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Are You Just In It For The Money?

I was having a discussion with my father (RE/Max, Missoula, MT) last night about the agent’s responsibility to ensure their buyer’s financial well being. As Steve Dawson commented on my last post (How to Negotiate and WIN), agents are bound by ethics to the ‘fiduciary responsibilities’ of a client. With that in mind, I proposed this question to my father: Have you ever, or would you in the future, put your client in a house you know will be financially overwhelming for them in the long run? He replied that he had not and never will. To him, it is less about the sale (money) and more about finding the home where his clients can be financially secure and happy with their purchase.

The Code of Ethics charges realtors to do the best they can for their client and their client’s well being. While it does not out rightly state that the responsibility of the agent in the case of financial predicament is to deter a buyer from their preferred home, it’s my thinking that even if it costs a sale you should dissuade your client from making a careless purchase.

What do you think? Have you ever knowingly placed a client in a home they couldn’t afford just to make a sale? Or do you run the risk of your deals falling through by steering the buyer towards something below their expectations?

Posted by Austin Smith - Goomzee.com on 11/11/2008 04:53 PM

Comments (13)

Code of Ethics in the Sales Strategies / Tactics Channel

agent responsibilities, agent duties, code of ethics

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13 Comments on Are You Just In It For The Money?

NOV

2008

Great post. Never have and never will. But I know a few who would and have done exactly that.

You should always do the ethical and responsible thing for your clients, however there are times that you do not know all of your clients financials as I rely on trusted lenders to really look at what the buyer is getting in to. That is why I use lenders with the same ethics I have.

Your father is a stand up guy! Lead by his example! Although the real estate industry has been slow, think about the past. Look back to see that it has and always been cyclical, we have our ups & down. Do not ever put your purse or billfold before your clients! Live by the REALTOR code of ethics. Go with your clients to see the lender! know what they are getting into! Educate those that need it and even those that think they do not! We are the professionals. We are REALTORS and we are who our clients depend on for professional advise.

Thanks for sharing! I never have and like to hope I never will. I want clients for life, so if I steer them wrong just to get a check, it's going to come back and bite me in the future. Plus, I love helping clients find the home of their dreams and want to share their joy not their stress when they realize they are in over their heads - I want them happy with me and referring others, not angry. Great post!

I always work at doing the right thing for my client. But, the reality is, that the final choice is up to the client. I can advise up the ying yang, but if the buyer really wants a specific house and is bound and determined to get it, then it is my responsibility to help them get it. ~ Evelyn

Austin, I never have and never will. My job is to help my buyers get the best house that meets their needs at terms and a monthly payment that they are comfortable with.

NOV

2008

Thanks for all the great feedback!!

Kim brings up a good point about lenders. The proper lender will screen most unqualified buyers, and it's important to use an ethical and trustworthy one.

Evelyn, while it is true that the final choice is up to the buyer, remember that the buyer hired you for a reason. They are investing in you because they recognize that you posess greater knowledge of the industry and the situation they are about to purchase their way into. If you take the time to foster a relationship with each client and gain their trust, your opinion will have that much more weight in their final deision.

You're right, Austin, but I agree with Evelyn. You can advise all you want, but in the end they will be making the decision they think is right for them. Let's turn that around. If you were going to list a house that really needed to be staged, but the owner refused, would you list it knowing that they were going to get less for it than if they had taken your advice?

Heather - Yes, i would list that house. Wouldn't you? You would be doing the customer a disservice by not encouraging them to stage their home, but in the event they don't heed your advice, why waste the opportunity for a sale? Plenty of unstaged homes get sold, albeit at a lesser value. So, while you might not be getting as large a commission as you would if the home had been staged, any commission is better than no commission, right? In the event of an un-staged sale, you'll have another case with which to back-up your advice to your next client. And hopefully after the seller loses $20,000 on their house they will be more inclined to listen to an agent's advice.

Which is exactly my point. We can't make decisions for our buyers, and most buyers will just go find another agent to sell them the house you refuse to. Fortunately, I haven't been faced with this situation. Yet.

Heather - ...and I hope you never will. Thanks for the great comment!

JUL

I don't think I am qualified to determine what people can and can not afford. If a home seemed like a big ticket item for a customer compared to my perception of their financial means, I might take it up with the lender first. and then ask the customers if they are very compfortable with what they will be taking on financially.

JUL

An - Thank you for commenting! True, while you may not be in the best position to determine what your client can afford, you are right in that you fall back on consulting the lender. If your client is approved for XX amount, then as long as they are comfortable with paying the total closing amount get ready to write the buy-sell.

I see your point though, and it becomes a tricky situation when your buyer pushes for a house that is obviously well out of his/her means. There is no explanation for this other than perhaps a lack of financial savvy on the part of the buyer. The ethics question comes into play when you as the agent find yourself in a situation where you can obviously see the buyer getting in over his/her head. Do you keep your lips sealed for fear of not being qualified? Or do you do everything within your power and limitations as a real estate agent to steer these financially UN-responsible clients into a home they can afford?

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