Snitch, Narc, sell out, Judas, you have heard the names. They all reference someone that is a “tattle tale”. Someone that is either speaking up because they think it’s the right thing to do or doing so because they are getting compensated. It maybe that they are going to get a new identity out of the deal and enter the lifetime “witness protection” circuit.
No matter that you call it, in some circles it is not accepted. When someone in one of the more questionable professions turns states evidence they may become “marked” and not have any chance for healing the wound that will be or has been created.
We are not talking about those “Johnny Brasco” type scenarios. We are talking about real estate. Real Estate where some agents scream, “Same Team – Same Team”, at the top of their lungs when we are working at representing our side of the transaction.
That is why we harp on getting your very own real estate representative. Staying with your own agent. Not using the listing agent as your representative in the real estate buying process. Hiring a Buyers Agent to represent you and you alone. We even feel this to be the case with new housing – take your own agent with you and never sign anything without them being present – even a simple “notification or interest” card.
- Here is a “routine” real estate scenario we experience when representing sellers and buyers in the Santa Clarita Valley. Not all agents that deal with are local – this one happened to be an real estate agent not HQ’d(head quartered) in the Santa Clarita Valley.
Real Estate Scenario – Seller oversold – Throwing your buyers under the bus:
Real estate is interesting at times. We have some agents that over promise and under deliver their sellers when it comes to listing their homes for sale. Case and point – A home our clients wanted badly.
We observed the price to be just over one million dollars. When we got back to my office to write up the offer, I ran the comparables and did a Competitive Market Analysis as I would prepare for a real estate seller. This shows the activity during the past 6 months, apples to apples in comparison, spot on bedrooms and bathrooms, square footage +/- 500 square feet. Lot Size – variable – but within 5K square feet. Same in the ways of upgrades, additions etc. Closed sales of the same type to the home our clients are wanting to write an offer on.
After compiling the data, done in front of these particular buyers, I observed the home to be approximately 300K over the current FMV – Fair market value.
I looked at the data again – showed my clients and asked what they thought. While they loved the property, the numbers did not lie. The home we had just viewed, and the one my clients just fell in love with, was in excess of $300,000 priced higher than the last home, with very similar qualities, sold for.
I sat back and said how much do you want to offer? The husband and the wife looked at each other and back at me with a sad look on their face. ”What do you think they will accept?” – asked the husband. I explained, “It depends on what their real estate agent promised them. It could be that the agent explained to them, during the listing presentation, the home is valued at $700K. Their chosen real estate professional then showed them the factual data, comparisons with other homes that have closed escrow during the past 6 months. The sellers could have said they want to “see how it goes” at the price they had in mind but would reduce to Fair Market Value if need be.”
“Do you think this is the case?” – The wife asked me. I responded, “could be, but I won’t know until I get this agent on the phone and confer” I said, “let me call.” – So call I did.
Agent picks up the phone – which is a GREAT start, “Hello”, a male voice said. I said, ” This is Connor MacIvor with REMAX’s Paris911 Team, I just took a couple into a home you have listed for sale at _____________, and have a few questions.”
The agent said, “Oh that property, there has been a lot of activity, lots of promises of offers, I’m surprised that no one has written on it yet, you better tell your clients if they want it they’d better hurry!”
I asked, “Just curious, why are the sellers wanting to sell?” He said, “They are buying a home in Westridge.” I then asked, “is home they are buying contingent on the sale of this one?” – “It sure is”, he said. ”The home they are buying is definitely a step up, we just need to get this one sold. Just to let you know my sellers are not going to take any less than list price.”
I asked, “What about the appraisal at the list price, do you have any concerns about that?” He said, “we are going to ask any of the interested buyers to waive their appraisal contingency – that should fix that. Are your buyers qualified at the list price?”
Having my clients permission to answer with the truth about them being able to qualify at the list price of the home we viewed, I responded in the affirmative. The agent then said, “do they like the home?” I said, “yes”. He then said, “Well, what are you waiting for?”
I explained, “We went back to my office to write the offer, however to establish value for my clients, I needed to pull comparables. Doing so we discovered that the home has been priced in excess of $300,000 more than the last three comparables had sold for during the past 6 months.” ”In fact, we have spot on comparables that had sold during the past 2 months – so their even more accurate in this case.”
“Did you show your clients the comparables?” He asked. ”Sure did”, I said. He questioned, “Why did you do that for? Now you aren’t going to be able to get them to write a full priced offer.” He then said, “Tell your clients that you will write the offer and they can fall back on the appraisal, but have them pay for the appraisal and the home inspection, they will be leery of cancelling after they spend some coin out of pocket. Plus this way I can convince my seller to lower the price because we will now have an appraisal.”
I said, “Thanks for your time, I will discuss it and let you know”.
I looked at my clients, if you want I can write an offer at the Fair Market Value and no more. I then explained what the agent told me over the phone. This is a scenario where the agent see’s GREEN on both ends from this particular sellers. They have it from the selling of their current home. The agent also has a pay-day with the home they are going to buy. Green on Both Ends. Apparently the seller cannot afford or qualify for two mortgages – therefore the agent has made the sale of the home you like necessary for them to buy the new home. Which is actually a good thing for the seller.
The “fall apart point” come in the ways of the unknowns. The agent told me they are buying a bigger home – probably more expensive. Are they counting on the equity from their over priced home in order to buy the new one? If that is the case, they are surely going to be disappointed and not going to budge on their price. The would not be able too if they need to sell their home at the price the agent agreed to in order to close on the new one.
That is a problem as much as the problem poised if the seller is overpriced because they would not listen to the factual real estate data. In the case of this specific home, there are plenty of comparables that are spot on matches that have closed as recent as the past two months. They were the same sale types and had the exact same floor plans with the same in the way of upgrades. Elevations and views were the same also. In this case, this is not rocket science – this is a simple comparison scenario.
The agent then told me to have you pay for an appraisal and home inspection after writing a full priced offer. To fall back on the appraisal even after he had instructions to have all offers written waive the appraisal contingency. He then told me how to “get my clients – you” to commit.
He then said, “Tell your clients that you will write the offer and they can fall back on the appraisal, but have them pay for the appraisal and the home inspection, they will be leery of cancelling after they spend some coin out of pocket. Plus this way I can convince my seller to lower the price because we will now have an appraisal.”
Another thing that is interesting – he commented about showing my clients the comparables. I think that is interesting and I do it every time. No one – not even family, want to pay more than something is worth. Especially in an unstable real estate market.
Not all real estate agents are like this fella. In fact, most are not. This agent has a job to do, he is representing a seller. I totally get that and we do the same. However, buyer or seller, I will never entertain throwing either client type under the bus for a commission – or for any reason for that matter. It is never worth it.
Be safe – happy day after the day after Christmas. :) Please share and subscribe to our Santa Clarita real estate daily show. We have the intel which you seek with regard to real estate.