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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{ 19 comments… read them below or add one }

1 Jackie sammartino

It’s your own fault. You shouldn’t have let him in your house. Or picked up that pen to sign.

2 Sandy Canilli

Well, this is one of the most self-serving, inarticulate articles I have ever read. You obviously have some issues that are not resolved. Mostly personnel I would say. Good luck with all of that. In the meantime, basically everything you said after “Yesterday, we discussed how your agent” is bullshit. Fortunately, I don’t need to read your previous articles or forthcoming articles. And postmortems on this article would be a further waste of my time. As I said, good luck with all of that. ::::: shaking my head :::::

3 Hascal Price

No sale, no commission. Their interest in creating a deal is obvious regardless of which side of the transaction they are supposed to represent. Their value is in knowing the area, and access to web-based advertising. Once a deal is in place, they have value in knowing how to put together financing, and knowing the ins and outs of the paperwork. And all of that can be a big help. My impression in talking to them is that they give cookie cutter answers because of concerns over liability. Ask them about schools or crime stats, and they hide behind RE protocols. Same for radon testing, same for any tweaking of the comparison of comparables in light of days-on-market. (Homes that sell quickly indicate demand which in turn indicates potential for a higher asking price. Duh…) This gives an overall impression of dishonesty with these folks, and in fact, if dishonesty includes not answering simple questions, than yes, realtors are dishonest. But even dishonest people have their uses.

4 Mikey

All realtors are the same. They put your home in the MLS and wait for the phone to ring. Until there is an offer, there is no conflict of interest. Once there is an offer, there is a huge conflict of interest. Not only is the realtor only getting paid if a deal is consummated, they’re also trying to play nice with your negotiating opponent so they have a chance to get their business when they sell your house next. We’ve sold four houses and it’s the same each time.

In our current case, the agent did not pass on relevant information to us that would have given us leverage and literally refused to use the leverage we did have because they wanted the deal done more than they wanted to look our for our interests. Rather than help us meet the conditions of the sales contract at the lowest possible price and inconvenience, they are doing everything they can to make the buyer happy including trying to trick us into agreeing to take on more risk and inconvenience so the buyer can get what they want.

I don’t think our realtors are evil per se. I think the whole industry is unethical because the interests of the service providers do not align well with the interests of their customers. It’s just the air they breathe.

5 Katie

Your post is incredibly idiotic! Forty people through the open house is an excellent turnout! The fact that you received two offers from it means that 38 other people DID NOT see the value enough to want to make an offer! Be happy you received any offers because if it was as good of a deal as you made it sound, all 40 people would have written! Lastly, what other profession will meet with clients at 11 pm, and for FREE? Quit bashing the agent and appreciate their hard efforts!

6 Dave

My story is similar to Cheryl’s. My elderly father was convinced by his retirement home exec to hire a certain real estate agent who claimed to be “a retirement specialist”. The agent already had a pre-arranged client in the wings – a developer and house flipper. She took full commission for pressuring a sale before the house was even listed on MLS, denying my dear old trusting dad a bidding war that would have netted him tens of thousands more. The developer flipped the house after a few months renovating for nearly double what he paid. This to me is not only unethical, but actually constitutes elder abuse. The retirement generation have a great deal of wealth and all too many vultures are out there looking to profit from it. Their generation are trusting of “professionals” and this fact is being used to pad the pockets of profiteers and the unscrupulous. Be warned if you have elderly parents looking to sell up.

7 KERRY

Well hello lovely, pleasant, people ! Sooo, I wish to sell my home/house & have no clue which agent/agency to conduct business with/through. I was thinking ‘for sale by owner’. Of course agent did not recommend that I do that, ( emphasis on ‘of course’ ). Then I must decide where to move TO..been where I am since 1968…know no other…as I’m sure readers have figured out already, I’M PETRIFIED. …any way,……suppose that is as good to say as it would be to hang a steak around my neck & not expect to get my head chewed off by carnivores.

8 Liz

Really?

9 Karen

Well after reading all of the above. I am very happy to say that I have found my realtor has not been pushy or given my gut a bad feeling. He’s been very positive and when I have gotten 2 offers he even said it wasn’t what I should take, but consider this or that. I’ve asked him tons of questions and when I research his answers have matched to what I find being said. I did find the comment from the investor above about working with the sellers agent if you are a buyer that they get a better deal & commissions etc , that I did not know! I think there are scum out there in every industry and I really believe I have the right agent.

10 Mary Wolf

The last two homes my husband and I sold we used real estate agents. In Florida the agent was a broker who owned the agency. In Ga. we signed with an agent from a top firm after interviewing 5 others. Both times, the agents bullied us into a lower listing price. Some of the comps were mobile homes or did not exist ( we could never find the home in tax records or driving around). The agents never updated us, we could never reach them and twice they asked us to show the house because they are busy and to make sure we keep silent during the showing. Things were missing from the home, one was a large wall hanging. Police would not do a report because there were no signs of forced entry. The broker did a “agent caravan” with good at our large waterfront Fl.home. We came home to open doors, salad dressing all over the floor in the kitchen, toilets with cigarettes butts floating and several lights on. You could see in the Master some had been laying in the bed. When I complained the broker told me a few agents had too much to drink and things (?) kinda got out of control but she left me some cake in the refrigerator. Both homes sold below what we wanted.
Both homes within 3 months were back in the market for $63,000 and $48,000 more then sold for, one in 2008 when the market was going down . We were fools to use the agents.
Cautionary advise: never listen to the “list your home low and create a bidding war”. If the only offer you get is the low price, you owe the full commission. My g\f fell for that line with her condo. After signing the agreement for $17,000 less than others had sold for the agent stood up and yelled SOLD!!! Yes, the listing agent bought the condo at the reduced price. Maria dropped out of school 3 months later, reason, her husband and her could not afford the house the wanted. They were counting on the money from the sale of the condo. Also, Marie’s husband went into a deep depression. He was from Cuba and worked very hard for the money. He drove to a remote area and took his life.
Maria now had to work full time, she rented a small apartment . She took a job at J C Penny and her dreams of being a nurse are on permanent hold. My husband and I tried to help, we paid an attorney but he said they owed he commission. I guess the upside is the agent sold the property fast, I Don’t Know How Agents live with themselves.

11 Julianne

I will NEVER hire a real estate agent again. The one we hired was unethical and that doesnt even describe her behavior. It decreased my belief in humanity. WE are going to sell our home by owner and will be just fine. They are all cut from the same cloth unfortunately.

12 Chelsie

My boyfriend and I are first time home sellers and cannot get rid of the feeling that we are being taken advantage of. No one in my family has ever owned a home and at first I thought that this was going to be a really wonderful experience like on HGTVs “Buying and Selling” (Spoiler alert: ITS NOT). We have a 1953 Cape Cod which we are restored to PRISTINE condition. Weve done the renovation work to ensure that it has all the bells and whistles like granite countertops etc., while still maintaining its character and charm. Needless to say its the best house on the block and a quick look at the photos on the internet compared to comps in the neighborhood confirm this. The problem? We spent too much on the renovation of course and are going to lose $19,000 because what we put into the home improves the function and look but does not increase the market value or appraisal of the property. Whatever, we have come to terms with this. We bought the house 9 years ago for $124,000, did at least $20,000 in renovations last year before we decided to relocate due to a job change, and listed it on the market for what our realtor said was market value $125,000. We explained all of this to our realtor. She SAW the property and knows what kind of condition it is in, she KNOWS what we paid for it and how much we still owe, and she UNDERSTANDS how much money we are already losing on this deal right off the bat if we accept a deal at list price.

Well after being on MLS an hour we had been pressured to accept the first offer that came in (which was $10,000 less than list price). We refused and said that we would hold out for list price. Well what do you know, the buyers came up to list price almost immediately. While we feel like we should have waited a bit to see if we could have drum up some more offers to possibly increase the price, or at the very least listed at a higher price, we went ahead and trusted our agent who let us know that “this is one of the best offers you could hope to get”. The troubles started almost immediately with the buyer wanting us to pay $4,000 closing costs in addition to a bunch of other costs throughout the contract. We said that we would not pay that much and that we were willing to pay $2,000. She came back and said the buyers agent would not agree to that and they have increased their offer to $127,000 but still want to keep the $4,000 closing costs– “its the same thing” she tells us. (Actually its not the same thing because agents get paid out of a percentage off the purchase price. So while the deal looks the same, it isnt because we are going to be paying higher agent fees to herself and the buyers agent so they are the ones profiting there not us). Whatever, we want to move quickly so we go with it.

The home inspection comes around and the buyers agent give us a bunch of non-sense repairs “fix Rolex wiring on the outside of the house” (pro-tip there is no such thing as Rolex wiring, its called ROMEX and a licensed home inspector should know this), “increase water pressure in bathroom faucet” (its a waterfall faucet and the water comes out slower than most faucets to make the water look pretty for decorative purposes), “replace missing chimney cap” (we dont have a fireplace so the chimney is just a furnace exhaust and its not missing its chimney cap, it never had one because they are know to create drafts). We already paid for and are offering an expensive home warranty so we were shocked to see such a long list of repairs that they wanted done by closing (when we bought the house we didnt ask for a thing to be repaired because we didnt want to take advantage of anyone and risk losing the sale but I guess we were in the minority with that mindset). We reached out to our agent and told her that we were not willing to pay for those repairs because they dont even make sense, expecting her to agree with us, and much to our surprise she didnt! She told me that we could not risk this sale not going through because we would have to start all over again with another buyer and “no one wants that do we?”. She wants ME (not the buyer) to get quotes on how much these idiotic repairs are going to cost, and for the ones that are non-existent (the Rolex wiring) wants me to get a statement from a licenses electrician that there is no such thing and that the inspector was confused. I told her that I felt like I was being asked to sacrifice my home with all these new expenses and was not willing to do so– we already didnt make any money at all on this sale! I told her that I wasnt worried about the sale not going through because if the buyer wants to walk, I welcome it and would like her to reach out to the sellers agent asap to let them know we wont be doing any of the repairs and that if their buyer thinks these repairs are a deal breaker that she should let us know now so that we can relist it asap. She straight up wont do it and is insisting that I reach out and get the quotes from the contractors first. Now I am supposed to waste my time calling contractors and getting repair quotes for things that I do not even plan on paying to fix. Isnt it customary that the buyer be the one looking up these quotes to ensure that I do not hire the cheapest shoddiest licensed contractor that I can find? Am I missing something or are things seeming a bit suspect here…..

13 Deball

Im selling my house, hired an agent, did background on her, she lied about how long she had been an agent

14 BH

You have to be careful out there. Of course a selling agent is wanting you to sell your house ASAP so he/she can get their commission and move onto the next home. But don’t let anyone pressure you into selling YOUR home without your approval on anything!!! You are the client, and you are the one who can walk away if you don’t like the way some agent is doing business. If he/she are pressuring you to list your home quickly, or using unlicensed painters to complete a job because it will move faster to market, you have to be the one to take a stand. For every pushy agent out there, there are ones who have the knowledge and expertise to work with you and sell your home the right way. If you smell BS along the way, dump his ass and move on to a better agent.

15 Traci Nicodemus

This thread reminds me of when we discuss politics or religion.. Both sides very passionate from where they stand on the issue; left and right! I can’t deny that the industry has some agents that lack ethics and integrity. I think if we are honest we will find this in any industry. Are there people in it riding the tide, self serving, and in it for themselves? I have to say yes there is. However, just like every industry there are dedicated people that work hard to be the best representative they can be for those they serve. These same people love helping people recognize there goals and protecting their clients. They spend their time for FREE lobbying in their Capital and nations Capital lobbying for the preservation of property rights. As a matter a fact I did just that last week. I was in DC all week away from my family at the Capital Club with my Congressman, I was speaking up at the Senate meeting concerning the cap on property taxes that actually gives no extra credits for married couples or multi generational, net neutrality, fair housing for familial status. No one paid me a commission! While you may not respect Real Estate agents or live in my state my efforts as a Realtor benefit you and you aren’t paying me so I would rather you just say thank you! This doesn’t get me a single sale! I think if you are going to speak on an industry you need to collect all of your facts concerning the industry. Of course unless your self seeking trying to get readers and ratings by only writing to a topic that will get attention. There are names for these types of writings however as a respected Texas Realtor I will just bare facts and leave the names to those who are better qualified for such.

16 Mary Wolfe

I second that. Elder abuse it is. My father was 88 and the retirement home sent their “specialist”. My father’s house was on a dead end street, it was a
old Sears kit house, the Marion model, beautiful Craftsman with built-in linen cabinets, milk chute, lead glass cabinets, oak floors and the most unusual limestone fireplace I have ever seen. She convinced him that the layout was “awkward” as you walked from the kitchen right into the dining room. (?)
It has an additional apartment built behind 3 garages (totally useless according to the agent) just a maintenance nightmare. The Realtor had him sign in the nursing home and A MIRACLE!! it sold without ever being put in MLS!! It was flipped for double. My father was so stressed he had a stroke and died.
I don’t see how a profession that has no assets other then the ability to find an address and open a door should earn such high commissions. The bank qualifies the buyer, the buyer picks what they like, the home inspection does its job, the title company does the paperwork and the lawyer in Georgia looks it over (usually his secretary does) and the agent picks up their check for all their hard work.
I have had 5 agents ask me about what the Radon mitigation system is on the home I am currently selling. They have never seen one. Really? in Georgia I am so lucky that I am the only person to have one?
Agents, if you want our respect, at least learn to turn out lights, flush toilets that your clients so rudely use and leave floating, put the lid down and lock the front door. My 5 years nephew can do that, I am sure with training, you can too. I would ask you to put on the home security, but that is above your ability – there are 4 numbers involved.

17 charles

Please don’t get residential agents confused with strictly commercial agents. Most commercial agents have years of training before they exclusively represent a client. I would also like to point out if brokers charged by the hour, it would not be cheaper than a sales commission. Plus unethical brokers may drag out closing for months.

18 Ra

I don’t trust Any real estate agent. It is all about the Money and Nothing else, they don’t care if you sell lower and lose a lot, the percent they get from selling is over priced, what they have to do now days when listing a house is NOT hard unless you have the mentally of zero. I can list my house with a lot of pictures on line myself, and write up a description which is a 100 times better than they will. You can do the titles and paper work mostly your self even though it may take a little more time and leg work. so don’t let them tell you how hard and that it takes these hundreds of dollars, and the home inspection people most have no clue what they are even looking at, their education is zero when it comes to inspection, this is another rip off ask them where they learned their job requirements and where they took classes/school at and see what they say, all these people fit in the same space as new and used car dealers.

19 Mary Wolfe

Amen, Realtors are predators – and idiots. Why do they want 3% commission and they can’t lock door, turn on home security, flush toilets and turn off lights? 5 years olds are better behaved – and cheaper. I just sold my house,
I used a deep discount broker to list – extra for Septra box, paid for the photos and he didn’t come to closing – but I saved 2.5%. I recently lost my husband and found out the listing agents pump you for information to get you to lower the price. He thought I was desperate – wrong He thought I would take a low ball – wrong but you are right, they are not in your corner. I hate that real estate sales has become a competitive sport and the seller is collateral damage and PLEASE forget reporting them to the real estate board – there are a pile of limp noodles.
One bright spot. I sold my house in N. Georgia. Bought it new, had home inspection – which did not begin to uncover the problems with it. Upon listing found out that the house built as a 5/4 was on a 4 bedroom septic. Wow, the buyers agent found this out and clubbed us over the head in negotiations – problem was, husband just diagnoses with bone cancer on top of his complicated cardiac problems. Had to move closer to Atlanta to get better health care and extend his life – so be took the offer and a 2 week quick close for cash. Yep, 2 weeks turned to 4, 4 turned 6, 6 turned to 6.5 weeks – proof of funds letter was cut and paste done by the sellers agent etc.
We took a huge hit, missed numerous other opportunities, my husband had
a heart attach from the stress – total, total nightmare.
How did the agent find out about the septic??? and my husband’s health?? Women across the street was secretary in my husband’s GP’s office, her husband is a contractor (he helped build the house as a sheet rocker), this agent sold some of his spec homes so the wife passed on personal medical information. The inside information was total dirty pool. At closing the agent leaned over me and told me to get a life and sneered at my husband “I hope you live long enough to enjoy the money”. Total Witch.
Flash forward, husband passed, looking to move – wow, my old house is back on the market and IT HAS GROWN!! yes, same septic system has not but now the house is listed in MLS as a 6 bedroom / 5 bath. Called listing agent and broker – both hung up on me.
So, I contacted the Building Codes (no permits were ever pulled) County Tax (taxed as unfinished basement – is that tax evasion??), Health Dept. on
septic and Tn and Ga. MLS. House now listed as a 4 / 5 – still not rights but
the pebble has been thrown into the the pool and the ripples will continue. I kept all the emails from the previous sale and will forward them to the new owner – if there is one. Makes me wonder what would have happened if I have not said something??? Insurance could deny claims for a new owner and worse, if they got a loan – they could be charged with mortgage fraud.
Not to mention their resale value will be in the toilet . . . just shocking.
Does the broker and listing agent care – absolutely NOT. Their MORAL COMPASS IS TOTALLY BROKEN. Buying a house on septic. Check with the County Health Depart. to see how many bedrooms and or people are allowed to live in that house. I was scammed by my agent and the original builder . . . it will happen again, it is an easy fudge.

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