Andrew Wetzel's Musings

September 14, 2016

Five Things Agents Won’t Tell You

Filed under: Uncategorized — awetzel @ 2:37 PM

From a Forbes article (http://www.forbes.com/forbes/welcome/?/sites/greatspeculations/2016/09/02/five-things-real-estate-agents-wont-tell-you/&toURL=http://www.forbes.com/sites/greatspeculations/2016/09/02/five-things-real-estate-agents-wont-tell-you/&refURL=https://www.facebook.com/&referrer=https://www.facebook.com/#60eb2d951669).

Agents are limited in what they/ we are ALLOWED to do within the “scope” of our job. Specifically, our focus is “the house” (meaning what we can see) NOT the neighborhood or the people we “think” should live in it.  Generally speaking, we are warned NOT to go beyond our level of “expertise”.  Therein lies the rub!  This is the law and found in our Realtor Code of Ethics and, while some agents think it “helpful” to provide advice beyond the “scope” defined for them/ us, doing so may get them/ us into legal problems for a variety of reasons.  Two major ones are (1) some buyers may feel discriminated against if they think we are “steering” them to or from certain areas and (2) frankly, our opinions are not guaranteed.  As far as the article, here are some “opinions”.

(1) You have to live somewhere.  Buying may or may not be cheaper than renting but, once you have made your last mortgage payment, you should have a sellable asset.  Whether it is “worth” more or less than what you paid is another issue.  Sure, you still have expenses like taxes, utilities, upkeep and repairs to manage but how do they compare to continuing to pay rent?  I have seen many “move up” using “equity” from a smart purchase while I have seen others forced to sell for less than what they paid.  Investment?  For most of my clients and people I know, their home values rose faster than most other financial investments they made but “timing” matters as does whether you made smart decisions INCLUDING hiring a good Realtor.

(2) NO CONTRACT is iron clad!  PERIOD!  I have had several clients lament that a good, old fashioned “hand shake” had more meaning than current contracts.  Thank some lawyers, politicians and bad actors who want to wiggle out of their commitments.  Best way to protect yourself? HIRE WISELY and invest in good legal counsel when necessary. Real Estates is a “you get what you pay for” transaction in most cases.

(3) Inspectors work for the BUYER.  That being said, too many seem to be ill-equipped to really analyze a whole house and many buyers seem to want upgrades that are not supposed to be part of a property inspection.  Most inspectors seem a “master” of some knowledge but not of all major components.  Again, you get what you pay for.  Want a discounted heart procedure?  A weak-minded inspector may feel the need to justify their fee by scaring the buyer (repeat business?).  There is a vast difference between “material defects“, “normal/ routine maintenance” and things that should have been factored into the amount offered.  A properly completed property disclosure statement (depending on the state involved) is a great start and it is a document that “survives settlement”.

(4) YES commissions are negotiable.  That being said, what a seller offers a buyer’s agent (“coop broker compensation”) MUST be competitive as buyers generally do NOT want to subsidize your being cheap (they agreed to pay their agent a specified fee) so they may pass over your house or lower their “net” offer to force you to pay what your market seems to be offering.  The BIG question is how competent is an agent who works cheaply?  If they can “do it for less”, that is great and over time will drive down commissions.  However, that seems not to be the trend over time: many discount brokers have come and gone! How will agents who accept discounted fees defend your asking price?  Hmmm.  Name another profession that only gets paid IF they get the job done?  Sellers need to understand more than the specific amount of the commission so that they better understand the mechanics of selling Real Estate.  Obviously the commission is a critical factor in selling a house and many sellers are really stretched in the process.  I find it better to have an honest conversation with a Realtor than focusing on the “lowest” fee as the major factor in a hiring decision.

(5) Part of a buyer’s “due diligence” is making sure that the house they are considering buying meets their needs BOTH inside and out.  Whether you spend time going through the neighborhood, talk to people who live there or people you know, look online or whatever, it is THEIR job to determine how suited the area is for them.  I know it seems like hard work but it should be important to them and will help accelerate the buying process.  Agents are NOT the ones who are supposed to do that evaluation.  BOTTOM LINE: buying a house REQUIRES that the consumer be engaged and take an active interest in what may be their biggest expense.  Mistakes are CO$TLY!  I can tell you stories!

HIRE WISELY!

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