Real estate agents are a funny breed of "professionals". If you've ever dealt with an agent, you've no doubt seen/heard the slew of catch-phrases designed to get your business. I wish I had a dollar for every time I saw a business card with the phrase "I'm never to busy for your referrals!" or "Your agent for life!". Ugh. Who wants to be committed to a real estate agent for life? My wife doesn't even want that! The fact is that the real estate industry is feast or famine for agents. One deal can be worth $10,000 or more, but it takes months to get it done, and unless it closes, the agent doesn't get paid. This creates a ton of (cashflow) issues that agents do their absolute best to hide from the public, lest their clients realize they're one missed deal from the poorhouse. The nature of the business means some agents are looking for as many ways to make money as possible to help fill the gaps in their checkbook, and some are even willing to do it at their clients expense. Here's a few ways agents do it:
- "My agent said not to look at short sales because they never close" - Of course your agent said that, but it's not the whole truth. Short sales are harder to close, and they take more time than a traditional transaction, but they are also an excellent chance to make a big time deal. Short sales can be negotiated well below market value, but the agent (and buyer) may be waiting 4-6 months before the deal closes. If your agent is looking to collect their paycheck a little bit faster, you may have only heard part of the story.
- "My agent keeps skipping homes I really want to see" - Buyers are surprised when a home they really like is unavailable for showings. Sometimes the owner has temporarily frozen appointments, but it could be possible that your agent doesn't have the tools of the trade. Some electronic lockboxes require a special kind of key that agents have to pay for every year. If your agent can't afford the bill, they're unable to show their clients all of the homes on the market.
- "By the time we have an appointment made to view a home, it's already under contract" - There's 2 possible problems here. Either A: (Your agent is too busy) or B: (Your agent works part time). Undervalued properties don't stay on the market for long, so if you're agent is unable to get you out to see them quickly, find a new agent.
- "My agent is charging an administrative fee" - While charging administrative fees is not unheard of in this day and age, let's think about what your agent is saying. If you're buying a $300,000 home, your agent is making somewhere between $7,000-$9,000. Do you really think the agent needs to charge you an additional $500 on top? Admin fees are generally bogus because they're not tied to a specific service. Make the agent eat the fee, or find a new agent.
- "My agent doesn't want to show me foreclosures" - Here's a dirty little secret about the real estate industry: Some agents won't show certain homes because the commission split isn't high enough. It's unethical to do so, it's a failure to their clients interests, and it happens more than buyers realize. If there's a house you want to see and your agent is hesitant to show it, find out why. Some foreclosures have low buyer agent commissions, and if your agent is more concerned about their bottom line than yours, you may be missing out on houses just because your agent wants to pocket extra cash.
The problem that pervades this industry is that some agents forget that this is a serviced-based business. When agents put their own interests ahead of their clients, you may not even realize that you've been duped. (photo courtesy of hans.gerwitz via flickr cc)
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