Top 5 Things Your Real Estate Broker Won’t Tell You

There is an old stigma attached to real estate brokers. Most people are cautious of them because at times they can be too eager to make the sale that they intentionally “forget” to mention any detail that would deter you from purchasing a property. Although this isn’t true for all brokers, there are some unethical ones who always manage to leave out the important details. Just to be on the cautious side, below are the top five things your broker is unlikely to tell you:

 

  1. “There Might Be Some Hidden Problems” – Some brokers would do just about anything to close a sale. This is especially true for those who are still new in the profession and those who are in a financial fix. These unethical brokers would hide pertinent information from you such as potentially large repairs that may just turn their buyer off. These hidden problems include trouble with pest control, cracks in the foundation of the house, leaks in the roof, and others.

 

  1. “I’m Not As Knowledgeable As I Appear” – Let’s face the facts. Other than having to a pass a licensure exam issued by the National Association of Securities Dealer and some other state exams, there really are no other investment courses required to become a real estate broker. Because of this, some brokers may appear more knowledgeable than they really are.

 

Other brokers also like to suggest big ideas to their buyers when in fact they don’t know much about zoning. One broker encouraged his client to buy a property with a dilapidated house situated on a beautiful marshland, with the advice that the buyer can do pretty much whatever he wanted on his property. The buyer went on to purchase the property, cut down some trees, and filled in some areas of the marshland only to find out that his actions did not fit with environmental regulations. Before believing everything your broker says, make sure to check with the correct authorities.

 

  1. “Your Open House is A Way for Me To Get More Clients” – One of the things that most sellers don’t know is that open houses can provide a way for brokers to meet more clients. In fact, some brokers prefer to stage an open house not to sell your house, but to gain more clients. In fact, it has been reported that the success rate of open houses is at a mere 2%. This is something to consider the next time your broker suggests it. However, if you are willing to take the extra measure to sell your home, then having an open house might still be worth your while.

 

  1. My Fees Are Actually Negotiable” – The aura that most brokers like to give off is that their fees are fixed and non negotiable. They make it appear to their buyer that they have a standard rate and they would like to stick with that. However, if the buyer just really asks (and maybe at times haggle), the real estate broker can make some adjustments to their asking fees. This is especially true in a brisk market where many brokers pit against one another for a property that they can sell fast. Some small time brokers may also lower their fees just by asking.

 

  1. “I Can’t Keep Secrets for You” – One thing that both buyers and sellers have to remember is that their brokers will take the side of the one who hired them. For example, if a seller took on a broker to sell his property, then that broker is obliged to give the seller information that might be useful in getting the biggest gain for the seller. For example, a buyer might reveal to a broker his budget for buying a property. Some sellers may ride on to this information and opt not to lower his selling price or not help out with the closing taxes because he knows that the buyer can afford the home.

 

Not all brokers are the same and some are humble enough to admit their lack of knowledge or they really go out of their way to explain some pitfalls of the property. However, whenever you employ a broker to help you find a property, it is always useful to exercise caution. After all, buying a property is an investment decision that takes a whole lot of money, plus there’s no return and exchange policy. And when it’s all said and done, in the end, the decision was made by you and not your broker.

 

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  • When at all possible try to use a broker that you personally know and you can usually avoid these problems. At the very least get referrals from friends and family to lessen the chances that you will stumble upon an unscrupulous broker. I've been lucky so far and haven't had any problems with any of the 3 houses I've bought during my life.

  • My last real estate agent (buyer) is pretty good and I'll keep her contact for the next time.

    I haven't sold anything in a long time and I'll definitely need a good seller agent when the time comes.

  • Open House most of the time does not work for the seller and realtor. Those who go to open house are usually from the neighbor who want to check out the house to compare with theirs. I would stay away from open house.

  • I wish I'd had this info when my ex and I bought our house. Looking back, it's so obvious that our broker would have said ANYTHING to make a sale. And conveniently, her husband is a licensed inspector, so he was the one who did our home inspection. He harped on little nitpicky stuff to make it seem like he was very thorough. We ended up with a leaking roof that required gutting a bathroom, replacing a bedroom ceiling, and a whole new roof, as well as a heating and cooling unit that died in mid-July right after we closed in May. If I ever buy again, I'll be VERY selective in who I deal with.

  • I was really lucky to had the real estate broker I did when I bought out house over a year ago. She was a real trooper, and did not give up on our nightmare of a short sale.

  • I've seen the "have an open house so I can expand my client list" thing at several different open houses. Then, I've seen some brokers stay up late into the night helping clients prep their home. It's hard to know when you've found a good broker.

  • Real estate agents are so plentiful that you really have to do a thorough search to find a good one. Referrals are best as long as you are comfortable with personal info sharing. I wish I had taken the time to get my own license along the way to broker my own deals.

  • Although I won't be buying property for a while ( currently enjoying dorm living!), I will definitely keep these things in mind when I decide to make that leap!

  • My realtor is kinda cool and has treated me well over the years, especially the 22+ that we have been married. My wife doesn't depend upon any income from real estate and works with family and friends. She can be totally honest because we don't need her to sell anything.

  • We had a buyer's agent when we purchased our house, and at the time I thought they didn't know much, and in retrospect even that was giving them too much credit. Their entire plan for us buying a house was put in more money. Granted this was during the late boom stage, but still. And we know for a fact that they shared info with the other broker, even though they did work for us. Good article and a good reminder.

  • YFS /

    I've been in several real estate transactions and many more negotiating situations and all the brokers have been horrible. I figure because when it's all said and done and not matter how you found your broker they only make money when they close a sale.

  • YFS /

    All of my agents have been nothing but glorified door openers. I think the value of the agent diminishes when people have access to all their same information. The value of a broker for me comes with how fast can they get my offer in.

  • YFS /

    Some pretty awesome food at an open house :-). The last one I went too had some fresh home baked cookies. Very very yummy. I agree with you. Open houses is for hungry people and nosey neighbors.

  • YFS /

    Ouch!!!

    That was the one thing I told my broker up front. I will not use your lender or appraiser. It's imperative to keep everyone separate so you can have a bit of checks and balances. If you buy again I suggest you pick a realtor you like. One that is speedy with opening doors. You can do your own research on pricing. Also, select your own inspector. preferably one who teaches classes (mine did).

  • YFS /

    Short sales are a different beast and require a lot of patience and time. I'm surprised you found a realtor who was willing to deal with one. Can you elaborate on what made your short sale a nightmare?

  • YFS /

    Very true.. it's hard to tell when you have a great broker until you start negotiating on a home. If your broker is telling you to over pay for your home you have a shitty broker.

  • YFS /

    I thought about getting a real estate license so I could broker my own deal as well. But, then I said f it. I'll use something like redfin to get a commission kick back during the sale :-). I say, use the agent as a glorified door opener. Do your own research and only use them to corroborate your own research.

  • YFS /

    Good! be wary of anyone who's livelihood depends on closing a sale. It's very hard to see how this person could have your best interest at heart. Also do your own research and only use them for support. Make sure you select your own lender and inspector also so you can maintain checks/balances over the entire process.

  • YFS /

    hahah.. nice! But I noticed something. You said "doesn't depend on any income from real estate". Well, of course she will treat all her clients with the highest integrity. Most realtors rely on closing the deal to eat which causes the conflict of interest.

  • YFS /

    I had a buyers agent as well. Even though she was a nice person I only relied on her to open the door. I didn't listen to one word she said when it came to negotiating the price of the home, selecting a inspector or getting financing. They all share information. That's why I never tell them my price range. I even had my lender modify my loan approval for my exact offer amount. Another trick I kept up my sleeve.

  • Being a Real Estate agent myself I totally agree to what you said above that “I’m Not As Knowledgeable As I Appear” and it is kind of funny sometimes when you pretend to be knowing something when you don't. But on the other hand I believe its my responsibility not to lie or let things unresolved that are important because this is what I get paid for. And in case I don't follow this it means I am not compatible enough to be contacted again and this hurts my reputation in the long run too.

    As a result I think those who don't know but they pretend to be so in serious matters do not succeed in the long run.

    Anyways I must say it was a nice post and I enjoyed reading it.

    keep sharing.

  • Financial Samurai /

    Mate, can you email me that source for only 2% of houses are sold via open house? I'm thinking about doing something myself.

    Thx!

  • I read you article and the last point made me to smile " I can't keep secrets from you", we lie in front of a sensible man to make him our customer but we still say him that "There might be some Hidden Problems".

  • YFS /

    I guess all is fair when trying to make a sale

  • Christi Frederick /

    I am a real estate salesperson as my side hustle. My first job I am a high school business teacher. I got into real estate because I was remodeling and building homes, and needed a reputable broker to sell them. I decided to do it myself.

    In the small area that we live in, it is necessary to have positive business experiences with our clients. I will, no doubt, run into previous clients in Walmart, somewhere down the line, and I want them to say "We love our home" and be repeat customers/recommend me to friends. I also happen to work for a real estate company that holds integrity in high regard. I would not work anywhere else. There are good agents out there. I share my resume with potential clients and work only as a transaction broker, which means I do not work "for" buyer nor seller, but to get their transaction done timely and accurately. All confidential information remains confidential, period.

    On your comment about negotiating the percentage down when listing your home, other agents in the multilist will be apprehensive about showing your home. Selling agents will show your home lastly or not at all, because they will receive a smaller commission if they sell it. On our realtor database, the commission percentage for each property is posted. I've had realtors purposely not show properties because it "wasn't worth their time", when they can get full commision on another house. As a seller, you shoot yourself in the foot. Also, there are some realtors that will take the listing at a lower percentage, and only show it themselves, because they want the WHOLE commission. I had a friend who listed with a realtor, and he was always "unavailable" to set up showings or would not drop off keys to the house for other realtors (including myself) to show. She was angry and asked me over and over why her house would not show or sell. I told her that her agent would sell it when HE had the opportunity to sell it. And, almost two years later, they sold it 20% below asking…and HE was the seller. Enough said, she saved 2% but took the 20% hit in selling price. She could have paid the 6% commission, and had it sold within six months for much closer to asking. It was a sharp home, great neighborhood, priced right, but they chose the wrong agent and wrong tactics.

    Also, I always suggest a reputable home inspector of their choosing inspect the home, and contract is contingent upon satisfactory inspection and appraisal. For buyers, I recommend they ask for a one year home warranty to be provided by the seller. This will cover the entirety of the home, and also the appliances. The seller is asked to provide it, but the cost is less than $500. A small price to pay to sell a home and give the new owners peace of mind. Not to mention it alleviates the seller from having to go to court because of some unforeseen problem in the future, as long as the disclosures were true and accurate.

  • Sharetha /

    YFS, you constantly emphasize that Buyer's Agents are glorified door openers, and that anyone who relies on closing a sale to eat can't be trusted. I say to avoid any conflict of interests, buyers should pay their well-researched agents upfront. This would avoid any conflicts and more often than not, have that agent work exclusively in your best interest. That should be one of your recommendations. After all, it is an option.

  • YFS /

    Just because I pay you up front doesn't mean you have my best interest at heart. I am in favor of me paying you to get a deal done. I just want people to know that they have to do their own research and not solely rely on the buyers agent.

  • YFS /

    Good tips! But just like stock there are full brokerages and discount brokers. This day in age you can go with a discount broker to sell your home and save quite a bit on the commission costs. I believe redfin caps the percentage you pay as a seller for the buyers agent commission and still gives the selling agent a full 3%. Thus saving you 2% and getting sellers willing to bring clients to your house.

  • Christi Frederick /

    Thank you for responding to my comment. I agree. You have to save where you can when selling your home. However, in our market, and I'm only speaking from my experience, the discount brokers do not offer the level of advertising and customer service as the full 6% listings and they require the lister to pay a one time, up front fee of $500 to $1,000 to put the house on the MLS. There is also nothing wrong with a for sale by owner…and that can be even better if you let your local realtors know you would be willing to let them bring a buyer and pay them a flat 3% commission. The most frequent problem I encounter with FSBO is that homeowners do not want to accept what the market is bearing at this time, and it is dismal, even for the most well maintained, updated home. They want to price 20-30% above market value, just because that price is what the market was allowing three/four years ago and are offended when realtors show them comparable sales.

  • Christi Frederick /

    Smart!! I always tell my clients that are buying to get several approval letters for a series of possible offer amounts, that way the lister never sees the top number we can get to.

  • Christi Frederick /

    In our market, we are not allowed to align our customers with a lender or appraiser. In fact, now the apparaisers are on a lottery system…you get who you get. I can give clients a list of lenders and tell them which banks/mortgage companies offer various types of loans…but that is it. Same for inspectors…you get a list of certified inspectors. I think I shared this with you already, Andrea, but posting it here for the YFS readers. BE CAREFUL about letting your Realtor advise you to use certain people. Ask around. Also, ask around to find a reputable Realtor. We are out there.

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