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10 Things Your Real Estate Agent Won’t Tell You
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Woman's Day
In an ideal world, your real estate agent serves as an advocate, confidant and maybe even a marriage counselor, guiding you through one of the biggest (and often fraught) financial decisions of your life. In reality, he's a salesperson who earns a commission based on what a house sells for.
This means brokers have an incentive for buyers to pay more, and in some cases, may also be tempted to gloss over details that could sour a deal. And those are just two potential conflicts. "Real estate agents provide an important service, and the top ones have your best interests at heart, but you should be aware of the practices that go on to protect yourself," says Eric Tyson co-author of the Home Buying Kit for Dummies. Since your broker may not be willing to tip his hand, we'll clue you into the secrets he may be keeping from you. Photo by: Thinkstock
"They're paving over the park across the street."
An agent who wants to make a quick sale might not share information a buyer could find unappealing about the neighborhood, like an office building going up on the street, or a registered sex offender who lives a few houses down. But these are things he's supposed to disclose, says Tyson. Guard against this by thoroughly vetting your agent in the first place. Moe Veissi, president of the National Association of Realtors and a broker in Miami, suggests asking realtors about area schools, crime statistics, parks, hospitals and whatever else is important to you (he should be well-versed in all of these topics) and learning how many years he's been in business (longevity is usually a good sign). Also check that he's a member of a local, state or national realtor board, which holds members to a code of ethics. A respectable agent knows repeat business and referrals are his lifeblood, so it benefits him to be honest with you, says Veissi. Still, it's a good idea to ask directly about upcoming construction projects and the proximity of sex offenders before closing a deal.
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"You can negotiate a lower commission."
On average, 5.4% of each home sale price goes to brokers' commissions, according to real estate research firm Real Trends. But the rate varies depending on your area. You probably know that the commission comes out of the seller's proceeds from the sale and is split evenly between the buyer's and seller's agents. What you may not know is that commission isn't a fixed rate, says Veissi. When you're selling, interview a few brokers to get an idea of the going rate in your area, then, before you commit to one realtor, see if any will lower their fees, says Tyson. Typically, the higher the value of the property, the more bargaining power you'll have, but it never hurts to ask. Just be sure a broker offering you a low commission rate isn't planning to dock the commission paid to the buyer's agent. "If your broker advertises a fee less than what buyers' agents normally get, buyers' agents are less likely to show your house," says Tyson.
"Everything else in the contract is negotiable too."
In addition to the commission, there are other parts of a seller's contract with an agent that are up for discussion. Check out the length of the listing agreement. Typically it's six months, but Tyson advises pushing for 90 days so you can get out of the contract sooner if you're unhappy with the agent's progress selling your home. Another thing to look for: "transaction fees." A growing number of brokerages are adding charges of up to $400 to each seller's contract as a way to increase their bottom line, says Samuel Tamkin, a Chicago-based real estate attorney and contributor to ThinkGlink.com, a personal finance and real estate website. "A good broker will tell you about the fees upfront, but others may just include them in the boilerplate contract, where you might not notice them," he says. It's a good policy to always ask about any hidden fees.
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"I make more when you buy or sell within my brokerage firm."
Brokerages offer agents a bigger cut of the commission if they sell in-house listings, says Tyson. Since a broker stands to make more from selling homes that their coworkers represent, he may bring buyers to more homes listed with his agency than properties the buyers actually want to see. If you're looking to buy, consider signing on with an exclusive buyer's broker-an agent who doesn't sell property and has no ties to sellers' brokers. Find one at NAEBA.org, the National Association of Exclusive Buyer Agents.
"Before I list your house, I'm going to tip off some of my friends."
It's common for a listing agent to let other brokers at his firm know about a "hot new property" before posting it in the multiple listing service (a.k.a. "MLS")-the database agents use to share information about a home, says Ulrich Salzgeber, president of the NAEBA and a broker in Steamboat Springs, CO. The reason? "He gets a better commission split if he lines up an in-house agent." This practice doesn't typically harm the seller, so long as the house is exposed to a wide audience soon after. But sometimes the broker's colleague brings in a buyer who makes an offer right away and the sellers are so delighted that they accept it, says Tamkin. This could be a mistake because the only way to know if you're getting the best possible price for your home is to let everyone see it.
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"Your secrets may not be safe with me."
You spot a cute house with a For Sale sign out front and decide to call the broker listed on the sign-this is how many people happen upon an agent. He's more than happy to show you the place, but in the process, you let slip how much you're willing to pay or when you need to move. In other words, you forget you're talking to someone else's broker. In many states, that broker is legally obligated to tell his sellers any info that can help them get the best price for their home, says Tamkin. The reverse is also true for buyers' brokers, who are supposed to relay anything that could help their clients get a better deal. So whether you're buying or selling, stay buttoned up about these details around other realtors.
"If you want to sell this place for the best price, you need to make some changes."
You might assume that your broker will tell you what to do to make your home more marketable, but some don't bother. "I see many houses for sale that are cluttered or have a dead bush out front or peeling paint in the bathroom," says Tyson. "Unfortunately, some agents think it's better to get a house on the market, and maybe sell it for less, than to risk offending clients with constructive criticism." Bottom line: If your broker doesn't initiate this conversation, you should-and you should be receptive to his suggestions. Even if your house is in great shape, there are probably small things you can do to improve it. If your realtor doesn't have any thoughts on the topic, or you feel he just doesn't care, it might be time to get a new agent.
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"Selling your home isn't the only goal of hosting an open house."
An open house can be a great way to get a lot of people to see your home. But only 11% of homes are actually sold through these events, according to a National Association of Realtors study. Some agents like to have open houses simply to generate new business for themselves, says Tyson. And since not everyone who shows up to these events is a serious buyer-some people go to get an idea of how to price their own homes, while others just want to see what's out there-there are plenty of potential clients. That's fine, especially if you like your broker and want him to be successful. But if you don't want to host an open house because it's a hassle or you're worried about theft (both legitimate concerns), don't let your agent push you.
"That deck you're dreaming of? It might not happen."
"Real estate agents tend to be positive, rather than naysayers and deal-killers," says Tyson. So if you tell your broker a house would be perfect if only you could add a deck, garage or pool, he's probably going to say those are great ideas-and may even make some suggestions of his own. But a good agent will advise you to check with the local zoning office to make sure those alterations are allowed before you make an offer. Don't trust a broker who tells you he knows for a fact that you can make a major structural change.
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"The home inspector you hired basically works for me."
Buyers' agents typically provide their clients with a list of recommended home inspectors who will look over the place before closing on the sale. In many cases, these inspectors are true pros; in others, they're people who will rubberstamp a house in return for repeat business from the broker. "If you picked a good agent, you should get high-quality referrals," says Tyson. Still, you shouldn't just take the broker's word for it. Interview a few inspectors and find out about their training and background. Check that they're members of the American Society of Home Inspectors (ASHI), or another regulatory body, and ask to see a sample inspection report. It should be a clear, narrative-style document or multi-page, annotated checklist, not something simplistic. Also, ask how long the inspection will take-most last three to four hours-and if you can be there when it happens, says Salzgeber. If the guy says he'll be in and out in an hour, that's a red flag.
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