As a break from the typical economic news I thought I would throw in something that can help people in this tough market. This is not intended as a slam toward Real Estate Brokers because most of them are hard working people just trying to make a living. In fact I work with quite a few of them on a daily basis. However, I think these are good points to keep in mind when buying or selling a home as a consumer.
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.
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.
3. “Think you’ve had no offers? Actually, there’ve 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,” says McNeill. “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.
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 home buyers. “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.”
5. “Sometimes I forget whose side I’m on.”
The past 15 years have seen the proliferation of the buyer broker, agents who are supposed to work strictly in the buyer’s interest, helping him get a fair price on a home as well as 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.
6. “I know zilch about zoning.”
Real estate agents love to suggest big ideas to prospective buyers—say, removing trees to enhance a view, or even squeezing a rental unit out of a roomy garage—meant to happen once the deal is done and they’re out of the picture. But just because it sounds like a good idea doesn’t mean it’s legal.
7. “I won’t let termites—or pesky inspectors—kill a deal.”
If a broker is selling a house, you figure he knows the place pretty intimately—after all, he talks a good game about the new kitchen, the big closets, the heated garage. What you need to worry about, though, are the home’s features that he keeps to himself. Steve VanGrack, former chairman of the Maryland Real Estate Commission, says, “We have had cases where [brokers have] been deceptive about termites and flood damage.”
8. “I sometimes forget I’m not a lawyer.”
Most states strictly regulate the contracts used in real estate transactions, stipulating the use of boilerplate agreements that offer little room for creativity—but some brokers can’t keep their clause adding instincts in check. “I see [brokers] pushing the envelope all the time with amendments and addenda,” says Gordon, the Kansas broker and attorney. “They draft language that can have consequences without really understanding it, but they want to keep the sale going.”
9. “My website is a dead end.”
Considering that 77 percent of house hunters look on the Web, according to the National Association of Realtors, sellers might assume that using a broker with a site can help make a sale happen. But some brokers’ sites are better than others, and you need to look beyond a well designed home page to figure that out.
10. “You can probably do this without me.”
Brokers like to create a lot of mystique about selling homes, insisting that the process is complicated and best left to professionals. Not so, say homeowners who have sold their homes themselves (about 20 to 25 percent do so each year). William Supple, publisher of the sale-by owner real estate magazine Picket Fence Preview and author of How to Sell Your Own Home, says that “properly priced and advertised, a house sells itself.” Supple adds that sellers should plant a yard sign and post online ads for the property on local sites aligned with print publications (call current advertisers to see if a site is effective).
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