Perhaps a buyer’s perspective…

Sometimes a comment is so darn good, it really should be a post.

Perhaps a buyer’s perspective might be useful here.

I don’t know jack about real estate. My husband and I have been burned in the past by a string of dishonest agents, most recently in January when we relocated to Seattle. We were so full of loathing for the industry in general that we seriously considered Redfin, simply because we had no hope of finding a “real person

120 thoughts on “Perhaps a buyer’s perspective…

  1. Polly

    Very articulate comments. It would be nice to hear from some of the other agents as to their perspective on your post.

    You said,

    “Experience does not always equal a traditional mindset. In fact, really good experienced people often got where they are by rejecting the old school all along, even before it was old (that is, mentoring doesn’t have to further the status quo, Russ).”

    While that is certainly true in general, it has not historically been true in the real estate industry.

    You also mentioned the “fairness” issue and analogized to your work with the EEOC. Fair employment practices and fairness in a real estate transaction (when the agent owes certain high level duties -historically called fiduciary – to their client) are worlds apart. Your post was all about the agent working in YOUR best interests (e.g. negotiating a lower price) and that the commission structure was contrary to that objective. Do you want Ardell to think about fairness to the Seller when she is advising you about how to best negotiate YOUR deal? Although a bit different since I am an attorney, if I told a buyer or seller client that we should be fair to the other side, they would fire me in a NY minute. If Ardell told you that a certain house was priced “fairly”, would you still ask her to see if you might shave a few bucks off the price and still snag it? Most buyers would.

    To be clear, a good negotiator must take into account the other side’s objectives in order to effectively negotiate. That is not being fair. It is understanding what the other side wants out of the deal and giving it to them while still getting what your client wants.


  2. Russ,

    Fair enough, I certainly recognize that EEO law and RE law don’t exactly mirror each other. I don’t think that necessitates agents treating fairness as an intangible – or an option.

    And yes, I do want Ardell, or any agent, to think about fairness to the seller in our dealings. In fact, I believe she’s noted before that she won’t work with anyone who wants to end up with all the chips on their side of the table at the end of the deal. It isn’t about an agent negotiating a LOWER price – I want an agent to negotiate a FAIR price for us. To the extent that means the agent gets a lower commission, there is a disconnect between the reward and the behavior. It’s really hard for buyers to wrap their heads around that idea and still feel well represented.

  3. Polly

    What is a “fair” price? Ask 5 agents to do a CMA on that house and they will come up with 5 different “fair” prices (and all of which will probably be different than the Zestimate). Ask 5 appraisers to appraise the value of the house and you will also get 5 different answers. Fairness is in the eye of the beholder.

    For example, you indicate that you want Ardell to “negotiate” a fair price. I would think that most seller’s feel that the listing price is a fair price. So to acheive what you ask for, there would be no negotiation, at least on price.

    When 70% of California buyers and probably close to half of Washington buyers are buying homes with ZERO down interest only mortgages, my guess is that most buyers may disagree about the “fairness” issue. When it all boils down, most buyers usually have limited cash, want more than they can afford, and they are looking to get as much as they can for as little as they can. Sounds kinda harsh but I think that is reality.


  4. Russ,

    That is a sad state of affairs indeed. For it all to work, buyers have to agree to be reasonable as well. Perhaps that is the bigger challenge! 🙂 If the typical buyer wants more than they can afford, I would hope a good agent would crunch some numbers and show them how many nights a week they’d have to eat hot dogs to get it. But again, talking a buyer down to a lower price range when they’re pre-approved for more means an agent is talking down their own reward…

    As to fairness in pricing, if you take the motivation surrounding compensation and lending out of the equation, I would hope the leftover difference could be considered margin of error. Maybe that makes me an optimist.


  5. What does the fact that their money is coming from a lender, with Zero down, have to do with anything? The seller gets the same net whether the buyer has a downpayment or not. I bought my first house FHA with $500 total dollars. Everyone needs a stepping stone in this Country. It’s always been that way. It’s the American Dream…the American Way. What’s with the negativity about “how” they pay for the house?

    If a seller has been on market for 120 days with no offers…I don’t think the fact the “the seller thinks his listing price is a fair price” is any indication that the seller is correct in that regard.

    It is not merely about negotiation. If it were about negotiation, than a buyer would be falsely “happy” to get a house for $20,000 under asking price, that was overpriced by $50,000 in the first place.

    My favorite broker always said “A good deal is a good deal for everyone” As an attorney, didn’t you ever stand up from a table and smile saying, good job today. Everyone got a fair shake. Never?

  6. Here’s a different way of looking at things, Polly. If we’re looking at a house for $300,000, and we can get it down by 3%, the difference in my compensation would be $270. But if I can leave you so knocked out that you send me everyone you know, the difference in my compensation will be tens of thousands of dollars over the years. In fact, we don’t think of things that way at all. We just do what we think is right, including working for nothing or even taking a loss if that’s called for. The money comes as a secondary consequence.

    Here’s something to take away from your experience with Ardell: Don’t ever do any sort of business with people you don’t trust. It’s only money, in the end, but your time and your peace of mind cannot be replaced.

  7. Ardell

    The whole problem with this “fairness” thing is the concern, I think, that if you are not fair, you are unfair. Nobody wants to think of themselves as unfair as this has a negative connotation. One does not implicate the other.

    And yes, I have on many occassions walked away from a negotation believing that the parties each got a fair shake, based on my assessment of the situation. I can honestly say, however, that I did not go into those negotiations with “be fair to the other side” on my to-do list. I can also say that in many of those occassions, one or both of the parties walked away thinking they got screwed.

    Haven’t you ever helped a buyer purchase a house where you felt the Seller got a “fair” deal and the seller was still unsatisfied? Who was right in their feelings? You? Buyer? Seller? Certainly not all.


  8. The FHA program is great – if you qualify. That’s the irony. Small down payments were only part of special qualifying programs in the past. Today, almost anyone can get 100% financing. America is leveraging itself, risking its financial future to get a piece of the American dream.

    Here’s a question – what role does an agent have in advising a client about how he/goes about financing his acquisition. Frankly, I advise clients to stay at the low end of their price range if they have 100% financing. The exposure is much too great, especially since all of these products have a variable rate element to them.

    There’s going to be a whole lot of homebuyers who will wake up and find themselves digging themselves out of a hole. Sure, their mortgage brokers will be easy (and often, valid) targets…but how much blame will agents get by these buyers in retrospect? Sure, there may not be any legal ramifications, but I surely can’t sleep well at night unless I’ve had a frank discussion with my client about financing, making sure they understand the reprecussions of their decisions (I even lost a deal once because of this).

  9. “Fair Market Value is the price at which neither party is exceedingly happy.” That being said, I have clearly had negotiations where my client was exceedingly happy. I’m sad when my client wins too much if it is because the agent on the other side laid down and played dead. I have no choice but to take advantage of that factor, but it doesn’t make me happy.

    I have several clients who want me to find something that isn’t for sale. I make it clear in those cases that I won’t rape anyone, and they absolutely agree that they would not want me to do that, even if I could.

    Honestly Russ, when people aren’t happy, it is usually about something else altogether. Like the guy who isn’t happy with his price because he didn’t want to sell his house in the first place. His wife left him and the house had to be sold. I’ve seen that quite a few times. I haven’t seen unhappy buyer clients, except the one that called me back to sell it right away because the husband forgot to tell the wife he was moving in the girlfriend a week after closing. She felt it was a little crowded.

  10. Polly, as an agent myself I get paid zero dollars if I can’t make the right deal for my buyer client. If the buyer wants a deal on price, a lower one, you bet I make the offer to properly reflect what my client wants.

    It still comes down to buyers and sellers and what THEY agree to.

    My best advice is to go with an agent (like Ardell for sure) that will show you what YOU want and is willing to work for what YOU want. Avoid agents that only show you their listings or their brokers listings. But keep in mind the right home for YOU could be represented by the buyers broker or agent.

    You sound like you want loyalty.. and you have every right to have it.

  11. As Russ indicated many buyers try to squeeze into the biggest house possible both because of their own selfish desire and by their decisions being encouraged and supported by agents and lenders. A real problem is that real estate agents often encourage buyers to “over-buy” in an effort to selling a home easier.

    Here is a VERY common situation. Buyer / Agents are told the maximum qualified mortgage is for a home of $300,000 by the lender at time of prequalification. (Remember, lenders want to qualify the client for the loan at standard ratio’s to get the deal done easily, so they will be very honest upfront as to the maximum qualifications). The moment they go looking at homes the “average” real estate agent STARTS them looking at homes $300,000 on UP. This seems to be because the agents believe the higher price means nicer home, easier to sell.

    The buyers will typically end up with something in the $320,000 – $350,000, which is way above what they were qualified for initially by the lender. The agent and buyer go back to the lenders and tell them they are in escrow and they gotta make the deal work at the new elevated sales price.

    This is when the creative interest only “stated-income” loans must be use. The mortgage lender doesn’t want to lose the relationship they have built up with the REALTOR as they know the agent will take the deal to another lender who will do “what ever” it takes to make it fly because they just worked really hard to get the buyer into escrow. If the lender does not accommodate the agent but getting the deal done, they will possibly lose the opportunity to future business. Since the lender typically depends on the relationship with the REALTOR to get more clients they will try to accommodate the agent even if it means helping the buyer over-extend themselves.

    What is needed is a disclosure upfront signed by buyers to make them “honest

  12. Jessie and others

    Don’t assume that lenders like to qualify at reasonable ratios. I have seen several here in the area push the ratios to sub-prime level on purpose. They make more money on sub-prime and need less documentation on sub-prime.

  13. Jessie,

    Beyond finding an agent we could trust, the most objectively confusing parts – and what I think would have gotten us into trouble had we gone with a discount broker, were the details and intricacies of financing. That’s what scared us away from doing it ourselves. Not big things like the difference in fixed vs. ARM, or what my standard ratio would allow me to qualify for, but details like “How can I really figure out the top end of my price range if I can’t lock in an interest rate until I have a contract in hand?” I’m a statistician by trade, I’m a geek for loving spreadsheets & data, and I track our spending obsessively. I know exactly how much I want our mortatge+taxes+insurance to be to facilitate our target retirement date, have 3 months of expenses left in savings, and take the occasional vacation. I even have two different numbers in mind for House A, which is so awesome that I’ll buy generic once in awhile at the grocery store, and House B which meets our needs for now and allows us to get organic home delivery. Clearly, I overthink things sometimes, but it was nervewracking to think I could have this all lined out on paper, and then have rates jump in the final moments before we have a contract and can lock in a rate, and then have that total payment be higher than I wanted (…or have it be lower such that on that particular day, we could have afforded more house). Things like this were simply overwhelming for us non-professionals and I couldn’t find clear, unbiased info on my own to figure it out.

    Hope that helps, I’ll post more examples of what confuses buyers as they come to me.

  14. Hello Ardell,

    I agree with you, just like there are some bad agents there are some bad lenders but the reality is the lender receives lot’s pressure from agents to make a deal happen. Unfortunately, many of the bad agents and bad lenders work together, which is part of the problem being discussed.

    As you mentioned, many lenders will sell a particular loan to make more money but agents are also guilty of this also… steering customers to the highest co-broke properties and away from discount or FSBO listings so that they can make 3% instead of 2.5%.

    The biggest difference is that everyone knows how much the lender makes (via HUD 1) vs. the buyer does see what the cost of using the agent as the buy side commission is not disclosed anywhere to the buyer. Also, if a lender makes 3% on a deal is that any worse than an agent making 3% to sell a home? Is it because the customer “could” have gotten a lower rate… just like they “could” have gotten a lower sales price with just one more counter-offer or commission rebate. The customer has the choice to say no on a loan, even cancelling at the last minute in escrow but they don’t really have the choice to say no for real estate services.

    Anyway this is not a finger-pointing contest. My original point is that the real estate agent is usually the initial point on contact and refers all other services down line, lender, escrow, title, inspection, etc. This is concept is proudly supported by the NAR’s why use a REALTOR. Agents determine what properties and price range the buyer is looking at, not the loan officer. I just think that if there is really going to be any change in our business it that real professionals (both real estate agents and lenders) should really sit down and educate buyers about finances and managing their money and that buying a home is not primarily a “great investment”… but most importantly a place to call home. A real disclosure of what they are getting into needs to be implemented. “Stated-Income” loans for salaried individuals need to go away (probably will anyway…. by the end of the year, since Wallstreet doesn’t really want these loans now). Traditional income-to-debt 28 / 36 underwriting guidelines need to come back.

    This may be a difficult point to reach as real honesty in many situations won’t sell a home OR do a loan. Remember, the one thing all real estate agents and lenders are committed to is feeding their families and they will do whatever it takes to do so.

    Obliviously you have very high standards and ethics as supported by Polly’s glowing review and your professional blog posts. I understand your defending the real estate agents image with you comment but I’m just addressing the traditional real estate model. It’s easy to get into “he said / she said” but that doesn’t solve the issues or concerns of our consumers who we have committed to serve.

  15. Hello Polly,

    Thanks for the insight. Again, I agree that mortgages are a very difficult part of the transaction because there is so many things that can affect the mortgage rate and can change. Since everyone has different questions / concerns about the real estate transaction, it reinforces why real estate / mortgage professionals will always be around. What I find particularly interesting is the fact that you looked towards the real estate agent to provide you information regarding mortgage financing. I assume it was to get third party validation of what was being told to you by the mortgage lender. Did you find that the “real estate” process or “mortgage” process caused the most concern causing you to seek professional advice / second opinions?

    Again, Polly, I really appreciate your time, sharing your insight, as I’m sure all of us can take-away some good information from your comments and that will help us all be more professional.

  16. Jessie, may I chime in here? It is not always known how much parties in a transcaction are earning. Oh, contrare!

    Interesting conversations! Making me think and reminisce about all the transactions we’ve closed. It’s making for some really good topic discussions which I’ll post on later.

    Transparency is a good thing. One thing Jessie and others need to understand is that it is very easy to hide fees or psuedo disguise them on HUD-1 Settlement statements. This is due in part to various regulations/industry pressures in the lending world or lack thereof depending upon your analysis and lobbying by powers that be–including the challenges of cracking down/enforcing RESPA violations and defining what should or should not be disclosed on settlement statements (which is something HUD is huddling about much lately).

    How do you ‘splain this:

    For example, in countless transactions I’ve observed over the last couple years or so, a loan officer gives the borrower a credit for some amount like $500-$2500. This is usually due to some “customer service problem/snafu” or boo-boo in the loan process. But ‘low-n-behold, the HUD-1 settlement statement states a buch of blank fields. No loan fee, no closing costs, no appraisal fee, no processing fee, no e-mail fee, no wire fee, no underwriting fee, no trust accounting fee, no “you asked a question” fee, no “you called me 10x” fee, no nothing in conjunction with obtaining the loan. It is after all a no cost deal. Right? So, where’d the money to give a credit come from?

    Makes you kinda go , Hmmmmmmm.

  17. Jessie, The problem in the situtation I saw was the lender that was putting everyone into sub-prime, actually I saw three of these down in the South End of Seattle, were also referring the buyers to the agents.

    When an agent takes a lead from a lender and the problem is the lender…not a pretty picture.

    It was most prevalent among ethnic groups from other countries. Since the buyers didn’t speak English, they went to a lender who spoke their language, who could only do sub-prime loans.

    There should be homebuying support groups for everyone, but especially for those that don’t speak English to provide support in their language.

    Maybe we could start one of those. It’s not necessarly techie or innovative, but sounds useful to me.

  18. I just had to step outside and see if I was still in America. Can someone tell me when it became wrong to get your client the best deal possible? Best deal possible USUALLY means someone is not going to be as happy as the other party at the closing table. You can’t make someone sign a deal if they don’t want to (unless you’re the mob). If a deal gets signed it’s because both parties agreed to the terms.

    Ardell if you were representing me and you told me you were going to try to make the seller happy I would FIRE you on the spot. I don’t want to make the seller happy when Im buying a property. I want the seller curled up in a little ball in the corner sucking their thumb (over exaggerated for dramatic purposes). I want to be able to list the home the next day after it closed and get all my money back.

    Here’s a real example:

    An agent lists a property and the home is on 2 lots the listing agent doesn’t take the value of second lot into consideration because it is a wonderful side yard so the agent prices the home as if it was on 1 large lot.

    Ardell you represent me and I explain the situation to you that I can build a second house on the property and the second lot alone is work xxx thousands of dollars. For my intended purposes the house is way under priced. Ardell would you tell the seller the home was under priced or just present my offer? Odds are once the seller finds out they listed their home under value they will not be happy.

  19. Polly-
    I wanted to chime in about your comment about agent compensation and agents getting the best deals for their clients. To me, real estate is about building a business. I would like to be busy enough that I can choose only to work with my favorite clients and let the rest go elsewhere. To get there, I need all my clients – past, present and future to be raving fans of me and my service. If I negotiate a deal for a buyer that saves them $50,000 they will tell all their friends and relatives about me and they will call me when they are ready to list their home. I may not make as much commission on this sale as I could have, but I have made friends and fans.

  20. Allen first, I think we can agree that you would not be my client based on past discussions 🙂

    Second, if the seller is represented by an agent, then the seller can sue their agent for underpricing the house, and it is not my problem.

    I am currently approaching an unlisted seller, older widow, about selling her home to my buyer client. I have made it very clear to my client if by some stroke of “luck” the woman thought her home was worth way less than it is, I would not be able to get it for him at an unfair price. My client absolutely agreed.

    Even before we approached anyone, we walked the neighborhood selecting the homes he liked, and saw a really old couple taking a walk. I brought the subject up then that I would not be trying to dupe some old people into selling their home for less than it was worth. He wholeheartedly agreed that was not his objective.

    Now Allen, if you are saying that you would say Whoopee!! if she was willing to take a couple of hundred thousand dollars less, because she didn’t know any better, then I would not represent you.

    So I think Russ, based on today’s Wall Street Journal article regarding buying houses that are not for sale, that people can in fact come up with a fair value, if you have two fairminded people, some data, an appraisal, and a fariminded meeting of the fair minds.

  21. As I mentioned before Ardell, the problem is that often these “bad” agents work together. The situation you are describing does not represent the majority of real estate transaction… but even so if we go back to the NAR’s Why use a REALTOR

    1. Your REALTOR® can help you determine your buying power — that is, your financial reserves plus your borrowing capacity. If you give a REALTOR® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders — banks and mortgage companies — offer limited choices.

    6. Your REALTOR® can help you in understanding different financing options and in identifying qualified lenders.

    8. When selling your home, your REALTOR® can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.

    as I indicated above, then the agent fiduciary responsibility should be to guide the buyer back into a good transaction. Did this happen in the scenario you mentioned… obviously not.

    Where I see a real problem, is the real estate agent will try to be “all knowing” and they start stating things that are no true. This is were some problems arise and in fact this practice appears to go directly against the Code of Ethics:

    Article 11
    The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.

    REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/95)

    Average lender does 20-30 transactions a year while average real estate agent does 8-9? Who has the most experience to talk about financing? What would happen to a loan officer if they made opinions and comments about real estate values / property condition that affect the real estate agents deal?

    I agree that support in native languages would help. This is why there is a big push from Century 21 to address this issue with Spanish language sites and why all loan disclosures are available in Spanish for example. Yes, it’s a big problem but everyone needs to stop complaining about it and start looking for solutions by listening to customers like Polly and proactively asking for recommendations on what can be done to make it better, faster, easier, cheaper. Tech companies with lots of money are trying to do it but the real estate industry is the one that should be guiding change… since we have the “street” level view of what clients are saying but more important… “Feeling”.

  22. Hello Tim,

    Simple. If they “charged back” (i.e. eat) the fees then no fee’s were charged to the buyer, therefore not disclosed. This means they paid it out of their own pocket. If someone was going to charge fees and they didn’t why would they appear? Where the money came from to pay for those fee’s is one of two places. Either the lender actually paid for them by not charging them or…

    It comes from something called a YSP or SRP. It’s a commission paid to mortgage lenders dependant on the cost of the loan. If the lender is a mortgage broker (not a banker), then this credit is disclosed as required by law, which I’m sure you are familiar with. If the lender is a banker, i.e. Countrywide, they don’t have to disclose anything because they are using their “own money

  23. Geordie,

    Polly wants you to do it because it is about HER. Because it represents HER well and that is your job…to represent HER well. Not because there is something in it for YOU.

    Cripees, I feel like Diogenes.

  24. Ardell, c’mon…we’re professionals talking about our business. Of course it’s all about the client’s needs; however, we are in this business because there’s something in it for us – a living, an income. This isn’t charity work. RCG is primarily lurked by industry insiders; it seems to me that Goerdie was sharing his feelings on the topic, and of course, you need to point out how different it is from your singular perspective, slapping him down.

    Your reference to Diogenes is telling. As you may know, he’s one of the founders of Cynicism. And notwithstanding Cynicism’s defective psychology, barren logic, and immature technique, it emphasized two principles: the absolute responsibility of the individual as the moral unit, and the autocracy of the will.

  25. Eric,

    What would you think of a doctor who said of course I’m going to fix your leg really well because you may send your friends. What would you think of a lawyer who did his best because you have a lot of contacts.

    At what point is it merely that we get paid to do our best.

    I am actually surprised that I am “singular” in thinking that a profession would think everything they do is about making more money down the line.

    When you represent people, it is not supposed to be ABOUT what you make. It is about them and their objective. Fiduciary means without self interest. Sure you get paid. But getting paid is never to enter the brain during the time you are doing what you do. Clearly I don’t think a doctor thinks about how much money he is or isn’t making when he’s doing a heart operation.

    Eric, it is true that my mindset is a little different because of my previous career as a fiduciary. I’m starting to think that maybe the outside world is correct. Maybe banks should be in real estate and maybe all agents should be salaried. If the business at hand is mostly about how to make more money, perhaps Polly is correct and that feature should be removed. Maybe if someone were salaried to represent a buyer and made no more or less regardless of what the buyer purchased, things would fall in line.

  26. Editor’s Note: If Jessie B’s comments seem a little out of place, it is because they were tagged as spam by my spam program and I just now added let them go live. This misidentification of good stuff as spam doesn’t happen too often, and it is a real shame when it happens on an active discussion.

  27. Buyers recognize that you have to make a living. We aren’t asking you to treat us like charity cases (OK, at least I’m not). To the extent that you attempt to create a long-term business model based on client satisfaction leading to referrals, that’s great… just remember that adopting this long-term strategy benefits your current client vicariously – that is, our present satisfaction with the deal you make for us is just the means to your end. And we have to understand that in order to accept that you’re working in our best interests. I don’t examine the business model of every goods and services provider I do business with every day, and it would be nice if finding an agent was the same way. To turn it on its head, it’s almost like you’re making me blackmail you – represent me well, or no referrals for you! 🙂

    Let me be clear about this – I think it’s great if you’re creating raving fans of your service. That means you’re doing what you should be… you’re doing a good job of representing the people who have chosen to depend on you. And there is nothing wrong with building your business on this model. But you shouldn’t have to tell me about that strategy to convince me to trust you – there must be a better way. I guess great service is great service no matter what your reasons are for providing it… I’m just asking you all to recognize the inherent difficulty involved in buyers accepting that *every* agent would give them their all, in hopes of some future unsubstantiated reward. Maybe this is a tired old analogy, but think of it this way. If you offer a kid a piece of candy, and tell him that if he saves it until later, he can have two pieces, would every kid you know save it until later?

    I’m really not trying to rail against your industry here, or make you all out to be terrible dishonest people out for nothing but instant gratification. I’m just trying to show you what buyers either wrestle with in their minds, or force themselves to ignore.

  28. Polly,

    I did not know that you were “burned by a string of dishonest agents” and “most recently in Janaury”. Maybe if you could generically tell us what you mean by “burned” and the specifics involved without names or house addresses, some “transparency” would evolve for the benefit of this discussion.

  29. Ardell,

    You said:

    “I am currently approaching an unlisted seller, older widow, about selling her home to my buyer client. I have made it very clear to my client if by some stroke of “luck

  30. To clarify my ealier message. I was discussing my MOTIVATION for getting a buyer client the best possible deal. Whether that deal is A. getting the house for less than asking price. B. Not buying that house, or any house at all. or C. Paying whatever it takes to get the perfect house. I get paid very differently under each scenario, but I am looking at the long term when it comes to compensation.

    How does a client know this? I show them value and hard work every step of the way. I educate them and educate them some more. I don’t “sell” them anything and I don’t overcome objections. I solve problems.

  31. Russ,

    If valuing a property really is this vast black hole of ambiguity you make it out to be, I would hope a good agent would be better equipped to at least take a stab in the dark than a buyer. Maybe we should be doing this ourselves after all! 🙂


    Most recent example (I’ll try to keep it short but bear with me): Our home in the Midwest didn’t sell before we had to move. To be fair, it was a dying town with a ton of job loss, mostly white collar. The average buyer for our restored 1925 in-city Tudor was trying to sell their own and get the heck out, just like we were. So we needed an agent who could work in that challenging market. Instead, here’s a description of what we got:

    He had it open every weekend, but he sat on the couch (wrinkling the slipcover I had so carefully arranged to disguise the baby-blue velour la-z-boy beneath) and blared Fox News on the TV while potential buyers just wandered in and out, ignored.

    He thought checking his email once or twice a week made him tech savvy, and insisted on calling me at work, where I had not put in my notice yet, and was trying desperately to keep the fact that we were moving under wraps until after holiday bonuses came out. I begged him to email instead, and every time the response was the same: “Oh I just thought I’d catch you real quick…”

    He refused to put pictures of our house up anywhere other than his own site, and being a really small outfit rather than one of the three or four big agencies in town, it got no traffic. We said we at least wanted pics up on (most popular search site by far among the locals there), and he explained in detail how their fee structure “screwed the little guy.” The outside pics he used for the MLS listing were taken on his first drive-by before we even met – the garage door was up, the yard wasn’t mowed, the leaves weren’t raked… and he wouldn’t replace the pictures (probably because he couldn’t figure out how to download the ones I took myself and emailed to him…)

    So our move day came, and because all the staging was really just our own furniture all dressed up, it all moved with us. There sat our empty little house in the icy cold gray Midwest winter. So when he called in mid-February and said we had an offer, we were ecstatic. The offer was low, but we were desperate. We were 2000 miles away and completely powerless. We asked him to give us an honest guess as to whether they were expecting a counteroffer – as low as they came in, we thought surely they were, but we couldn’t afford for them to walk away, so we needed his assessment from “on the ground.” He said they couldn’t pay any more, and had offered all they were pre-approved for, so we’d have to take it or leave it. So we took it, and celebrated not having to think about it anymore.

    Then the paperwork started rolling in, and we found out that he was their agent too. And that they were pre-approved for way more than they offered.

    Then came the inspections, appraisal, etc…. by the time we found out that they could not get homeowner’s insurance without a complete roof tear-off & replacement, we’d stopped being surprised. He even tried to get the roof on the detached garage included in the deal – even though the garage was specifically excluded from inspection in our initial paperwork. It became so ridiculous that when he started negotiating for a brand new driveway, we started hypothesizing that he and the buyers were related. He knew we’d close no matter what. He knew we weren’t good for any local referrals. He knew we were helpless, and he took advantage of it.

    To answer a few questions I’m anticipating:

    We didn’t fire him because we were working with him through my relocation package. I’m sure we could have found a way to orchestrate that, but it seemed like more trouble than it was worth, especially since by the time it got really bad, we were already 2000 miles away. The “devil we knew” still seemed better than turning it over to someone we’d never even met midway through the process – especially with “his” buyers already on the hook.

    It wasn’t really about the money. I know all the details of this story seem to hinge on the price of the house and the cost of the repairs, but the amounts weren’t the sticking point for us. He demonstrated such a lack of respect for us, and a lack of integrity in general, at every step, that we had a month of heartburn and sleepless nights, just wondering if we were really going to close, if he was going to screw up the paperwork, if the deal was going to fall through and put us back at square one again… we knew we had no one on our side, and we just had to hold our breath and cross our fingers that by magic, everything would fall into place on time, in spite of him.

    And here’s the thing. He was a top producer – a 25 year local track record as *THE* listing agent you want, and he specialized in our neighborhood. He came highly referred from multiple sources. A man of the community, with a string of satisfied clients. Thinking back, he asked quite a few fluffy conversational questions about whether we were “sad” to be leaving lots of friends and family behind, and I foolishly told him most of our friends and family didn’t live there. Thought we were just chatting. Really, he was learning that he would never see repeat business from us and we had no one else to send his way. So he could treat us however he wanted and get a great deal for his local buyers (who I’m sure rave about him to everyone they know). So, was I an idiot to not measure my words more carefully around someone I thought I’d retained to represent my interests? I sure felt like one. We didn’t come out financially ruined – just ashamed, embarrassed, and scared to ever go through it all again. I have no idea whether we got a “fair” price for the house. Doesn’t much matter, does it?

  32. Russ,

    We’ve pretty much established that you don’t want me to know the value of a property or even how to value a property. You don’t want me to know what asbestos looks like. You don’t want me to be able to fill out a form 34 with clauses that support the meeting of the minds between the buyer and the seller in the transactions.

    Some inspectors don’t want the agent present at the inspection at all. Some lenders tell me that seeing the HUD 1 prior to my client signing anything is “none of my business”. Some escrow companies want to know why I need to see the HUD 1 (both sides) and why I need to be with my client when they sign. Most lenders don’t want me to have an opinion with regard to which type of loan program might best suit the buyer’s needs.

    Many agents don’t want me to have an opinion regarding which items in the home inspection findings need to be addressed and how and when.

    I totally understand that for some reason I have become a fish out of water who is not supposed to know anything about my field of expertise. Nor apparently am I supposed to suggest to others they they should know something about their field of expertise.

    I totally get all this. Now someone tell me why we are not supposed to be experts at what we do for a living, when our clients certainly are not the ones telling us to stick our thumbs up our butts and put duct tape over our mouths.

    Redfin is a generic term for a level of expertise worth 1%. Their business model, and not an “accusation” by me.

    When we are being directed to dumb down, for I’m not sure what reason. When lawyers tell brokers to tell their agents NOT to attend home inspections or to sit on the front step and not listen to the inspector. When lawyers tell brokers to tell their agents not to have an opinion with regard to the home’s defects and how to handle them. When lawyers suggest that an agent cannot possibly know the value of a property, duh, isn’t that what we DO for a living? Part of it anyway.

    I can only guess that someone’s idea of “innovation” is to reduce everyone to the lowest possible level. Apparently that is their answer to reducing commissions across the board.

    Unfortunately that is NOT the way to propose new and reasonable cost options to the consumer, that will still cover their butts on all counts.

    Now I’ll take that Vicodin for this root canal. Going to the dentist has certainly created an interesting 2-part thread here, that is up to 80 something comments on a combined basis.

  33. Thank you Polly. I DO hope that you at least told the company who assigned him to you as “part of your relocation package” that you do not recommend that they continue to recommend him to their employees.

    When an agent thinks an Open House is a waste of time…it becomes a self fulfilling prophesy.

    At the very least what an agent should be doing at the very first Open House is to get to know the house intimately through the eyes of the buyers. To see what they are reacting to positively and what they are reacting to negatively. To pay very close attention so that anything that is correctable can be corrected.

    Dual Agency should never be entered into without written INFORMED consent. This means that the listing agent CANNOT write an offer for a buyer without first getting the consent of the seller to do so.

    I think your take on what happened is right on and why I stand on my comments to Geordie that HIS MOTIVATION must be because it is the right way to handle it from the client’s perspective. An agent’s motivation can NEVER be because it makes them more or less money for them, now, or in the future. Take the money OUT of the picture, and then make your decision.

    To Eric et al, I hope you at least get the point that the person who makes the most money is not necessarily the one you should choose to emulate.

  34. Ardell

    You said:

    “We’ve pretty much established that you don’t want me to know the value of a property or even how to value a property.”

    That is correct Ardell. You absolutely, positively cannot KNOW the value of a property. You can provide an opinion of value that may or may not be confirmed when a willing buyer and willing seller strike a deal. You are not THE real estate god. You are a real estate agent who has opinions and skills derived over years in the business. When you do a CMA, might other agents who are doing a CMA come up with a different valuation of that property? Of course. Are you right? Are they right? Nobody knows until you actually close a freakin’ deal.

    Should you know what asbestos looks like? Quite frankly, doesn’t matter as long as you don’t hold yourself out as the expert evaluator of asbestos or attempt to advise your clients about what they should do to remediate the stuff just because you have happened to see it on occasion.

    Should you draft language from scratch on a blank addendum? Quite frankly, doesn’t matter as long as the drafting is up to par of an attorney who drafts docs for a living and has been trained in that regard.

    The problem Ardell is that agents like you are ones who want to control everything in the transaction and the best way to do that is to profess your expertise about everything in the transaction. The reality is that there are very good inspectors, lenders, escrow agents, attorneys, CPAs, title officers, contractors, blah, blah, blah who actually believe that client service is a good thing and put their clients first, apparently just like you. These people do their specialized job every single day. How in the heck are you going to be better at it than they are?

    Agents SHOULD walk the house with the inspector. They SHOULD review the HUD 1, they SHOULD review the title report, they SHOULD attend the closing, they SHOULD point out red flags, they SHOULD opine all day long about things that are important to their client. At the same time, they should also involve people who know more than they so that their clients are truly served by the best people in each area.

    As a baby lawyer, I used to be frightened by the proposition of not knowing something when talking with a client. I used to think that the client was hanging on my every word and since I was the legal expert they had retained, I had better know my stuff. After many years in the business, two things have happened. First, while I know a lot more than I did when I started, I also realize how much I don’t know. Second, I am unafraid to say “I don’t know” or that someone else is better than I on a particular matter. And my clients are better served.


  35. Excellent comment Russ. Best you’ve ever written. It is my job to know red flags and know when the other participants, who do not represent the consumer, need to go back and try again. The difference between all of those people and me is that I represent the client with regard to all of those people. When the lender is pushing their flavor of the day and that flavor is not what is best for my client that day, it is my job to tell him “try again”. When escrow is charging the seller something different than the buyer because the seller is getting a deal, it is my job to say “try again” because the total discounted price is still divided 50/50 under the terms of the contract between the buyer and seller. When the inspector says the roof is 15 years old and will need to be replaced soon, I step in and ask how the 10 year old house could have a 15 year old roof?

    When a lender said to me that it is not her job to represent the buyer nor to worry about whether or not the loan her boss told her to push this week is best for the buyer and it was none of my business, I just agreed to disagree. One person “represents” the client with regard to all of the ancillary services. That one person is their real estate agent. That responsibility cannot be “passed off” to the other people without supervision by the representative of the client. The other people sell things to the consumer and do not “represent” the consumer…only the agent represents the consumer and they cannot turn a blind eye to the other happenings in the transaction.

    The client is always free to do whatever they choose, they can certainly go against my best advices, that is their choice. But that does not relieve me of the obligation to offer my best advices.

  36. Russ and Ardell you are both right in your last two posts. The area in between is where all of us real estate professions had better be an never end up outside of those lines.

    I’d replace the SHOULD in Russ’ post with BETTER.

    As in if an inspector said the roof is 15 years old and needs to be replaced but the home is only 10 years old, then I BETTER be aware of this and have my client hire another inspector AND ask for his or her money back from the first inspector.

    But in my experience I’ve not come across an inspector with such poor work as that. Anytime that a client of mine (seller or buyer) questioned something on an inspection report we get the inspector on the phone or in person to explain themselves on the item, and perhaps get with another inspector or a roof inspector/contractor (in this case) for a second opinion. All within the inspection period to clear up any clouds that could affect the transaction.

    If you are a consumer that is getting less than that kind of willingness from your representative (in a service related biz), then you have the wrong representative. The only think I really know about a roof is that it covers the house so I NEED the expertise from someone other than me on behalf of the client. I NEED it so my client is going to NEED it as well (unless they by chance are a roof inspector or contractor themselves and will agree to continue the transaction).

  37. Ardell (or Polly)-
    I always do my best to the right thing for my client. That’s who I am as a person.

    But it would be silly of me to think I can “take the money out of the discussion” whether it is on this transaction or those in the future.

    If I was idependently wealthy I wouldn’t be in real estate. I would still be a park ranger in our national parks. I would be a seasonal employee without health benefits and no chance of ever owning a house. I would be fighting forest fires, performing search and rescues, chasing down drug runners and poachers.

    My clients know (absolutely) that I am fighting for them at every turn, but they also know I am working for a living and expect and deserve a paycheck.

    There, I have overstated my point….

  38. Dustin-

    I agree with you that Polly’s comments should be required reading for anyone in the real estate biz (all allied r.e. professions). Probably applicable to any small business owner regarding customer support and service issues.

    Someday I’m going to get the courage to ask a client if we can tape or have an agent observe a closing/signing (obviously not their own clients). If you want to be absolutely blown away with what consumers say at the signing table, both good and bad, this would be the way to see it in action. Sometimes just their body language and posturing tells the story.

    Recently, I’ve experienced one of the best cases and worst abuses of customer service/representation by agents and loan officers.


    Thanks for the information regarding broker/banker differences in fee structure disclosures etc.. I hope it was helpful to those readers who may not understand the nuances of lending.

    Your point about no free lunch was really the point I was trying to make. Consumers pay. In lending it’s either via actual closing costs disclosed or no closing costs disclosed but made up via interest rates.

    It terms of credits to consumers by agents vs. loan officers? I’d say it’s fairly equal. We see credits all the time.

    One funny story: a transaction we closed about a month ago…the L.O. was making serious YSP coin and the borrower was capped out on closing cost allowance/threshold, so to make it work and get the borrower under the threshold the L.O.’s processor calls my wife and asks if she would reduce her escrow fee ($495/side for a $640,000 purchase). Needless to say, my wife started laughing. Just amazing arrogance. There is no other word to describe it.

  39. Geordie,

    Thank you for sharing your passion with us. How do you implement your passion for these things into your current life? Do you have free time that allows you to participate in the aspects of life that you clearly enjoy immensely?

    We all have our Big Whys in this world. Mine are my three daughters whom I choose to “be there” for now matter how old they get.

    The definition of Fiduciary is without regard to self-interest. Day in and day out during negotiations with agents I hear them say that they are doing something because of their own personal interest reasons. I like this one. They are bringing me a full price offer with no contingencies at all, no inspection, nothing that could be countered, because they are leaving for vacation and want it to speed through escrow without there needing to be around and available. Great for my seller, but I just don’t like hearing that an agent is putting themselves into the picture.

    I think it is good for us to remind ourselves that we are not “a party in interest to the transaction”. The more we say it…the more we hold ourselves to the highest standard.

    Again, I very, very much appreciate your sharing your personal side. It’s what makes RCG an “online community” vs. a board of info.

  40. Todd et al,

    Always, when a “bad” inspector is in the mix, I am the agent for the seller and not the buyer. I can’t do the things that you (and Russ on the asbestos issue) suggest that I do. It puts me in an awkward position when it is obvious that the inspector is not going on the roof to inspect something we highlighted on the Form 17. The items often become totally disregarded by the Buyer and the Buyer’s Agent, because they do not appear on the inspection report.

    As to knowing if a roof is bad or not without an inspector, I’m sure you will agree Todd, that sometimes it is simple math and visually obvious. Clearly when I list a property and advise regarding seller’s estimated net proceeds, I need to caution the seller before he sells it, that his net may be reduced by the need for a new roof. It would be quite unconscsionable for me not to do so.

    If you have a 20 year shingle on a 27 year old house and the owner knows it is the original roof…it’s not too hard to figure out you may have a roof issue at inspection time.

  41. Ardell

    I only want to see the inspection report when it is in addition to a buyer inspection form (like we use in AZ) if I’m representing the seller. Otherwise by now my client has disclosed, disclosed, disclosed. In a typical listing neither I or my client are certified home inspectors, nor do we have to be. Typcially at the listing signing I point out red flags (like obvious roof leak) for disclosure. Even though my client does the disclosing, I have to be sure and confident on what the client put on the disclosure form because in essence I am representing that document.

    I can’t speak for the great state of Washington, but in Arizona buyers basically have a ‘free look’ during the inspection period these days. The worst inspector in the world could offer up a totally bogus report on behalf of the buyer and the buyer can simply walk away in the time frame of the inspection period. I’ve heard of this happening no questions asked or reasons given. Listing off the market for a couple of weeks, the whole 9 yards. To me that is not the spirit of the purpose of the inspection.

    I use to list plenty of REO’s a few years back. I was given a limited budget on what I could address on the property by the company that hired me. I used to ask any buyers agent if I could see the inspection report — even if their client canceled the agreement — so I could give a report to my REO client. Through this process I did learn some things about construction of a home, and like you will point things out to a client that I am sure of, but will always expect a home inspection report to be done and that report be the basis for further negotiation.

  42. Ardell,

    Do your clients find the inspectors on their own or do you recommend them?

    If you recommend them it sounds like you better get a new list of inspectors, loan officers, and closing agents.

    Ive worked with 2 loan officers very closely for 10 years and their philosophy was the best.

    “You go out find the best deal you can find for a loan I will meet it or beat it and you will enjoy outstanding customer service”

    Never did the conversation of are the clients paying to much for a loan come up. The clients found what they thought were the best deals. The loan officer then verified it pulled all the mystery out of it and closed the loan.

  43. Todd,

    The CA Disclosure form had a place for the agent to put things they knew and saw. Perhaps the rest of the Country should follow suit on that one.

  44. Ardell,

    As a listing agent you don’t have a choice in who does the inspection. However, the seller has a choice to accept the inspection or not. If there is a questionable item the seller has a choice to hire their own professional to dispute or concur with the conclusion of the buyers inspector and then make a decision on what they wish to do.

    On the recent sale of my own personal home the buyers inspector said the crawl space needed a sump pump. I hired an engineer to verify or dispute the buyers need for a sump pump. The engineer concluded that there was no need for a sump pump and the buyer accepted his opinion and the buyers inspector conceded the point. In this case the listing agent on my home was the selling agent as well and she recommended the inspector to the buyer. She handled the whole situation very professionally.

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  46. Ardell and Russ have made excellent points but I don’t agree with a few statements.

    A) Everyone on the transaction is “selling

  47. One of the biggest reasons I chose to hang my license at the office I’m at is my brokers statement in the initial interview “we put the client’s interested ahead of all other things, especially the commission”. I’ve been here just over a year and so far I’ve stayed because the agents in my office seem to all walk-the-walk when it comes to that line.
    Polly, it’s a shame that you had the experience that you did. I wish everyone in our industry was as good as Ardell. I know that’s the level I strive to meet.

  48. Robert,

    I was with Coldwell Banker for many years. Almost everything I do is “the Coldwell Banker way” from the old days when “we” were owned by Sears 🙂

  49. Jessie B. Don’t know if you are an agent, and if you are, what state you are in, but unless you are an agent in Oklahoma, you are dead wrong on most counts. Our state law says that a license “represents” the buyer, not the lender, not the inspector, not anyone else. And since we represent the buyer with regard to the entire transaction, not just to “sell them a house”, we are responsible to assist in all facets of the transaction.

    Oklahoma has no agency, it was outlawed there. Florida has no Dual Agency, it was outlawed there. Some states have Transaction Brokerage as an option. But our state requires all licensees to “represent” the buyer.

  50. Ardell

    I understand that you are making your point from a legal definition of “fiduciary” but what I was addressing is the reality of how people feel and act when involved in a real estate transaction. Things are never that clear cut and simple.

    For example: Most mortgage brokers in CA must have the same real estate license as an agent. Now you have two parties that can have the same responsibility according to their licensing. So who really “represents” the client? My guess, they party who initiated the transaction with the client.

    My point, which was contrary to your statement, was that real estate agents are not the only ones who can look out for the clients best interest… regardless of licensing. This egotistical attitude that many real estate agents have about being the most important (required) part of the transaction just because they are an “agent” and licensed is a problem because it displays a lack of respect for other professionals and customers. Agents are not the “only” ones that can help a transaction go smoothly… it’s the work and cooperation of everyone including the clients.

    Any real “professional” involved in the transaction will exercise the same care and watchful eye looking for obvious inconsistencies as you pointed out for their client. So it’s important that everyone works together to focus on delivering the best most professional service possible to clients instead of worrying about who is most important in the deal. Only then, will the general publics opinion of the real estate profession be improved.

  51. Jessie,

    Being “the one” who represents all can be as simple as bringing in someone tried and tested to represent as you would have them do. Or the consumer choosing what is best for them, and your agreeing with a simple check.

    You are the boss. The boss doesn’t have to be arrogant, but he does have to be the boss.

    Go back and read Polly again, the consumer needs, wants, and the law states, that the agent be cognizant and “in charge of” all of the pieces to the puzzle.

    “Closing the Deal” is not good enough, and a throwback to when the buyer’s role in the transaction was to consummate.

  52. Jessie B.

    You can be anonymous, but please tell us if you are a real estate agent, and if so, where? If you are a lender or closing agent, your comments make more sense than if you are an agent somewhere in the country.

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