The first time I bought a home, I didn’t use a realtor’s services because I wasn’t convinced that they brought added value to the table. Granted, as a buyer, the realtor walks you through each prospective home, and provides detailed information about the home, current market conditions, and comparable sales statistics in particular neighborhoods. But realtors don’t have a lock on this kind of information; it’s widely available on a host of different websites found through a simple Google search.
As for the house walk through, I assume they mean well but I find realtors to be more nuisance than helpful. I mean, as soon as we walk in the front door, they start selling, pointing out what they see as appealing features, staying silent about the negative aspects, and offering a fix for any troubling issue mentioned. I find myself having to focus not only on inspecting the house but also trying to block out incessant sales pitches.
Most importantly, I was led to believe that ‘your’ realtor is an objective advisor, on your side, giving to you the good, bad and ugly about your potential new home, protecting you from being sucked into a bad deal, and negotiating the lowest price for you.
Just like people ‘lawyer up’ in a lawsuit, when buying a home, you ‘realtor up’ because it’s you and your realtor pitted against the seller and their realtor.
But it’s the rare realtor who’s looking out solely for your best interest. Fact is, realtors are in the sales racket. They get paid only when deals are struck. And as the person bringing a buyer to the table, their role is one of inherent conflict: buyers realtor exists to encourage buyer to buy! With the ultimate goal being consummation, you’re better off doing your own diligence if you don’t want to get f —-d.
But … ‘MY’ Agent Is Really Good!
Ask your friends, they’ll recommend a realtor. ‘Mine was so good, you have to use her.’ Or, ‘Listen, this guy’s cool, he just lets you be and doesn’t push you to buy. You’d be a fool not to use him.’
I don’t get it. Why is it common for people to get attached to their realtor? Well, here’s my guess: it’s human nature to trust. We want to trust. We want people with whom we have relations to be trustworthy. So, we project trust onto the realtor, the person who has smilingly told us that they will take care of us, they will ensure that we get the home we’re looking for. And why shouldn’t we trust someone who holds them self out as an expert when it comes to helping folks buy and sell homes?
Now, let me be clear before continuing: I’m not anti-realtor. Just like any other profession, some realtors are ‘good’ people, some not. My point rather is to shine a light on realtors, to encourage you to recognize the bluster, the snow jobs, and see when realtors are not on your side, are not acting in your best interest.
Don’t Worry, Be Happy
First off, the intent of this heading was not to plant the song in your head. And if it’s now going round and round, the trick to getting rid of it is to think of another song. But I digress.
Realtors love you when you first meet. Visibly excited, they ask questions about you and what you’re looking for in a home. They want to be your pal, ingratiate themselves to you. And they tell you how much experience they have, and whatever area of town you’re searching, they know that area inside out. In other words, realtors know that in order to sell you a house, they first have to sell themselves to you.
The realtors goal is to have you believe that their interests are aligned with yours; that they want you to buy the ‘right’ house just as much as you want to buy the house that perfectly fits your needs and wants. So in these early days, everyone’s happy and motivated to get to work.
Grinding Out The Search
As time marches on, after you have viewed five, ten, twenty or more houses, the realtor is wearing down, calculating whether or not their effort will be financially rewarded, calculating whether or not to cut and run. But before doing so, the realtor will start banging the drum for you, buyer, to broaden your search, spend more money, and/or lower your expectations. Basically, whatever it takes to convince you to stop looking and get on with buying so they can get paid.
Lets say you find it; the house you want to make your home. And now you’re ready to make an offer. Naturally, you defer to the realtor, the expert who has been through the process countless times. That would be a mistake. BIG MISTAKE.
Because the realtor can smell the deal closing at this point, their goal is keep you moving forward, toward signing on the dotted line. So, what happens? First, realtor will try dissuading you from negotiating. Depending on the market, you’ll be encouraged to either offer the asking price or above asking to stack your odds of sealing the deal, and avoiding any drawn out negotiations that may or may not end with a handshake.
Here’s the thing, the list price is made up. Not exactly out of thin air, but it’s the sellers agents guess as to how much someone may pay for the property. Not how much it’s worth, but how much the seller may get. If you’ve done your homework, then you have an idea as to the property’s value and this should be your opening bid.
Low Ball. If you offer less than list price, your realtor may come back with, ‘oh, if you do that the seller may take offence and not want to strike a deal with you.’ This is baloney. Buying and Selling property is a business transaction. Seller always retains the option to say no to any offer. Worst case scenario, seller says no. Then you decide whether to increase your offer.
False Conditions. A sad, common tactic is for the realtor to manufacture a false sense of urgency. You’re told that if you want a shot at the house, it’s best to draw the offer immediately because it’s a hot property and other bids no doubt will be pouring in anytime now.
Listen, this is a massive purchase for you. Don’t rush the process. Ever. Think it over, discuss the pros and cons, and only when you feel ready, then you make an offer. If you feel the slightest bit of pressure from the realtor, walk away from them, saying you’ll call when you’re ready. And in the interim, if another offer is accepted, so be it. The house wasn’t for you.
Along the trail of my first home buying experience, an offer was placed on a property that I didn’t end up buying. The offer came in slightly above list price because it was a strong sellers market and I thought the home was undervalued. The realtor I used encouraged me to offer ‘as much as I possibly can.’
Four hours later, realtor calls me. Tells me ‘You’re not going to believe this. I’ve never seen this in all my years. Someone else bid the exact same price as you. So, I think you should raise your offer.’ Oh? By how much, I ask. Again, realtor trolls out the same line, ‘as much as you can possibly afford.’
At that point, I walked away. Why? Because realtor was anything but on my side. Because who knows if there even was another offer on the table? Maybe seller’s realtor implied there was another offer, and my realtor was all too happy to read between the lines and come back to me with an urgent request to immediately increase my price. If realtor was actually on my side, they would have provided fair guidance, told me to think about it, suggested parameters for a sweetened bid, rather than hoping I would up the ante by a silly amount.
This happens. Lots. Because buyers realtor has two goals in mind: get the deal done as quick as possible, and get the highest price possible. So really, you’re negotiating against your realtor! And in any negotiation, always be willing to walk away; this is your power.
Looking Out For Number 1
In the house buying game, you are Number 1. And you’re better off looking out for yourself, educating your self about how realtors operate, and learning about the local real estate market before and during your search.
Do all realtors operate as I’ve described in this post? No, of course not. But enough do that I thought it worthwhile to share my thoughts and experience. That said, rely on your realtor to show you houses and maybe get you front of the line access to new listings. Nothing more.
As for making a decision on what property to buy and negotiating, cut the realtor out of the picture and do this on your own. Or, if you’re not comfortable on your own, hire an independent, objective third party, such as an attorney, to fill that role. Sure, it will cost you a few bucks. But the cost will be so much less than what you would have paid by relying on someone who may be working against your best interest.