10 things your real-estate broker won't say
The person you hired to help you buy or sell a home may be holding back. Here are a few things you should know so you get the best deal — and the best service.
1. "Your open house is really just a networking party for me."
Hire a real-estate broker to sell your home, and one of the first things he'll likely suggest is hosting an open house so that potential buyers can casually check out your property on a weekend afternoon. But while open houses are promoted as a great way of finding a buyer, a National Association of Realtors study found that their success rate is a mere 2 to 4 percent.
No matter. Holding an open house serves another important purpose — for the broker. "It gives him a database of clients," says Sean McNeill, an independent real-estate broker based in New York City who says that he doesn't like open houses, preferring to match clients with appropriate buyers. "At open houses, you get all kinds of people walking in. Some are (trying) to see how much they should sell their own places for; others just want to get a look at what's out there." All are perfect pickings for a broker looking to increase his roster of buyers and sellers. "Think about it," McNeill says. "The broker is devoting a couple hours of a weekend. He won't do that unless it helps him in a big way." But it doesn't necessarily mean that a seller should forgo an open house altogether — "It's still a real good way to showcase your house," McNeill says.
2. "My fees are negotiable."
Brokers like to make it sound as if their fees are engraved in stone, but that's rarely the case. During the housing bubble, for example, as the number of brokers sharply increased, so did the competition for listings. One broker says he lowered his fee by a full percentage point just to give himself an edge. But even in the wake of the recent crash, you have a good chance of negotiating a better deal; that same surplus of brokers is still out there competing for even fewer listings, giving you something of a leg up.
The broker we spoke with, who asked not to be named, says that sellers should always shop around for better terms and has some suggestions for the best conditions to induce brokers to lower their fees: "If somebody's willing to commit to me for selling one place and buying another," or "If you're in a particularly desirable neighborhood with a house that will bring a lot of traffic" for an open house. And with a lot of smaller brokers, he says, "all you need to do is ask and they'll lower the commission."
Bing: Search & decide
3. "Think you've had no offers? Actually, there have been several."
Legally, the broker you hire to sell your home is obligated to tell you about all offers that come in. In reality, some do not. Perhaps he thinks the offer is insultingly low for you, but more likely, "the broker thinks it's too low for his own purposes," McNeill says. "He wants to hold out for a bigger commission." Another possibility is that there's an outside broker (or "co-broker") circling your house, and the primary broker is waiting for one of his own clients to make an offer so he can keep the full 6 percent to himself.
"You must be clear with your broker that you want to be informed of all offers," McNeill says. "Otherwise, you may be leaving him to make decisions that you should be making." Check the listing agreement drawn up when you hire the broker; if the promise to disclose all offers isn't listed explicitly, insist that it be added.
4. "I'm not obligated to keep my mouth shut for you."
You spot your dream house as you're driving through a neighborhood and call the broker listed on the "for sale" sign. That's how a lot of buyers stumble on a broker — who, in turn, happily shows you other houses, asking about your needs, laughing at your jokes. It's easy to get loose-lipped and forget whom you're dealing with: someone else's agent. "Legally, brokers are obligated to provide their sellers with any information that can help them get the best prices for their homes," says Stephen Israel, president of Buyer's Edge, a Bethesda, Md.-based company that represents homebuyers. "If you tell the broker that you're willing to pay $500,000 but want to offer $450,000, they'll pass that on to the seller. They have to."
Also, some brokerage companies encourage prospective buyers to get pre-approved for loans. While that can make a buyer more attractive to a lender, it also tells a broker whether a buyer can afford a $600,000 house when he's trying to haggle on a $400,000 property. "When somebody asks for (a pre-approval), find out who they're representing," says Israel, acknowledging that such details can short-circuit your negotiating leverage. "If they represent a seller — or someone in their office does — they shouldn't have it. The broker may tell you she will be impartial, but how can she be?"
The bottom line: You need to hire your own broker. "The only safe way to go about it is to have an agent who represents you," Israel says.
5. "Sometimes I forget whose side I'm on."
The past 15 years have seen the proliferation of buyer brokers, agents who are supposed to work strictly in the buyer's interest, helping him get a fair price on a home and avoid pitfalls along the way. Unfortunately, things don't always unfold so nicely. While buyers may think they're getting a broker who isn't commission-hungry, many buyer agents are just that: They usually get about 3 percent, the same amount any broker typically earns when he gets involved with another agent's listing. "Buyer brokers are sometimes too focused on closing the sale and getting that commission," says Max Gordon, an Overland Park, Kan.-based real-estate broker and attorney, so it's often in their best interest to see you pay as high a price as possible.
Even worse, some brokers who call themselves buyer advocates are actually working for companies that also represent sellers. "Brokerages offer bonuses to buyer agents if they sell an in-house listing," Israel says. A good way to get a broker who has no such conflicts of interest: the National Association of Exclusive Buyer Agents. Its Web site (www.naeba.com) can help you find a buyer agent near you who pledges to help you get the best deal possible and has no ties to sellers' agents; many even work on a fee structure rather than on commission.
How about ten things drive-by journalists won't tell you?
1) We did absolutely no research whatsoever and didn't even talk to a reputable professional.
2) We write the most controversial stuff to get ratings and ad revenue regardless of the truth.
3) [What's the point?]
As we all know choosing the wrong real estate agent can be a painful experience whether you are a residential or commercial property buyer or a seller.
If anyone has had a great experience with an agent please share it at Hallmark Abstract Service by leaving a comment at the article 'How do you choose a real estate agent' here: http://www.hallmarkabstractllc.com/how-would-you-rate-your-real-estate-broker/.
Include exactly how the agent did the job well and a link to the agents website.
Mike Haltman, President
Hallmark Abstract Service
I'm a real estate agent and I would never engage in any deceptive practices. Guess what? Not only do I have ethical problems with doing that, but I could lose my license and be fined A LOT of money. I'm positive that the vast majority of other real estate agents would also never behave in the ways detailed in this article.
Real estate agents are people, and as in every single profession, you're going to have a handful of dishonest people. But to make it seem that most RE agents are, is erroneous and disgustingly untrue.
Yes, RE agents do a ton of work to sell your house, and their commission usually pays for itself and over.
If you ever have any issues with your RE agent, bring it up to them. If it doesn't get better, call their brokerage office, and speak to the manager. If that doesn't help, contact your state's occupational and professional department.
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