The Finance Blogger

Real Estate Agent – Trust

Real Estate AgentDo you trust your real estate agent to always act on your behalf and in your best interest? We came across a situation that suggests that maybe you should not. Maybe you should make your own informed decisions! At the very least take control of your situation and talk with a number of people before just accepting the opinion of your real estate agent. Here is the situation that we recently came across.

The situation is as follows. A friend is trying to sell their condo unit. It has been up for sale for some time without a lot of interest.  The market is a bit difficult now and homes are not moving as fast as the seller would like. They are considering lowering the price and spending some money to update a few items in the condo they are trying to sell.

The agent has another solution which could be self serving!

Lower the price to make it more attractive to buyers and make about $20k in upgrades to make it more interesting to those people who want new carpets, new paint and granite counter tops. If it still does not sell the agent has offered that they will buy it at the lower price. Good deal for who? We happen to think that this is a really good deal for the agent where they really cannot lose.

If it sells they get the commission. If it does not sell, the agent buys it and still gets the commission. It has been upgraded and will sell at some point. What does the agent know that the seller does not know? Well this particular market has increased over 25% in the past 6 months and this condo once it is upgraded could actually be worth more than what is being asked.

Consumers do not want to deal with construction and upgrading due in part to the cost. But mostly due to the hassle of hiring contractors and dealing with a mess that they just do not have time for or the patience for.

The seller is not going to take this deal, but it really shows you cannot trust your agent! What do you think about this?

Dealing with a Real Estate Agent in General

At best they are always under suspicion. They claim they are trying to help the customer achieve their objectives by buying a place they like at the best price. Or by selling a place again at the highest price. But at the end of the day, they have not made any money unless they close a sale. The good agents are the best at pushing customers to close deals. This is when they get their commission.

Most agents are anxious to close a deal and some cannot disguise their interest very well. You feel that they are more interested in closing the deal than saving you money. For example if you can reduce the price you pay for a home by ten thousand, that’s a lot of money. It is your pocket and not someone elses. Of course you risk losing the deal if the seller does not take your offer. But ten thousand is a lot and it will take you sometime to save that much if you spend it.

On the other hand the agent just wants the deal to close. Saving ten thousand reduces his commission five or six hundred dollars depending on what his commission rate is. He would like this money. But really he just wants the deal done so he can get on with the next sale to another customer.

Bottom line is always follow your own instincts and make the best deal for you with the input of several people, not just your agent.

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