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”
Wow, cranky realtors pulling out the cheap shots here! I like my realtor, but I don’t for a second think that he would put my interests before his. Despite the word “trust” in the title, the article isn’t really about realtors being dishonest… it’s about the fact that they benefit more from a completed sale than from the buyer getting the absolute best deal (the realtor who mentioned the Freakonomics bit seems to get this). There’s a saying, something about “don’t ask a car salesman how much car you need”, that seems relevant here — somebody making a profit selling you something is not primarily motivated by encouraging you to not buy, or to buy less.
That said, I completely understand that many of us clients (including maybe some posting here) are clueless, entitled, or hate-filled, and it must be a drag to deal with us.
Don’t trust an agent….who won’t answers yours questions. I just fired mine, John Chisholm for exactly that reason. He told me today that his
focus is on the buyer because that is what pays and since he is my listing agent I was horriffied. His advice for me when I ask what is the right list price for my property ” we won’t know until it sells, just keep dropping the price every 2 weeks until it sells”. Are you kidding? If I want to sell I need to be prepared to lose money and lots of it. What exactly does a person need a real estate agent for if your being told to sell at a huge lose? Come on people why would you lose even more paying an agent to do this for you?
What an excellent post. Our current buying agent did every one of those things today and (as of tomorrow) he will no longer be our agent. But in another country even before the internet was invented, we had another house buying crisis when I was pregnant. House prices were zooming and deal after deal fell through with gazumping while in the meantime, I had already agreed a selling price for my flat. That agent came to the rescue and when something unexpectedly came up we viewed and offered the asking price the same day. I agreed to stick to my original sale price, the house we bought has increased in value 400% over 10 years, the agent who sold my flat and bought us the new one has been managing the now rented-out property ever since and done very nicely out of the commission. We currently want to view a lot of properties. We are willing to pay above the market rate in terms of commission because of that. But an agent who wants to squeeze a higher rate of commission out of a lower rate of service. meh.
To say that all agents are like this is grossly unfair. I am currently a buyer, and our buying agent has been beyond helpful. We have been through two offer processes, neither of which panned out, and at no point did she encourage us to do anything to keep a bad deal going. I feel bad that we are spending so much of her time looking at houses and making these offers, but her absolutely willingness to work for us, is apparent. Does she want us to buy a house so she gets a commission? Of course, and we want her to get a commission. I don’t feel at all pushed to buy a house I don’t want, and in return I will easily recommend her to all of my friends, many of whom want to buy a house in the coming year. That’s how good people do business.
No, don’t trust someone who has spent thousands of dollars and literally hundreds of hours of classroom education, plus hundreds or maybe thousands of hours of research and even more time, money and resources trying to find just the right property for buyers or find a ready, willing and able buyer for a Seller’s house. No, don’t trust those people. Trust some guy who writes a blog on the internet. Give me a break. It’s easy to bloviate about how agents are only in it for themselves and perpetuate an antiquated stereotype in an attempt to appeal to the lowest common denominator. Fear mongering and conspiracies certainly appeal to some. But the fact is real estate agents are so dependent on their reputation to make a living and so heavily regulated and policed that only an idiot would consciously defraud or mislead a client. Your piece clearly indicates that you have little more than a tenuous grasp of how the real estate industry actually works and yet you take it upon yourself to grossly mislead your readers with your posturing. You do your readers a disservice by leading them to believe that all agents are dishonest and self serving. That’s like saying all bloggers are hacks, incapable of securing legitimate writing assignments when in fact that might only be true of a small percentage of them. Present company excluded of course.
I had a bad experience buying my first home. The realtor was super nice and friendly but when it came down to it, pressured us into offering full price. She had a million reasons…no other home like it, might be gone soon, don’t want to get into a huge negotiation or bidding war, blah blah blah. The house was a foreclosure and had been on the market for over a year so in retrospect I know we could have gotten it for at least 10,000 less. We were stupid first time home buyers and didn’t know any better. Our fault for not becoming educated on the process and also our fault for trusting our realtor to give us good advice. 3 years later, we are trying to sell our house and hoping to just break even. Needless to say, we are not using the same realtor.
Joe Owens,
Wow, *literary hundreds of hours* sounds impressive!
California sales person license, for example, requires to take 3 standard semester length (45 hours) courses; or 135 formal hours total. It makes the whole education a part time study for 1 semester. The courses are offered to take online, no tedious assignments, read at your own pace (I can bet some people could take just a few weekends to complete). There are offers $99 per course ($300 total). Anybody, who’s not too-too lazy or too-too poor, can get this license.
California broker license requires in addition to it to have 2 years staying with a broker, and to take 5 more courses. This would make 225 hours more, or part time study for 2 semesters, or more weekends reading online.
For comparison, a 4 year Computer Science degree (how to do some trivial things like writing code) takes 1800 hours. Sure, I would be hesitant to trust a professional education that requires only 135 formal hours or a few weekends to complete it.
Julia,
If it’s so simple that anyone can do it, why isn’t everyone? Just because the initial education is shorter than a four-year CS degree doesn’t mean it’s less relevant to the field, and to insinuate such is simply ridiculous. Sure, it’s a couple hundred hours (which, as the man you attacked in your post stated, =/= “hundreds”), but guess what? Once you’re out, you don’t get a steady paycheck like that CS grad does when they get a job.
Realtors have to spend their own money and time, investing in their own business, to get anywhere. You have to look at marketing costs, such as advertisement, business cards, flyers, website hosting, etc. etc. etc. Likewise, it seems like you’re under the impression that once a realtor takes those classes, that’s it. Totally incorrect. The classes you mention are pretty much completely based on real estate law, and have NOTHING to do with actually learning to the ropes of the career once you get your license. For that, yet again, the licensee is on their own. Some agents are smart enough to seek out a mentorship or training program that will guide them through this, sometimes paid for out of pocket, and always unpaid.
To get that broker’s license, you can’t just get your sales license and then jump into the broker’s license. You need years of experience first.
For the sake of argument, let’s look at other professions with short entry requirements. Here’s one, how about engineering technicians? They’re obviously what you’d consider “educated”, but the courses required can be done in a matter of months. Still admittedly longer to do schoolwise, but guess what? Once they get that first job out of school, they’re guaranteed to be paid. That’s not the case with agents. You’re looking at up to 6 months without making ANY money, but still PAYING money.
If you think a lazy person that gets their license will succeed in real estate in any way, you’re ridiculous. The hours and work required to complete a sale is much more than most people realize, and it’s all gratis until the sale goes through, IF it goes through.
I’d love to hear another example of a career that requires so much self-motivation, and that’s completely commission-based, that takes longer to get into than real estate does. Good agents earn their money, and bad ones are weeded out due to lack of referrals.
We were looking to buy a new home last year. We came upon a nice house listed for 239K and decided to make an offer at $226k. Our agent submitted our offer and later told us that the seller counter-offer and wanted to bump up to $234K and that is as low as they can go. We told him that we would go as high as $228K. It turned out that we lost that offer. Four months later, we found out that the house was sold for $220K. We decided to let our agent go.
I would guess that everyone who has posted here about the fact that agents are dishonest and unscrupulous are simply projecting their own lack of character onto the agents they have dealt with. I am certain these people who are critical of agents are themselves dishonest, liars, and cheats with no code of ethics whatsoever. They cannot be trusted and I would caution any real estate agent not to work with them as they will steal from you at every opportunity. So how does that feel haters? Does it feel good to have someone who doesn’t know you at all make a gross generalization about your character? I didn’t think so? To the author, you are doing nothing more than bashing a group to sell books. Good authors don’t need to do that which explains why you do. To the haters, if you don’t denigrate an entire profession practiced by a lot of hard working, honest people to sound clever here on the internet. There are enough trolls. And one last thought, of you don’t like agents, next time you buy or sell a house, don’t use one. And good luck with that.
Some realtors may be like this. Most are not. As an ex-realtor I can tell you it is largely a thankless 24 hour seven days a week job. I always acted in my clients best interest which often meant showing them 35 houses and submitting and negotiating up to 5 unsuccessfull low ball offers per buyer client (not all -some clients were well educated and knew what they wanted) until they finally accepted market reality. Also spending long hours counseling a seller who needs to sell but cant accept our falling market either.
The problem is how agents are paid . If you need assistance in cleaning your house, or medical or legal care you pay for it. Agents provide property services in regards to finding or dispersing of your home. They should be paid on an hourly basis or by specific events. Ex.$35.00/showing,$200/submitted offer and subsequent negotiation with an addition $200.00 if its succesfull, etc. Then it would eliminate this kind of unkind suspicion of an agents motives. It would be fairer to all agents. Apparently , if what you say is true this would be the remedy for that too.
As a Realtor of 10 plus years I can confirm this author is 100% correct. Come on fellow Realtors, you know it is true. We play this game because it works and we get paid big bucks. Great article exposing us but it won’t make a difference.
So what if the agent has their own interest in mind? Every potential buyer or seller should understand that and remember that only YOU can have your best interest in mind. The problem is when agents do this at the expense of the buyer or seller. I think different states have some laws to protect clients, but for me, I vote for http://www.forsalebyowner.com with an mls listing. I was in control the entire time. It was more of a headache to schedule showings, but I saved more money and had the peace of mind of knowing we did everything to sell the house. It did sell at full price…over $20K more than the agent we interviewed suggest we list it for.
Funny, sounds like my agent. Wanting to hurry things up try to convince me to close a deal that I don’t want.
I am not really a Realtor. Just someone posing as one because I like to troll the internets.
I totally agree with this article. My agent tried all the aforementioned tricks to get us to raise our offers and speed us up. Personally, she’s a nice lady however, she does have to make a buck. I’m certainly glad that as a first time home buyer, I wasn’t sucked into the subtle manipulations. When our agents said, come on, raise your offer 1000k (and this is on a 429000 offer, I was enraged to say, shouldn’t you be saying that the seller! Don’t try and talk me into spending more, talk them into taking a realistic value. Their house was over valued to begin with. I think the whole real estate system is flawed. I’m in search now of a better way to do it. Perhaps BO. I also think it’s strange that houses are appraised after everyone agrees to a price. Why not just have an appraisal and get rid of the middlemen across the board. Why would you bid and guess the worth of something that is later going to be appraised anyway. It makes no sense.
I’m assuming you mean 100k, not 1000k (which is a million, by the way). Either way, you obviously had a bad agent. The thing is, you can’t judge an entire profession based on a few bad apples.
I don’t know how the real estate industry is run in other states than where I am, but here agents have legal fiduciary duties to their principal. Seller’s agents work to get the seller the most money possible, but a good agent wouldn’t advise their principal to post listings at a value high above market. This would just result in a listing sitting for months or years without so much as a single look from prospective buyers.
I think the real issue here is that the naysayers speaking of bad agents didn’t do THEIR due diligence in researching the agents they’d be negotiating huge sums of money through. This is why agents’ reputations are so important to their success-a bad agent will be known as such rather quickly.
If you want to sell by owner, go for it. But I can guarantee you won’t have the success a GOOD agent would in listing and selling your property. Not to mention your lack of access to the MLS, which shows properties for sale much more quickly. You could always go and try to sell it through an open listing with a broker, but good luck getting them to agree to something that’s obviously not in their best interest.
By the way, you don’t have to wait until the price is agreed upon to have an appraisal, so I’m not sure where you’re getting your “information”. You can pay yourself to have your property appraised, and use that as a selling price if you wish.
Its funny how the realtors respond in their defense as if they were personally attacked. I consider the author’s message excellent advice for anyone who is buying a house. If they happen to have a trustworthy agent then thats great, but its not always the case.
I bought a house that the seller stated was built in 1998, a few weeks ago I found out a high school buddy use to live in the house when he was younger. However, we graduated high school in 1997. So this wouldn’t add up. Trying to see if we would have a case against the seller for fraud. I think this would affect the house of the house and or property taxes as the house would be much older than what the seller sold the house for.
WARNING:
BEFORE you sign a Realtors Contract ( OR *any* contract they give you) CONTACT a Real Estate attorney. DO NOT SIGN until your attorney has looked over it & gives you the okay.
DO NOT let realtors recommend you an attorney, an inspector, a contractor/construction worker , an appraiser…. *Do you understand???*
GET YOUR OWN!
These realtors will sneak in broker’s fees & the Devil knows what else! and you’ll end up paying.
As you can see by their posts these people are not to be trifled with.
They are one nasty greedy little bunch of bad spellers among many other things & many of them made plenty of money with their lying speculations that they fed their ‘clients’ before the housing bubble explosion!
And still they are at it & will be it at it at full force .
Realtors are STARVING SHARKS . Makes no difference if you’re a seller or a buyer they smell your blood & go for the kill.
They are conniving, tricksters that will say & do anything to get your money.
I should know I’ve dealt with plenty of them.
And no lazy they’re not, but then, NOR is the devil!
Know this : speculation in the 17th century was a crime. Speculators were hanged. Today they run the state and the financial markets.
“What does it matter now if men believe or no?
What is to come will come. And soon you too will stand aside,
To murmur in pity that my words were true”
(Cassandra & Agamemnon by Aeschylus)
Courtesy of Yahoo! Finance:
http://finance.yahoo.com/education/real_estate/article/101456/10_Things_Your_Real_Estate_Broker_Wont_Tell_You
How about a listing realtor submitting my offer through my buyers realtor when there’s another bid being submitted at the same time from the listing realtor’s own client. My bid was written up with an escalator clause adding $1,000 above any other existing competing offer. But my bid lost….. Gee, I wonder why? Can you say coercion? Has anyone else had this happen to them?
I recently made an offer on a house using my own realty agent. At the time we wrote the offer, the listing agent, who when I met at the house the first time told me there hadn’t been any offers in the last several weeks the house had been listed, suddenly advised us that there would be another offer being submitted at the same time mine was. At first I figured this is just “realtor” talk. But to be safe, I wrote a reasonable cash offer with an escalator clause increasing my offer by $1,000 over any other existing competing offer. My offer was declined, the other offer accepted and the listing realtor refused to give us the details.
I kept an eye on the county recordings and learned 6 weeks later the house sold for $1,000 less than my offer.
The obvious reason would be coercion on the part of the listing realtor. They actually “bought” the seller into accepting the lower offer, which ultimately netted the seller slightly more than my offer, even though that offer was lower, and saving the listing realtor thousands of dollars in commission because it meant they wouldn’t have to split the commission 50/50.
What can I do about this? Is this considered unethical? Immoral? Illegal? all of the above? I thought so. But I complained to the state and they wouldn’t do anything about it.
What do you think? Is this a a normal thing for a listing realtor to do? If I had made this offer direct to the seller without the realtor being involved, the seller would have taken it. I was only trying to protect my own interest by getting a buyers agent to represent me. But it cost me the house.
I can see that you don’t like to pull your punches so ill cut right to it. The only thing article proves is that you are not real estate expert, let along someone whom should be giving real estate advice.
“Don’t bid too low or you will offend the sellers”: depending on currently local market conditions, a low offer is when a property is priced CORRECTLY (-+10% if fair market value) and you have a buyer whom has taken the advice from someone like you and comes in with an offer at 50% of fair market value; since they didn’t trust their agent and instead decided to play agent themselves and turned to stats from zillow and trullia. What you fail to understand is that the seller in this event does not get offended in the true sense of the word but rather acknowledges that you are not knowledgeable about current market conditions and rather than wasting their time trying to educate you, they choose to counter one of the other offers on the table and ignore yours. When you have a motivated seller this often leads to you losing out on the deal entirely because you are sitting there waiting for an acceptance or a counter while he/she is entertaining a serious offer. First hand I can tell you that I have had agents and buyers alike tell me after another offers gets accepted and theirs gets ignored that they would indeed have payed the asking price or higher if they would have gotten a counter or have been informed of their offer being rejected rather than just be ignored.
“You should get a bid in quickly before someone else puts a bid in”: This can be used to create false urgency however a REALTOR unlike an agent must be honest with you, therefore it is more than likely its not to get you to write that offer today, but rather to educate you on market conditions. 2009-2012 in my market which is south Florida, it is not uncommon for REO or foreclosure properties to get 30+ offers in 1 day. I have personally submitted offers on a property that I viewed with my Buyer at the same time another agent (form my company was showing to theirs). The agent went back to the office and submitted an offer, while my Buyer wants to grab lunch and while I prepare the paperwork and meet me after. I submitted an offer 1 hour after the other agent for about 5-6% higher price with the same cash terms and inspection periods. To my surprise the other agents offer got accepted before mine and the listing agent said it is because they seller had already been presented with the offer and signed off on it prior to viewing my offer. This goes to show you why REALTORS say, so that when they lose 5 or 6 offers and start to wonder why they still haven’t bought anything. Again this is a case by case scenarios that is relevant to current local market conditions.
“Are you willing to lose this house for $2,000?” In an event like this both parties should be asking their customers the same question. The listing agent should ask the seller if they are willing to lose a buyer for $2000 as well as the selling agent asking the buyer. This is a simple reality check, because sometimes being wrapped up the process of buying or selling often gets a party stuck with a number in their head that may not even make sense to them. Ultimately the decision does not the agents to make but they as professionals are responsible for making sure the parties are well informed and educated enough to make an informed decision. Sometimes buyers due to any number of reasons including being stubborn, or wanting to feel like they “won something” refuse to budge and walk away from a deal for 1000 or 2000. Yet at the same time the buyer fails to realize that the flight they just payed for and week they took off of work to evaluate a property, as well as all other misc charges like inspections will not be recouped! I have seen buyers stirred by emotions not think clearly and walk away for small sums of money only to realize after the fact that the decision in actuality has cost them 5x – 10x that amount in time and expenses they incurred and will re-incur during the inspection of the next property.
To make a long story short there will always be bad agents and good agents, bad REALTORS and good REALTORS just like all people are motivated by different things. Either way you look at it, any full time successful agent or REALTOR will have much more information and knowledge on a market then 99.9% of all buyers and sellers individually.
If anyone is having a hard time getting exceptional real estate service, try getting away from the big name companies that hire any agent with a license and get 30% of their profits and look at boutique shops how are looking to build a brand name. Make sure you have someone whom is not only knowledgeable but hungry when choosing an agent, because they are the ones that will go beyond your expectations and truly do everything in their power to help you get what you want.
Obviously this person doesn’t have a clue about real estate agents or he worked with one of the “bad apples”. We do make our money by selling homes, however, we are not just looking at the deal that is currently on the table. We are also looking at the fact that the customer might return in the future and also that “word of mouth” is the best advertising. I for one represent my clients as honestly as possible. I will not push them into a deal they will regret later just to make a buck.
Don’t bid too low…. an experienced agent has a pretty good idea of reasonable offer. When making an offer on a home, you want to make it as low as possible but in the window that the seller will make a counter offer rather than reject your offer.
Get a bid in quickly before someone else bids…. I have seen countless homes go under contract within hours of my clients having their ducks in a row. In this market, “move-in-ready” homes within a reasonable price range are few and far between. Therefore….The buyer should get a bid in before someone else does.
Are you willing to lose the house for $2000. This is a legitimate question but it is not always about what they are willing to pay but rather what that have the ability to pay. Someone buying a million dollar home will most likely have no problem with a couple extra thousand but a person making $12 an hour making an offer on a $25,000 property may not want to add that much debt or reduce their savings that much. A good realtor can help the buyer determine whether it is worth the extra money.
There are good, knowledgeable and honest agents out there. Don’t just settle for anybody.
Thank goodness other agents already responded to stick up for those of us who actually do abide by our state governing laws, ethics and just good sense. This article is assinine and proves the author is either an ignorant fool who lives under a rock, or he hated his last (past) Realtor(s). Sorry that you got a “bad” one. Sorry someone treated you wrong. Sorry real estate has soured your outlook. Many of us spend hours and hard earned money in class annually to learn and practice proper, legal buying, selling, marketing, negotiations, etc. As a consumer, don’t be lazy. Do your research to find out who your next Realtor will be. Get referrals. Find out what their experience and history of sales in the area you want to purchase (or sell in) is.
And for you self-righteous buyers who think money is everything…. Just because you bid what you “think” is a good price, just because you “think” you are being competitive, just because you “think” you are the highest bidder, proves you don’t know jack. Your closing date could have been less than stellar, your financing terms could have been weak, MAYBE there is a personal vendetta against you from the owners of the home (I’ve experience homeowner spying on showings). Bottom line, there are a myriad of reasons why YOU DIDN’T GET YOUR WAY. So cry and b*tch and moan and complain all you want, but know this: Most of the Realtors that I know are top of the line, cream of the crop. They go out of their way and sacrifice soccer games, dinner with their families, weekend trips to the beach and school plays to show you a house that you’ll probably underbid on. They don’t complain. They just work. And work. And work and work and work until they make a sale to pay their bills, feed their families and keep a roof over their heads. Remember, the whole 100% commission thing? Yeah, we have no other choice. Go back to sitting at your desk, making your salary and unless you decide you want to be an attorney and practice real estate on your own (good luck!), then you’ll always have to deal with Realtors. Do your research and find a good one. Or prepare to never buy or sell a property again. Ever. In your life. Maybe renting would be good for you. Yeah, you’re meant to be a renter.
@ Dennis:
What you described is illegal in the state I live in, and is called dual agency. A listing broker can only act as a transaction broker if it’s agreed upon in writing. My advice to you would be to contact the state’s DBPR and report the activity. They investigate EVERY claim, and quite thoroughly. You say you contacted the state but didn’t mention what department of the state government.
If you did in fact contact the DBPR and they didn’t follow through with your claim, then that means they did a preliminary probable cause investigation and found there wasn’t probable cause. You should keep in mind that sellers have a mind of their own and they’ll accept the offer they want to accept, no matter what. Also, legally, if the seller accepted the other offer even a moment before yours was presented it’s legally a done deal, and they can’t accept yours after the fact.
I agree with this article and those of you who don’t like it …tough. After many house sells and purchases we are amazed at the lack of negotiating that each realtor as shown. Why would a seller/buyer get offended at an offer? Why? It’s a free market folks. We had a realtor annoyed that we wouldn’t meet a sellers price by 3k. We stuck to our guns and won. He was sweating bullets for days though. It’s our money after all. And yes, for Michele, we have jobs too…maybe more hectic than yours…it’s debatable. Hard work equals money. That simple. Don’t expect to get handed sales on a platter while laying in bed. Buck up! Ps , we hired you. You work for us.
There will always be dissatisfied buyers and sellers whether its cars or appliances or electronic or houses. it has been my experience that these folks usually need to find someone else to blame for their misfortune. also in my experience I’ve never met any real estate agent who holds a gun to the head of a buyer or seller to force them to make a deal. certainly there are some agents who are not as fearless as others when negotiating but they often do so so as not to lose the house their clients want or to lose an offer that is close to their asking price. Agents are in a no-win situation. Even if they find a house the buyer likes and get the deal done, eventually the buyer will complain they paid to much. The same goes for sellers. so I have a very simple philosophy. I do the best I can for my clients. I’m honest, hard working and everything I do benefits them in the deal. I do this to get referrals. If there’re happy after the deal, they’ll refer me, if not, they won’t. And there’s nothing I can do about it. There will always be complainers, it’s just the way it is. Now if anyone would like to talk about the Buyers that tell you they aren’t working with another agent when they are, or make multiple offers on three properties with three different agents, or sellers who tell you they have a permit for a deck when they don’t, we can certainly talk about that.
Great discussion and points made by consumers and realtors alike. On a lighter note look at the email request this moron from Michigan made to me, sidenote he created a fake hot-mail email account and he gives his reasons for not giving out his name. He wants to stay in a house for free so he can test it out..
“THIS IS THE BUYER WRITING. ITS A BUYERS MARKET MEANING THE BUYER CAN CONTROL THE TERMS OR THE TESTING OF THE HOUSE.
A COMPARATIVE ANALSIS IS NOT ENOUGH . THERE HAS TO BE A PROFESSIONAL APPRAISSAL THAT WILL HAVE TO BE DISCLOSED TO AVOID
OVER PRICEING .
I DONT GIVE OUT MY PHONE NUMBER TO PEOPLE I DO NOT KNOW.
I WAS REFERRED BY SOME MICHIGAN FRIENDS TO TRY NAPLES FLORIDA . I CANT LOOK YET AND I AM IN MICHIGAN COMPLETED YOU HOUSE SURVEY ONLINE
I BELIEVE IN TRY BEFORE YOU BUY WITH THE SELLER PROVIDEING A WARRANTY ON HOUSE TO WARRANTY ROOF AND FOUNDATION.
WONDER IF THIS HOUSE IS STRONG ENOUGH FOR HURRICANE ?
GOOD DAY YOUR MICHIGAN BUYER ”
I should include the entire email string…but I think you guys get the picture. Enjoy!!!
Why is this that everybody knows about Real Estate and how to negotiate etc but the Real Estate Agent itself. Buyers, why do you even contact a Real Estate Agent if you dont need their advise and think they dont tell you the truth. I understand that there are a lot of shady Agents out there but that does not mean that speaks for all of them. Do yourself a favor and dont work with an agent if you dont believe in an agent. You can probably look up every home for sale yourself online anyway and after you have made 3 offer who were not accepted because you went in to low or got to emotional maybe you will just stop looking for a home to buy. Great, that way you stopped wasting everyones time. Just so everyone knows that 95% of every real estate sold in the United States is with an agent. I dont think this number would be that high if everyone follows the advise given in the report by Mike Holman.
Its comical how all the realtors speak up to try to defend their slimy tactics. The article is mainly true and let’s face it, realtor “professionals” have the ethics of a used car salesman. It’s all about the commissions and any realtor will do whatever it takes to make a commission. It’s sad that the general public thinks they are being protected by a realtor. I personally know 5 people who have successfully sued their realtors for various offenses, one of them cost the buyer over $25k. Think twice before using the “services” of a realtor!
I really have no idea how old this post is but oh well, I will chime up and say something.
Having been on both sides of the coin, an hourly worker, then management 27 yrs in a factory until free trade shut us down and moved our operations to Mexico. I understand the issue about how much it costs to sell a home.
Now, because there are so few jobs around I have my real estate license, Ontario in case your wondering. So now rather than get my paycheck every week as the non-realtors do, I have to pay every month to work, advertise, split my share to the office, run clients around, take phone calls seven days a week, become a counselor, teacher to those who do not understand, listen to people cry when their house doesn’t sell when they will not listen to the market (those I will not deal with anymore), discount brokerages, and those who feel as Michael said slimy tactics.
I have always been an honest and standup guy, who still believes in a handshake, will always go out of my way for a friend, and believes in providing exceptional service to those who work with me.
For those that have jobs and at the end of the day walk away with your paycheck and enjoy your weekend (I miss those days). I honestly wish you could spend six months in the life of commissioned sales to understand.
Oh for those that think its all great with commission let me show you something. $250,000 home at 5%, $12,500 simple! Oh, you have the listing, so you advertise it for 6 weeks until the sale.
Sold by another agent, they get half 2.5%, so you get $6750, less the thousand for advertising, then office splits, they take 40% you get around $2,700, less a transaction fee, the monthly office fees, less the $1000 advertising, less your gas, and expenses, plus you have to pay tax on this.
Damn I miss my job!
Good discussion raised. Let me share my thoughts: if you are new to the area, buying agent is definitely needed. Agent is kind of useless if you are buying new house or, like me, live in the area many years, know every its corner, know all infrastructure around, know which schools are good or bad, and know specific place you want to live in, and you are ready to wait. In the case agent is no more than a person who can unlock any door for you, that’s the only advantage of having it.
Does buyer pay commission? Sure, it does, though indirectly. The seller can sell house for the price less on the amount of commission it pays to agent. That’s what one selling agent told me when I directly asked her this question: It’s not official information and I do not have to disclosure it – she said, – but yes, you would have a chance to get house for less price in case you act on your own.
Remember that buying agent is interested in selling you house as soon as possible and for as high price as possible, because they are having fixed percentage from the deal.
I have dealings with approx 12 agents over the last decade. Every one of they lie, to get the listing and to make the sale. They flip flop, forgetting who they represent, and often fail to mention or explain dual agency role. WORKING WITH A REALTOR, this is another big joke, Clause C is a clause designed to keep people in limbo trapped with agents they are unhappy with. This is the most disgusting profession. Prostitutes have higher morals.
@Francis… Wow. I have to say there are a lot of agents that are as you describe. However, I know several good honest agents. I am also a licensed contractor, therefore, I notice details that even a good home inspector misses. I don’t keep the issues to myself, I prefer that the buyer know everything possible when buying a home. I would rather lose the deal by being honest and gain a loyal customer than lie and make a quick buck but lose the customer for life. We have 2 listing contracts that agents in this area use. One is the state contract and the other is from our local MLS. I will only use the MLS listing agreements because they have a clause allowing the seller to fire me at any time unless I have already found a buyer. I prefer it because if the seller decides to use a different agent, they will learn the difference and soon return. So to say that all agents are liars is just simply wrong. Maybe I will not make as much money as the greedy smooth talking salesman, but when their client base dries up, I will be there strong as ever and ready to show his/her former clients the right way to do business.
Hi
I read that article and the thing that comes to mind is who ever wrote is a hater and a generally negative person. You all have minds of your own, but why is this person at the top of a google list.
Of course some agents are out for themselves, but I’m not, yes I want to get the deal, but I want my client to be happy and comfortable otherwise I will feel uncomfortable too. It takes a lot of patience on our part and sometimes we do months of work for no pay check. There is a lot of anxiety over wondering if we are going to be able to pay our own bills. If this guy thinks we make too much, he should just try it.
Also client’s often lie to us about certain things, so that should be taken into consideration.
Sorry this writer lives such a negative life, I wonder when the last time was that he/she smiled or had fun!
Tell me if this is ok.
– My ex-agent requested that I sign an exclusive buyer-agent agreement, but I said I will sign an exclusive property specific agreement based on each property that was shown to me
– She insists that I use a loan officer within her same office building because it will be “easy” to get update on the loan process even though it has a higher APR. FYI – I have a 809 credit score, I can get a loan anywhere
– She keep telling me so and so property will sell quickly and it’s still in the market after 120days. And yes, she absolutely think it’s an awesome deal and I should put in as close to asking price as possible even though I disagreed
– She refused to schedule a showing for a house I requested for because she says it’s just not for me and tell me it’s more fitting for her other client
– I put an offer on an open house I saw on my own because she is often not available or take days to reply to email, and later found out that she told the seller’s agent my business… things that I thought is confidential
Thank god we part ways. How hard is it anyways to get a real estate license?
In VA – you need to complete 60 hours of pre-license education and then take the exam. After that, you’ll get access to the holy grail of all the tools. Yah – I think I’ll do that.
I’ve seen both sides of this. My partner is a real estate agent here in Milwaukee, so I do have a very good understanding of the market and the profession. My partner and his team move a lot of homes, with respect, fairness, and integrity. But there is a power attitude here in Milwaukee where agents think they are out curing cancer. Self important and pompous. With 5000+ agents in the area, they should be a little more humble, they are easier replaced than underwear.
I am in the market to buy a home now, and in dealing with some listing agents, we have had really bad luck and met some scumbags. We had an offer contract die this morning because the agent didn’t return the accepted offer, even though they spoke yesterday morning and both parties were agreeable to the terms. Before the offer, he didn’t review the condition report and because it was incorrectly filled out, we had to postpone making an offer for 3 days until he finally remembered to send the new report over. Now, I don’t want to re-submit an offer and deal with this a$$hat through the entire purchase process if he can’t even get an offer contract or condition report back to us in a timely manner. So the seller is losing a buyer because of his self important agent. I feel bad for them because they have been trying to sell the home for a long time.
Realtors are very similar to used car salesmen in that they will say and do whatever is necessary to get the deal done. As the article says, people place so much trust in their realtor when in reality the realtor has their interests in mind only. Most will bend any rule they need to in order to make the commission. Sure, there are a few good ones out there but when it’s solely based on commission it can get ugly really fast. You wouldn’t trust a snake oil salesmen so why would you trust a realtor?
I recently spoke to a real estate agent that also worked as a collection officer at a collection agency. During the day he was collecting debt and in the evening he was showing houses. Apparently, there is no regulation against real estate agents working as collection officers.
Michael,
Your a moron. You have no idea what you are talking about. Will the crazy people please sit down, please sit down.
I have been in this business and I will tell you I have seen more realtors who flat out get taken over by the public and they simply smile and say that is ok I still love doing what I do. Being a realtor is a tough job and there is so much work going on behind the scenes that no one understands until you are in the business.
Also incase noone knows realtors pay lots of money to lobbyist so that the government does not increase fees or create taxes on the home owners. Don’t think the government doesnt know that the biggest expense to most people is there home and they are always trying to add a tax or fee to your home. Realtors spend a huge amount of money to fight the government so that it is easier for the consumer to own a home.
All this and all anyone on here can say is that realtors are like used car salesmen.
Great discussion. But Derek (post 321), it’s rude to call someone a moron. Especially when you wrote this:
“Your [sic] a moron. …they simply smile and say that is ok [sic] … Also incase [sic] noone [sic] knows [sic] realtors pay lots of money to lobbyist [sic] so that the government does not increase fees or create taxes on the home owners [sic]. Don’t think the government doesnt [sic] know that the biggest expense to most people is there [sic] home and they are always trying to add a tax or fee to your home.”
Yoiks.
Real estate agents are people like you and me–good folks. But too many are unethical.
And how many is too many? I can say that every single one of the 8 realtors we have dealt with in the last 12 years in Ontario and Quebec (4 of which we contracted) have lied, misrepresented, or have committed or indicated they were going to commit, actions that are not only prohibited by their boards, but some by law as well. Some were small points, some were big.
I told one agent point blank I was going to sue if he didn’t adhere to the terms of our contract. He sheepishly ran away. And is now out of business.
Lessons learned here, folks? Buy and sell privately. Never, ever trust a real estate agent. The only professional truly required is a lawyer. If you can handle a day job, raise kids, or drive a car, you have the faculties, common sense, and time to sell or buy a house yourself.
@Derek, didn’t mean to offend, I was simply stating that the current commission structure gives realtors an incentive to do anything to make a sale. I know a few agents that have had to pay off former clients from suing them because of negligence, misleading information, etc. They have a fund that they pay into but the general public doesn’t know about it. If by ‘behind the scenes’ work you’re referring to simple photocopying, faxing, emailing and chatting on the phone – and junior high student can accomplish that. But people think they need a realtor “professional”. Unfortunately if the students (future realtors) get marks for simply showing up to the classes, you can hardly call that a “professional”
Hi,
We are looking at a buying a new house, and have not had great experience with agents in the past. We are currently working out our financing so that we can make an offer when we find the right house.. everything is on track just taking longer than we thought. In the meantime we still want to be looking at houses so we can get a better idea of areas and what exactly we want. Well, in talking to our agent we found out that he had spoken to our loan officer and got information about our loan process etc. We never authorized that our information be shared. I guess our question is, is this a common practice, or is there a line that has been crossed? We do not like our personal business being discussed without our knowledge, I don’t think anyone would.
I just got fired by my second buyer’s agent. I have been thinking of buying a house for about five years. I had an agent five years ago who showed me quite a few houses..maybe 20 and I declined each for various reasons. I reentered the market a year or so ago. I worked with a buyer’s agent last year and almost bought a house..actually put up earnest money. The seller declined my scheduled showing with my sister and me and my agent. I said she could not reschedule and to cancel my offer. I had a hell of a time getting my money back. I waited a year and just started looking again, with the same agent. He put me with his “partner”. We looked at two houses one day, and scheduled to look at another last week. She said she had a meeting with another client and could not meet me at the house. I went alone. She did go there and told me a little about it. When I got there, the grass was half a foot high, the house in sad shape. I figured I would look past that. I went in the utility rooms and saw termite damage. I told her I was not interested. I found another house and we did go look at it. I noticed paint bubbling on a door frame…and shoddy plaster/sheetrock work. There were also cracks you could put a finger in in the walls and ceilings. She inquired and did find the house did have a fire in the hallway 40 years ago. (HER office LISTED the property and did not know about its history until they asked. I find it hard to believe they would not inquire on the history of the house when they listed it.) I did not want to buy a house with fire history. I told her I was not sure I was interested. The next day, my former agent called me at work and said, “Sounds like we found the perfect house for you!” Well, I already told her I was not interested….so she has him call and try to “encourage” me to buy. He said the house had fire damage 40 years ago and implied I should not let that stop me from buying it. Today, she said she needed to meet with me. She said the house was fine and I had too high expectations for the price range I am in, and that she could not work with me any longer. This is MY money, my future home, and my investment. This is just a sale and commission for them. I am disgusted at the whole process. I thought they were there to represent ME. It is not like I looked at 100 houses and turned them all down. I even usually did a drive-by before contacting them. How do I know I can trust any buyer’s agent. All of the ones (four) have seemed to think I should offer full price, and seems to belittle any comments I have about the houses. No house is perfect, no neighborhood is perfect, and no house will need no repairs or changes. It is MY decision as to what I am willing to live with, not theirs.
I found this site after I had made a second offer on the house, and God I wish I had found it sooner. I regret having signed up with my realtor and don’t trust her a bit now. I wish I had never been so honest and naïve with her, but oh well, too late for me now.
But thanks for your advise.
My buyer’s agent was advocating for the seller’s interest and giving a series of misleading statements/lies. What the agent thinking that I would not figure out what the agent was up to? If honesty were introduced in the real state industry, it would collapse.
I am sorry that you find real estate agents “useless.” I wonder though how the real estate industry will look like 10 years from now if we were to delete real estate agents in the picture. I think the scenario will be unhappy.
As a Realtor I will not say that there are no unethical agents – I’ve worked with plenty of them. But I’ve also worked with some fantastic agents that do not fit your stereotype. You absolutely have to do your research before choosing an agent, but if you go into the process expecting them to be against you and you are skeptical about everything they say, then you will not have a great experience. For instance, as somebody who has personally submitted a lowball offer only to have the sellers take offense and ignore my offer and later accept an offer lower than what I was willing to actually pay I will tell you first hand that this is a real thing. For every one of these stories about a nightmare agent there are 20 more about great ones. Do your homework and ask for referrals. The internet is flooded with reviews of everything from banana slicers to neurosurgeons. Find an agent with great reviews and do your research online first to know what you want in a house and what you can afford (and make sure your budget lines up with your requirements). There is a saying that whether you think you can or you think you can’t you’re right. That can be applied to many aspects in life, such as whether you think you will have a great agent or a terrible one you’re right.