
  • “Dual-agency means there is no conflict of interest even though I represent both parties”. The “dual-agency” scam is where a selling party has a real estate agent and a buyer comes along who doesn’t have their own agent. The selling agent will offer to “act” as both the selling agent and buying agent and of course collect double the commission. Even though this is such an obvious scam, I actually don’t think this one is a big deal since real estate agents are basically working against you anyways at negotiation time so adding more conflicts probably doesn’t really matter.
  • “Are you willing to lose this deal for $2,000?” (or $5k, $8k) This is a tough one – on the one hand it seems silly to not close the deal 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 buyer? Ie – “we are going to walk, do you really want to lose this deal for $2k?”
  • “Are you willing to lose this deal 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 buyer are $12,000 apart then 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).

Conclusion (pretty much the same as yesterday)

The more you educate yourself about the real estate market you are looking in and how real estate agents operate then the better off you will be when selling a house. Real estate agents are quite useful when selling a house because most people won’t buy from a private seller and because they have access to MLS.

Whatever you do, never forget that they get paid when the deal gets done and only then. They don’t get paid for having extra open houses or walking away from close deals.

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

Check out another perspective on real estate agents.

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{ 11 comments… read them below or add one }

1 Dan Balm

Yes. All real estate agents are liars and cheats. All politicians are liars and cheats. All lawyers are liars and cheats. All bankers are thieves. All taxi drivers are thieving immigrants. All gardeners are latinos (who are also liars and cheats). All auto mechanics tell you that you need to spend more on your cars to fix them, so they are liars and cheats too. Your grocer? A liar. Those vegetables didn’t cost her that much. Your hairstylist is also probably robbing you too.

In fact, trust no one. Ever.

Your column is nothing more than a collection of rants about what I truly believe are isolated incidents that has led up to fear mongering of others.

There are true real estate professionals out there and your gross over generalizations contribute very little positive to the world or to people who may need a professional to help them.

2 John Farabaugh

Obviously, there are 2 sides to this whole conversation. Now, it is my turn to let the truth be told in the middle. First i will say, I do agree with the some of those passionate Realtors above. I know what they do and how hard they work. I do agree that selling a home with a good, experienced, competent, honest Realtor will make you more money. There is know doubt about it. They will keep you from panic selling, bump your buyer agent or buyer up even when you said you would take it, protect your interests like their own, show you simple tricks to put more in your pocket, and many more things i do not have time and space to mention.
However, the problem with the Real Estate industry is just like every other profession, but …gets noticed and brought to our attention more often in this one. It truly is the fact that there are so many individuals doing this profession that really don’t care. They do not educate themselves more than what is required, nor do they care to give you advise nor ever learned how, they work as little as possible, they it part time, some are even just plain unethical and greedy, some really just pray it closes for their hopeful paycheck. These agents do nothing to prevent negative transactions, constantly have deals fall apart without an itch of bother to them outside their own financial loss. Then, also their is the young newbees, that were thrown out to the field with little or no training. Its not that these agents do not care about their client, its that they know very little to help. Or worse, theyy could put their client in harms way and lose market time due to their ignorance.
Unfortunately, this is usually more than 2/3 rds of the industry. Think about this though….in your own profession or those you have experienced…isn’t it the same? Those that come to work with passion to make a difference and those that just do enough to get by.
So those of you that had the bad experience or felt you received a raw deal from an agent, chances are you probably got one. The odds are really against you. I bet you……you probably went with the cheapest firm in town, or someone you knew, or you never did any homework before choosing your Realtor. Shouldn’t you be, are maybe your are….very particular when it comes to picking out your IRA broker/investor, your surgeon, your dentist, your contractor, your baby doctor, your cleaning lady, and so on. But because of maybe you possible lack of knowledge and not thinking about it this way, you were not selective in your choice of Agents. If you paid attention to the passionate agents above and realizing that their work ethic granted them the ability to not be pounding the pavement for a new client. 90 percent of their business is through repeat or referral. What kind of impact are they making on their clients…..when their being sent their family, friends, and coming back years later to look up that same person. These are the individuals that make a difference in any profession. And, i bet you, no matter what they choose to do…they will go at it with passion and be granted success. These Realtors do not come by cheap, they are not the least expensive but they may not be the most expensive either because its in their blood to carry compassion and not greed. They just believe they should earn more than the ones that shouldn’t be in that business.
The reason i know this ….is i am a Realtor that is just about to leave the business to go to do something else that i have a different passion for. This profession was my third….and i was very successful with all of them. It is this business that frustates me the most. It is those agent that give the best a bad name. It will be my clients that i will miss the most not all my peers. I have the utmost respect for those agents that i had the privilege of working with that i butted heads with on so many occasion because we took out fiduciary commitment to our clients almost too serious, and battle out every detail in our clients best interest. It will be those whom shared the same stories of sleepless nights because a family was all packed ready to move to their dream home until a snag arose from the lender side. It was those times our personal lives were put on hold working together and not resting until we overcame what needed done to close, where we make picked up the ball where someone dropped it elswhere to get it done. WE MADE IT HAPPEN….we didn’t sit back watching and blaming. My hats will be off to those agents! Because of their pride and respect for what they do, they had to show they were better than everyone else. They had more knowledge, they had more drive to get that knowledge, they carefully took their time on every decision to make it the right move for their client not just doing enough to get by. They took great pride in getting that look of awe from their clients when they pulled the impossible off. The took pride when they told their clients “NO” we are not going to take that offer…we can get more …and they did! Also, the pride these agents feel when their clients time after time say …”what ever you think is best” “I trust your judgement”….because THAT is something those agents earned. Knowing people generally do not entrust someone with that kind of power, but they do for you. They must feel they are truly being looked after.
These Agents evoke that special bond with buyers or sellers to where they confide to them what thier rock bottom is or what they can afford max. These agent pride themselves almost egotistically, to go to work in negotiations and only to bring back much better results than their client ever expected. These agents at times even worried if they almost pushed to hard for their client that they could have lost the sale.
These agents want to feel like they earned their keep!!!….and FOLKS…and especially you MIKE HOLMAN…Its too bad you never found yourself a an agent like that. I know quite a few of them and they are all very busy. I believe you just had one or two bad experiences. Then you already made your opinion and never looked any farther, other than for more of the faulty ones to support your belief. You just believed and will always believe because of your ignorance to open your eyes….that… they (agents) are all the same.
Mike…you just ‘Stereotyped’. Your writings just presumed judgement on all. Assuming with no exceptions!
All Agents are all the same!…is what we all were to perceive. Its a good thing we weren’t talking about a color…you may have been considered a racist! I ask you …Is it not fair to knock any profession, (or gender or race) because of your experiences? Is this irresponsible in your writings? Isn’t this how unfair beliefs always started….with someone with the power of the pen portraying the bad in a whole group? Is there not good attorneys and bad? Good doctors and Bad? It is because of you bad experiences and how people like you portray us after is one of the reasons i am leaving this business.
You could have just worked in your experiences and what to look out for. Instead of trying put the fear of God in everyone so they can be against a certain kind. Hmmmm…what a thought!
Maybe you could have even expounded some kind of outrage of how many brokers let anyone become an agent. Protesting as i do, by demand more requirements to become a Realtor. More education, more training, mandatory apprenticeships, and etc…making it more difficult for those whom are just looking for a pastime to join the field.
And…Mike…FYI….the greedy ones without compassion…….??…don’t worry, they usually work themselves out of business. Without referrals they get tired of chasing down new business for years and earning the bad reputation amongst their peers. Your article could have had a more positive spin ….with some more investigation on your part.
But again, like i said…..not all members of a profession dare to go that extra mile….that includes writers

3 Jeanne

We just did the worst real estate contract of our lives! The realtor became a different person, pushy, arrogant. Everything in our neighbourhood was going for full price. We had 2 showings! 2! And he told us he was coming over to present an offer to us. I was tired, my husband was tired, we told him not to come, and he came anyway! He pushed and pushed us into signing the deal, even though we didn’t want to. Despicable! He has lost our business and we will never, ever recommend him to anyone, ever! We lost a minimum of $4000-$5000 on the deal, maybe more. We had put a lot of money into improving and updating the house as well.

4 Jeanne

Worst real estate experience we have ever had! We have bought and sold, many times, but have never been pushed so hard into accepting the first offer before, ever! It is a really hot market where we are, and people are getting full prices for their homes. We are very unhappy with the way the realtor treated us, and will never do business with again or recommend him to anyone! We lost over $5000 in the deal and put tons of money into the place, improving it.

5 Howard

Wow Mike, must have taken you longer to write out all these fake comments as it did to write the entire article!!

Thank god there are people like you saving these poor people from making such a big mistake! Like who would have thought real estate agents only get paid when they make a sale???? Thats just so insightful!

6 Tom adams

I have bought 9 properties in the last 8 years.

My strategy is simple. ALWAYS approach the selling agent directly. Make it clear you will use them in the purchase.

They start to salivate. They get BOTH ends of the commission. They are way,way,way more likely to encourage their client to take a lowball offer.

I will save several thousand dollars. The agent gets more thousands in their pocket. The seller is the one losing out.

Re commissions. It’s a joke. An agent has almost no incentive to sell your house at a market value…none. Their commission percent diminishes and they are not going to risk listing 15 thousand commission to earn another 200 of getting you another 10 thousand final price.

Here is a way to maximize your return. Offer 0 ( yes zero) commission up to a reasonable selling price …what you would accept. Then offer 50% ABOVE that. A motivated broker will scramble and work his hardest.

7 Cheryl

My parents just listed their house about a month ago. In a super nice area, and their house is in very good shape for an over 40 year old house. I grew up in that house and know it is worth so much more. The realtor told my parents to list the house low because that’s what the game is about now. To list low and let the bidding games begin. My dad should’ve listened to his gut and listed it at the price he knew it was worth. They had a one day-2 hour open house over the Easter long weekend. With almost 40 people coming to see the house, the house only got two offers. But then again, it was the long weekend, the open house was listed for about a week, people could’ve been out of town, people were busy with church, and people could’ve forgotten about the open house (like I do at times.) the realtor kept pushing my dad into signing a contract and dealing the deal and I kept telling my dad to have another open house because someone out there will want his million dollar land and be willing to pay big bucks for it. His realtor was highly manipulative to sell immediately to such a low offer when my dad could’ve sold his house at almost 2 million dollars, and retire in style. I love an hour away from my parents and with two young kids, I couldn’t go to my parents’ house and guide them as to what to do and not fall for this realtors trickery to sign for less than what the land is worth. He refused to and also told my parents that other open houses won’t do any good and that there was no point, when I kept advising my parents to have more open houses because it was my dads house after all and he could do whatever he wanted as the realtor would have to oblige to him every wish. Sadly, this manipulative realtor is a con artist who feeds one first time sellers and so my parents felt like they had no choice but to sign the contract because he made them believe no one else would want the house/land. And houses have been selling in that area for over 1.5 million. This realtor was very negative and only spoke about the flaws in the house which worked for my family for over 30+ years because the house was built that way. And it would’ve worked for the ppl who wanted to pay top dollar for it. Honestly, if I was at my parents’ house while the realtor was there at 11 pm, persuading my parents to sign the contract, I would’ve ripped him a new one! Not all realtors are bad, but you must remember to be able to trust your realtor, and choose a positive realtor.

8 Davey Realtor

I have a great idea… why don’t we abolish all Real Estate Agents all together. We’ll let all the geniuses list their homes for whatever they think they’re worth. Lets watch them sell a home for considerably less than market value. Then lets watch the neighborhood follow suit by getting less and less for their home. Real Estate Agents made the marketplace and are responsible for keeping prices at a proper level for their respective locations. This has been done over years and years of hard work. Or maybe you can listen to some a*shole spew out their advice to the world because of his never ending accumulation of knowledge. Remember, everyone has an opinion, in the end it’s yours that counts.

9 Kev

I got a question… we’ve won the house recently and the seller’s agent tells us we can’t go to seller’s house who invited us for dinner before they move out (closing day in 3 weeks) , is that legally true? what rule is that? I know for “Purchaser’s Visit” they need to know … but does it mean he can’t privately see me in his house?!?!

10 Kathy

I just read this (IDIOTIC) article by you, #Mike Holman on using a Realtor! WHAT a CROCK and completely slanderous against an industry! I don’t know what STATES most of these incidents happened in, but in TEXAS we are held to a very high standard and my REPUTATION and my license are more important to me that to participate in activities as describe by most in these negative comments. Too bad you can’t be sued for slander but in this GREAT COUNTRY even IDIOTS can voice their opinions. And you know what they say about opinions!
By the way Theresa, what happened to “buyer beware” and taking some responsibility on yourself for the choices you make? AGAIN, in TEXAS, we have option periods for you to have inspections so that you know UP FRONT what is wrong with the house. During that option period, if you find issues like this that the seller is not willing to take care of, YOU WALK AWAY! AT NO TIME, do I as a Realtor, become part of the decision making process about condition issues of a house YOU are buying. YOU as the buyer contract the inspector and YOU as the buyer make the decision as to what repairs are needed before you close on the deal. As a REALTOR, I can advise you on professional repair people to call and get estimates or do the repair, but I DO NOT MAKE THE CALL of moving forward with the purchase. IN A LOT OF SITUATIONS, if the loan is FHA, USDA OR VA, if this type repairs/conditions are not addressed, repaired/replaced BEFORE CLOSING the house become NON-FANCIABLE and YOU are not held to the contract….meaning you MOVE ON!
Really, people….get a clue about what a TRUE PROFESSIONAL does and the VALUE we can bring to the table. Would you go to court and defend yourself in a murder trial, would you operate on yourself, and in 90% of the situations, would you BUILD YOUR OWN HOUSE?

11 Shannon

Hello, As a Realtor for 12 years I just want to make sure you all know that an agent “double ending” a deal does not necessarily mean it has to be a Dual Agency. In fact a buyer who doesn’t have an agent and contacts the listing agent to view a property can be treated as a customer and offered a “No Agency” relationship. Agents still need to be honest about this with the buyer in letting them know that they represent the seller so basically not to tell them any information that they do not want the seller to have. The agent also has to be honest about any disclosures that need to be given about the property and they can still explain real estate practices and forms. A Limited Dual Agency would be asked for if the listing agent has buyers that they are working with and they happen to want to purchase a house that agent has listed. In this case the Realtor would have to be impartial and ask for a Limited Dual Agency. I can say that most agents I know work very hard for their clients and truly do care.
Shannon

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