Tom, Home Buyer in Pleasantville, NY

How do real estate agents handle conflicts of interest between buyers and sellers in a down market?

Asked by Tom, Pleasantville, NY Mon Jul 19, 2010

Our buyer rep is also a listing agent for many houses in our target market. He is very knowledgable about the area and the houses. However, each time we ask him whether a particular house is underpriced or overpriced he replies "I think the asking price is fair and you should make an offer." Yet we continually see asking prices being reduced for homes in this area, so we are highly skeptical that all the asking prices are fair prices. We don't think our agent is incompetent, he's been in the business for quite some time and knows alot. So we think he's obviously got some sort of conflict of interest and we're thinking of ditching him. But we wonder whether any other agent will be any different. Real estate agents are obviously try to close deals and collect commissions and I'm sure that's easier when you offer close to asking. In addition, listing agents always want to tell their potential clients that they get top dollar on their listings, so list with them.

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Respectfully I disagree with the last post that every agent only thinks about their payout. That simply is too broad of a statement and may in fact reflect your own past experiences but is not that of everyone. I have no problem saying when I work for a buyer I am happier that they get a lower price. Honestly if my client can buy a home for $20,000 less, the amount of difference in my check after splits with agent, company, etc is minimal. This is a long term, repeat business so if taking $200-$300 less means my client is happy, that is very small price to pay for customer satisfaction.

In regards to the question that Tom originally posted you do have several options that people have already posted. Also you may ask the agent you are working with to have another agent in his office assist you in researching the price and presenting a proper offer. The listing agent will always have fiduciary responsibility to his seller so he is in a very tough spot as he should never say its overpriced unless the seller has given specific instructions to let people know the price is high or that they are testing but know its worth much less.

Another agent in the office would not have same responsibility to the seller and could possibly better represent you. You as a buyer just need to feel like someone is giving you real information that is accurate which is why people sometimes choose to have a pure buyers agent. As an agent who lists homes I actually find that as long as it is disclosed that I am a sellers agent and I have 2 motivated parties things can go quite well. Regardless of whom agent represents they are required to reflect all offers over and give you the sellers response.

At end of the day, I still feel firmly that at some point the market bears itself out and I think a key indicator is days on the market. In Westchester we saw increased transactions recently for a host of reasons. Yet inventory still remains high as well as average days on market, which to me is basically saying when new inventory comes on the market priced right, they are getting interest. Conversly if you have a home on the market that is overpriced or is just like all the others, you are most likely sitting for a while till seller adjusts the price. Good luck with your search and dont be afraid to expresss your concerns with your agent.


Andrew Rogovic
Associate Broker BH&G Rand Realty
andrew.rogovic@randrealty.com
1 vote Thank Flag Link Wed Jul 21, 2010
Tom:

I agree with you. I wouldn't find that sort of response helpful, either. But that's what quite a few agents do. I'm not sure why. Maybe it's because they feel uncomfortable giving advice (though that's what they're supposed to be doing) and figuring that since the final decision is yours (which it is), they shouldn't get involved. And the proof is in the pudding, as they say: When you see asking prices being reduced, you know that the asking price was too high.

You do make an interesting point that "Real estate agents are obviously try to close deals and collect commissions and I'm sure that's easier when you offer close to asking." I started off as a real estate investor. And investors know that if they get 1 deal out of 10 accepted, they're doing great. On the other hand, most Realtors would consider a 10% success rate to be miserable. It's a different mindset. I'm not saying to think like an investor, but rather that some agents feel real pain any time an offer doesn't get accepted. Oh, and they also feel real pain when their client makes a low offer. Some agents (not all, but some) really worry about getting a reputation for submitting low offers. So they try to discourage their clients from making low offers and those they think won't get accepted. It's possible your agent shares some of those traits.

As a Realtor, I am forbidden from interfering with your relationship with your Realtor. And I won't. But if you feel you aren't being adequately served by him, then you might want to reevaluate that relationship. (Your choice. Not my recommendation.) But I can say that there are plenty of agents who will give you the sort of advice you're asking for.

Hope that helps.
1 vote Thank Flag Link Mon Jul 19, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Hi Tom, This is why I am a Buyers Agent. I've learned ove rthe years there is no way to properly represent a buyer and seller in a transaction and truly protect their interests. As a Buyers Agent, when asked the question you aksed your agent, I would do a Comparative Market Analysis for you. This means we will look at what other homes have sold in your target area so we can make an educated decision. When it comes down to it a home is only worth what you are willing to pay. As a Buyers agent your best interest need to come first..always. If I'm not doing this and sitting in the middle of buyer and seller I'm doing you a dis-service. I would never pressure anybody to make a sale, I want you to refer me to your friends and family! Always rememeber this...the listing agent of a property already represents somebody and it's not you.

Sincerely,

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
Legends Realty Group
914.406.9023
1 vote Thank Flag Link Mon Jul 19, 2010
Tom,

Any agent worth their salt understands that our business is not about "closing deals." Short term gain long term loss. The general public doesn't understand this because they don't sell real estate for a living, but to stay in business longer than a couple of months or years, you have to shift your focus from "the deal" to the long term happiness of your clients. You need to be willing to talk clients out of buying houses that are wrong for them - even if they are emotiionally attached. Those agents are the ones who survive because buyers and sellers are willing to come back to them time and again and most send everyone they know to use their services.

With regard to your agent, you should understand that he has a contractual obligation to his sellers as well. If you are asking what he thinks of the price of his listings, he would be a fool to say that he thinks they are overpriced. Imagine how you would feel if he had your house listed and he was running around town telling everyone your house was overpriced. If it isn't his listing that you want information about, press him on the issue and ask for more information.

Good luck in your search!!

Cameron Piper
Web Reference: http://www.campiper.com
1 vote Thank Flag Link Mon Jul 19, 2010
I stand by my comments that the agents are manly in this business to make money and they are paid in %. It is not a broad statement but a fact.
Nevertheless most of them do a great job to inform the client (seller or buyer) and provide very resourceful information, but as a buyer always keep your head cool and do not rush the judgment without making broader assessment on your own.
I agree that most of the agents will comply with the buyers request and will work hard and if the house is overpriced they will tell you the approximate value.
Of course you should express your concerns to the agent and you should feel comfortable to do so. If in any way you are not at ease with him, do not waste your and his time move on and contact another agent.

Frank
0 votes Thank Flag Link Thu Jul 22, 2010
Dear Tom,

First, all agents are paid on % so their goal is to sell at higher price possible.

Expect if he misguides you on some factual evidence, I don’t see any conflict of interest.
In addition you have the option to go and see the same properties with another agent and do comparisons yourself. That’s what I did and at the end I stuck with the agent that I felt he was the most sincere about the fair value of the property. Yet when I put an offer in a house according to his opinion it was to low. Instead on following his advice, I dropped the offer for another 10K. At his and my surprise the offer was accepted and today I live in the house.
Bottom line, agents are mainly in this business for their own interest not yours - always remember that. Nevertheless, there are many of them who do their job good and will educate you and they will work with you but the decision should always be yours.
As a rule of thumb on Westchester County if you see a house price always put an offer for 50K less and even if the house is gorgeous and you love it do not reveal that to the agent nor seller.
My agent was great and I tried dozens of them, if you want more information PM me.

Frank
0 votes Thank Flag Link Wed Jul 21, 2010
Hi Tom

I quickly read through the responses below, and perhaps I missed it, but from what you have described - your agent may be acting as a dual agent, unless that's not how it works in NY.

In NJ, anytime we show a company listing, as well as our own listing, we are considered to be disclosed dual agents.

Has your agent used this term with you?
To the NY agents that are here - is the situation Tom has described a case of dual agency?

Tom - A dual agent, representing both seller and buyer, cannot put the rights of one party above that of the other party.
Thats why a dual agent canot say: "I think the house is overpriced" - that would be doing a disservice to the seller. A dual agent cannot say to a seller:"Oh, I think the buyer will pay more than he is offering".

These are just a few examples of how a dual agent must act - they need to be impartial. They can, however, provide you with comparable sales and stats, and they must disclose all material facts about the home - you would, though, have to decide what you want to offer without the agent's guidance, as far as the number goes.

If your agent is a dual agent, that is why his responses are more generic.
This should have been explained to you.
Perhaps a NY agent can shed more light in this.

Besi wishes.................
0 votes Thank Flag Link Mon Jul 19, 2010
If you are unhappy with your agent's replies--do ask for comps, recently sold similar properties in the immediate area, review the data and make a determination as to what is a fair value. Keep in mind that the seller can set whatever price he/she wishes and as a buyer you are free to make whatever reasonable offer you wish--and any reasonable offer will open up the negotiating table. Is your agent aware of your dissatisfaction--if not do have a discussion with him, and go from there.
0 votes Thank Flag Link Mon Jul 19, 2010
Tom,

You say "buyer rep". Do you have a contract with that agent? If not, in my state, that agent is bound by law to represent the seller's interests. If you do have a contract with the agent, then you have what is called dual agency. And in this case the agent is acting within proper realm of his/her capacity. If you do have a contract and do not feel that you are being represented properly, go to his/her broker and ask for designated agency. They should then assign a different agent to you.

I have represented many sellers and buyers in the same transaction. It can be challenging, but if you operate within the law, that's all you can do. I always explain this upfront to my buyers prior to signing a buyer agency and then when it comes up, I explain it to them again. I have never had a problem.

Linda
Web Reference: http://www.lindacefalu.com
0 votes Thank Flag Link Mon Jul 19, 2010
As to whether he has some conflict of interest, I don't know. It's certainly easier to close deals when both the buyer and the seller already agree on the price, but that's just part of a real estate agent's life.

It's not a sin to be less than candid, but you do seem to feel under-represented by your buyer rep, which is probably more to the point.
0 votes Thank Flag Link Mon Jul 19, 2010
"He is very knowledgeable about the area and the houses"

It does NOT matter how much they know about the area and houses.

it DOES matter what they help you to know and to learn.

This is like taking a college course and having an instructor with such a thick accent you can barely understand them and who also does not explain things so you can understand the concepts they are trying to explain. It is time to transfer and fins an instructor you can learn from so you can succeed.

You do NOT want to get a failing grade when buying a house. A new instructor can help you to pass this easily.
0 votes Thank Flag Link Mon Jul 19, 2010
Hi Tom,

To be quite honest not all of the houses are priced correctly in Westchester County, therefore not all of the asking prices are fair. Home prices are being reduced from previously higher prices. Chris is right, your agent should present you with a CMA of comparable properties against the subject property you are interested in. Then you can see the price range where the subject property falls. Sounds like your agent has not performed his due diligence.

Robin Lynch
Keller Williams Realty Group
0 votes Thank Flag Link Mon Jul 19, 2010
Hi Tom,
I am sorry you are having that experience!!! I worked with a listing agent for one day, and had the same experience... I was expecting him to point out pluses and minuses of the home, because I really didn't know much about real estate. Instead, he was really vague and asking me for feedback about the house, because it was his listing. I found out about buyers agents, who do not have listings. I had a totally different experience, and when a home was priced to high he said so, when it was priced low, he let us know it was a good deal. He steared us away from a home that made a high counter offer, told us we could probably find a better home for that price, and we did! If you have not signed an agreement, you might want to think about working with an exclusive buyer agent.
0 votes Thank Flag Link Mon Jul 19, 2010
Actually, we've noticed a similar problem as well, even when our agent isn't the listing agent for a property. He's often vague and won't answer our questions directly. He's told us to consider our budget and buy the best house available within that budget. But we've told him that we don't find this particularly helpful: if all the houses in an area seem unjustifiably overpriced relative to other neighborhoods and historical price relationships and recent pricing trends, then buying the least rich house is still buying an overpriced house, especially in this market when housing prices keep getting cheaper and cheaper over time. Honestly, I believe agents don't add very much value in the house buying process when it comes to pricing and negotiations. They assist in passing papers, which has some value of course, but not as much as one might expect.
0 votes Thank Flag Link Mon Jul 19, 2010
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