Those who are regular readers of TrueGotham know that this blog was born out of the necessity in my mind to dispel the used-car salesman persona of real estate agents. Before I go further I want to say that I’m sure that there are a great deal of honest and ethical used-car salesman but I use that industry because…well…you know exactly why. I must also state that for the most part, the agents whom I have worked with recently have been of a higher ethical and professional caliber than I have seen over the past 17 years in the industry. The bar is definitely being raised thanks in part to a much more savvy and demanding consumer. That said, it only takes one bad apple to spoil the bunch and oh boy are there some apples out there that are just rotten to the core. The following example is precisely why some members of the public continue to distrust our profession.
Recently, a friend of mine who has been a top producing real estate agent for more than 20 years in the Manhattan real estate market had an experience with one such worm-infested, pesticide laden, poor excuse for an apple. She is representing a seller who has been a long time friend and who’s children are friends with her children, etc. They treat each other like sisters. Due to some current financial changes, these people are selling their current home to move into one of the top public school districts in Manhattan.
On a recent Sunday, the husband visited an open house being conducted by one of this agent’s colleagues. Immediately upon exiting the open house, the husband contacted his wife who reached out to her friend the agent to get comps and discuss the property. This agent immediately reached out to her colleague who was representing the seller to get additional information on the property including an understanding of what comps were used to price the home. Here’s the rub. Instead of having the common courtesy, which MOST OF US DO, to reply to his colleague with the information requested, he contacted the client directly suggesting that if they worked with him directly they would have a better chance of procuring the apartment. My friend then explained to her friend that based on this agent’s disgusting behavior, she would probably be best served by dealing directly with this sleazeball and she would coach her friend from the sidelines and forgo any commission…at least for now.
Now I know that many buyers out there feel like this is indeed the norm but I’m here to tell you that in my 17 years in the industry, it’s NOT. With almost every property that I have sold in the past there has appeared the direct buyer who points out that s/he is not working with a broker as if that would give them an advantage over another bidder. Here’s why that "advantage" doesn’t actually exist.
The buyer often believes that by going directly to the seller’s agent that they can either capitalize on the agent’s greed to collect the entire 6% (not out of the question unfortunately) or they have leverage to negotiate the price by a percentage of the agent’s commission (not likely particularly if you’re happen to be dealing with that greedy agent). The problem lies in the fact that given the small percentage of deals that are done directly with no buyer’s agent, there is less of a chance that the seller’s agent will reduce the commission. They would rather seize the opportunity to capitalize on the direct buyer. In the boom market of the past decade where multiple offers were the norm, being a direct buyer may have given you some sort of advantage. But in today’s market of marathon negotiations, it makes much more sense to have an advocate on your side negotiating on your behalf.
Back to our scenario…on the rare occasion when you find yourself dealing with a greedy seller’s agent like this, the most important factor to consider is whether or not you trust your agent (representing you as a buyer) to do what is in your best interest which could unfortunately (for your agent) even be to step out of the transaction. It’s times like these where you will see the true character of a real estate agent. I’m very pleased to say that the buyer’s insistence on having her friend represent her in this transaction paid off and they are on the road to a successful purchase.
As for the uncooperative, self-serving seller’s agent, his reputation is becoming more tainted on a daily basis and I suspect that as the industry learns more about how he does business, his deal flow will begin to slow. We can only hope. By the way, not surprisingly, he does a greater number of direct deals than the norm.
Lastly, if you’re a seller and curious about the agent’s reputation whom you decide to hire, ask them what percentage of deals they do directly with no buyer’s agent. If they answer more than 25%, you may want to further question them as I believe about 90% of transactions take place with each side being represented by their own respective agent.
And the reason this all matters is because you don’t want an agent like this to convince you to accept less money from a direct buyer in an effort to line their own pockets.