A Realtor’s job shouldn’t be to talk people into buying. However too frequently you’ll hear Realtors saying “Now is the time to buy” or “We have reached bottom.” Maybe they believe it, maybe they are brainwashed, or maybe they are lying. Irregardlessly* in reality Realtors don’t know where the market will be in 1 month, 1 year, 5 years or 10, and don’t believe somebody whose pitch is always the same… UP! (*yes that is a made up word to see if you were paying attention)
What many Realtor know is if they can convince you to buy, they might make another sale! More Sales = More $ for the Realtor
One lesson stood out most from my mother…
On a sunny spring day in 1995, my mother was working with her Buyer Agent Realtor, about to put in an offer. The Realtor kept looking over my mother’s shoulder as she was deciding on a price to offer on a house. The Realtor was not the Listing Agent, but her Buyer Agent (supposedly looking after her best interest). The Buyer Agent Realtor kept saying in a “salesy” fashion: “$XYZ would be a great price!”, or “You will make a ton in 2-3 years!” and “You should put $XYZ!”
My mother stopped her and said, “Let me ask you some questions,
- “You will make money if I buy this house right?”
The agent replied “Yes”
- “Will you be sharing in my risk if this property goes down?”
The agent replied “Sorry, No”
- “Will you be making more money, the higher this offer is?”
The agent replied “Yes”
- “Is the % likelihood of this deal being accepted go up with every $5,000 higher that you recommend we put in here? And thus the more likelihood of you getting paid?” The agent replied “Yes”
“Then please be quiet and let me think.”
(she probably wasn’t as nice as that).
Warning, blatant subliminal sales pitch approaching: When it comes to price, a Realtor’s job should be to delivery information, not suggestions.
The Realtor might use their experience and compare the bidding process to a trip to Vegas and say “at this price you might have a 25% chance of getting it, at this price an 80%”, but when asked “What should I pay?” a Realtor shouldn’t answer that since they have a bias and it isn’t their money. Only the buyer knows their risk levels, how the monthly payments will feel, and how much they love the place.
Don’t get me wrong, a good Realtor can help you get a lower price (ask for some testimonials) and come up with a strategy to do such, but they should not say “If I were you I would bid $XYZ.” Trust me (never trust anybody that says “Trust me”), the higher the price, the easier the job. Fighting to get that last $5k or $10k is the toughest part*, but important especially if the market goes down more, you’ll be glad you fought for that last $10k.
(*Note that some people would rather just buy at full price and have an easy transaction, we can do those too, whatever is important to the buyer.)
I can’t really list all the insider buyer agent techniques on a public Blog being read by my competition, but one example would be to not stop at finding one great home, but finding 2 or 3 houses and taking a “round robin” approach. Offering a price on one, and if that doesn’t work, bid on the next one, then the next and then back to the first with a slightly higher price and repeat as necessary (are you really supposed to “shampoo and repeat?”) until somebody bites.
And lastly, don’t trust any data from NAR, The National Association of Realtors. Just don’t do it. Ignore it. As Peter Coy wrote in Jan 8th’s BusinessWeek, NAR said on 12-12-05 Prediction: “The national median home price will rise about 6.1% in 2006. Over a full year, it has never declined since good record keeping began in 1968”- NAR. This was followed up by “The Reality: Through October (06), the median price of residential properties was down 3.5% from a year earlier.” (Actually probably more like 5% when you include seller subsidies, see earlier Blog on MRIS data.)
Yes they can make one mistake, but the NAR president repeatedly says we are at or near the bottom.” My earlier Blog exposes a NAR advertisement that says now is the time to “Buy Or Sell”, while only listing reasons to buy. How can one time happen to be perfect for both sides? I’ll tell you, when money is involved and it flows to the recommending party, that is how. Also the data is manipulated (see MRIS data report Blog).
Here was the T-Shirt that I was giving my clients at their closing. Even when buying a $3M house. This proves that I warned them about a potential bubble:
The 2004 version was featured in a Article (near end).
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Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com