What to Watch out for with Real Estate Agents
The most important things when it comes to what to watch out for with real estate agents are high pressure sales tactics, lying, passivity, lack of responsiveness, argumentativeness and a general lack of ethics. We’ll discuss the classic signs that you should run from whether you’re buying or selling and much more in this article.
Signs of a Bad Buyers Agent
Can’t answer simple questions about the process
A classic sign of a bad buyer’s agent is the inability to answer basic questions about the home buying process. For example, you ask whether buyers can back out of an accepted offer, and your buyer’s agent has no idea but promises to get back to you.
Keep in mind that buyers’ agents won’t necessarily know more than you about a property listed for sale, as most of the information about a listing is the same on public websites as it is in the broker database. This is especially the case in NYC where the REBNY RLS broker database doesn’t have data that is much more differentiated than what you can find by yourself on any public search website.
This won’t be the case everywhere however and will vary by region. For example, in Westchester County and the Hudson Valley in New York, the Hudson Gateway MLS (HGMLS) offers significantly more information about a property vs what they will share with public search websites like Zillow.
If you’re buying out in the suburbs, your buyer’s agent may not know much about a specific listing off the top of their heads, but they can certainly find out more by looking in the MLS.
Doesn’t mention anything about closing costs
A classic sign of a bad buyer’s broker is one that doesn’t bother mentioning or explaining what closing costs are, either because they don’t know themselves or more maliciously because they don’t want to discourage the buyer.
This can be extremely problematic for first time home buyers who don’t even realize until it’s too late that closing costs in NYC for example can be 1.5% to 6% for buyers, depending on whether you are buying a condo vs a co-op and whether you are buying a new construction home vs a re-sale.
Doesn’t explain that new developments have additional closing costs
One of the biggest signs that you have a terrible buyer’s agent is if he or she doesn’t bother informing you about the additional closing costs associated with buying a new construction property, until after you’ve gotten an accepted offer.
In contrast, a good buyer’s agent will dutifully inform you prior to submitting an offer that developers and sponsors customarily expect the buyer of a new construction property to pay the sponsor’s NYC & NYS transfer taxes as well as the sponsor’s attorney fees.
Additionally, new developments might have additional closing costs such as an initial contribution to the building’s reserve fund or a pro rata contribution for the purchase of the building superintendent’s apartment.
Doesn’t explain that closing costs are negotiable
The worst type of buyer’s agent is one who doesn’t bother explaining or perhaps simply doesn’t know that everything is negotiable in real estate, including closing costs. This is especially important when it comes to new development purchases where closing costs really start to add up.
A good buyer’s agent will inform their client that even though the sponsor customarily expects the buyer to pay the sponsor’s transfer taxes and attorney’s fees, it is all negotiable just like the price.
A worse than useless buyer’s agent however will negotiate an accepted offer based purely on price, without ever mentioning what closing costs will be to their client. If the buyer is lucky, the buyer’s lawyer may explain to the buyer before contract execution about the additional closing costs that are ordinarily expected. At this point, the buyer will likely just shrug it off since he or she is already so emotionally invested in the purchase.
Refuses to go to any showings
We totally understand the desire to save your buyer’s agent some time, especially if you are early on in your search and just browsing. In fact, it’s universally preferred for buyers to go to open houses by themselves, and to simply sign in with their buyer agent’s name.
However, some mom and pop discount brokers have taken this to a whole another level. We’ve received complaints from former customers of some of our competitors [1] that in order to be efficient, these one man shops have refused to go to any showings, even if it’s a second or third showing before an offer submission.
It certainly makes sense, given that an operation with just one, two or even three people simply can’t operate long term with the principals acting as the salespeople in addition to trying to run their business.
However, this type of behavior can result in extremely poor outcomes with listing brokers who are already plainly aware of the rebate being offered (i.e. from a simple Google search of any broker they’ve never heard of), who become even more displeased once they hear that the discounter won’t even bother doing any perceived work, yet still wants half of their listing commission. As you can imagine, this isn’t a conversation that typically ends well.
[1] These are not direct competitors because Hauseit is not a licensed real estate broker, but rather a platform that connects discerning buyers and sellers with real, established, traditional partner brokerages who are not discount brokers. Because our partner brokers never openly discount their services, buyers and sellers don’t have to deal with the risk of their agent being ignored or boycotted by the traditional brokerage community.
Signs of a Bad Selling Realtor
Is unresponsive and uncommunicative
Being unresponsive, uncommunicative or simply MIA (missing in action) is one of the worst traits a real estate listing agent can have. If your listing agent is supposed to be the architect of your home sale, how do you know he or she is doing a good job if you can’t even get a status update yourself?
A seller’s agent who is uncommunicative or non-responsive may simply have too many others things going on to focus on your sale. For example, he or she may have too many other listings or clients to take care of, or perhaps he or she works another job or travels often.
Either way, you’ll want someone who is able to focus on your sale full-time vs someone who is simply moonlighting as a real estate agent.
In contrast, all of our partner brokers prioritize responsiveness as one of the key traits they look for when hiring new real estate agents. Our partner brokers and agents are trained to give prompt feedback after every showing, whether it’s a simple text or an email update.
Furthermore, our partner agents are trained to give a weekly summary of traffic, interest, offers, feedback and questions. This weekly summary is typically sent on a Monday or Tuesday so feedback from the weekend’s open houses can be included.
Is argumentative or combative
A really bad sign for a listing agent is someone who is confrontational and angry when dealing with customers and other agents.
For example, classic examples of listing agents who don’t play well with others are those who don’t bother responding to buyers’ agents inquiries, despite mandatory co-broking rules by real estate associations and MLS systems across the country.
If the listing agent is going to make life difficult for buyers’ agents, then why on earth did you list your home with him or her? There’s no reason to have a listing agent if he or she isn’t going to co-broke.1 If that’s the case, you might as well list your home For Sale By Owner or get on the MLS yourself via an Agent Assisted FSBO listing.
Even worse is if your listing agent regularly loses his or her temper with you, and gets in heated arguments with you over various details of your home sale. For example, it’s one thing to have a level conversation about your home being priced too high, but it’s another to get into a shouting match over lowering your home price vs increasing the broker commission.
Is passive vs active in responses to inquiries
A lazy or simply inexperienced real estate listing agent will respond very passively to inquiries from buyers and their agents.
For example, if a buyer’s agent emails asking whether the listing is still available, a passive listing agent may respond with a simple, one word response of “yes.” However, this responsive may be viewed as worse than passive by the buyer’s agent.
Not only is it barely sufficient of an answer, it lacks enthusiasm and may demonstrate to the buyer’s agent that the listing agent isn’t serious or motivated to do a deal. Even worse, it may be a clue to the buyer’s agent that perhaps this listing agent will be difficult about co-broking.
In contrast, a good listing agent will be very pro-active in his or her response with something like: “Thank you for your inquiry! Yes, this beautiful, 3 bed, 3 bath loft in the heart of NoHo is still available. We just reduced the price a week ago, and it’s now priced to sell. Please feel free to ship your buyer to our upcoming open house this Sunday from 2–4pm, and let’s do a deal!”
Doesn’t make an effort in marketing the property
While it’s true that properties are marketed almost entirely online these days, and that a listing agent can’t do much more after a listing has been uploaded and automatically syndicated from the MLS, a listing agent can still hustle to get more attention to his or her sale.
The most common tactic is to do a search for comparable listings for sale, including similar listings that have recently sold or gone into contract. An enterprising listing agent will then send a note to each listing agent telling them about his or her new listing, and ask whether the other agent has a buyer for the property. The agent may also mention in the note that amount of the co-broke being offered, and that they’d be happy to do a deal.
A second common strategy is to send an email blast or newsletter to the listing agent’s network advertising the new listing, or perhaps even to promote a recent price drop. You’re bound to get some additional views, even if many folks only see it as they scroll down the email to hit unsubscribe.
[1] Listing agents are typically bound by the terms of their MLS co-brokerage agreements to co-broke and split commission with cooperating buyer’s brokers.
Real Estate Agent Pressure Tactics
Prices will just keep rising
A classic refrain from a buyer’s agent is that you might as well suck it up and pull the trigger now, because home prices are headed just one way, up. While this may be true in the long run, local markets do see fluctuations between buyer’s markets and seller’s markets where prices do move both up and down.
While your buyer’s agent is right in that you shouldn’t wait too long due to the very real risk that you may get desperate down the road and bid much higher than you would have now (i.e. if your lease is expiring), at the same time this is a common pressure tactic meant to push a buyer to accept a seller’s counter-offer.
Home prices in the US have gone up over time, but so has the stock market. Is your money better invested in the stock market vs NYC real estate?
You only have until tomorrow to make a decision
A common high pressure sales tactic used by real estate agents is to tell their clients that the counter-party will be backing out of their bid or offer by some date, and therefore a decision needs to be made before then.
Often times, they are simply relaying the story fed to them by the other party’s agent. However, you may also see made up stories entirely from unscrupulous agents who simply want a deal faster.
A classic example is where a listing agent tells a seller that the buyer is now looking at rentals, and will sign a lease by the end of the week if the seller’s accept the buyer’s counter-offer. If true, this is actually a very serious threat, especially in a slow market where the seller’s doesn’t have any other real offers, or if it’s November and winter is already upon us in NYC.
Sneaky Real Estate Agent Tricks
Lying about multiple offers
Yes, unfortunately Realtors can lie about having multiple offers. A listing agent can easily tell a bidder that they’ve received one or two other offers, and that they’ve decided to hold a highest and best offer process on Friday. Ironically, if the buyer chooses to participate, he or she will be bidding against him or herself.
Lying about being excluded from the other offer
If a listing agent lies about multiple offers, and you call their bluff by refusing to budget on your offer, then sometimes they will come crawling back to negotiate. This is a clear as day sign that the agent had completely made up the other offer or offers. Think about it, why would the seller be willing to negotiate with you if they have other offers, that are sometimes explicitly explained to you as being higher?
When we’ve encountered this situation ourselves, the lying listing agent will usually try to explain it away as a case of him or her being “excluded” from the other offer.
In other words, the listing agent will explain that because it was previously marketed by another agent, he or she had to accept a few excluded buyers that had seen it with the previous listing agent. If one of these excluded buyers bought the property, the new listing agent wouldn’t be eligible for commission.
As a result, this is the supposed reason for the listing agent to be negotiating so hard to try to get a deal done with us, even though the seller has a better offer.
To try to make it more plausible, the listing agent may try to say that he’s willing to lower his commission, and so should the buyer’s agent, in order to get a deal done.
Read the Full Article: https://www.hauseit.com/nyc-rent-laws-regulations-changes-2019/
Disclosure: Hauseit (https://www.hauseit.com) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).
