Homebuyer Mistakes – Part 3

In choosing a real estate agent it is important to understand who represents whom. Last week I talked about the importance of making sure that you work with a Buyer’s Agent, one who represents you in the transaction, rather than the seller. But there is another common kind of agent: one who works primarily for him or herself.

When they do those surveys about which professionals we trust, nurses, doctors, and firefighters come in at the top. Real estate sales people are near the bottom, slightly ahead of car salesmen and politicians. Is that justified?

I know many real estate agents who are the kind of people who, as I like to say, who will “lie down on the train tracks for their clients.” But my guess is that the percentage of those who will do that is pretty small. There is a larger percentage at the other end of the ethical spectrum who look out for their own interests first. Their primary concern is how much money can they can make on the transaction and how hard do they have to work to earn it?

I’m sure you’ve met someone at a business function who joins a small group in conversation, but then abruptly leaves after a few minutes. He, or she as the case may be, is probably one of those predatory people who hunt for clients/victims at such events. He left you because he had determined that there was no money to be made in your group, and so moved on to the next group.

There is an old saying, “Sales success is dependent upon warmth and sincerity, and once you can fake that, you’ve got it made.” I have seen a situation where an agent may have known someone casually for years, but when the word leaks out that they might be moving, all of a sudden he becomes their new best friend. They don’t care about helping you, they want to help themselves.

There are people who are can be all smiles, but in situations when money is at stake, they can be vicious. They are motivated by self-interest, period. As a client, you want to avoid dealing with these people. The fact that so many are out there emphasizes why the choice of an agent is so important.

In almost everything I write I talk about finding a real estate agent or mortgage loan officer by getting referrals. In many cases, you may still also want to get references too, and check them out. Remember that some people who give you a referral may well be clueless and their advice isn’t worth much.

Therefore, it might make sense to interview more than one agent. During the interviews it is important to use all of your senses. Don’t just listen to what they say because some agents use a highly developed sales presentation. What you want to identify are more subtle factors, using skills you have been using all of your life in evaluating people. Remember that your goal is to find someone trustworthy and with whom you communicate effectively, and these qualities have nothing to do with a canned sales presentation.

Finally, even though you have chosen an agent you hope you can trust, I would not recommend being totally forthcoming with that agent. You should be honest, but you don’t have to tell them everything about your intentions. For example, when making an offer, you should go through a process to decide what a property is worth, which is likely less than the listing price. So you and the agent try to come up with an offering price. It would be quite natural to say, “It’s listed for $250,000, probably worth about $240,000. Let’s offer $230,000, but I’d be willing to pay $240,000 for it.” I wouldn’t do that.

Let’s look at what is going on in the mind of your agent when he presents the offer. My belief is if he knows you are willing to come up to $240,000 he will not be as tough a negotiator as if he really believes that $230,000 is your BAFO, your Best and Final Offer. He will work harder to close the deal at your offering price.

Your agent’s job is to communicate your intention and if he is portraying you as having reached your limit, that there won’t be any counter-offers, you stand a better chance of buying that home for $235,000 instead of $240,000.

Be careful out there!