The Real Estate Agent Is a Spy
By Steve Gillman - 2005
A real estate agent, unless specifically working as a buyer's
agent, is working for the seller. Many buyers know this, but
don't think it matters, as long as the agent is helpful. This
true to an extent, but what buyers don't realize is that an agent
has a legal responsibility to and loyalty to the best interests
of the seller. This is referred to as a fiduciary responsibility.
What does this mean?
Why the Real Estate Agent Is a Spy
Suppose you make an offer on a home. You mention that if the
seller says no, you'll probably offer $5,000 more. The agent
now has an obligation to tell the seller what you just said.
That makes it an expensive comment, doesn't it? The agent may
spend all their time with you, showing you houses and helping
you write offers, but their allegiance is legally with the seller,
unless they are hired by you.
A good agent, even if she is a seller's agent, can be a great
help. Just remember that she is a salesman, and you're not the
boss. Be careful about what you say, and be careful with what
she says. Another option is to work with a buyer's agent. In
this case the agent can actually work for your best interests,
but even here remember that they usually get paid only when you
buy something, so their objectivity is suspect.
Sometimes real estate agents work under "dual-agency"
rules, meaning they are supposed to work for both the buyer's
and seller's interests. Be careful here. They only get paid when
a property is sold, so they may be more helpful to the sellers.
In any case, how can someone really be on both sides of a negotiation.
It is likely they would work harder for whoever they like more.
Do you want to be in a popularity contest that can cost you thousands
More Agent Secrets
Agents often let you assume things. They want to get the sale
closed, and will let you believe what you have to in order to
do that. They'll tell you that the seller and buyer always split
the closing fee, for example. They'll tell you that they can't
change the commission after it has been set. They'll tell you
that you have to write a big check for a "good faith"
deposit when you make an offer.
I have seen realtors knock $4,000 off the commission to get
a sale closed at a lower price. I have seen the buyer or the
seller pay the entire closing fee. People sometimes put less
than $1000 down as a deposit with an offer, and sometimes nothing
- with the agreement to put up something when the offer is accepted.
Very little is set in stone when it comes to real estate.
Real estate agents are not all experts. The first time I made
an offer on a house, the agent didn't understand what I meant
when I told him that I wanted to get a 90% first mortgage and
have the seller carry a second for 5%, so I could get in with
only 5% down. Years into his career, he still had only dealt
with deals that had regular bank mortgages.
How do you choose an agent to work with? Often agents will
be very knowledgeable about a certain type of real estate, or
a certain neighborhood, but know little else. Like other professionals,
they specialize. If you really need help finding a particular
type of property, look through listings online until you find
a real estate agent that already has several of that type listed.
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