What Real Estate Agents Don't Want You To Know
The majority of home buyers and sellers engage a real estate professional to help them list and/or purchase a home. Real estate agents can provide a wide array of important services such as telling you the selling prices of other homes in your neighborhood, what you should do to improve your home for showing and when to turn down an offer. However, there are other important details they may not disclose quite as quickly. Here are a few things your real estate agent may not necessarily want to discuss.
There May Be A Better Agent To List Your Home
Agents work to become known as the leader in representing buyers and sellers for specific neighborhoods or areas. While your agent may be well-qualified, there may be another local agent that has a better track record of success and can more quickly find a buyer for your home (at your desired price as a seller) or negotiate a better contract for you as a buyer.
They May Be Spending More Time On Other Clients
Agents often work with multiple clients at a time. If another client represents a more lucrative commission, chances are they will command more of your agent's time and attention. That could mean that you get more face-time and service from your agent's staff instead.
You Can Give Allowances Instead Of Making Upgrades
Experienced real estate agents know which homes will be your competition and what type of repairs and improvements are going to make your property more attractive. Don't assume that you need to make expensive changes such as replacing laminate countertops with granite, installing new stainless steel appliances, etc.
While those changes may make the home more appealing - and therefore an easier home to show for your agent - you could choose to lower the selling price and/or provide a financial allowance in the contract (i.e. $5,000 toward new carpeting) for the buyers to make changes on their own. (We provide top tips on how to help sell your home in a rough market. Don't miss Closing A Real Estate Deal In A Down Market.)
You Don't Have To Use Their Recommended Contractors
When you sell a home you will typically have to work with a number of contractors such as inspectors, appraisers, repairmen, etc. Most agents have relationships with a handful of professionals they call for these types of services.
However, they may overcharge and/or not necessarily be the best, and you will be the one responsible for paying. You can thank your agent politely for the recommendation but you have the right to find and hire people on your own.
Your Neighborhood May Be To Blame
Even if you make every change, improvement and repair that your agent recommends, if your house is located in a less desirable neighborhood than similar properties that are for sale, you may have difficulty selling at your desired price point.
They May Be Willing To Lower Their Commission - Or They Have Competitors That Will
The common rule of thumb is that agents make between 5% and 7% in commission, so most sellers assume that approximately 6% of the final home sale price will be taken out of the proceeds and split evenly (3% each) between their agent and the buyer's agent. However, times have changed. Even during the housing boom real estate firms began experimenting with discounting commission as a way of enticing clients.
There are even individual agents and discount real estate firms that will charge clients either by the hour or a flat fee instead of commission. Some offer rebates if you find a buyer and rewards if you refer another buyer or seller.
When you interview a potential agent (and you should do your due diligence before signing a contract to have an agent represent you), ask if they are open to discussing a discount on their fees. Some agents work for firms that will not allow them to negotiate. However, you can use online services such as HomeGain.com or Yahoo's real estate site to find an agent who would be flexible on fees.
They Make Money Even If You Don't
Most agents get paid their commission regardless of whether the client (that's you) makes or loses money on the sale. (Find out how to stop chasing the market and start leading it in 5 Things Every Real Estate Pro Knows.)
They Might Not Know Your Market
When real estate is hot, people flock to become agents and cash in on the boom. Before choosing an agent make sure you know their experience and background and, just as importantly, how long they have worked in your local market. Agents that know the market and have a strong base of past clients can rely more heavily on repeat business and referrals than a "newbie."
They May Not Be Showing You All The Properties You Could Buy
If a homeowner is trying to sell their home on their own as a "For Sale By Owner" (FSBO) property, your agent may not share the listing with you because the seller will not pay a commission for the buyer's agent.
They Are Not Financial Advisors
Only you know if you can really afford to buy a home. A realtor can help you secure financing and execute all the necessary paperwork to become a homeowner but they're not going to analyze your budget and determine if you can truly afford to repay the mortgage loan. Ultimately, you are the one responsible for deciding if it's an investment you can afford to make.
You Don't Need One
With the emergence of the For Sale by Owner industry individuals can - and are - buying and/or selling their homes by themselves. Depending on local market conditions, you may be able to buy or sell a home without having to pay an agent's commission. (There's no guarantee that realtors will act in your best interest, but it may be worth hiring one anyway. Find out more in Do You Need A Real Estate Agent?)
The Bottom Line
As helpful and friendly as they may be, at the end of the day real estate agents are business people. Their primary objective is to build their business and make a profit in the process. Understand that before you make assumptions about how they are going to interact with you. Ask questions, press for details and get everything in writing when working with the person that's going to help you make one of the most significant financial transactions of your lifetime.