Typical realtors expect buyers to pay the seller’s price.
They don’t like conflict, they struggle with valuations, they aren’t professional salespeople, and they get pushed around by the sellers and/or other agents. Because they aren’t that good at handling their end, they just expect you to pony up. This goes for listing agents, and many, if not most, buyer’s agents.
I’m a fighter, and a precision guy. Not only am I going to stand up for my client’s price (seller or buyer), I justify it in writing to back it up. Not many realtors do that.
I just heard this from another agent, and want to run it by you:
“I’m not that concerned with what my buyers pay, because in 7-10 years it won’t matter.”
How would you characterize that statement?
A. More expected psycho-babble from money-grubbing realtors.
B. Weak – misses the point of fiduciary duty.
C. Mathematically it doesn’t sound like much but over time it adds up.
D. In an appreciating market, it wouldn’t matter, but…..
E. She’s right, it won’t matter – years later most people can’t remember their exact sales price.
F. It’s only money – the enjoyment/benefit from raising the family is what matters more.
I would characterize it as A(but not all Realtors are), B, C. I can’t put it at only one, because it crosses too many lines. The buyer’s agent is forgetting who they work for, and may also be having a vested interest in the buyer paying more because their part of the commission would be more.
As for ‘F’, what if the price is so much that they can’t enjoy raising the family because they are house poor – almost all the money going to the mortgage.
G. What a douche.
I bought my house 14 years ago and I know the exact price and the comparative value it was at the time and how this price has done me so well and the exact interest terms of my loan and how the escrow agent was pissed at me for reading the entire escrow document before signing and. . .and. . .and. . .
I know I am preaching to the choir here but I will testify to Jim’s integrity about being your agent. He was the first realtor I have ever experienced to give an honest valuation of a house I was considering. Every other agent I have been exposed to gives me the kind of response you would expect from the salesperson at the Gap (“the price is x dollars”) and says stupid stuff like “this is the kitchen” (No shit sherlock, I know what a friggin kitchen is).
Jim is my agent for when I finally get back to San Diego and he should be yours as well.
Oh, and yes price does matter; a lot. It sets the course for the emotional response you have when you tell the story of how you got into your home; and that is a story you will tell many times over.
The old adage that you make your money on the purchase has always held true for me. I would fire a buyer’s agent that ever told me that what I paid for a property did not matter. I know the cost of every property I ever purchased, even ones in which I no longer have an interest.
There are a number of excuses to be made by a Realtor not willing to negotiate in the very best interest of the client. While it is very easy to attribute that to the fact that a lower sales price means a lower commission more often it seems that many Realtors are simply ‘sales people’ with only a cursory knowledge of the marketplace. They could be selling shoes or cars or plasma televisions sets. They simply lack the talent, knowledge, and skill to aggressively represent their client on either side of the deal.
Even if a home is a lifestyle purchase and not an investment one still expects to get the very best deal one can.
“G. What a douche.”
QFT. I wonder if that agent cares about the commission, or thinks it will matter in 7-10 years.
“There are a number of excuses to be made by a Realtor not willing to negotiate in the very best interest of the client.”
There’s a fundamental agency problem. The Realtor doesn’t get paid if you refuse a bad deal… what’s he going to tell you to do?
Certainly ” A “. Only concerned with the commission,the higher the price , the more commission. I have bought 6 homes over 35 years and know price paid and sold on each. Some Realtors are very shallow…
H: A douche but accurate economic observation.
The buyer’s agent, by being paid by commission, actually has the opposite incentives of the buyer. The buyer wants low price or walk away, the buyer’s agent wants HIGHER prices and to make a sale.
And in 7 years it matters anyway. An extra $200/month in costs because the place is more expensive adds up.
E. is silly as an option. Lots of people have total recall as to how much they paid for houses, which is why they’re so obstinate about not wanting to get less.
If it’s not going to matter in 7-10 years why dont you give me half of your 3%.
90% of realtors are clueless dingbats. 5% are really good at what they do. 5% are crooked to the core and are on the lookout for a mark.
B, the issue is one of trust and doing the right thing in all issue of life. If you have but one job, do it well to the fullest of your abilities without fail.
I will go with “G – just plain lazy”.
It is a lazy meme akin to “you should buy now because interest rates are as low they can go.”
D
It would certainly be less in 7-10 years my 1,000,000 house will be $800,000 or less with 7% interest rates.
Thanks Keith!
Great response from all, and I like Joel’s answer the best.
If your agent is going to sell you out on price, how do you know they’ll be critical about the condition of the house? Be helping you get the best financing? Setting you up with the best fix-it guys?
You wouldn’t, and that seed of doubt would be unsettling, to say the least.
shadash,
Tell them about the realtor who knocked on your door the other day!
“If it’s not going to matter in 7-10 years why don’t you give me your 3%” – shadash
Exactly! What sets JtR apart from nearly everyone else in real estate land as he really does have his client’s best interests at heart.
The very worst agents are the ones that give you a guided tour of the house as if you’re blind (This is the kitchen, here’s the 2nd bath).
I remember one open house, and all the agent could repeat was: “It’s so light and bright” and when I asked a few questions, her answer to every one was: “I can get back to you with that answer”. I quickly left and felt she really did a disservice to the seller she was representing.
Seriously, there’s been some where I knew more about the house than the agent showing it…
For me it’s A, B and C, with a tossup between whether A or B is #1. As for the others…
In an appreciating market I might choose to pay more, but I’ll be damned if I’m going to let the realtor decide that for me. A realtor’s job is to get me the comps and submit the offer I choose to make. I’ll consider the realtor’s opinion, but don’t think for one instant that I don’t know where the realtor’s commission is coming from.
I’ve owned four houses in the past 30 years, and can remember the exact purchase price of every single one of them.
No matter how happy my family ends up with the house, the realtor is not a member of my family and I CAN separate my family’s happiness from my low opinion of a lousy or crooked realtor.
Who bases evaluation of property conditions on the realtor’s opinion? I’ve hired an independent inspector for every house.
B and C.
Similar to the 7-10 years statement, I worked with an agent who liked to say that “Inflation erases all (pricing) mistakes.” And in retrospect, the same agent didn’t have my best interest in mind.
Considering the current economic climate, it would seem even more important than ever for an agent to get both the price and the property right.
Jim won’t leave you wondering about his opinion of price and issues for a property. He does the right thing for his clients.
“The very worst agents are the ones that give you a guided tour of the house as if you’re blind (This is the kitchen, here’s the 2nd bath).”
Funny!
I actually bet that a lot of blind people can tell a bathroom just from the feel of tile underfoot and the way sound bounces in a small tiled space. So “here’s the 2nd bath!” may be wasted on them, too.
A & B — I’m the super cheap type. The lower the price a buyer pays can mean a lower down payment. That leaves $ in their bank acct (to use for home improvements, vacation or invest/save). Or maybe a buyer would borrow less $ for a mortgage loan. The savings from lower property taxes based on a lower sales price could really add up over 10 years.
Just call him a lazy clueless idiot and have done with it.
I go with A,b, and c…on a side note does anybody know a decent agent on the westside in los angeles…i really could use one.
Jim, do you have any thoughts on alternative incentive schemes for buyer’s agents?
You are unusual in thinking about the long-run — you know that the better job you do as a buyer’s agent the more business you will get (at least from non-douchebags). Plus I doubt you could live with yourself if you did anything less than your best.
But most people are influenced by immediate incentives, and it’s absolutely the case that the 3% buyer’s agent commission gives them little incentive to work hard for their buyer.
Be interested to know if you have any thoughts on alternative compensation structures. Ideally the better job the buyer’s agent does, the more money s/he should get — how would one make that happen?