Is your realtor on your side? - Make sure your agent gets you the best house at the best price.

I came across an article By Stephen Gandel, Money Magazine senior writer, (senior in high school perhaps... judging by his lack of insight) on CNN Money.com titled "How to make your Realtor work for you". Naturally my curiosity was peaked.

          He begins by making, in my opinion, a rather brash generalization about Realtors. "When you're shopping for a house, it might appear that the friendly broker who listens to your needs, drives you around to showings and answers your questions is unflaggingly devoted to you. In reality, however, most agents work for sellers. Now, even more so. These days, see, agents representing buyers are increasingly being showered with extra incentives that may cause them to push certain houses." Gandel goes on to assert that these "extra incentives" are causing Realtors to show the houses in their own interest, rather than the interest of their clients. He then has the audacity to offer the following suggestions to consumers to ensure that homes that they are shown are what's best for them, not their broker.

Go it alone 

Finding a house yourself, rather than relying on a broker, is easier than ever. Realtor.com has extensive listings, and you can call listing agents directly to set up appointments.

Once you decide to buy, ask for 3 percent off your final price. Listing agents often try to collect the full 6 percent if a buyer is broker-less.

But you did the work; you deserve the rebate.

Set the fee  

If you'd rather use a broker, have him put in writing what percentage he'll get paid and guarantee that it will be the same for every house.

Tom Early, spokesman for the National Association of Exclusive Buyer Agents, says to sign a contract before looking at houses. Stipulate that any bonus being paid by a seller be used to pay closing costs.

Put it in dollars  

Eliminate all conflicts by getting your agent to agree to a set dollar fee rather than a percentage of the sale. That way your broker will have no incentive to show you overpriced homes or discourage you from negotiating the price down, since she'll get paid the same either way.

Well, Mr. Gandel, unfortunately you have made too many broad generalizations with out enough substantiation, something which is typically a no-no for a journalist for a respected publication. Are there unethical Real Estate Agents/ Brokers? Yes, there are. There are also unethical Mortgage Brokers who charge exorbitant fees without justification. There are unethical Physicians who will prescribe certain brands of medication to get kickbacks from pharmaceutical companies. There are unethical Attorneys who take cases that they know that they can't win in order to rack up billable hours. There are unethical Mechanics who recommend repairs that may not be necessary as a means of increasing profits. What do all of these businesses have in common? They are businesses where a reputation of integrity is (or at least should be) very important. While there are always a few bad apples in every bunch, there are still countless professionals who possess a high degree of ethics which govern their business practices. I guess I should also note that there are also unethical JOURNALISTS that do everything from invading the privacy of individuals and families to publishing inconclusive, inaccurate articles that deceive, ill-inform and misadvise their readers due to a lack of research prior to publication. Does this mean that I should condemn all journalists and/or Money Magazine for your mistake(s) Mr. Gandel?

The following are the fundamental problems with Mr. Gandel's suggestions.

 Go it alone  

There are several problems here. First, Buyers Agents are not just "lock-box" openers. They are professional representatives that work in the BUYERS favor. If a buyer makes an appointment with the listing agent directly, while this is acceptable, the buyer should be advised that the agent is working for the SELLER. This means that the buyers are not represented in the transaction and therefore assume all responsibility for issues that arise. This serious problem if the buyers are not home-savvy. It is not the Sellers Agent's responsibility to inform you that the roof is not as new as you may like or to remind you that the sewer line has not been replaced. They are there to show you the positive features of the home. That's why it is important for the buyer to have an Agent. A good Realtor can spot many things that can indicate a problem with a given property; many of which may not be observed by the lay person. It pays to put that knowledge and experience to work for you.

Secondly, the fact that the buyer doesn't have an agent doesn't automatically entitle them to the commission or a discount on their price. That determination is dependent on the listing contract and/ or the seller.

Set the fee  

Buyers can offer a commission to the buyer's agent and ask that the buyer's agent decline the commission offered by the listing agent, but they can't control the compensation of the buyer's agent when they aren't under contract or are offering no compensation. If the agent works for the seller, he has fiduciary duty to the seller and has no obligation to help the buyer buy the home for less.

Put it in dollars

Another bad point. Assuming that the buyer is looking at homes priced between 300k and 350k and buyer's agent agrees to be paid $10,000 regardless of the home purchased. Now, suppose the buyer is between two properties, one of which will pay the Agent $8,900 the other of which will pay the buyer $9,600. They are right back in the same situation they are were trying so hard to avoid. Also, probably a better point is that if a set fee established and the generated commissions do not cover it, they buyer would be responsible to pay the difference, in this case, up to $1,100.

The bottom line is that you have to find an agent that you can trust. If you don't know one, ask around. Ask your friends and neighbors who they used and if they were satisfied. If you don't feel that an agent honestly does have your best interest at heart then you probably shouldn't be using them in the first place. Speaking for myself, I just don't have the time to sit down and figure out how much I will get paid from house to house. If I find my clients the best house for them and they are happy, I will make far more money in the long run then I would from stirring them into the wrong property today.