It’s time for a new home. The first thing you do is get a real estate broker or agent, right?
As you embark on this process, you need to keep some things in mind. You probably suspect that there are things a broker or agent doesn’t tell you, but you don’t know what those are and all you can do is imagine things. We decided to expose some of those secrets and to reveal the true aspect of the relationship between a real-estate agent and the client.
10. They don’t work for you.
You might be tempted to think that the client is the one that dictates everything when working with a broker. Well, that’s not exactly true. The reality is that real estate agents do not generally represent the buyer. But the buyers think they do and this way confusion appears. When calling in response to a listing broker’s advertisement or showing up at an open house, be clear on one thing: This person is employed by the seller of the home.
9. The open house is for them, not you.
Another mistake people usually make is thinking that the purpose of an open house is to attract buyers, but these receptions are not really for the seller. They serve the agent’s long-term plan.
“Most people who show up are ‘tire kickers,'” says John Kavaller, an agent with Catskill Sales Associates Inc. in upstate New York. “People turn up to get a sense of the market or the neighborhood, but they are not ready to buy.” They tend to sign in, tour the place and then take off with the agent’s business card in hand.
8. You will have conflicts with the zoning board.
Don’t expect an agent to warn you about zoning pains that await you if you buy this property. If you have your heart set on making changes to the place, do your homework carefully and master the zoning maze yourself (or pay a lawyer to untangle the red tape). The only situation when the real estate agent would be completely sincere with you about all the pains that await you is if he/she is your friend and the chances for that to happen are slim.
7. You don’t have to use them.
You have the option to BYOB – which, in this case, means Bring Your Own Buyers. Not many people are aware of the fact that, when working with an agent, you can also bring your own buyers to the table. This will allow you to get around paying a commission in case one of them turns out to be a serious buyer. It’s best to discuss this aspect up front and before you hire a broker.
6. The inspector is unreliable.
Every real estate salesperson has a home inspector. home inspectors, as well as those who detect and treat mold and termite problems, consistently complain on Internet forums that they are black balled by brokers if they reliably find and expose problems, despite their own fiduciary responsibilities to their clients. You can’t rely on what the inspector actually says so, as a buyer, it’s best to select your own licensed inspector. At least this way if you have a problem later on you’ll know it’s because of you and won’t have to blame somebody else.
5. You can sell your house yourself.
Of course, no real estate agent will tell you that you don’t need their help to sell your house. But in reality you can actually do that. You can list the house online, find possible buyers, arrange meetings, make a deal and save lots of money. Now it’s easier than ever to do so thanks to all the internet sites designed specifically for this purpose.
4. The contract offers you very little protection.
Very often, people sign contracts without fully understanding the implications. The contracts include a provision in which it’s stated that the buyer is not relying on any verbal statements of the seller or real estate agent and this contradicts what the buyer actually knows and relies on. So make sure you thoroughly read the contract before you sign it and optionally have someone with you to watch your back.
3. They prefer fast sales.
What’s better to a broker, a dozen percolating sales at $300,000 each or four potential $900K deals? You might suppose that fewer transactions would be sweeter – less paperwork, after all – but since any given sale can fall apart, most salespeople prefer volume to price. So, while many agents are serious in their promise to get you the top payoff possible, it is not necessarily in their interest to wait for the very best offer. To speed up the process, a broker may pressure you to drop the price. Be clear and make sure your broker understands that you won’t change the asking price.
2. The warranty is almost worthless.
Developers, and the agents who represent them, may offer warranties on new home construction. Barry Ansbacher, a Florida attorney, says buyers are foolish if they find much comfort in such guarantees. “The definition of a ‘defect’ in those warranties,” he says, “is so carefully worded” that most claims end up null and void. Beware the standard contract for any new development you are considering buying into.
All builder contracts include a waiver of right to sue, which means you-know-who will bear the cost of repairs for shoddy construction. Get your own lawyer to pinpoint that pesky clause and negotiate it out of the contract.
1. The commission is negotiable.
We saved the biggest secret for last.
Realtors “purposely hide” their commission rates and the lack of transparency has stunted price competition, a consumer watchdog agency alleged in a new study. “The reluctance of traditional real estate agents and firms to provide information about commission levels helps explain why there is so little price competition in the industry,” said Stephen Brobeck, a senior fellow at the CFA, who has over two decades of experience researching brokerage practices. So don’t be afraid or ashamed to bargain. You might be able to get a better deal. The commission should be high enough to motivate the broker but doesn’t necessarily have to be 6 percent.