Consumers of Residential Real Estate: Buyers Beware & Sellers are Clueless

For years the phrase “buyer beware” is a good mantra to heed. In fact, home and condo buyers today have access to lots of information that helps them make good decisions. One of the best decisions buyers can make is to work with an experienced buyer’s agent. Give home buyers a thumbs up for getting better at home purchasing process.

And now for you sellers, at least those of you who hire and contract licensed real estate agents and brokers to list and sell your home. You’re clueless. I am the first to admit and even advocate that the best chance to sell a home is by using a Realtor. So why am I slapping sellers in the chops?

Because sellers have no real understanding about the qualities of the Realtor who is going to list their home. Really, what criteria do sellers use when selecting a competent listing agent? What kind of clothes they wear, what country club they belong to, the resemblance of a distant relative? Bear in mind that 80% of all consumers who hire a real estate broker do so after speaking to only one agent. Eight out of ten.

Sellers have no real understanding when it comes to differentiating between listing agents.

But here is a fact: Sellers have the best chance to sell their home by using the top producing listing agents who work specific areas.  Sellers may see real estate signs, have friends who “know” other realtors, or just have one who lives across the street, but how does a seller know who is a good listing agent or a bad one? They simply don’t.  They are clueless. Questions like where they sell, how much they sell, how they market, what’s the average DOM? (days on market), what’s their average list to sales price? – these important questions are often left out of a seller’s dialogue.

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Home owners have their best chance to sell a home when using the top producing listing agents in the specific home area.

True story below.

Last year some friends of mine moved out of state. They had heard of the consulting concept, but brushed it off because they had befriended a Tucker agent who went to the same church. They felt comfortable with this agent and I guess it was the biblical setting that reassured them. (Part of the 80%, at this point).

Ok, I begged them to let me provide the agent statistics for their tony neighborhood in Carmel. I got my foot in the door when I offered to provide stats for the Tucker agent they felt so good about. After all, the consulting service is free, and the seller gets an advocate to help them during the entire pre-listing period. Sellers should beware that the motive of any listing agent is a contract signature.

I showed up in Carmel a few days later at their house with fresh agent data, including the sales production of the Tucker agent who sat next to them in church. I walked inside, greeted them then handed the stat page to the wife (who is a practicing attorney). Five seconds is all it took her to X-nay the Tucker agent. Yes, the nice one from church. Why? Sorry, but nice won’t cut it: the facts were that she had not sold any residential homes in the county where the sellers resided. What?  Plus, the last 6 months the agent had only 4 sales with two of them being commercial. “She’s out.” The wife said after looking at the recent production.

Then we sat down and I showed them the top listing agents in their area and price range and we compared agent to agent until we narrowed it down to three top agents. Yes, the seller has to listen to three extremely qualified listing agents who are proven sellers in this very area. After three good (and separate) interviews, sellers have a very good idea about their home value and what it will take to sell it.

After three separate interviews (no listing contract signed yet) sellers are no longer clueless. They are educated. For free.

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Open Challenge to the Real Estate Community – Discussing Limited Agency and its inherent Conflict of Interest

The Fishy Side of Real Estate is a book that addresses an issue that very few people in the real estate industry will discuss – Limited Agency, or known in other states as Dual Agency. It is simply when one real estate agent represents both a buyer and seller in the same property transaction.

“Fishy”  deals with the reactions from individuals who work in various jobs in the real estate business. Nearly all of these characters who understand the inherent conflict of interest associated with Limited Agency, just don’t want to discuss it.

My question to all of you people in my line of work – why not?

There's not much room to negotiate when one agent represents both buyer and seller.

There’s not much room to negotiate when one agent represents both buyer and seller.

We are talking professionals that represent the real estate industry on a local and state level – mortgage VP’s, people in title companies, real estate brokers, and agents – all these individuals know that the level of service is potentially compromised when an agent engages in Limited Agency. All of the characters in the book and all the real agents who work out there in the market representing home buyers and sellers – just-don’t-want-to-talk-about-it.

The answer behind their reticence is really simple. Although they know there is a compromising of agency service to the client, they can’t give in to the double-dipping of income that accompanies a limited agency transaction. Rather than stand up and admit that we’d rather potentially screw clients instead of taking the high road, well, many take the low road. The money is worth far more than doing the right thing. That’s why they won’t discuss it. The dangling carrot of doubling your money is far more attractive than doing the more ethical route of single, or exclusive representation.

So I am issuing a challenge to you people at the Indiana Association of Realtors (IAR), MIBOR (Metropolitan Indianapolis Board of Realtors, the Attorney General of Indiana, any Indiana licensed broker or agent, any of you real estate industry people are being asked to sit down at a public forum and candidly discuss the details, the ramifications, the inherent conflict of interest that is associated with Limited Agency.

But to all you potential home buyers and sellers who would benefit from such a candid conversation, my guess is that you will never hear it. Why not? Because they don’t want to talk about it. They’d rather take your money instead.

Ain’t that right, Spike?