Trust Your Broker?

Perfect! Now that Doug’s on vacation, The New York Times has a big ol’ article about his favorite topic: trusting your broker. He started this blog in large part because he’s fed up that some bad seeds have ruined the reputation of honest brokers.

Vivian S. Toy’s "Let’s Make a Deal" article
is rooted in the reality that now that the Manhattan market is no longer a seller’s paradise, negotiating tactics are coming back in vogue.

An unsettled aspect of said negotiations: Should you depend on your broker in the heat of negotiations? Can you afford to have one you don’t trust? Toy quotes conflicting experts:

Gerard I. Nierenberg, founder of the Negotiation Institute, which has taught negotiation techniques for the Pentagon and for the United Nations, said that because real estate deals were largely negotiated through brokers, “it’s important to get a broker you can depend on.” But whether you are a buyer or a seller, he said, studying the market carefully and knowing what a property is worth is crucial.

“Find out what previous sales in the area were,” he said. “You should always examine the market yourself because you can’t always believe the figures a broker’s giving you.”

On the other hand:

Max H. Bazerman, a Harvard Business School professor and an author of “Negotiating Rationally” (Free Press, 1992), warned against using brokers as advisers at all. “The broker’s most important goal is to close the deal, and that’s not necessarily your goal as a buyer or seller because you care more about the quality of the deal,” he said.

Since brokers are naturally biased, he added, they also should never be told exactly how high or how low you’ll go because they might use that information against you.

Dr. Bazerman had one final piece of advice.

“You should always be able to walk away from a deal,” he said. “Fall in love with three houses, not just one, because if you have to have it, you’re going to pay for it.”

The whole article is worth a read. There’s plenty of wisdom on this and other topics that I’m not quoting.

But to me it comes down to this: if you’re going to have a broker, you might as make sure you have one that you don’t think is out to screw you, right? There are a lot of brokers out there. No point in not doing a little homework to make sure you get a decent one. How do you do that? There are some very specific things to do. I promise it’s not salesy at all: Doug has a whole podcast episode explaining how sellers can pick a solid broker.

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