Tough Questions for Agents
Realty agents like to say that they only win when their clients do. But is that really true?
Agents’ claims and business practices are a matter of debate even within the industry. Here are some common arguments agents use to justify their fees – and the other side of the coin.
Is the agent using your house to get buyers for other houses?
Online ads sell houses, according to the National Association of Realtors’ 2011 Profile of Home Buyers and Sellers. Househunters rely heavily on online ads to screen houses they are interested in and to scan the market. But when a buyer contacts an agent about your house, the agent may well divert that buyer to another house or try to lock in that buyer for a househunting expedition.
Why let your house be used as bait for the agent’s other goals? When you sell by owner, you see every single email and catch every single call generated by your listing. If a buyer isn’t serious or isn’t qualified, you can screen them out by asking for proof of loan preapproval. But you won’t be wondering why your house isn’t attracting attention, when the agent is simply skimming inquiries for herself.
“I have a buyer for your house, but you have to list with me first.”
This is a common tactic agents use to try to get by-owner sellers to list with them. Of course, once you list, the buyer evaporates…but the listing contract doesn’t.
There’s an easy way around this: offer a single-buyer listing. This contract ensures the agent a fee – which, of course, you should negotiate – to show the house to one specific buyer. Require that the name of the buyer be in the contract. If the agent balks, you’ve called his bluff: the phantom ‘buyer’ was a ploy to get you to list.
Of course, you can signal to all agents that you’re interested in their buyers by offering a 1.5% to 3% commission. That guarantees an agent that actually produces a buyer that she will be paid for her efforts. And you will still save the 3% commission typically charged by the listing agent.
Is this agent actually representing you, or is this a complicated arrangement that you haven’t heard of?
As if things aren’t already too complicated, state real estate regulations keep changing – and not in consumers’ favor. According to industry publication Inman News, it’s no longer safe to assume that an agent is actually working for you, even if you are paying her. The Inman article reported that “Consumers may assume that, like a lawyer, a real estate agent always represents their interests and their interests alone. But the rules governing the agency relationships between consumers, real estate brokers and their agents vary from state to state, and have been completely rewritten in the last 25 years. Laws in most states allow real estate agents to “double dip,” representing both the buyer and seller in the same transaction without owing either party their undivided loyalty.
Licensees in 25 states are now permitted to provide services to one or both parties as non-agency “facilitators” or “transaction brokers,” owing limited or no fiduciary duties to act in their clients’ best interests.”
To be safe, don’t rely on past experience – those laws may have changed. Instead, contact you’re the agency that regulates real estate agents in your state and bone up on the current rules. If you decide to go with an agent, read the contract carefully. If the agent glosses over the technicalities, consider taking the contract to a real estate lawyer for review. The last thing you want is to find out that the agent was actually working for someone else – and you didn’t get the best deal you could.