In the interest of full-disclosure, I am a real estate agent. While this may make my profession look bad, I believe that consumers need to be educated. Please remember, not all agents are liars. There are some that conduct themselves with integrity and look out for their client’s best interest. Enjoy.
1. “Once in a lifetime opportunity!” – sometimes an agent will tell you this is the “once” in a lifetime opportunity. If the agents are out of the field and looking at homes constantly, opportunities happen on a monthly basis. When the agent tells you this and indirectly pressures you to buy when you’re still getting acquainted with the home, you gotta ask yourself, “Does my agent have my interest or his pocketbook interest at heart?” Also, when great deals come on the market, capitalist society sees to it that you will have opportunistic appropriation. If you see a gold mine, others will see it as well. This tends to lead bidding up prices, etc.
True, agents are paid when a deal closes, but that doesn’t mean the agent can’t get paid and look out for his clients best interest. In many cases, “rush buying” usually does not turn out well. When I come across scenarios where my clients have to make decisions on a whim and are hesitant, I tell them to just wait for the next opportunity. I love to work under the gun, but if you’re buying a home that you and your spouse will live in for the next 11 years, take your time.
2. “This is the only nice home in the area” (aka “The Run”) – When I first started real estate, the thought of this never crossed my mind. The idea: essentially, you show the buyers only crappy and overpriced homes and then at the end show them the nice home priced well. And voila! You have the perfect home. This is the power of contrast. You surround a rose with weeds and the flower looks ever rosier. As you can tell, this is deceiving and unethical.
The first time I heard of something similar to this was when I read The Champion Real Estate Agent, one of the most popular real estate agent books. The logic is similar to above, BUT you don’t screen out nice homes just to use contrast to sell. You show your buyers the home you believe is the best at the end of the showing so that property will leave a lasting impression. This also uses the power of psychology, but not deceivingly.
3. “Real estate prices will always go up” – in retrospect, we all know this is NOT true – or at least in the short run. It’s all too easy for an agent to paint rosy pictures and that it’s the “perfect time” to buy. For agents, anytime THEY get paid is the perfect time for YOU to buy. Asking an agent if you should buy is like asking your barber if you need a haircut. Next time your agent tells you that, ask him why? Justify it. Explain it. Ask him to back up his opinion. If an agent is ONLY a salesman, then they are overpaid. They have to do more than paint roses.
4. “The sellers are very sad to leave” – in my experience, half of the people selling in this market (in 2008, 2009, 2010) they are likely in DISTRESS or they are a “move-up” seller. Many people can attest to the fact that now is a good time to buy. Now is a BUYER’S market. That implies it’s a bad time to sell because buyers have options and pricing control.
5. “There are other offers on the table” – this is probably one of the most often used terms for listing agents. A good litmus test I use is, “Really? Is it SIGNED around? Do you have MUTUAL ACCEPTANCE?” Many people can create a false sense of demand, but when you explicitly ask if the offer is signed around it’s hard to lie about that. If the listing agent lies it works against them because my response would be, “Well I guess my buyers and I have to move on.”
6. “Rates are creeping up so you better get in now” – Yet another common tactic, but today more than ever I believe it bears much truth. Short term interest rates are at zero percent and it can only go HIGHER. If the average loan balance is $300k, every .5% move increases your total payments over the life of a 30 year mortgage by about $35,000. So with 30 year fix rates at 5.25% (not the lowest, but still very low by historical standards) this will have a big impact.
7. “Because I’m an agent, I’m an expert” – it saddens me to say, this is not a true statement. With the amount agents get paid I believe they should be the expert (or at least on their way to becoming one). They should be experts in customer service, real estate, real estate law and more. But in this business, if you return your phone calls and emails – to all parties such as escrow, title, counter-party agent, clients, etc. – you’re doing better than average. Additionally, many agents are more salespeople than experts.
8. “These are ‘normal’ procedures” – there is value to this statement, but too often realtors misuse this to manipulate their clients into doing something they would otherwise do in the name of what’s “normal”.
To be honest, there are no REAL procedures besides that required by law and the contract. I tell my clients although certain procedures are common practice such as 1% earnest money, etc. they’re subject to do whatever they wish as long as it’s legal and aligned with the contract. But I do tell them what the likely reaction would be from sellers if they put down $100 for earnest money.
9. “The seller pays the sales commission” – This last one is not an explicit lie, but it can use clarification. The seller does pay for the commission. It gets deducted from their proceeds. However, since it’s a cost to the seller, the home has already priced that cost in and to some extent it has been indirectly passed on to the buyer.