Be Careful! Be Very Careful!

I received a call last week from a friend who was looking for a home. She had fallen in love with a property she had seen at an open house and wanted to make an offer on it. I can and do act as a real estate agent for people from time to time so I went to get the details on the property. It turns out it wasn't listed on the local MLS, the Multiple Listing Service. The plot was thickening!

We called the listing agent who said that he had an "exclusive listing" agreement with the seller, and that he wouldn't deal with other brokers, just directly with buyers. That is unusual because most listings give the broker the exclusive right to represent the seller, but not the exclusive right to sell.

The listing agent's job is NOT to sell your home; it's to get some OTHER agent to sell your home. That's why MLS exists in the first place. It is also a reason why agents cluster together in offices. It makes it easier to expose their listings to the market. Those other agents have buyers and they want to find out about attributes of new homes that have been listed, hoping to find one that might match with the needs and desires of their clients.

I think that this exposure is really important if you want to get all the potential buyers in the market to know about your home. By comparison, this agent was basically keeping it a secret! How is that in the best interest of the seller?

Now I think that there are exceptions to that rule. It is not all that uncommon for an agent who works a particular neighborhood to have his/her own buyers. Most agents work with both buyers and sellers and is obvious that sometimes there will be a match. It also happens when a buyer wants a particular model, so a hard-working agent might knock on doors of that model seeing if they might be about to sell. That's OK. Usually the agent will be very forthright in saying, "I have a buyer for your home," because s/he does.

In these situations, the agent will tell the seller that they want their buyer to see the property and perhaps make and offer before it is exposed to the market. Note that in this situation, the agent would be acting in a dual-agent capacity, legal in most states. Obviously, if they have been diligent about coming up with a price that is fair and can put the deal together, all well and good.

The other exception is that the agent might ask for a couple of days in which to expose the property to agents in their office only. In a large office, this would be plenty of exposure and perhaps a deal could be put together. In these two situations, it is not uncommon for the seller to get a benefit too, a reduced commission.In most situations, however, this is not the case. Homes DO end up in "Multiple" and some other agent brings the buyer.

As a buyer, you should be a little wary about situations that are not normal. Your WARNING RADAR should be in a FULL ON state. Why? Let me return to the property we started out with. I called my appraiser who did a quick check and said that he was unable to find comparable sales data that supported this price! My associate, who happens to live nearby, went out to see this property and then did a check on recent sales. That check showed that this property was listed for over 10 or 15 percent more than what the market demonstrated, validating the opinion of the appraiser.

I was out-of-town for the weekend so I told the buyers to hold off and that we'd find them another property after I got back. While I was gone, however, they made an offer about 5 percent under the listing price. In my opinion, this was still well over the market price. They made the offer through the listing agent of course, and had given him a check for $30,000 to accompany their offer!

Luckily, things calmed down and by Sunday night they realized that they were making a mistake. When they called me on Monday they wanted to know how to withdraw their offer and get their money back. I told them about the procedure and they executed it. We're now going to work with them in a more rational, careful, deliberate manner and I think that we'll find them a home that is a better value than this one.

My point here is that there are some dangerous people lurking out there, eager to find victims who are naive enough to do something irrational. This agent was trying to control everything and purposely exclude others who might keep things rational. That was an indication to me that something was fishy. We want to get our clients into a home that they like, but falling in love with a property can be dangerous and expensive. It can be very easy to make a mistake when emotions are running high. That is why it is so important to surround yourself with trustworthy professionals who are looking out for your interests.

Be Careful! Be Very Careful!