The opinions expressed in this article are those of the author. They do not reflect the opinions or views of Mashvisor.
Being a real estate agent is not an easy job. But those who are proficient in their skill, enough to deal with two opposing parties effectively, can sometimes even go overboard and ‘sell’ more than what they’re actually required to sell. This means that good real estate agents may be able to subtly manipulate the facts at times, without really blatantly cheating anyone, and close deals in ways that give the greatest benefits to themselves instead of either of the two parties between whom the deal is done.
They use tricks and secrets to do this to make good money out of every deal. We wouldn’t say that what they do is morally wrong, as they’re providing a real service to both parties after all, but we could probably save some extra bucks for ourselves if we are able to read between the lines as they speak.
Here are 11 things that real estate agents wouldn’t tell you.
1. You may be able to sell your house at a higher price on your own
When property buyers see that a house is being sold directly by the owner, they perceive the deal to be safer and risk-free. House owners are not usually marketers, thus they don’t know how to oversell. Maybe that’s the reason that buyers think the information they would get from the house owner would be more realistic than that from an agent.
This is why when a property is put up for sale or rent directly by the owner, more buyers and tenants show up at the door. Buyers also know that the owner would have all the authority to negotiate on the price, which saves time for both parties. But this trust that the buyers place in the house owners actually takes a toll on them because eventually, they end up paying a higher price for the house than they would’ve been able to get through an agent.
Related: How to Sell Your House: A Complete Step-by-Step Guide
A study conducted in Northwestern (2007) revealed that property owners in Wisconsin who registered in the “for sale by owner” category ended up making more money on the sale of their homes. The prices of their homes were actually around the same as the agents were offering to buyers in the region, but they saved on the hidden costs by not having to pay any commission to a real estate agent, thus making more profit.
2. The agent may reveal everything to each party about the other
So you’re almost ready to finalize a very good deal, but are going to ask for a small discount on the price. You’d be thinking that you could send the agent to negotiate the price with the owner.
The agent you are speaking to has already seen how much you like the house and made his presumption about your affordability. After all, he’s also making money from this deal, and his portion is commission-based. He is more likely to go to the owner and tell him/her that the chance of you backing off from the deal is too slim, and hence it’s not worth it to drop the price.
3. Open houses are more about getting new clients
If your agent suggests you hold an open house to attract more buyers, think again. You’ll be investing too much time, effort, and money to actually organize an event for the agent to promote his services, rather than your house.
When you arrange an open house, most of the visitors would be the neighbors and other residents from the same area, or people who are just visiting randomly. They wouldn’t be the ones looking to buy a house, especially if they already have a house in the same area.
It’s a strategy for your real estate agent to expand his services from one client (i.e. you) to all other potential clients in the area by gathering everyone in one place.
4. Commission is always negotiable
A real estate agent’s commission is always negotiable. The same agent could be offering a higher rate to your neighbor, telling them that that’s his “standard rate”, or could have recently given a bigger discount to his previous client even though he tells you that his commission is non-negotiable.
However, the flip side of the story falls back on you as well. If you try to negotiate too much on your agent’s commission, he might lose interest in working for you.
5. The recent sale prices are often out of date
Many agents would determine the offer price for your house by averaging the recent sale prices of other houses in the neighborhood. But if you want to know the real market worth of your house, you should be looking into the pending sales instead.
If your agent is really good at his job, he should be able to get this information either through his network of other agents or by being local to the area and knowing many people there.
Related: How to Easily Find Real Estate Comps
6. You could have gotten a greater deal
Whenever a deal is closed, the agent would gladly tell both parties that they got a fantastic deal. This may not be necessarily true.
You could have probably gotten a better deal if you hadn’t rushed or done more research. Some agents are given monthly targets to achieve by their employers. That’s why they would encourage you to accept the very first reasonable offer you get.
7. They could secretly play both sides to double up their commission
There is a concept of “dual agency” in some US states, whereby a single agent works on behalf of both parties.
Some buyers see this as a chance to cut their commission costs by negotiating with the agent for a discount. But when the agent notices that one of the sides is unrepresented, they know that the party wouldn’t be familiar with the market rates either.
What some agents do is, they would agree on the surface to “cut their commission”, but would actually charge double from the unrepresented side and end up getting paid three times the usual amount.
8. It’s possible that you actually chose an awful house
When real estate agents see that you like certain aspects of a house, they start overselling everything else about it as well. If they find out that you like the layout of a house, for instance, they might conceal the fact that retail and grocery stores are too far or inaccessible from the housing area.
They would always make you feel that you are making the best choice. In reality, you might even end up with an awful house, just to realize it a couple of months after moving in!
9. Small agencies can be as competent as big ones
When it comes to hiring a real estate agent, it is more about how skilled the individual is who’ll be working on doing the selling for you, rather than how big the agency is that he’s working in.
We shouldn’t always go after brand recognition of big real estate agencies. The big agencies typically pay a small share of the commission to the agent who works for you, making them less enthused to put in any extra effort in the job.
10. The contract you sign has some fine and hidden words
When agents give you the contract to sign, they would normally say that it’s a standard contract prepared by a lawyer.
If you read carefully, you would find many slippery clauses that you need to beware of. For example, an agent who has promised you 101 things to get you to buy a house could silently slip in a disclaimer stating that any verbal commitments made by the agent during the purchase would be deemed completely invalid upon signing the contract!
11. Buyers and sellers should check the agent’s record
When you are dealing with an agent, it is a good idea to check for his misconduct. It is mandatory for real estate agents in the US to undergo the process to become licensed, and to disclose their license number if asked for it by a client. You can then check with the state if the person has ever needed to be disciplined for any wrongdoing.
Concluding Remarks
Whether you are the buyer or the seller, your home is probably one of the biggest real estate investments you’ll ever make in life. You wouldn’t want someone to take advantage of you, just because it’s your first time getting involved in a real estate deal. If you do your homework well, you could end up with a much better deal that you deserve. While the agent is good at his job, you should be good at your role as well. Hence, next time you plan to buy or sell a house, paying attention to these small details and behaviors is going to be worth it.
This article has been contributed by Diana Clark.