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”
Derek is absolutely right about a few things: a good agent who knows his or her stuff and will tell it to you straight. The problem is that most people don’t want to hear the truth…they want to hear what they want to hear. They hire the agent who agrees with them and then paint everyone the same color as the weaklin they hired who did not get the results.
Dan, this may or may not be the case for you, but it happens a lot. When we do our proper diligence before sitting down with a potential client who has either made up his/her mind what their house is worth or previously interviewed a yes-man agent, they are shocked sometimes even offended by what we present them, and opt for the cheaper guy.
It is also true that a “professional” successful realtor won’t have a problem walking away from a contract with vendors who expect more than the market will bear… the desperate, hungry unsuccessful ones will cave, take the listing… while they are looking for a job to bring home some money every week!
If you are paying for a TATA ride, don’t complain about the lack of comfort, reliability or safety that you would get in a VOLVO ride. It’s as simple as that. Both will get you from point A to B, but the first won’t get there as quickly, and perhaps with a lot more headeaches and costly surprises, that the second.
Dan – you said your friend runs a 16-man team closing 400 transactions a year, that breaks down to approx. 40 transactions per agent and you said he works like a maniac despite having a team in which each individual likely handles certain aspects of the overall process…. it comes back to my earlier comment about 30 transactions a year for a 1-man/woman operation being a very heavy load.
If realtors worked on a pay-as-you-go hourly rate + expenses such as with many other professionals, maybe the public would then have a bit more respect for all that we need to do to make them happy 😉 …and we would not have to cross our fingers that they will buy or sell in a reasonable time frame + we would get paid no matter what, every week, just like the sandwich gorl at the counter 😉
Dan,
My friend runs a business. He is not just a real estate agent. It would be like you running your sandwich shop and create the perfect sandwich. People from everywhere wanted your sandwich. If you started making a million a year off this sandwich, you would not reduce the price of your sandwich. It’s called free enterprise. If your sandwich was to expensive, people would stop coming to your sandwich shop. You would than go out of business. If your business boomed you would still not reduce the price because now you are probably going to take on more overhead by expanding, opening another store maybe. A true fact in business is that you are either growing or dying. There is no in between. Bill gates has more money than he could ever spend right now. Should he.reduce the price of microsoft software. No, because he knows what fair market value is. Warren Buffet once made 9 million in 1 day. What do you think he would of done if you told him that he should of only made 1 million. I think he would of laughed and said your funny. Both of these man have gave more help to society than most could dream of. These guys earn what they are worth. America was set up that way. Dan if you think you have a better system than most of the other agents, than why don’t you get in it. I guarantee you will make more than 23 an hour if you are better than 90 percent of the other agents.
This is soooo true! I was so naive to think that he was on my side, now that we are in the process of negotiating, he seems to be brushing off my concerns everytime I bring up one. He tells me that is something that I can take care of later on when I get equity or something like that. I have had to put my feet down several times to demand that either it gets fixed or I walk away simple as that. I felt he was no longer on my side the time we signed the counter offer.
Sari,
I hate that for you. The trick to negotiating though is to know what you want before you start ngotiating. You should have in your mind what you want and what you will settle for before the paperwork is ever in front of you. Your agent should know what you want and what you will settle for. Most people do not know how to negotiate. Most agents know how to negotiate but do not know how to make negotiation go in the path it is suppose to go in. It is like taiming a bull. You never know which way the bull is going to start running. The bull is stronger than you so if he runns in any direction you can not stop him. The bull is a buyer or seller. The strength of the buyer or seller is that the buyer or seller is more emotionally tied to the transaction than the agent. As an agent we should coach you to not be emotional during negotiating. 99% do not do this. Most of the time buyers or sellers are mad, sad, out for blood, or anything but calm and collected. When buyers and sellers are like that they do not think right. They will react without logical thinking. So agents most of the time will back off when there buyer or seller becomes emotional. Than the situation gets out of hand and everyone is mad. If you and your agent had a set in stone list that you would not negotiate. Than ask for the world and see what you get. If you only get your list than you got what you want. If you got your list and a little more, than be happy the other buyer or seller and the agent gave your way a little. If you did not get what you wanted on your set in stone list, than it is easy, you walk away. The problem is most people do not know what they want. They just want everything. When they do not get it than they think they are loosing. Ever heard of the saying don’t go into a knife fight if you don’t expect to get cut. You just have to cut deeper than your opponant. But you still got to expect to get cut. Hope this helps.
I think this is hilarious! Realtors are there for a reason, to inform people. Mainly, prospective home buyers are aware that the agent is paid on commission, but alot of people go with one, because they know that they do not know the ins and outs of the real estate business, and wouldn’t have the slightest clue on where to start. The comment I get the most kick out of is the one about the “false urgency”…well that’s all fine and dandy advise, until someone wants to buy a house they really love and they take your advise and dick around, low ball an offer or wait too long….and then…Ooops! the house gets sold to someone else. The market is a first come, first served market. If you dont come to bat with an offer that the buyers will actually consider, then they absolutely wont take you seriously and they will keep waiting for real offers to come in…the agent will more than likely think you are a moron for not taking their advice. Also, I find it quite funny how you contradict yourself alot in your little rant. Judging by the sounds of this interesting little fairy tale you wrote, that you are probably a minimum wage, average Joe who thinks that they know everything, and probably did get suckered by an agent who wasn’t very good…which happens…but not every realtor is the same. Being a realtor means that you risk not making money at all, therefore the rewards ( if any) will be higher than your average Joe who wont take the high risk jobs and are comfortable making minimum wage until he/she retires. I sure as hell am not one of those people, and would like to be able to make an unlimited amount of money…realistically….who wouldn’t. Its people who believe that everyone is out to screw everyone else are the real scam artists. What a joke!
Ouch! Paula was harsh. I agree with most of her points though. Everything except the part where she talks about the average joe. I am not going to assume anything. However Paula is right about the urgency about the market. It is the same with anything you buy only you will never find 2 houses the same. So if you miss on a steal, well than you just missed and you will never get that same deal again. You may find a better one or a worse one, but it will never be that one again. I can not tell you how many buyers I have had that want to ponder on something and days later it goes under contract. The old saying goes “nothing sells like a sold house”. Than my buyers pop back up and willing to pay more if the other buyers will go away. Its to late. I tell my buyer’s “don’t should on yourself”. This sounds like something else. But I tell them this means don’t do something that 2 months from now you will look back and say I wish I shoulda done this. Now most buyer’s would say well we have to think on this because this is a big purchase. I agree, but when you find the house that is not the time to go back and think about it. You should of thought about that before you called the first agent to look at a house. You have to be prepared when you find the house. You can not find the house and than go back and think about it for a week or so. Sometimes you can, but this is the worst way of going on the biggest decision most people will make in there lives. Good comment Paula, just next time try to kill them with kindness.
HAHA! I wish I could, but I was built to be agressive…LOL but I know I was a bit too harsh…just got under my skin. My thoughts are just that majority of first time home buyers need a helping hand and so do alot of second or third time home buyers. Not all realtors are the same, you may have a horrible experience with one, but could befriend another for years. It really just depends on how you look at it. Be smart, do your research…and if you dont know, ask a professional. Don’t just assume you can do it on your own. As for the way in which they put food on the table, well that’s their own business, no one works for free! Not even Mr. Cheap. As they say “time is money”….what is your time worth??
Paula
Paula,
I understand that built aggressive part. I have been pretty aggressive thru this whole post. I have had lots of people come in and try to attack me. I think I defended myself pretty well. Hopefully in time I will get everyone on this site to respect agents a little. Most people do not see what all agents do. They do not understand how tough of a business it is. I try to go after Mr. Cheap sometimes. He is smart but sometimes does not tell the whole story. Keep on being aggressive Paula.
OH DEREK – I am an EX-Realtor and 100% AGREE with you!!! I find Paula to be “one of them Realtors” who feel they “HAVE TO” defend their profession (well because they have to don’t they – it isn’t like they’re going to agree with you for Pete’s sake lol)!
But Your Words are on the money! Agents make ZERO unless the deal closes and if they have bills to pay, kids to feed —- do you really think they’re thinking about YOUR best interests? Wrong! They’re human! And any Realtor who says they “Aren’t in it for the Money is LYING”!
JM
Thank you for agreeing with me. You being an ex realtor, you know first hand how much of a smack in the face it can be sometimes.
I do disagree with you a little on the reason agents are in the business sometimes. We are all in the business to make money. But most agents who are in it to only make money, usually do not last in the business. Simply because the drive for more money is usually not enough drive for the pain that is in the road for becoming a successful agent. It is kinda like the mouse that was going after the cheese on the mouse trap. You know what the mouse said when the trap popped on him when he was going after the cheese. He said forget the cheese I just want out of the trap. That is the sole purpose most businesses fail. Most people start a business only thinking of the money. Than early in a business the pain starts and they give up. That is why 9 out of 10 business fail within there first year. The great business owners have more than the money on there mind. Aberham Lincoln, Henry Ford, Sam Walton, Gary Keller, JCPenny and Zig Ziglar are all greats that you rerely heard them talk about money. Now if you ask them they would say it is important, but you have to have more motivation than that. My motivation is my family, the history books and Jesus. The money side is that I want my wife and daughter to have the best life possiable and money to not be an issue. I have no college degree, nor do college and I get along. So my only option for me was I had to own something and hire the college degree people to work for me. The history side is that I want to do something great so I could write books and do siminars that help other people do whatever I did. Hopefully in time I will be a Zig Ziglar or a Sam Wilson. The Jesus part is that I want to help people out. Alot of people are in a bad situation with money or relationships. I would love to be in a position to where I can finance a homeless shelter or pay to have a non profit hospital built for people who can not afford insurance and need the cheapest (but quality) medical help they can get. I have made a decision I will die broke. What good is it to die and leave a zillion dollars to your family to fight over.
So you have to have more than money as a motivation.
lol I had to come back and add to my previous post 🙂 because you are right in regards to the “Money Factor”.
When I first became a Realtor it was definitely NOT about the money. I loved looking at houses since I was a child and always dreamed of doing it for a living. As an adult I was taken advantage of by a Realtor and swore I’d never be a victim again. SO my “Initial” intentions were admirable!
In the beginning I felt GOOD about why I was doing it and once things got rolling (and boy did they get rolling) I hate to admit it but it DID start becoming more about the money. It wasn’t just a “Listing” anymore – it was “How much will it cost me to market this property, How much can I make, What buyer market am I going to go after and all these other scenarios that had LITTLE to do with the “People”. I can’t tell you how many times I got a seller to list at a pretty high rate knowing FULL WELL that I already had a buyer lined up and would make BOTH SIDES of that deal!
I mean I was GOOD … VERY VERY GOOD at sizing up a property right away and about developing a marketing strategy that gave me an average list to sell time frame of under 67 days (yes even in this market) … My Buyer database was a thing of beauty and I’d very often have a buyer for a property within hours of listing it or even BEFORE hand!
BUT … one morning I woke up and just realized that something had changed for and in me. I had lost the “LOVE” of houses and didn’t care so much about the “People” anymore …. I cared about the bottom line and what it could do for MY life (for my kids etc…). And ya — that’s all well and good because as a parent it IS my job to give my kids a good life … BUT … this really truly got me down and about 6 months ago I walked away from that career!
There are people out there who will never tire of making money and I WILL MISS what I did because I again – I was REALLY GOOD at it, but I am the type of person who HAS to know I did it HONESTLY and unfortunately a Realtor (the majority of them in my opinion) cannot say that about their bank account. That money was earned by “Leading” buyers to properties that stand to make them the most money. I witnessed many Realtors who pushed properties because of the BONUSES that came with them … BONUSES that were never disclosed to the buyer! I did it one time and just felt AWEFUL about it. God knows that check was incredible but to this day it still bothers me because I feel that a Buyer’s Agent should let their BUYER get that $$ off of that mortgage vs. pocketing it – but I also understand that an Agent can go months with NO income so that bonus can put food on their table or presents under their tree!
A BUYER should ALWAYS ask if there is a bonus attached to ANY property their “Buyer’s Agent” is pushing!!
Anyway … didn’t mean to make this so long but there are just so many reasons why a BUYER should ask so MANY questions and the truth is they probably just don’t know the right ones to be asking.
NO: It’s isn’t all about the money … but even Agents need to eat and it CAN and DOES cloud their judgement …
JM
I find my self to at times looking at it the way you do. I find my self sometimes getting mad at my wife when she ask me to do something small and I break my back and jump thru the ring of fire for my clients. I find my self skipping church at times to go show homes to hot buyer’s. I sometimes have to have a check up from the neck up. I have to go appoligize to my wife, because she is one of the most important people in my life, more than my clients. I have to tell my clients no at times I need to be in church. Sometimes I just have to take a day and think what am I doing this for. Get back on track. Than I am back in love with real estate. It tends to burn you out I think if you look at it from only a money perspective. It gets boring to me. I have been on listing appointments where the couple and I have cried together (dont tell anyone lol). I have been on appointments where we did nothing but fight about every idea or price. I remember going on a listing appointment one time and it was an old couple. They were getting ready to retire. They had an arm loan. They were on the verge of loosing the house. If they foreclosed they were going to have to continue to work. We looked at the CMA and determined there was nothing I could do. They were going to get foreclosed on. I helped them with the bank. They still lost the house. That listing appointment was about 4 years ago. I still remember seeing there face as I left there house. They knew it was over when I would not list there house. I drove down into the cul de sac of the neighborhood and cried the hardest I have in a long time. That was the first listing appointment I went on and wanted to list the property, the sellers wanted me to list it, and we could not.
You have to understand I do not cry alot. I probably cry maybe once every 3 years if that.
JM I respect you. Not many people will step back from something they make alot of money at and are good at, because of an issue of the heart. Most people will ignore the heart and look at there wallet. To me all the successful people in history have always followed there heart and not the wallet.
Way to go JM, do what you love and not what makes you the most money.
Thanks Derek and I’m actually starting college again in May for my RN Degree (so I was totally serious about everything I’ve said).
I worked as a CNA back with I was like 18 in a nursing home and absolutely loved it. I also did a lot of First Aid, Combat Medical Procedures during my Army career. 🙂 (I’m not just an Ex-Realtor but a Disabled Army Vet). I haven’t been this focused SINCE my Army Days so I KNOW I’m on the right track now.
Money is wonderful but I do think there is something to be said for “When is enough, enough”? I for one cannot wait to hold the hand of a sick child or senior citizen and know that what I am doing makes a difference. Nurses make a decent living … they aren’t rich by any means but I cannot imagine a more soul-satisfying responsibility!
Anyway .. thanks for the response and I can’t wait to post an update in 2 years 🙂 announcing my graduation from Nursing School. Whooah!
JM
My wife is a Dental Hygienist. She wanted me to go be a Dentist. I thought it would be cool. I went and watched our friend who is a specialist in the dental field. He was putting on the invisiable braces. Not the trays. The ones that have a plug in the roof of your mouth and than they stretch rubber bands to each of your teeth from the center of your mouth. I watched that get done. I used to be a construction worker. The tools that were used were to close to each other. I decided I could not do it. Have fun with the RN school. I hear it is tough.
Reading these comments, there seems to be a fair amount of emotions running on both sides which I think should be stripped away to look at the bare facts. I just did two real estate transactions. One as a seller and one as a buyer.
As a seller, we interviewed 4 agents. 2 of them should have paid us money for the time wasted as they brought absolutely zero to the table. The one we chose with was great for us as she sold our house in a down market and we wanted to close quickly as we were moving. At this time is was worth it to go with her as she had a lot of prospective clients she brought and she was a good negotiator. We ended up not getting as much as we wanted but was expected due to market conditions.
In our buying scenario, we found the area in which we bought by researching the MLS for some time and even ligned up the meeting with the builder ourselves. We got zero value from the listing agent as we found the house oursleves and our agent we used for the buying was a horrible negotitator (was reccomended from friends) so his value was non-existant as well. This was a 600K house. btw, I never saw gifts from any of the agents I dealt with, so don’t know about that as a cost. Honestly in my mind, both agents in this deal did little more than get in the way, as things were slowed down in getting (e-mailed) papework back in forth to the buyer by having to go through them and their turnaround times.
In summary, much like the automobile business has changed where you can do most of your research and purchasing through the internet, the real estate business is changing as well and I think the folks in it would be wise to adapt or be looking elsewhere for employment. For these agents who are talking about advertising in papers and magazines, and doing open houses, I would ask why are you wasting your money? Open houses in my mind is spending an afternoon with tire kickers. If someone sees something they like on MLS and are going to take the time to make an appointment, they are a more prospective buyer. I don’t know anyone who recently bought a home who did not do all of their primarly research through the MLS website. Yes we only see what people are asking but not selling price, but this is an arbitrary number anyway as the price listed is what they expect in a best case scenario. I would have no issues making a realistic lower bid (compared to a 5% below listing price offer from an agent who doesn’t want to offend seller or other agent). This is business, even if they do have soft skin, if they are trying to sell their house they might not like your offer but they are still going to look at it and counter if they feel they have a pontential buyer, especially if they have been sitting on it awhile, or are in divorce situaion, or moving, etc.. This offending people statement is pure BS. .
I know when I sell our current house, I will plan to list myelf on FSBO. I know I wont have the best access because I can’t get on the golden goose which is MLS. I have heard there are new businesses though where an agent will allow you to list only on MLS with no other services for a drastically reduced fee. This to me makes sense in certain scenarios. I have 15 years in selling various IT hardware, software,services, etc. and based on what I have seen from the agents I have met with, I am a much better negotiator. I don’t care it is a different product, negotiating is negotiating. Having said that, if agents bring clients to the table, I would be happy to pay them their earned comission.
PB – you have many GREAT points!
(NOTE: If you’ve read any of my posts you know I WILLINGLY Left Real Estate about 6 months ago BECAUSE of all this CRAP!)
1. Not offering 5% below list IS a load of BS … the agent only says that to keep that offer UP there to increase commission! I’m not saying a seller should take a HUGE loss – BUT – their agent isn’t doing them any favors by failing to point out how long they have lived in the property and what they would have paid in RENT had they been RENTERS that whole time … that $$ amount should be considered when ANY offer comes in. Even if it was a low-ball offer I ALWAYS advised my sellers to NEVER just outright reject an offer and to always do a counter off FIRST!
2. Listing on MLS … yes there ARE companies out now that have arrangements and will list your property on the MLS for around $400 and/or Realtor.com but you definitely want to make sure you can’t do this yourself for less … just take your time and ask ALOT of questions! I’ve been watching and researching this myself along with the FSBO business but am not versed well enough yet to fully comment on that.
I think as long as you use an attorney that you trust to do the paperwork you’ll be okay.
3. Open Houses: Less than 1% of Open Houses produce a buyer for that property. They are a FARMING tool for the Realtor to build their BUYER database. Now this isn’t always a bad thing because that Realtor could be holding an open house at another property and have a buyer walk in that is PERFECT for your property but Sellers need to know UPFRONT the true purpose of an Open House and the Realtors I know do NOT make that clear to their sellers!
4. Buying Vs. Selling Agents — It isn’t easy to be great at both of those labels. They may claim to be a buyers agent but when all is said and done they get PAID by the seller. While I often handled both sides of a transaction (happens alot in small markets) it was very HARD to walk that fine line when it came to disclosure and fiduciary duties so I do NOT recommend EVER using the listing agent as your buying agent. It’s a shame this guy came recommended and failed at his duties to you. Next time (if there is one) I’d ask for history of their deals that include figures that show the difference between the list vs. actual sales price. Once you look at a good batch (and I’d want atleast 6), you can get a pretty good feel for the ability of that Buyers agent.
5. As for “Gifts” … you probably wouldn’t be aware of them IF nobody ever brought it up. I advise a BUYER to always ask if there is ANY Bonus being offered to the agent by the seller if a property is sold within a certain timeframe. If the agent fails to disclose this and you later find out they DID get a bonus … that agent can lose their license! Those Bonuses belong to the BUYER – NOT the agent!
NOTE: The ONE TIME I did it …. I didn’t KNOW it was a violation. In fact I didn’t know this until I took the Broker Course 2.5 years into my career! It was NEVER brought up in the Agent Course and quite frankly — I saw memo’s faxed around ALL THE TIME to all the agencies — telling them about these bonuses and they were pinned in a area for the AGENTS to see but never a client. The point is — if Broker/Owners don’t make that CLEAR to their agents then they are as liable as the agent when all is said and done but MOST “Old School” Brokers still feel that these bonuses belong to THEM so they don’t enforce it or teach it and unfortunately NEW agents just simply have no clue and could end up losing their license over something they were never told about!
PS: Derek – sorry for coming in and posting on your blog – but couldn’t help myself :). Seems I’m going to have lots to say over the coming years lol.
PB
I am glad your listing agent was great for you. The other 2 agents you think need to pay you. They just was not right for you. They may be perfect for another person. In business people click and some dont. This is just business.
As far as your buying agent. I am sorry you feel you had a bad agent. The market has changed. You are right. The internet has made it much easier for buyers to find there own house. You have to understand that is not the agents job as much any more. Back when horses and buggies were around. The agent would have a MLS book. He would wave this book infront of you so you would sign an agency aggreement. Once you signed you got to look at the book and you felt like you had the top secret files to the government. The agents main job of todays greatest agents is in the negotiation and contract. In the 80’s our contracts were 1 page. There were about 100,000 law suits in my state a year. Today the average contract is around 10 or 12 pages. My new construction contract is usually around 40 pages. There are millions of law suits every year. The saw suits have grew more than the number of houses sold. Guess who the majority of those law suits are, FOR SALE BY OWNERS. It is easy for one party to lie or the other party to not know what to ask for and than later want something. The stats are that 80% of FSBO’s usually list with an agent. So in a given year in my market there are 80% of agent sold homes, 20% of FSBO sold homes. The 20% FSBO market is more problem than the 80% Agent market. Now agents deals go to court also. I know this. But your risk is much greater as a FSBO. The realtor association interviewed the FSBO law suits one time and you know what they said. “If only I had an agent, so the finger would not of been pointed at me”. It is like the saying the mouse said when the trap popped on him “forget the cheese, I just want out of the trap”. The commission we make is not worth the liability we take on. This liability does not cost us except in errors and ommission insurance. Insurance will alot of the times not pay for the mistake, because they try to say the agent did it on purpose and not by mistake. It is like riding a 55 gallon barrel in an ocean storm. You know a wave eventually is going to hit your 55 gallon barrel. You just hope it is not a big wave, cause if it is your barrel is collapsed and your dead.
Negotiation issue: I agree with you to an extent about you should not worry about offending them, it is strictly business. But if you know anything about negotiation, you should know that the trick is not to get the upper hand and shaft the other party. It is to create a win win situation. So in one sense you have to care about there feelings. I have a house listed now that a year ago they had it listed as a FSBO. An agent in my office brought them an offer. The sellers offered to pay 3% commission. The deal ended at a price of $410,000. The sellers were mad and said no. The buyer walked away mad. Now I have this house listed at $339,000 and the seller is paying 6% commission. If only the parties had not got mad at each other. Negotiation is a very hard science. Many people think they are good at it and in reality less than 1% of the population is actually good at it. I have read alot about negotiation. I do it every day, it is the difference if I sell house or someone walks away. I still scratch my head sometimes. The negotiation is where the agent today is worth gold. I can guarantee you on a custom build (especially 600K) I can save you more money than I will cost you. There are so many tricks in custom home building. I know alot of them. Enough to save you at least double what I will charge in commission. I guarantee you. I used to work construction, I know the short cuts. I could make a book on short cuts that builders can do. Some of them are not even short cuts, they are actually ways you can cut cost and still add sq. ft. .
Plus if we get out of the business, do you know the government would attack the home owner. The government knows there is alot of tax dollars to be made in home ownership. Who do you think pays speakers to to before the government and fight any taxes the government wants to impose on home ownership. I know me for one paid $500 extra this year to fight a bill that added an extra closing expense to home buyers.
I agree with JM about the bonuses. They just about a year ago changed the contract for us agents. We now have to disclose any bonuses given to us. I never took a bonus off of a house anyway. I always gave it to my buyer to either get a price off the house or use for upgrades. I am fine with the 3%. Pigs get fed, hogs get slaughtered.
Hi Derek,
I should probably qualify why I said the real estate agents should have paid me. I am also in sales and took time out of my day to meet with the agents. Two of them showed up with no market research on my neighborhood and absolutely no idea what to list my house after the visit. They wanted a second meeting. I have been doing IT sales for 15 years and if I showed up to a meeting with a client and did that I would never be invited back. This has nothing to do with one person clicking well with another. I realize there are going to be very good agents and very bad ones. It seems the extremes in real estate are even more so because of the easy barrier to get in to the industry.
Perhaps the liability thing is an issue in the U.S. I am in Canada and the real estate agent as far as I can tell has absolutely nothing to do with this. I don’t doubt you have the ability to carry extra coverage on behalf of the client, but much like warranty on a new TV, I doubt that it is often used. Everything must be done by lawyers on both ends, so the liability thing is not an issue here. If an agent told me he was protecting me from liability as the value-add, I would probably suggest they take up a career in the insurance industry. Anyway I wouldn’t buy into it here, but perhaps this is different in the U.S.
I realize you are in the industry and obviously are very passionate about it. I believe things have changed in this industry to a point where the fees do not make sense for what value is brought to the table in certain situations. The other thing that should be changed is the compensation model itself. The reason I believe I have met as many horrible agents as good ones, is the industry rewards the agents equally. The agent who does the actual selling in most situations is the one who brings the client to the table, yet the listing agent gets a good chunk of the check. Also in Canada I believe the agents get paid 7% on the first 100K and 3 % on each 100K after that. On any house over 100K, there is really not much incentive for an agent to make an extra 5 or 10K for the client on the selling price because the small extra percent they would make outweighs the risk of further negotiation and the cost of the extra time.
If I was in this business and was good at it, I would want to see some reforms to better incent the agents for selling higher. I don’t mind paying for value. As mentioned my first agent was excellent and I never even considered negotiating her comission. If anything I would like her to be paid more and better compensated for selling higher not getting the automatic 7% on the first 100K.
Anyway as someone who has spent his life saving before buying, I don’t fall into the realm of typical home buyer. I do a lot of research, I have paid between 35-50% down, and I make a business decision on a house, not an emotional one. I just feel for what is provided in a non-down market, using an agent on the current fee structure system is not worth my hard-earned money.
Hi Pb,
I understand what you are saying. It is easy for people to get into the real estate business. It is hard to learn everything and pass all the test. Never the less, the class and test usually do not last much longer than 6 months or so. So compared to a college degree it is quite simple. It is also simple to get started with a company. I agree with you on the easy door to get in part.
The liability part. I know it is hard to tell a seller or buyer you should use me strictly for the liability reasons. They would laugh and say is that all you got. I hear alot of people say the liability is on the attorneys. This is totally false. The attorney has no liability. Attorneys rarely have liability. They are the ones who write our contracts we public and agents have to use. Do you think they are going to put a trap for them to step in on the contracts. No way. They make the blame on someone else. I can not think of one case where the courts step up and say the attorney was at fault or the contract did not have a blank for something to be answered correctly. They change contracts every year to try to make them better. What is the reason for the changes. It is because of the problems they find thru the year. Never do they say though the attorneys should of had this in the contract. They point the blame at the agent, buyer or seller, never the attorney. A perfect example of this is title insurance. When you buy a house an attorney does a title search. We agents do the best we can with this, but we can not do as great of one as an attorney. Title search searches for any easments, road construction coming, past owners, current owners, taxes, leans, flood zones, anything that could be a splinter to the buyers. As an agent if we miss something with this and a contract is written and signed than something is found later. Guess what, we now have a law suite and the buyer is in court suing the agent. The attorneys have created something called Title Insurance. The attorneys do the search about few days before closing. Than when you go to closing and there is a charge for title insurance. This title insurance lets the attorneys off the hook for there research. If something is found later, and you try to sue the attorney, title insurance comes up and pays you off for the damages. Worst scenario they will give you back everything you paid for the house. The attorneys can do a better title search than we agents can, yet they have insurance and we don’t. That is a classic case of the attorneys make the contracts so they are not the ones being fired at. There are tons of areas like this in the contract, this is just a real obvious one.
Commission: That commission rate is different than ours. I do agree they have to change as well. They are old ways of doing things. I will tell you though, they will not get cheaper. If anything they will go up. The world is changing. It is getting more expensive for everything. Greed is always here on earth. The reason I say it will go up if anything is because the profit margin for a real estate office is already low compared to other fields of business. The IT industry from what I understand used to be good and now is going to india. The profit margin for a real estate office is only about 5%. The average for any business I think is at least 10%. This is why lots of real estate businesses usually do not make it. Paper marketing is very costly. Office space is very costly. The market is changing and paper market is going away and everyone is going to the digital office now. This will cut cost. But the internet is booming and so that money will only be transfered over to creating web sites, making more advanced phone options, money spent on LCD screens instead of paper. Think about this: in 1993 agents did not have computers and cell phones. If I were an agent in 93 I would of saved 200 a month on a cell phone and around 300 a month on computer equipment. Today my 2 biggest expenses are computer technology and my phone. I can’t tell you how many web sites I am on. When I get free time to goof off. I am on my web sites trying to make them better. Just 16 years ago these things did not exist. I remember having a pager and paying $10 a month for. Riding down the road and having to pull over and call someone when my pager went off. The market has changed but the expenses have only been replaced by another source. And with the internet there have only been more sourced added. A perfect example of this is the number of people who have filled bankruptcy this year. In Canada in 94 you had 65,000 cases file bankruptcy. In 2008 you had 125,000 file for bankruptcy. I dont even want to go into my country the USA. ,We go thru money like it burns our hands. Anyway, it has rose more since 94 to 08 (14 years) than it has in the 60 years before 94. Reason this is: I think because there is simply more stuff out there now. Everyone wants an ipod, a new computer. These things did not exist before 94.
Sorry for the long writing, but story sold simple the profit margin for a real estate office is low as it is. So I do not think commissions will go down, only up. People demand that you do more today and it cost money.
Your an IT guy. Just think probably 15 years ago your job did not exist. So to a company you are an added cost. There are some companies out there that have rooms full of servers and IT guys 24-7 running that equipment.
Thanks PB you are one of the more smarter ones on here. You make good points, instead of just saying well realtors lie and they should all die for it. I am still not sure I have proved my point based on what you said. You still may have the upper hand. I will have to sleep on it and maybe write more tomorrow.
I can tell you from my experiences using a realtor and not using a realtor. I believe I got a much better deal by myself not using a realtor. This article is exactly true, realtors want to close the deal and as a buyer they push you up and as a seller they push you down. Let’s face it, everyone, including realtors is out for themseleves. If you are not afraid of a little work and research you are better off doing it your self. You can get current sales information that realtors say only they can get easily by going through mpac or some other agencies you can pay. Most realtors are grossly overpaid for what they do and the little amount of education or advice they have. Let’s see I can become a realtor in what, 6 months after taking a simple course only an idiot would ever fail. My suggestion to buyers and sellers is if you are not afraid of some work then do it yourself, you will almost always come out ahead.
Ol David,
So most realtors are out for themselves, right. You say most of us are overpaid. You also say only an idiot would ever fail. Let me repeat the facts that I have already said about 5 times in this blog. David the profit margin in this business is only about 5%. It is very easy to over spend and go belly up very fast. You do not understand this until you are in this business. It is not fun to spend $2000 of your own money in a marketing plan only to realize at the end of it you got nothing out of it and you found a ton of mistakes you made. Everyone makes the mistakes also, everyone. I see huge companies that make marketing mistakes. Marketing it’s self is a very tricky business. Your right it is only a 6 month class to get your license. And we act like that 6 month class makes us have doctor degrees, I agree with that. But, what you learn in that class is nothing like what you will need to stay in this business. It is simply just a wall the government puts in front of people to stop the initial non motivated people. As far as we agents are only out for ourselves. I can give you a number of my clients to talk to and they will tell you I was for them. And I am not an exception. I know alot of agents that are out to really help there clients. Very few of them are acturally out to get there buyer to pay the most price. I am talking 1% or 2%. Do you know for every $1000 of price negotiations I make or loose a whooping total of $14.10. That is off our standard resale house at 6% commission. I make $14.10 for every $1000 the buyer pays. If you are the type of agent where every deal your going to try to spueeze an extra $14.10 or $28.10 into your pocket. Than your trying to hard. You will waste so much time trying to get your buyer to come up on price on every deal that your probably not going to sell but 5 homes in a year anyway. I have always been honest with my buyers. I will give them what I think it is worth before we even start negotiating. Now if I say it is worth $150,000 and the buyer has an emotional attachment and they are willing to pay $160,000. That is not my fault. My advise at that moment is to walk away and if the buyer says but I love it and it is worth the extra to me. Than who am I to tell them no it is not worth the extra. David you are an easy one to overcome. Come on try harder.
I know real estate agents work very hard and most are good and care for what they do.Well the one I had with the biggest real estate agency Newyork state sucked and was not doing his job.He was our buyers agent and worked for us(thats what he said)Well the house was listed 400sq feet bigger and taxes were alot higher.The taxes listed was what the old lady was paying.She got a huge discount from nys enhance star program and her husband got discount for being a vetrean.Our buyers agent said the taxes were 2300 and that before the basic star program were entiled to.He point blanked lied to us and taxes are 1000 more.Hes not listing agent and blamed him,Well then what the hell is he good for?He should make sure its right.
Hes a realestate agent should of known by the taxes something was wrong.Well my wife is in tears casue wants the house and I dont.I will not overpay for a house from a lying scum bag.
All i know is for opening a door and saying here is the kitchen etc does not warrant 4000 commision.
Like I said I know real estate most anyways,work long hours and are good people but like any other profession there are scums out there.Wehn buying a house,make sure get comparables,you the buyer check the county and town records make taxeas and sq footage are correct.Would think thats what buyers agent is for but Cant trust anyone.
Tom V,
I am sorry for what is happening to you. I think you for still saying we agents work hard even though you have an agent that is dropping the ball. I agree with you that your agent should of checked on the taxes. You should ask your agent to show you everything. I know me being a buyer agent. I open my door to my buyer’s. I show them everything. It takes alot of guesswork out of the process. Things like a market analysis can be read totally different ways with different people. You can have the same house and 10 agents and 10 appraisals can be done and you will have 20 different prices. I think it is important for us agents to be a source of the source, but not the source. This means we need to provide the information, provide our opinion (that is what it is agents an opinion), and then let the buyer make the decision. Tom we as agents do and should expect to trust that the other agents give correct information. Sometimes that hits us in the face at the expense of you the buyer.
Tom if you found out the home is 400 sq ft less and taxes are 1000 more after your offer was accepted, I would go to the 2 agents and ask them to speak to the seller and tell them that you wish to cancel the contract and go back into negotiating. The seller defintly is not propably going to want that. If the agents can not get you a result with this, than call the broker in charge at the 2 companies. If that does not get you anywhere, than go to the local realtors association. Hopefully these steps will get you somewhere. If your agent made the mistake and than told you before you signed the accepted contract, than there is not much that can be done.
The worst thing I heard was around 2006 when things were really booming here in Edmonton. Realtors were advising their clients that there were some number of other families bidding on the house and that the client should make a bid equal to the asking price plus 2% for each of these other families. For example, house shoppers being told “there are 5 other families bidding on this house so your bid should be 10% above the asking price.” Of course, there was no way to confirm the number of other supposed bids. In addition, the higher the sale price, the greater the realtors commission.
I’m a realtor and ive read part of this post and a lot of it makes me laugh. One thing everyone has been forgetting is what about all of those transactions that dont tranform into a transaction. It happens at least 2 third of the time. You have to factor that in.
I understand my clients when they say its expensive and hell yeah it is no mather how you slice it. But in taking the cheaper realtor or the one that tells you what you want to hear dont come crying about cheap realtors missing out on the next buyer in your neighborhood due to incomplete listing and those kind of things.
Dont forget that some people ask for a good realtor once they have burn there house from the market. A good realtor comes in and tries to undo or salvage the info thats out there now…
The thing that i find the hardest about this jod i chose for my passion of real estate is when people associate the quality of a realtor with the fact that the house is sold or not. Sometimes everything is done right the price is right and for no reason it just wont sell. In the current market an average realtor will sell a house every 8 to 10 listing, 5 years ago it was every 6 to 8 and 10 years ago it was every 28 to 30 listings. If you look a the current market curve where heading in the 10 to 12 or more.
So do i start counting the total hours on every 10 listings, no is the answer. It is very hard to quantify the wage per hour of a realtor cause if your professional at all this amounts to being available at all times and having a heavy schedule.
But i can promise you one thing, the day we start charging an hourly rate this will come to a higher bill to the consumer in the end. I think a lawyer is very expensive but would be more accessible and cheaper in the end if they would be paid once they reached the desired result…
Right now the general public have access to a professional realtor if thats what they want. They can get full scale publicity of there property to get the best price possible for there home at 0$ if nothing materialises.
A god realtor to sell 12 listings and have 12 sucessfull buyers has to list at least 50 properties a year. These are big numbers to crunch and i challenge anyone to do this and tell me that they actually overcharge there clients and didnt really earn there 60 000$ to 80 000$ a year. This seems like big numbers but the cost of a professional working days, nights and weekends amounts to that salary.
This job is not so easy when done very professionally and one of the proof to back up my claim is that half of the new realtors quit within the first 5 years. I think only card dealers at the casino have worst numbers… I hear some people saying that card dealers at the casino are overpaid, i respond you try doing there job for 5 years and then think the same thing…
At the end of the day the grass of a realtor is not as green as some would want to beleive. Our grass could be greener if we would not be professionals whit all those license and fees to protect the public… The public is currently well served and i would not want it any other way. They can chose from any range and types of realtors. Of course as in any other profession there are better professionals than others. I think people dont spend enough time shopping for realtors or are not looking for the right things in a realtor to satisfy there demands.
I love my job passionately and my clients are satisfied with what i bring them… I tell it like it is…
Ken,
What you said may not be junk. Maybe that is what agents were seeing in the boom of the market and they are only telling you. If you think it is a commission thing, forget it. An extra 2% in price is pennys in our pocket. If you had read my earlier blogs here you would of seen I figures it up. I only make or loose about $14.10 for every$1000. Do you really think most realtors are out here counting every little $14.10 they can make. If they are than they are agents who are going under and are trying to watch there pennies. Than in that case they will be out of business in a short time and another bad realtor is out. The good ones watch there money close, but not to the extreme of that. There time is worth more than going back and trying to get you to negotiate another $1000 higher. Ken maybe some of what the agents were saying was junk, but maybe it was not. That is why they should show you a CMA (Comparative Market Analysis) and if you choose to pay 10% higher to get the house. Than it was due to supply and demand that you paid more. If you choose to not pay 10% higher and loose the house than don’t cry to your realtor. I know I for one had clients looking in the bubble and were bidding against others. They ask me what should I do. I said it is up to you. I tell them, one thing is for sure though. When there is a bidding war, the price always goes up.
I have seen alot of you on here saying we agents said this and that. Well maybe at that time that was what was going on. Now it is different, things have changed. We just tell the story, we do not make the story. If we did do you think we would of planned this recession? No we would of made everyone’s property shoot through the roof and than we would of made millions of buyer’s just fall on the door step and say I have to have this house. I do not care what it cost. Than a year later we would do this all over again. That would be our story. But we are the spokesman for the market. We do not control it. You as buyer’s and seller’s control the market. When you go get a loan and they say we can give you this loan but it will be an interest only loan and for 40 years with a 2% interest and a monthly payment of 2000 a month and you only make 30,000 a year. You have to be the one to say wait something is not right. It seems that I can not afford this home.
Is it really snarky to say that it truly frightens me that the above posters are in charge of filling out legal paperwork where every t must be crossed and every i dotted?
Rachelle: I’m right there with you!
Rachelle
Please explain to me why it is truely frightening. I eat, sleep and breath real estate. I read about a book a month about real estate. I work 5 to 7 days a week at it and around 12 to 16 hours a day. I have seen all sorts of cases, disasters, simple closings, husband and wife seperate at the closing table, homes that were built wrong that are new, and on and on and on. You tell me how this frightens you that I call my self a professional. Please tell me. You to Mr. Cheap. I’m listening.
Please allow me…
Derek, your spelling is horrible and your grammar is even worse. Rightly or wrongly that’s enough for me to think that you are not detail oriented / smart / or educated enough to do a real estate transaction.
Derek,
If you want to look professional you’d better learn to spell and use proper grammar. I’m totally serious. You are posting on a public forum and people are judging you on how you write.
One of the supposed benefits of hiring a real estate agent is because of their great skills in dealing with legal contracts. As a property manager I have had to fill out over a hundred N-4’s in one day. These forms cannot be amended and everything including the names of every person must be perfect or be thrown out of the Landlord & Tenant Board. If you can’t manage to spell properly with spell check and grammar check I wouldn’t hire you to fill out a contest entry at the grocery store never mind my real estate contract.
I count about six spelling errors in your post above. So learn to use spell check on public forums if you want to be regarded as a professional. That little red line underneath your words means the word is spelled wrong. Your bad spelling and grammar make you look like an uneducated moron and even though you may work very hard it will turn off a lot of people. Sometimes working smart is worth more than working hard.
Oh and by the way, English is not my first language, French is, so don’t even go there.
Rachelle,
Your right. Ok you got me on that one. I type fast and on things like this I do not worry about it being correct all the time. On documents and paperwork I do worry about it being correct. I understand though about this is a public site and it adds to looking professional. Rachelle, good job. I think you are the first one on this blog that has pointed out something that I have to admit that I am wrong on. All these big thinkers and guys who think they know everything. And along comes a woman (who’s first language is not Englist, French is) , who puts me in my place. I still am a professional in real estate, but Rachelle you make a good point.
See I can admit when I am wrong. Can anyone else do that?
Derek,
You misused the very first word of your response. You’re is the contraction for you are not your.
No one else is going to admit to being wrong because you did not directly address any of the points in the article and make your case. In fact in several cases you actually agree with the substantive points that Mike brings up in his post.
For example, Mike says don’t trust your agent when it comes to setting the price. You respond by saying the agent doesn’t set the price, they are merely a spokesman for the marketplace. So in effect your argument actually is in conjunction with the article.
Your fellow realtor bemoans the fact that houses don’t sell in many cases and he doesn’t know why. I rent apartments on commission for a living and it’s my job to figure out why. There is always a reason.
I work with a lot of investors and look at a lot of property out in the market and I have to tell you that real estate agents are not professional, and very unethical in many cases. I have never seen an industry in which there are so many dishonest, manipulative people. My last boss was a former broker and he still owes me $4200. Realtors will tell whatever lie or fabrication they have to just to get a sale. They will withhold comparables, they will create urgency by telling you there are other offers, they will buy houses from old ladies who don’t have a faintest clue about market value and rip them off and if you’re an invester they will lie about how much rent you can get. They get kickbacks from the lawyer, mortgage broker and home inspector they refer you to.
In realtors’ defense, however, I feel sorry for you guys and the way you get robbed by your trade associations, brokers, other agents. From a $20,000 commission your agent gets about $5000. With this he has tons of crap to pay for, the entire system is designed to bleed the guys who do the work dry. The entire system is structured like multi-level marketing.
Rachelle,
I agree with you some. The part about agents getting a small fraction of what everyone thinks we really make is true.
The part about the other agent saying that homes sometimes do not sele and noone knows why I agree with you. We are the experts, if a house is not selling we should have an answer as to why.
The market being saturated by dishonest people, I do not agree one hundred percent. Every market has it’s bad apple’s. My market has them as well. I find that most agents in my area are very caring, honest agents. The agents that are bad apple’s in my market tend to get a name for themselves and it does not take long for them to become lonely sheep where noone wants to work with them. As in any business, 10% do 90% of the business. The same holds true I think as for public view. The public most of the time sees the 90% that are scrambling for business. They assume this is how all agents are. This is simply not true. I for one will not do anything unethical. I do not care if it lines my pockets. I have had builders that I could of made a fortune from. They were the cheapest around for the best quality. I cut them loose because I did not want my name to be associated with them. I just think you can not say agents are snakes. Alot of them are great people.
I do not agree with the name of this article. The saying goes “we are a source of the source but not the source”. I believe this to be true. We tell people what is going on in the market. It is constantly changing. We do not control the market. We do not make the market. We only give our opinions of what is going on. Now different agents can have different view points as to what is going on. Maybe this is where the public thinks we tell stories all the time. The truth of the matter is that everyone makes up the market and no single person can tell you exactly what is going on. We all take in the information, digest it and than tell what we make of it. Some agents specialize. So an agent who handles alot of REO’s may not be able to tell you what is going on with resales or new construction like an agent that is in the resale or new construction market. This is why as a seller or buyer you should do your homework. Do not call an agent that deals with alot of banks and foreclosures to do your resale. An agent that is heavy in property management is going to have a different opinion on your resale home than an agent who really deals with only resales. So I do not agree with the title of this blog. I do agree that the public should do research on the agent they choose to listen to and believe.
You are smart Rachelle. You have been the toughest yet to say and prove where you are just wrong. I am not saying you are wrong. I think neither of us are wrong. Just a difference of opinion.
I am just getting started in the Real Estate industry and I am very excited about my new career path. I was just looking to see what other agents did in the beginning of their careers. I have obtained a ridiculous amount of knowledge during my Real Estate class and don’t see how I can really remember every detail without actually getting out there and doing it “hands on”. Also, I know I can’t ask how much commission is an average amount but how do agents get paid when they bring in somebody to rent a condo or apartment, or a house?
Micheal
The requirements for becoming a real estate agent are three correspondence courses and one week in class. This is a ridiculously small amount of knowledge for a “profession” Doctors spend 7 years in medical school. Lawyers also spend lots of time in school.
I spent a full two years in school to become a property manager.
You will get to charge one month’s rent when the property rents. You may also get to split that with your broker and the other listing agent.
You will also get to fill out the ridiculously complicated OREA application and lease which does not even include the Information For New Tenants as required by law in Ontario. You will have no money to pay for advertising the rental property. It will be listed on the MLS not any of the much more effective websites, such as viewit.ca or even craigslist.
I’m glad you’re enthused, you’ll need it 🙂 For god’s sake negotiate the heck out of your broker deal so you end up with a little money in your pocket after all the licenses, desk fees, phone fees, sign fees and all the other fees your broker will dream up to drain you dry.
Good Luck
Thank you for the insight
I am not quite sure how everything is going to turn out but I am definetly very ambitious and looking forward to something more challenging than bartending. I loved my real estate class and know I can do well as long as things move in a forward direction. The housing market here in Florida is slow to change with property values still going down slightly. I had a comment on a quote from an earlier writing I had seen on this blog. This comment stated that “real estate agents will tell you whatever they can to make a sale”. Although this might be true for some things I was under the assumption that real estate agents were held liable for everythig they said. To say something is definite without knowing for sure is grounds for fraud and culpable negligence. Also, real estate agents obtain a lot of business from word of mouth advertising and referrals from past clients. I dont know who a lot of these people were dealing with but I think they just were unable to find the right agent who actually will work for them.
Real estate agents to ensure that their customers have all the information they need to fix prices, make offers and negotiate a lot. Real estate agents receive a commission is a percentage of the selling price for each transaction, so your earning potential is unlimited.
Earning potential is unlimited. However the average earning for a real estate agent was a wopping $4200 for the year. Man a lot of us starved. I feel like I killed my computition now.
We agents are held to what we say. The trick to this is though. You got to get it in writing. If you go to court the first thing a judge is going to want to see is proof of anything. I love to give anything I say or do in writing, because if I tell you something and you do not listen and it blows up in your face and than your mad. I want my proof that I told you so. I am all for documenting what I or my clients say. I actually use the livescribe smart pen a lot on appointments. This is a pen that has a voice recorder in it and it has a camera in the tip that records what I am writing and puts it together with what is being said at the time. I have this pen named in my computer as the Liar Killer. The best place I have found it to save me and my clients is on when I have a buyer working with a builder. We meet with the builder and he tells my clients yes to everything. A month later I find he is not doing something or he wants to charge for something he said he would give free. I get on the phone with him and say hold on a minute and click where I wrote the note about the issue at hand and hold the pen up to the phone and let him hear him saying sure I will give you that second bathroom vanity for no charge. Than I say was that your voice. He usually says ok without any argument. I love it.
We agents do have to be careful about what we say. Even if the client does not document it, it will over time kill our name. Agents get a reputation for who or what they do. We hear and see what other agents do. It is very hard to hide it. So it usually takes around 5 years for you to build a reputation and than all the agents in business usually know if you are shady, overprice all homes, steal clients, lie, cheat or etc. I had posted earlier that 90% of agents are good people. 90% will tell you the truth. This is because the 10% of bad ones usually get black sheeped by all the other agents and than cannot survive in this business. If you are a shady agent other agents will avoid showing your listings. We legally cannot steer a client to another direction. But I do inform my buyer that this agent is very difficult to work with. Than I leave it to my client if they want to see the house or not.
Hey there is good and bad in every vocation, including authors.
We are in the process of purchasing a short sale and just now realizing that our agent is indeed our enemy, but not for all the reasons pointed out here.
She is forgetful and not at all detail oriented. She does not follow up on our requests (“I got that document Monday, dont know why I didn’t send it to you yet”). She does not always reply to emails. She relies on advice from her husband (he is a real estate attorney, so *of course* we should trust him). She makes up excuses (“This has been a crazy week for me” or “I won’t be available this weekend…. I’m going to a hockey game”).
Then for her next trick she made our earnest money deposit disappear.
Poof!
Yes, er company *LONG and FOSTER* actually *LOST* our check. No idea where it went. No explanation. We canceled it immediately and wrote another one. Then she tried to make us go out of our way to wire the money when we did nothing wrong.
Basically, she’s just not very intelligent.
@kb,
I’m sorry to hear you have had a bad experience with your realtor. There certainly area number of agents in this industry who can’t hold there own. The only thing I can recommend is be honest with your agent about their shortcomings and then, if necessary, part ways.
Many agents work by referral based on previous clients they have helped out successfully. Try asking around and find someone who can recommend an agent with a good track record. Next, even if you find someone who comes recommended, start inverviewing them and let them know how you would invision a smooth transaction from start to close. If you need anything else, please contact me via my website… I’m in California but the logic is universal. Good luck!
KB
I hate to hear this from you. Especially on a short sale. Short sales are hard and there is no certain order to them. This is a big part as to why Realtors sometimes have trouble with them as well. Never the less, your agent does have problems. If your agent and the attorney are husband and wife, I would not use them together. This is a conflict of interest to me. You have a forgetful agent, what makes it so that the attorney (husband) will not cover up for her. Another attorney would be more direct with you I think. Short sales are usually on a strict time line. The bank will drag there feet to answer your questions but they will give you 24 hours to answer there questions. This seems fair right. If a short sale is what you are after I would find a short sale agent. Short sales are the hardest deals to make work. You get a good deal, sometimes better than a foreclosure. I handle short sales. Let me know if I can answer questions for you. I am not in your area, so feel free to ask away without the worry that I am going to try to tell you that you need to let me represent you.
WOW!
I can only take two things from this post. One, is that you have worked with some really baaaad agents. Two, is that this was written to be alarmist to sell a product.
If buyers don’t trust their real estate agent then they need to change agents! You wouldn’t go to trial with a lawyer you don’t trust or go to a doctor that you don’t trust enough to tell the truth to.
If someone out there has had this bad of an experience with their real estate agent or REALTOR I do feel sorry for you. You should be able to trust your agent completely to handle your transaction professionally and in your best interest!
Is it ever done this way – the buyer negotiates directly with the seller/owner of the property?
Is it ok to try to get the seller’s contact info and bypass the seller’s agent?
Claire, Great question… short answer is NO, its not a good idea. At least you should tell your agent if you did. But always confer with your agent first when you have questions. I know as an agent myself I would be upset if I found out my clients were going behind my back to take over negotiations. If you are feeling compelled to go straight to the source you probably are not getting the quality service you deserve from your agent. There are numerous reasons to use an agent as a buyer: 1. It’s free, or should be free since the seller typically pays the broker commission out of proceeds from the sale. 2. It takes the emotion out of it for you 3. The agent has knowledge and training, or has far more access to information about the real estate environment in your area to help you make an informed decision. 4. Agents have a fiduciary commitment to each party in the transaction to act on their behalf.
Again, if you are at the point where you are negotiating on your own, you could be blowing the deal. Talk to your agent first, and if unsatisfied, kindly sever ties and find someone new.
Claire,
I have to agree with Chris for the most part. It would not hurt my feelings if my clients went behind my back. This is business to me and I understand that people are most of the time going to do what they want regardless if someone tells them to not do it. I really agree heavy with him on the part where people blow the deal when they go and negotiate by themselves. I have seen this time after time with for sale by owners. This is the biggest reason to me. Negotiating is an art that 99% of people do not have. Probably 50% of agents do not have it. I have yet to see but 2 or 3 people who were really good at it. Most people say I want it and they go after it. The only thinking they have is I do not want to pay more then this. Everything else just happens on a fly. If that is a buyer by passing the agent, well than the buyer lost before already negotiating.
Jacquie made the real point of this whole blog in one paragraph. We make business hard. It is simple. If you do not like or trust your agent than get rid of them and find one you trust and like. My real estate coach’s saying on this is “if you do not want to help that client than get out of the way so someone else can help that client”. This is true. This is what makes our nation a free enterprise nation. If someone gives bad service than they will probably not stay in business. The greats rise to the top while the bads fight over the left over bones.
Here’s a question. In Los Angeles, does my realtor have a requirement to tell me if the multi unit property I am buying is under rent control or is it ENTIRELY up to me to find out? Especially when I asked if there was a way to evict the tenants and my realtor answered, “Well you can just jack up the rent and they will ultimately move because it is too expensive for them.” Or am I just plain SCREWED? Can I hire a lawyer or is that just going to be throwing good money after bad money. To me, it would seem negligent of my realtor and I am sure they have insurance for things like this.
Sly you said you laughed but you are the one that is hilarious. I read your post in utter disbelief. Are you saying because you don’t charge per hour you should be dishonest just to get a deal through? That is what all your ranting suggests. I am in the process of buying a house, believe me this is about the best thread I have read in days. You need a basic understanding of what an ‘agent’ is.
I’m jumping in here. When I see typographical errors from friends, I can ignore them. When I see typos from real estate agents, it makes me wonder how detail-oriented they are and it leads to a lack of trust. I just got a listing from our agent who sold us our current house. I told her about two typos on the first page of her listing (not obnoxiously but nicely) and she said people ignore them. I do not because it “speaks” to the character of the agent. Sloppy is sloppy and detail-oriented is a joke.
When we made various offers on homes, we both read carefully through the contracts because of her mistakes. I did not trust her. I heard too many canned lines from her. She was in marketing for many years before becoming an agent and brother, did it show. I would’ve ditched her but my voice was only one-half of the equation (the real estate agents are totally right – if you don’t like the agent, get rid of him or her). Thank god, this should be our final house.
We also found our home and quickly put in a bid. I knew what the few houses in this particular neighborhood were selling for and their history of what they sold for and the taxes in the last ten years. We felt we knew what the right offer was. After it was inspected, our agent told us to write down three “big ticket” items found during inspection and use that to negotiate. We wrote a list of about ten items with estimates from a contractor. Our agent asked us again to reduce the list and we said no. We were able to get a little over 1/2 knocked off the repair estimate at closing. We were happy with that.
I know there are good agents out there. We had one in our lifetime of owning a few homes. But, the bad (to me) outweigh the good and honest ones.