Most prospective house hunters or sellers think they have a “good” agent. Either it’s someone who they previously worked with or perhaps a referral from a friend or a co-worker. One of the big reasons for having confidence in their agent is a belief that the agent is “on their side” and “honest” etc etc. I would suggest however that by a certain point in the process, your agent is your enemy and you are negotiating against them more than the other party. This post deals with the buy side of the house buying game. The next post will deal with the sell side.
In the beginning: happy friends
When a house buyer first signs up with an agent, things are usually pretty rosy, the agent assures the person that they can find an appropriate house for a price you can afford and everything will be great. The agent has “lots” of experience and knows the area inside out. At this stage of the game, you and your agent are mostly on the same page. You want to buy a house and they want you to buy a house. Your agent will most certainly want to get the process over with sooner rather than later, but that’s usually the case with the buyer as well.
During the search: uneasy allies
Agents know that they need to spend a fair bit of time with a buyer, especially ones who want to look at a lot of houses. After a while however it’s not worth it for an agent to continue a long search especially if their contract is running out. This is the time when the agent will start trying to convince the buyer to lower their standards and raise their prices. Sometimes this is educational if the buyer has unrealistic expectation, but mainly this is to speed up the process so the agent can get paid. I should point out however that real agents are normally quite useful during the search since they often know more than you do about the general real estate and can get you access to private showings. The other big benefit is their access to sale price information for similar houses.
Related – How to win a house bidding war
Thinking about putting in an offer? Trust no one!
The point when the buyer submits a offer on a house is a time when a lot of house buyers, particularly first timers feel out of their element and defer to their agent for advice. This is the worst thing you can do. Your agent gets paid when the deal gets done and only when it gets done.
This is a time when knowledge of the real estate market should be a big help in determining how much negotiation should be done. As well, if the buyer is not in a hurry to buy then that sets up a great negotiation opportunity. However if there is one thing that real estate agents don’t like it’s clients who negotiate hard – why? Because the only way to negotiate properly in a deal is to be able to walk away if the price you want isn’t met. The way an agent sees this type of situation is that if a deal falls through, they have to spend a lot more time looking at houses with you before they get paid.
Things that your agent might say (and you should ignore) when you are about to put in a bid are:
- “Don’t bid too low or you will offend the sellers”. This is garbage – if the sellers can’t handle a low ball bid then they are unrealistic. And what exactly is a bid that is “too low”? I’m not saying put in an unrealistic bid, but don’t be afraid to start low and work your way up. It’s important to know the market so that you don’t have to rely on the asking price or your agent to tell you the proper market value of the house.
- “Don’t bid too low or you might offend the selling agent and might I have to work with them in the future”. This stunning example of gall and self-interest was actually told to Mr. Cheap. I don’t think this one needs any further comments. 🙂
- “You should get a bid in quickly before someone else puts a bid in”. This is a favourite of my agent – create a sense of false urgency, get the deal in motion and get it done ASAP. Sometimes this is good advice, but other times – such as when the house has been sitting on the market for a month or longer then it’s just not appropriate.
- “Someone else is looking at the house later today and they are really interested”. This lie usually originates with the selling agent, but smart buying agents are usually more than willing to play along because it will increase the chances of their buyer putting in an offer in that day.
Negotiation – don’t listen to a word your agent has to say.
At this point you are potentially pretty close to buying a house. You want to buy the house at the lowest price, the seller wants to sell the house to you at the highest price and your agent wants you to buy the house and doesn’t care at all what price you pay because they just want the deal done right now. Since paying a higher price will get the deal done quicker, a lot of agents will encourage you to bid higher which basically means that you are negotiating against them as well as the seller.
Things that your agent might say (and you should ignore) when you are negotiating are:
- “Meet them halfway or in the middle”. This sounds quite reasonable at first- if the asking price of a house is $500,000 and you bid $460,000 and they come back with $490,000 then isn’t splitting the difference at $475,000 quite reasonable? Not if you can get the house for $470,000 or $465k,000 The fact is that the asking price of the house and your first bid are very arbitrary numbers and splitting the difference between the two might end up in a price that is not market value.
- “Are you willing to lose this house for $2,000?” (or $5,000, $8,000) This is a tough one – on the one hand it seems silly to not buy a house and be only a half of a percent away from a deal, but on the other hand shouldn’t your agent be asking this question to the seller? Ie – “We are going to walk, do you really want to lose this deal for $2,000?”
- “Are you willing to lose this house for $12 a month?” This is part two of the previous point which is applied if you don’t bite on the first attempt. It’s also a more useful gambit if the “separation” is a bit greater. If you and the seller are $12,000 apart, that sounds pretty significant, but what if you are only $75 a month apart (for 25 years) or even better what if you are only $63/month apart (over 40 years). That doesn’t sound like much (even if it is).
Conclusion
The more you educate yourself about the real estate market you are looking in and how real estate agents operate, the better off you will be when buying a house. Real estate agents are quite useful because they can get you access to houses for sale and will often drive you around to look at them plus they have access to the sale price of other houses. Whatever you do, never forget that they get paid when the deal gets done and only then. They don’t get paid for showing you more houses or walking away from close deals.
Tune in tomorrow when we take a look at the trustworthiness of real estate agents when selling a house.
Take a look at another perspective on real estate agents that Mr. Cheap wrote.
Do you have any good “lines” that you were told when buying a house?
588 replies on “Why You Can’t Trust Real Estate Agents When Buying A House”
Clearly, sir, you haven’t the first actual clue about what an agent is. Please allow me to enlighten you so that you cannot, in good conscience, write another article on this subject as ill-informed as this one.
An agent is defined as “a person or business authorized to act on another’s behalf.” Agreeing to act on someone’s behalf creates a fiduciary responsibility to act in that person’s best interest, just as the person would do for themselves if they haven’t hired an agent. “Fiduciary” is a legal term that is defined as “a person to whom property or power is entrusted for the benefit of another.”
An individual who is licensed to sell real estate and currently has no listing contracts is NOT a real estate agent. That individual is a real estate salesperson. The salesperson becomes an agent if and only if, when and only when, the salesperson enters into an agreement to become someone’s agent. When the agreement ends, the agency ends, and the salesperson does not become an agent again until entering into another agency agreement.
As you can see, then, if a potential buyer approaches a salesperson, offers no money, and asks for help buying a house, that buyer must understand that the salesperson is the seller’s agent. You made that point yourself, but then you showed you don’t truly understand when you addressed the buyer in this relationship and used the phrase, “your agent.” WRONG. Never happened. Doesn’t exist. If the buyer didn’t enter into a buyer’s agency agreement with someone and pay for those services, the buyer has no agent. It’s just that simple. A buyer who refers to the seller’s agent as “my agent” is uninformed and almost certainly will run into trouble.
Oh, but that’s the whole basis for this pair of blog entries, isn’t it? Buyers can’t trust sellers’ agents. Well, duh.
That leads me to the concept of double agency. Again, you’re talking about something that doesn’t exist. Double agency is a physical and legal impossibility. No one individual can faithfully keep fiduciary responsibility to both sides of one transaction. One or both sides will suffer from someone who is not representing them for their benefit.
Unfortunately, thousands to millions of people who work in the industry do not understand this. Either they are ignorant of what agency fully entails and believe they are doing right by both sides, or they understand perfectly and lie to their clients.
Finally, I fully acknowledge that these experiences are quite common among buyers and sellers alike. Misinformed buyers become disillusioned when someone they falsely believed represented them acts in a way contrary to their interests. Then they perceive similar behaviour when they sell, and so on. And certainly there are unscrupulous real estate salespeople, just as there are unscrupulous individuals in every industry on the planet. There also are completely honest people in every industry on the planet, including plenty of real estate salespeople who act in every way for their clients’ benefit when they become agents. Instead of writing about how awful real estate agents are and how none of them can be trusted, ever, you could have presented the far more realistic and truthful advice that it is wise to do due diligence when selecting a salesperson to hire as an agent. Don’t just hire the same person your brother-in-law hired and claimed did a good job. Research the salesperson. Talk to some of their previous clients and find out to what extent the agent upheld their fiduciary responsibility. The good ones are out there. Just as with finding the right house, though, finding the right person to be your agent requires investigation, research, and time.
Education is the answer. Lack of knowledge.
What an irresponsible article and irrational mindset. While every profession may have individuals who behave in ways described, this by no means represents ANY person I know in real estate. Agents, whether representing sellers OR buyers are customer people, and by AGENCY relationship, defend and build trust with their customers based on the customer’s needs, not their own.
Well I would not believe your perspective since you just called Infiniti a luxury car…Lexus is a stretch too. Look up lease prices of even nice cars – not that much a month. And I would trust them more anyway – if my agent is driving a Camry and I’m looking at high end homes (real high end, several millions, not hundreds of thousands) I would think they don’t have a high closing rate, so I wouldn’t trust them.
In regards to the article and all the ‘geniuses’ agreeing with it: You just need to be able to see thru basic bullshit and you’ll be fine. Don’t be afraid to use a buyers agent. Because in order to get a deal done, they need your approval. If you’re just nodding your head throughout the process then you’re doing a disservice, not your agent. You’re giving the impression and the permission to proceed. Granted there are ”mean” agents out there, (there’s mean people everywhere – a burger guy tried to charge me 2 extra bucks, but I didn’t fall for it, it can happen anywhere in any industry). But for the good agents, it rarely falls 100% on them. Buyers have the option to cancel contract, fire an agent, find another, or report bad ethics. So don’t play victim. It’s hard to get trapped into bullshit. Though agents have more information accessible to them, most records are open to public so there’s no reason why you shouldn’t know it too. Dont be so blinded by the stress of the process to fall for stupid shit. Listing agents work for the seller no matter how much they smile and agree with you. You’re still the buyer, and you just got suckered in by believing the listing agent is on your side. Never underestimate the amount of crap a listing/selling agent will give your buyers agent, but to upkeep professionalism, buyers agents are discouraged to dish out on the selling agent. Just work thru the bullshit so that the client wins.
As for their commission – in reality it’s a small price to pay to get your dream home. Buyers have to come to reality and know they are pinching their pennies more than ever because a large sum is going out at once, however it’s part of making a large investment. I’d be embarrassed with myself if I missed out on my dream home all because I didn’t want to work with a so-called snooty agent. Get over yourself. They’re making money just like anyone else who works. It seems like they’re instantly making a ton, but between splitting it with their brokerage, expenses related to finishing the transaction, and let’s not forget that amount does not include taxes being taken out – after all that math and depending their closing rate, some agents could actually be making less than minimum wage. If that’s they case they should be doing something else, but still, there’s no reason to assume they make millions or just get a ton of money easily. Not all agents are bad, most of them just wanna do the job and keep a credible reputation, so let’s not shit on them. I work with a lot of agents, I’ve used agents in my personal purchases, I was an agent at one point (honestly it was so demanding I found myself overly exhausted from being on call basically 24/7). They’re unavoidable for the most part, might as well enlighten yourself on the industry and learn to work with one than to fight them every step of the way. A lot of confusion comes from lack of information, so before you stomp your feet and whine, ask the right questions and do your research. And if your current agent isn’t doing their due diligence, get someone else! If something is seriously wrong, report it! Easy. That simple. Done. *mic drop*
*The Camry reference was in response to Donna
I’ve had an agent like the one you mentioned. I’ve also had agents nothing like the one you mentioned. My current agent doesn’t pressure me to “act now”, and doesn’t feed me any lines about offending someone. It is pretty refreshing. We are looking at fixer-uppers in a nice neighborhood, and I often ask my new agent what kind of offer she would put in. It is usually lower than what I might try by at least 10k. She understands my situation and genuinely seems to want me to get into the home that best suits my needs.
She helped another friend -a first time buyer- find a home. They looked for longer than my friend would have on her own, and our agent urged her to be pickier and visit more than once/different times of day. She also didn’t pressure her into a price-point out of her reach. All of that adds up to more work for the agent.
So yes, I’ve known the type of agent you speak of, but they are not everyone!
My ex-husband is greedy and illogical. His agent (once ours, with our first home), never tried to negotiate the lowest offer and acts exactly how you described. The agent lived in the neighborhood, and was obviously interested in bringing up his own property value. Consequently, we paid too much for that first home and have not been able to sell it. The last time it sat on the market for over a year with barely a nibble because it was at least 30k overpriced. The agent sold his own home for a tidy profit not long after he helped inflate that local market, while we were stuck.
My ex is gullible enough to go with this agent a THIRD time, because he still believes the guy’s unrealistic assessment of that house.
The other day, my ex got pissed at me because I made an offhand comment about my own real estate search and how it all comes to down to price, and if something is sitting too long – it IS overpriced, a function of supply and demand. Oh, he was immediately angry, clearly thinking about his situation. Then he went on to condescendingly lecture me on how it’s not all about price. I am still in awe he clearly believes homes (or anything) have a set price which does not fluctuate. In his brain, HIS home is worth $$$. He is an CPA, btw, and works in finance. Scary stuff, to not have the ability to be clear-eyed about money when it should be part of your job description.
Oh, and the cherry on top of this scenario – my ex went to high school with my agent! He could have gone with her, but prefers the image of a slick high-rolling agent (his agent drives a Jaguar), rather than my down-to-earth negotiator.
Honestly – in the end, it seems to me that the client is half the problem. Unscrupulous agents are always going to find idiots who “fall in love” with a home, or chooses to ignore all the comps when buying/selling.
Reading this article really opened my eyes to the cons and words that came out his mouth. We were in a hurry to buy. The biggest lie told to my wife and I was that houses sell very quickly so you have to jump on the opportunity. The second was there are three other people bidding on the house so I will advise you to tell the owner you will pay asking price plus full closing to ensure you get the house.
Paloma San Basilio is right. All the realtors are saying this article is shameful. It is reality. If you are buying a home and the home is priced at $100k and 3% going to the buyers agent. Do you think he is going to tell you that you should offer less so he can get paid less?
I am working with a realtor now and i noticed somethings that are not of my interest, like offer the full listing price. So i just ignored it. He is a great agent for everything. But you have to pick and chose because he is not making the decision for you. He is there to provide what you need.
You don’t have to hire them hourly. Just keep in mind that anything that lowers the price of the house will affect how much the agent will get paid.
Liz, no you do not have to sell to those people no matter what they offer. It is your property. You sell or do not sell to whomever you want at whatever price you choose. If you do not like them and they offer you a million dollars, you can tell them no and choose to sell instead to some homeless guy for $5.
This article presents a very poor generalization or stereotyping about realtors. I would suggest to anyone who reading this article that if they decide to purchase a house that they use a Buyer’s Agent who has a fiduciary responsibility to the Buyer and if you’re a seller that you use a Seller’s Agent who has a fiduciary responsibility to the Seller. Certain states allow for dual agency or dual agent, use discretion before signing the CSI which is presented to you before working with an agent. A professional Real Estate Agent will take the time to help you understand these terms before asking you to sign it. And if you do decide to take the risk and go it alone without using a professional Realtor, then read up on the risks you take and what the real cost can be by taking this path. We all know that in every industry, there is sleaze and incompetence and a good way to spot it in Real Estate is to watch for the jumpers, who move around from broker to broker. They usually don’t last long in this business as in Real Estate, business is usually earned through referrals and referrals are earned from satisfied clients. And if I may offer one final piece of advice, … If you do decide to go it alone I would contact the author of this article Mike Holman as he appears to be very confident in his facts. Contact him and ask him if he would be willing to compensate you for any losses that you might incur from taking his advice through this article. I’m sure Mike’s a stand up guy and not at all like the way he generalizes Realtors and will stand by his words!
I totally disagree with this article and it’s very misleading and the information is totally wrong. When you as a buyer or seller sign an agreement to be represented by an agent, the agent will be deemed by law to be a fiduciary (same level of other fiduciaries for example: executors, trustees and guardians) and the agent will have the following duties or obligations:
1) loyalty ( agent is obligated to act at all times solely in the best interests of his/her client to the exclusion of all other interests, including the agent’s own self-interest).
2) confidentiality (This duty of confidentiality precludes an representing a seller from disclosing to a buyer that the seller can, or must, sell his property below the listed price. Also, an agent representing a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more for a property than has been offered).
3) disclosure (an agent is obligated to disclose to his/her client all relevant and material information that the agent knows and that pertains to the scope of the agency).
4) obedience (an agent is obligated promptly and efficiently all lawful instructions from his/her clients).
5) reasonable care and diligence ( an agent representing you in your real estate dealings, is under a duty to use his superior skill and knowledge while pursuing his/her client’s affairs). This is the same duty
any professional, such as a doctor or lawyer, owes to his patient or client.
6) accounting (an agent is obligated to account for all money or property belonging to his/her client that is entrusted to the agent. This duty compels an agent to safeguard any money, deeds, or other documents entrusted to the agent that relate to his client’s transactions or affairs.
I agree with you and the author. This whole realtor system needs to be changed. Supposedly, the seller’s agent protects the seller and the buyer’s agent protects the buyer. But with today’s market, no one is really there to protect the buyers. They all want to make as much money out of you as possible. Our agent has said all those things mentioned in this article and more to us during the process. She did opened doors for us for 1 to 2 times, then we were told to look at open houses on our own. I basically did all my research on the area, schools, and comparables. We’re in contract now and appraisal came in 10k lower than the final purchase price, about 1.5%, but at the exact price we originally wanted to offer. Our agent suggested us no appraisal contingency so she said we can’t negotiate the price with the seller now. She said 10k to a lot to ask from the seller and then she said paying 10k more is nothing. Throughout this whole process, she was never on our side. And the worst thing is we went with the inspector and the lender she recommended and now we don’t know how much we should trust the inspector since we can’t trust our agent. I feel she’s more like the seller’s agent, persuading us to grant the seller every wish they have so she can get paid in the end. We’ve also ran into good buyers agents in the past who wouldn’t let us overbid. But someone out there should improve the process of buying a house and make it a more pleasant experience for buyers instead of leaving buyers feeling helpless.
This article is complete and utter BS. There are great agents, good poor, terrible… just as in ANY profession (including medicine and legal). My wife is an agent – and I can tell you right now – that she works her tail off for her clients. She is obsessed with their best interests – and she NEVER lies about anything. Prior to her becoming an agent – we used to treat our agents suspiciously – and we were COMPLETELY ignorant to the work they did for us behind the scenes. If you are not an agent – or have never been one – then you have no clue what you are talking about. Bad agents are obvious to spot. Perhaps you’ve hired one. But excellent agents work their butts off till the wee hours of the night while they micromanage the ENTIRE process that takes place in order to get a home from discover – to contract – to closing. There a million different timelines and a million people involved. Good agents make sure everyone stays on schedule and nothing gets dropped or changed at any point. You… as an ignorant home buyer or seller – would have NO CLUE what you where doing in this regard… as even experienced agents continue to encounter new scenarios and learn new things. It is a profession – and many agents are extremely hard working professionals. They have legal responsibilities taken on to protect you. And btw… agent do work FOR a their buyers – providing market analysis, negotiating in their buyers best interest (that’s right – my wife spends hours trying to get the LOWEST price that is realistic). Just because most of you people feel perfectly fine offering an insanely low amount – doesn’t mean that it is a realistic or educated amount – or that it is not simply insulting to the seller. It is not good business to insult the crap out of the other side of the deal – so perhaps this is what you are talking about? Who knows. All I know id that I am incredibly impressed by the sheer amount of analysis – organization – late nights – and constant micromanagement and negotiation that I witness on the realtor end of things. And guess what…. it does typically take a single month to sell or buy. I’ve seen people spin our wheels (on my grocery money) for over a year at a clip before – ultimately never even intending to consummate… using us as a free city tour guide service and dumping us once distracted. If you haven’t had that happen to you – then you don’t know why some realtors feel the need to protect themselves to some degree. This string is full of ignorance and selfishness.
I decided to use another realtor, because my 1st didn’t get back to me in a timely manner, days, weeks.
And supiciously enough when making offers with cash on bank owned properties the properties always end up being bought out from under me.
When ironically enough my realtor is partnered with investors who are interested in the same type of properties.
I suspect he tips them off with my offers and provides them with the same listings.
I’m already off to a bad start with this next realtor referred by my bank.
She had the aduacity to ask me to look up my own MLS numbers? Even when asking to see properties that she sent me. Excuse me? Isn’t that her job?
I’m just suppost to show up to look at the house, provide a deposit for offers, and the sign papers, not do research for her.
I’m waiting to hear back from her to see properties, but I get the sense shes no better at her job than the previous broker.
Now I understand why 95% of our business is referral and why internet leads are typically a waste of time- they are all skeptical and untrusting from reading articles like this.
@ Paul Zubrys
The problem isn’t that realtors are making too much a year; the problem is that there are too many of them, and they’re making too much per transaction to justify their cost.
Furthermore, how much they make has nothing to do with how many hours they put in, which is frustrating. I could find 95% of the information I needed myself, and zeroed in on one house. All I needed from the realtor was counseling on the right price and how to negotiate, and help with the paper work. For the second they’re fantastic, for the first, they only seem to have worked to make our initial bid higher, and were even suggesting a one and final offer at a higher price, possibly so they could make a quick sale.
I feel like buying agents have to be treated like any other salesperson.
Your article disgusts me. There are good agents out there and you attempt to discredit ALL OF THEM in one article. Find something better to do with your time.
I am a real estate agent, and although I do find my self useful to my clients, I do mostly agree with this post. I have actually printed it out as a reminder to myself of what people sometimes think of agents. All agents should be aware of their industries stereotypes. However, agents are all humans. Some are more honest than others. Some see people they can help with the transaction, others just see the dollar sign at the end. Some agents are truly good people, just like people in almost every other industry. Often times clients lie to agents because of that distrust, which doesn’t help. I got into real estate because it involved numbers, research, and people. I love all of those things. It is also an industry where your income is completely dependent on your effort, not you hours, and I like that. A good agent will ask his/her clients all of the questions suggested in this article, and should be willing to walkaway if their clients are. We (agents) manage the process, clients make the decisions. Keep in mind that not even a good agent can fix an unreasonable client. Expecting a person to sell you a million dollar house for $50,000, or a person to come in and give you a million for your $100,000 house doesn’t work either. So find a good agent and stick with them. P.S. Commission in my state is disclosed by law. Being shady and concealing information from clients is never okay.
At first I was a little angry reading this. As a Realtor I pride myself on being driven by doing the right thing. I believe that builds longevity and doing the right thing is always the right thing. On reflection, there are, just as with many industries, some bad apples among us that make the good majority look bad so there is some justification to a few of these points.
However..being that roughly 70% of buyers/sellers only interview one agent before proceeding with a transaction, a good place to start would be due diligence as other comments have suggested. Unless you’ve been referred someone, why go with the first name that you see? Meet with a few realtors and see which you like best and feel you can trust. It amazes me that people are so willing to walk off into the sunset with someone they know nothing about. Shop around! I swear, people probably spend more time reviewing their potential next vacuum cleaner than they do which realtor to use.
I’ve talked clients out of buying a house because it wasn’t right for them, priced too high/potential resale value wasn’t looking too good or there were issues with the location etc. This has resulted in less commission and in some cases they’ve walked away and continued to rent for another year. But I’ve been able to sleep at night knowing I didn’t screw anyone over and from a business stand point will ensure I get a good recommendation. This mindset represents the majority of Realtors, especially any I’ve ever come across.
We work hard and it’s not the hours you see us working that are important, it’s the ones you don’t know about. For every house you send us that you find online, we spend hours looking up tax records, flood maps, CMAs etc to make sure you don’t walk into a financial ticking time bomb. We research the markets, looking for opportunities for you and your family to take advantage of and spend time keeping up to date with the areas you want to live in. There’s a lot more to it than driving around and showing houses.
If you don’t trust your agent, get a new one. Please don’t paint us all with the same brush. Most of us love what we do and are proud of the extremely valuable services we provide.
Teresa,
I understand your frustration with realtors. However, I can attest that not every agent is a bad agent. My team is built up of a small amount of realtors who do whatever is in the best interest of our client(s). I’ve a deal going right now where I took part of my commission and paid it towards the clients rental agreement so the deal can still go through. There’s isn’t a day that goes by that I don’t hear about someone getting screwed over by an agent. That is the number 1 issue I’ve with real estate. As for the amount of money an agent makes on a transaction, all varies. Example:
$200k home purchase price
3% commission = $6,000
Minus Taxes owed from agent 20%= $4,800
Which is a good deal if you work for yourself because most of that you’re going to keep. But most agents work for someone (Has a broker they have to give a portion of their commission to). Let use a popular split of 60/40…
$4,800*40%= $1,920 subtracting that from the $4800, we are now left with $2880. Still not that bad. Some people don’t even make that in a month working a 9-to-5 job. But now you have to subtract gas, tolls, food and anything else that pertain to this one transaction. You may be thinking gas is only $20 to $30; but in reality it cost you $600 in total because you took your client out to see 10 to 15 properties and each time you had to fill up your gas think which cost $60, which now leaves us at $2,220. Now we will just round this down to $2,000 and say $220 went for food, tolls, and any small misc items.
Now if I only made $2000 on this transaction, I would not be able to do what I do with clients which solely depends on referrals. How can I do that with $2000 and still make a healthy living.
Does this realtor work for a company or privately?
David,
I was really enjoying your posts. Especially the reference you made about the “sharpshooter”. However, when referring to how realtors and appraisers directly caused the 2008 meltdown. our real estate crisis started in 2006. We didn’t see it until 2008, just say our real estate crisis started in 2006. We didn’t see it until 2008, just as if you were looking at a train start moving from the stopped position. But either way, the banks were the direct responsible parties who created this whole entire mess. Realtors and appraisers did play a big role into allowing a lot of this to occur because of greed
Sarah… You Rock! But as your mom would probably say… don’t pay attention to the negative ones. They had their experiences just like we do as Realtors. Only we don’t spew the garbage out in public about other human beings.
I still love my job after almost 20 years… and I try not to read the writings of people that think they know the business. We usually just call them “Newbies”.
Congrats to your mama, Sarah!
that is all.
There are horrible people in all service professions. There are terrible lawyers but you’re still going to hire one to represent you if you get sued. People try to cut corners and not use a realtor but chances are you will get a worse deal without one. A lot of the scenarios described in the comments are unethical and in some cases illegal if your agent is violating their ethical obligation go to the state board and file a complaint.
Yes duh an agent only gets paid when the deal closes but most realize that a satisfied customer means referrals and that’s how you grow your business. Some agents are dumb and short sighted sure but if you go with your gut and select an agent wisely this shouldn’t happen. If you are feeling pressured and it’s coming from the agent and not the situation ( yes there are situations where time is of the essence and hesitating means loosing) then it’s time to get a new agent. But don’t listen to the author and assume no agent cares about your interests. I want win win scenarios and I’m happy to help a buyer find another house if the one they thought they wanted isn’t the right one. Because when the buyer loves their home and feels good about the deal they tell people.
Agents more than earn their commission. The woman suggesting an agent makes $1000 an hour GET REAL who would be a doctor if agents made that kind of money. The average Salary of agents is 55k. Sure they get to deduct certain expenses but that only means they don’t have to pay tax on the money they spent on expenses they still had to spend the money. People also don’t realize that the agent doesn’t even get to keep that entire commission they have to split it with the broker. So if you represent the buyer and get 3% the broker takes typically 30-50% of that. It’s more than just the time, gas, and wear and tear spent showing homes it’s self employment taxes, licensing fees, board fees , listing service fees, office fees, marketing costs, continuing education, time spent doing research on the properties you fall in love with , verifying info , sitting with the inspector, answering every phone call you have morning afternoon evening and handling every problem that comes up along the way so you don’t have to. If you are lucky and nothing goes wrong great but when it does a good agent makes the process easier. it is their choice to do this work but anyone taking time away from their families in the evenings and on weekends to help you find your home deserves to be compensated and not just minimally. Then there are the times that an agent spends hours showing 20 homes to buyers who decide now isn’t the time for them after all that agent makes $0. Yes the agent looks like they are getting a fat payday at closing but they might not close anything else for a month.
Yes there are agents making money left and right there are the 1% of real estate who make serious cash but that’s not the average. I’m not saying feel bad for the agent either. Most know what they are getting into and do it anyway because they enjoy it but the compensation is fair for what they do. The fact that there are bad agents doesn’t mean agents deserve less if anything it just means there should be stricter requirements to become one.
I see where the author is coming from but why not just state your specific experiences and suggest ways to weed the bad agents out rather than making a blanket accusation that no agent is looking out for the buyer once the deal time comes.
I showed interest in a Michigan waterfront property listed and the agent started telling me that it was not a good location and a lot of other bad things as to why I should not purchase the property and house. So why was the agent trying to stop a sale?
Lol
Many realtors are slap diccs looking for an easy payday, it’s quite clear when you look around. That however does not mean that all of them are. David you sound like you were probably one of these yourself. That’s why you are no longer in the business and are on a thread attempting to vent about a great career for a motivated and honorable individual. You sound like a pretty articulate person so I would venture to guess the reason you left is because of some sort of self-limiting belief you hold for yourself.
Now that you are out (and probably mad you didn’t make any money) you have resorted to silly suggestions like hiring an attorney or sending certified mail to submit offers.
Petty, scorn, & emotionally bankrupt are words that come to mind when reading your diatribe.
As a community of honest business people, thank you for failing as hard as you have. We need the delusional people like you to fall off so the industry maintains it legitimacy.
Keep flippin those burgers.
See you in the drive thru big boy!
I had an interesting experience back in the late 80’s. My real realtor had shown my property to a prospective client in the morning and later in the day the prospect came back to view the property, one more time. They confided in us that they were very interested in our property and would have the realtor present an offer right away. We exchanged contact info and waited for the offer.
The next day the realtors (ours and theirs) came to us with the offer. Although it was a good offer we wanted to counter, however the realtors insisted we were being foolish and trivial. We demanded they counter but they refused. So I picked up the phone and contacted the prospect and made the counter offer directly, and they accepted on the spot. The realtors sat there dumb-faced, they couldn’t believe what just happened.
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On another property we listed, a realtor called to say they wanted to show our property. I advised her that the asking price had recently been substantially increased and she should inform the prospects before showing it. After the showing she presented a full price offer for the old amount and said my increase wasn’t effective. I told her that we would have to counter. She became furious with me and said her clients would never accept a counter; they would just “walk!!” Needless to say, the next day we received a revised offer, which we accepted.
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Don’t be afraid to ask a realtor to reduce their commission, even just for a couple hundred bucks. It’ll help with legal fees.
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The only reason to get a realtor is to access the MLS, a pretty expensive proposition. For Sale By Owner is a viable alternative. You advertise it, people will come and view it, and you will get offers. No one can “sell” your home as effectively as you, you’ve lived there you know its real value. A realtor can’t tell prospects the real story. You can provide prospects with things like who are the neighbours and whats it like to live in that neighbourhood. It makes it much easier for you to support a higher asking price.
What Cindy said.
I’m a realtor. A rookie, but a realtor none the less. I enjoy all of the aspects of being an agent.
I hope many agents are reading this blog. There is so much information on this page to make each and everyone of us a better person and a better agent. I have actually shown this blog to several clients when they voiced the concerns as several have above. I simply told them to not allow me to be “That” agent. Work hard, be honest and listen.
This article is written from a very suspicious point of view. I guess I understand that to a certain extent. Afterall, there are some bad agents out there. Having said that, there are FAR MORE great agents out there.
Yes, you’re correct when you say that the agent doesn’t get paid unless you buy. That is a simple fact, BUT that doesn’t mean it drives a Realtor’s actions. Getting paid and providing the best service to your clients is NOT mutually exclusive. I would never push a client into buying anything just so I can get a paycheck. That is a short term gain with long term, negative consequences.
I am MUCH more interested in assisting my clients with a purchase with which they are comfortable, but I am especially interested in building a trusting, long term, excellent relationship. Those clients who have had an excellent experience then refer me to others. They wouldn’t do that if I manipulated them into a decision with which they are unhappy. THAT is how I can help my clients make well-informed, intelligent decisions which work for them AND get paid well in the long term. Bottom line, this is a relationship business, not a sales business.
What I don’t think you know is that, even though agents get paid their percent of commission, half of that goes to their broker. So, let’s say I represent you in buying a $100,000 home. As the buyer agent, I net $3000 in that sale. I then have to give $1500 of that to my broker as my hiring contract states. I’ve then worked for you for 6 months showing houses and made $1500 in the course of 6 months. Then you have taxes and healthcare you have to deduct from that (because we’re considered independent salespeople) we pay our own healthcare. I’ve now made $600 for 6 months of work and I’ve spent my money on gas, childcare expenses for our children, food/dinners for clients, gifts for when you close and you’re upset that we are able to have a tax deduction? That’s insane! It’s not that simple, we don’t just walk away with 3% commision and get to deduct all these expenses. You’re wrong.
Family member showed us a few dumpy houses, I was actually insulted he was trying to offload his own junk property. We found one on our own, a nice size house with huge yard, corner lot, needed ton of care. We had the luxury to fix it up to our needs, new windows to new wiring and plumbing, about 40k. Cost $27,800 but worth about 124k now. We did let our family member help with paperwork, cost about $900.Mortgage alone is about $211 a month.
A house I had an offer on was broken into and robbed in-between our first viewing and home inspection. It wasn’t until I brought up the fact the door jam was crushed he told me what happened.
I then had to listen to him, for the rest of the afternoon, try to convince me that it was an isolated event and I was overreacting. Well, yeah, no shit it probably was but you’re not the one that would be moving your infant into the house.
One of the more uncouth business interactions I’ve had in my life.
I pride myself in my integrity and treat all my clients with their best interest in mind and Never fudge on my integrity. If I have clients that are immediately enamored with a house and I know there are issues with it, I immediately point them out. I can tell you 2 things after reading this article.
1. Their are plenty of self serving agents out there (as in EVERY occupation)
2. The writer of this article is no better as a writer than the agents in point 1 are as agents. What an arrogant A**hole.
This article is total bullshit – since you are the expert, what type of market do these lines of yours, prove to be ineffective in? Have you experienced a seller’s market? Have you raced to a house only to find there are 5 other offers on it?
Wait wait, I know. You are one of those loser bloggers who purposely write hate blogs on other professions to get TRAFFIC! We all see through it. Grow a pair and stop cowering behind your computer like the dipshit you are.
As a Home Inspector for 20 years and one who worked with Realtors for many years prior I can say first hand the industry is in a shambles and needs major enforceable regulations because far too many American families and citizens are being harmed by the current way of doing business..
Far too many Realtors recommend sub-par Inspection Companies and prevent the thorough ones from inspecting homes even after the client has hired them, they flat out either refuse them entry or go into panic mode trying to scare the client away from the Inspection Company swaying them to other “more helpful” Home Inspectors, this usually ends up in the buyer having far more out of pocket expenses than they would have had with their own choice.
I’ve done hundreds of Home Inspections where the sellers totally freaked out after my thorough inspection revealing many thousands of dollars worth of issues then showing me their inspection report, which were jokes in my opinion, that had hardly anything of value in them. One such woman was a retiring school teacher, single, a grandmother, and I wrote up 30k worth of issues including mold, water issues, roof issues, fireplace issues etc and her inspector did not even right up one thing recommended for evaluation!?
Granted, that is an extreme account but that Home Inspector has been inspecting longer than everyone else in our city and has done well over 20k Home Inspections and is well known for exactly that.. who recommended him and who does he get almost all of his business from? Agents.
Realtors have been telling me for over 15 years they are going to put me out of business and quite frankly have cost me hundreds of thousands of dollars due to cancelled appointments that could not be filled because they usually wait until very close to the inspection date to cancel.
Are there honest Agents? Absolutely, are they hard to find? Yep.
Too many Realtors depend on a few sales to make their yearly income but the high achievers seem to be the worst when it comes to shady practises and recommending marginal Home Inspectors.
It doesn’t take any education to be a Realtor, no college required, anyone with a high school diploma can be one and most have no clue of the inner workings of what makes a home good or bad.
The American public as a whole needs to petition Congress to disallow Agents from being ANY part of the Home Inspection process.
Lol,
Love all these disturbed real estate agents tooting their own horns in these comments. I’m the greatest person ever, just trust my word for it.
Just another quest for you, does anyone else believe Jesus may have been the devil?
Here is my case… guy comes along says he’s the son of god. Says a lot of things that make him seem like the legit thing. He then of course amasses a following that basically listens to his beck and call. He was and is pretty much worshipped by a good portion of mainstream religion. He has literally said the only way to be saved is through him. That phrase literally allows him to take all glory from god as he is now the only path. Is that not what Satan wanted to do from the very beginning?
Lol, hey but it’s a dog eat dog world out there. Y’all can shout from the highest mountain top that you are the greatest of people and only work for others interests, but I’m just saying a high majority of you saw dollar signs when you walked into the real estate industry, thus you gladly work a lot of hours to earn a large reward. You people tend to have a lot more contacts and more sources of information to pull from than regular Joe Shmoe out there, so ya it’s kind of necessary to use you for those specific things. That’s basically what buyers/sellers should get into their heads.
This is a business deal, everyone is there to satisfy their own interests. Thus negotiating is a part of it. Since it is a business deal remember that it is business, not time to make friends. You can be friendly, but the moment you start actually trusting someone in a business deal that hasn’t laid their entire stack of cards in front of you, is when you have given away some of your power.
Don’t you realtors pretend you aren’t in the business for profit. It’s your job, this you are only there for profit as that is the way you feed yourself and put clothes on your back. To pretend you don’t care about profits is just a lie. It’s gonna be fun when I hop into the scene. Don’t forget, you are USING your real estate agent, you are not their friend. Words are good, but actions speak much louder. I have seen a lot of wealthy real estate agents. Straight up millionaires. This comes about by A being lucky B doing a lot of work and all of it paying off or C straight up being a crook.
BTW the majority of them were some very unscrupulous people.
BTW live by your own rules. Don’t think the “normal” way is the only way. We all may have to be a part of the same society, but don’t think you have to play by all its unwritten “rules” all the time. Business is business, don’t let emotions allow you to act in careless ways. BTW good luck I hope you the best of everything. Don’t be surprised if you get had by that person you just met who you thought was your “friend” or “ally”
This article is insulting to buyers and agents alike. First of all buyers agents don’t receive their commission from the buyers. They receive their commission through the listing. If our buyers can’t buy a house, we don’t receive a commission. We are working on the same team. We are their representative that goes to bat for them.
It is best practice to recommend a client go get preapproved to know their number. Why would we push them to go over this number?
Most agents have referral based businesses. It is not in our best interest to “con” a client as you are suggesting we try to do. If we do a bad job, how do we expect our business to flourish? It is in our best interest to keep our clients’ interests at the top.
I love the instant hatred from the realtors in the comments. The funny thing is that this article isn’t really commenting on realtors- it’s discussing ANY agency arrangement where the agents are paid a success-based fee. At certain points during a transaction, an agent’s interest will align with the interests of his/her client, and at other points the two indviduals’ interests will diverge. It’s human nature, and it happens in every industry.
From lawyer to financial planners to real estate agents and even medical professionals, any time someone’s paycheck depends on whether a client moves forward with something they recommend, their opinion will always need to be taken with a grain of salt. Yes, even if they swear an oath.
I’m not a realtor. Housing prices are outrageous and the fees realtors get for doing a simple job are ridiculous. Being a realtor is what people usually do after they’ve failed at other things, because it doesn’t take a lot of smarts or effort to become one. If you need a realtor in this market to sell a property, then you deserve to pay 50,000 in realtor fees on a 1 million semi.
Funny how you were so quick to respond to this article. Sold my homes fsbo 9 times now and I have managed to never pay a single cent of my hard earned money or investments to a real estate agent. I despise the fact RE agents will blackball fsbo and their buyers do not even know they could have had a home but you didn’t show them. Also sad you feel so entitled to other people’s money. Homeowners are not ignorant and uneducated…. I have my laws degree and can thankfully just check a block to be my own RE with a license. Re agents just love that! I make 150 an hour with a degree that took me 7 years to complete. You paid your $500 and took a two hour test, what would entitle you to 100k of my money when you sold my house? Things need to go flat rate and I pray the internet will one day diminish the self righteous worth of agents. The only thing that help you out is your secret little network and unprofessional blackballing. You live. Sad existence.before you attack me, I’m a lawyer for property damages.
I’m a REALTOR. I read your article and many of the comments. Mostly I laughed out loud, particularly the one that says we make too much. You’d never work the hours we do, and we don’t charge by the hour. Maybe we should, but no one could afford us even if we were being paid minimum wage. I’ve had clients who thought I made a lot of money on their deal. Sure they thought it was easy because we don’t tell them about all the emails, texts messages, and phone calls we make on their behalf. We don’t just show a house and fill out a form. It’s a business. We have many expenses just like anyone else on here who is self-employed. We have mortgages. Kids to put through college so we need to make more than our expenses just like you do. You think we try to keep the price high for the sake of commission? If you know the commission being charged, do the math. Why would we jeopardize the deal for a few bucks? I can tell you there’s plenty of other professions that’ll throw you under the train for those few bucks. We are so regulated at every level of government we can’t do some things for you that we’d like to do. And, yes, if you send too low an offer, it will be ignored. I’ve had sellers in the past who asked what the bottom line was; when I told them, they said put it in the garbage. They’re being childish? No, you’re being greedy and showing your ignorance when you offer too low. Yes, it will take longer to sell if you think your tract home is a castle and price it accordingly. Yes, in the market we’ve had the last few years, there could be multiple offers. All a buyer’s agent knows about that is what the listing agent says. I’ve had buyers who were always too late and too low to get anything. One day we were at a house at 5pm on the first day of showings. The appointment was cancelled at the time we arrived. There had already been 18 showings and six offers according to the listing agent. Received an offer they could live with. It came off the market that same day. So, when we tell you this stuff we are not lying. Walk a mile in our shoes, then sing your song.
Law, fiduciary duty, Integrity, Loyalty are all vague terms and when dispute arises hard to quantify. If the Agent promises 1 year home warranty, 5 yrs ADT if there is a robbery or refund of all commission if dissatisfied, agents might work else do not use an agent.
The headline of this article jumped out at me because I am a recent victim of the real estate joke. I tell people that buying a house is like jumping into a pool full of sharks. The selling agent lied to us, our buying agent suddenly takes days to return our phone calls, mortgage brokers are holding money in escrow until disclosure lies are dealt with, the inspector actually told us we were SOL when we confronted him about some pretty costly repair jobs that he failed to put in his inspection report. I feel like all the “legal paperwork” they tell you is for your protection is really to protect all the people that get involved with the deal. It is a huge legal scam. All the education in the world will not help you, they know exactly what they are doing and how to get around the system. Good luck to anyone entering into this world of liars and cheaters.
My husband’s crazy ex-wife just became a realtor in Charleston. Right off the bat, her bio is full of flat-out lies about her “extensive real estate experience”, including how she flipped 10 houses in 12 years. All she’s done is screw her second ex-husband out of half of the house he built before they were even married, and renovate a condo she purchased with the money from the divorce. Now she is claiming that homes that go under contract are “sold,” two days after being put up for sale. To me being 100% dishonest about her experience does not bode well for her potential clients. Not that she puts much into working for them. She works for a large brokerage agency (with a F rating from the BBB) so I wonder if they just pass clients on to agents. She spends her days surfing instead of working for her clients. So yeah, not a good representative for the field. Total shyster
It certainly represents the one I fired, not saying they’re all like that .
You hit the nail on the head. I am a Realtor only because I am an investor. I could not find a Realtor with any guts to get me the deals. So I became one! Now I just do my own buys and sales. The licenses is a joke! I took the class for one week then took the state test and in one month I became a real-estate professional. The majority of Realtors that I talk to do not even own personal or investment Real-estate. Would you buy a car from a guy or gal that never owned one!!!!!!!
You are so right. I am looking for a house myself and my realtor has told me everything that the article says. I am a selfemployed individual and I also have to spend on gas food etc working for my clients so what’s the deal? I ended up making an offer for a house that didn’t fit my expectations and was more expensive at my realtor’s advise expense. I had to walk away from the contract and they were not my friends anymore. Like don’t ask the seller for this or that in this market they will find someone else. Let it be then, the right house will come
So true. This is opening my eyes. My agent has told me everything that is said in this article.