3 ms·

> Real estate agents have a fiduciary responsibility to represent a homeowner’s best interests in negotiations, which is defined in state laws, licensing requir

> Real estate agents have a fiduciary responsibility to represent a homeowner’s best interests in negotiations, which is defined in state laws, licensing requirements and an industry code of ethics. Our experience with real estate agents has been far from this ideal. We had to fire one after she lied to a counterparty and then lied to us in an attempt to cover it up. Other agents weren't much better, and none of them seemed to take their fiduciary responsibility seriously. They seemed to be looking out for themselves 100% of the time, and their client only when interests were aligned. The relationship epitomizes the principle-agent problem.

poulsbohemian 4y ago
Real estate agent here...While there are many agents that hold themselves to the standard that the National Association of Realtors has documented in their code, one of the root problems is that state agencies are negligent in enforcing rules and investigating fraud. For example, I know a fellow agent who had documented proof of another agent committing a fraud that did approx $400K in damage to a client - and the state didn't even bother to investigate. For that matter, local Realtor associations are often complicit as well - mostly out of laziness rather than deliberate ill-intent. My best advise is to treat a real estate agent the same way you might your accountant / lawyer / financial planner / private banker: don't just pick one off Zillow or at random, but carefully cultivate a relationship before you need their services and take steps to discern for yourself whether they are acting as a fiduciary. I agree completely - there are a lot of bad actors in this space, but over the next decade I expect market forces to drive a lot of people out of the business and improve the professional standard.
- gnicholas 4y ago
  What is it you anticipate happening that will trigger the change you describe in coming years? We were grossed out by our agent a decade ago, and when we went with a different agent (who came highly recommended by a neighbor whose house she sold) in a more recent transaction we were met with even more dishonesty than before.
  - conductr 4y ago
    Less volume will push the underperformers/hobbyists out of the RE agent business. Word of mouth is not a great way to hire, there a lot of incompetent but charismatic people in this industry. I interview a handful of them and then I basically do all the negotiating myself. In my opinion, they’re just there to unlock the door so I can view the home/or put my listing on the MLS. Once an offer is being made, they just care about the transaction closing. For this reason, never take their recommendation on inspector either. Find people that work for you and are not concerned with a ruining a relationship with your agent (their referral source). Also, never sign a buyer representation contract. It’s unnecessary and no agent worth their salt cares about locking you in (if you’re a serious and capable buyer). Never engage with an agent at an open house, this is usually agents without much work trying to drum up business.
    - poulsbohemian 4y ago
      >Also, never sign a buyer representation contract. FWIW: In one of the states where I do business, it is about to become law that we have to have these with clients. I expect it to be a total clusterfuck.
      - conductr 4y ago
        Required to sale or show? I should clarify that I’ve usually signed and amended it during pend stage so agent gets commission and has documentation that I’ve agreed to all the terms within. I also limit it to just the property in question so if things fall apart it does too. Requiring it to show, seems like a mess that will slow things down or people will just ignore it/backdate it like they do so much already to beautify things for underwriters and such.
        poulsbohemian 4y ago
        We're kinda waiting to see what form it will take, but there seems to be a belief we are headed toward a required to show type scenario. I think it was one of your earlier comments that said something I completely agree with - clients should always have the ability to walk away from an agent they no longer want to work with, and should not feel pressured into signing an agreement that might create a binding relationship they don't want. Already we're strongly encouraged by our state legal advisor and MLS best practices to use buyer agency agreements - but I (mostly) don't for exactly the reasons you stated - if a client wants to work with me, they will, and if they don't, a piece of paper shouldn't force them. The general public is scared / distrustful enough of Realtors, and now we're supposed to put this legal document in their face the moment we meet them? Sounds like a good way to further create distrust and alienation.
- conductr 4y ago
  Also would add, RE just isn’t that complex. It’s mostly standardized contracts in use. The contract to rent an apartment is usually more complex than the average RE sales contract. Read them ahead. Study the market to form your own opinions. Learn about what’s actually happening (agent can be helpful here) and what negotiating techniques you can deploy in the process. For most people, it’s worth your time.
  - poulsbohemian 4y ago
    I'd agree in general... that said, those standardized contracts change regularly, often because someone sued someone else leading to updating those contracts. So a real estate agent who stays up-to-date on contract issues can make a difference. As you point out - where an agent will really shine is market information and negotiating. I saved a client a ton of money last night because I out-negotiated the other side. That's why I'm worth the money - because what I saved them is more than I will make on the deal. Agreed too that my office lease is about the same number of pages as a typical residential contract, but far more dense. My landlord added some of the most ridiculous clauses I've ever seen in any contract - and prior to real estate, I regularly wrote business contracts from scratch.
    - conductr 4y ago
      > I saved a client a ton of money last night because I out-negotiated the other side You’re in the business so this might seen brash but it’s not meant to be. I’m just a pretty experienced buyer/seller. The assumption I have to make is 1) buyer couldn’t have negotiated that themselves (I happen to be a good negotiator) and 2) further negotiated to keep the buyer’s agent portion of the commission (it’s a standard seller’s cost they’ve already agreed to pay so doesn’t matter if it goes to me or to an agent, net to seller is the same). I’ve done both, regularly. It’s not for everyone for sure, negotiating skills are the hardest to screen for when I have used agents but people not knowing how to negotiate should definitely focus on trying to find that skillset. But saving more than you cost someone is good, but not guaranteed and it’s always possible to pocket the fee you do charge; so you still have a cost and I usually have to decide if “you’re” worth it for something I can do over a handful of calls/emails. Also I’m a landlord and those contracts like you said are much more dense. Where I am, the standard sales contracts change annually but not significantly in the last 15 years anyway. For example, I’ve noticed they’ve recently done away with the X days after in favor of precise dates. The math involved in X days and then finding later it lands on a Sunday or something was always sloppy IMO so I welcomed this change. But anyway, the fact it’s focused on a sale makes it so much easier to read than a lease which specifies so much more about condition, use, pets, roommates, etc.

poulsbohemian 4y ago

Real estate agent here...While there are many agents that hold themselves to the standard that the National Association of Realtors has documented in their code, one of the root problems is that state agencies are negligent in enforcing rules and investigating fraud. For example, I know a fellow agent who had documented proof of another agent committing a fraud that did approx $400K in damage to a client - and the state didn't even bother to investigate. For that matter, local Realtor associations are often complicit as well - mostly out of laziness rather than deliberate ill-intent. My best advise is to treat a real estate agent the same way you might your accountant / lawyer / financial planner / private banker: don't just pick one off Zillow or at random, but carefully cultivate a relationship before you need their services and take steps to discern for yourself whether they are acting as a fiduciary. I agree completely - there are a lot of bad actors in this space, but over the next decade I expect market forces to drive a lot of people out of the business and improve the professional standard.

gnicholas 4y ago
What is it you anticipate happening that will trigger the change you describe in coming years? We were grossed out by our agent a decade ago, and when we went with a different agent (who came highly recommended by a neighbor whose house she sold) in a more recent transaction we were met with even more dishonesty than before.
- conductr 4y ago
  Less volume will push the underperformers/hobbyists out of the RE agent business. Word of mouth is not a great way to hire, there a lot of incompetent but charismatic people in this industry. I interview a handful of them and then I basically do all the negotiating myself. In my opinion, they’re just there to unlock the door so I can view the home/or put my listing on the MLS. Once an offer is being made, they just care about the transaction closing. For this reason, never take their recommendation on inspector either. Find people that work for you and are not concerned with a ruining a relationship with your agent (their referral source). Also, never sign a buyer representation contract. It’s unnecessary and no agent worth their salt cares about locking you in (if you’re a serious and capable buyer). Never engage with an agent at an open house, this is usually agents without much work trying to drum up business.
  - poulsbohemian 4y ago
    >Also, never sign a buyer representation contract. FWIW: In one of the states where I do business, it is about to become law that we have to have these with clients. I expect it to be a total clusterfuck.
    - conductr 4y ago
      Required to sale or show? I should clarify that I’ve usually signed and amended it during pend stage so agent gets commission and has documentation that I’ve agreed to all the terms within. I also limit it to just the property in question so if things fall apart it does too. Requiring it to show, seems like a mess that will slow things down or people will just ignore it/backdate it like they do so much already to beautify things for underwriters and such.
      - poulsbohemian 4y ago
        We're kinda waiting to see what form it will take, but there seems to be a belief we are headed toward a required to show type scenario. I think it was one of your earlier comments that said something I completely agree with - clients should always have the ability to walk away from an agent they no longer want to work with, and should not feel pressured into signing an agreement that might create a binding relationship they don't want. Already we're strongly encouraged by our state legal advisor and MLS best practices to use buyer agency agreements - but I (mostly) don't for exactly the reasons you stated - if a client wants to work with me, they will, and if they don't, a piece of paper shouldn't force them. The general public is scared / distrustful enough of Realtors, and now we're supposed to put this legal document in their face the moment we meet them? Sounds like a good way to further create distrust and alienation.
conductr 4y ago
Also would add, RE just isn’t that complex. It’s mostly standardized contracts in use. The contract to rent an apartment is usually more complex than the average RE sales contract. Read them ahead. Study the market to form your own opinions. Learn about what’s actually happening (agent can be helpful here) and what negotiating techniques you can deploy in the process. For most people, it’s worth your time.
- poulsbohemian 4y ago
  I'd agree in general... that said, those standardized contracts change regularly, often because someone sued someone else leading to updating those contracts. So a real estate agent who stays up-to-date on contract issues can make a difference. As you point out - where an agent will really shine is market information and negotiating. I saved a client a ton of money last night because I out-negotiated the other side. That's why I'm worth the money - because what I saved them is more than I will make on the deal. Agreed too that my office lease is about the same number of pages as a typical residential contract, but far more dense. My landlord added some of the most ridiculous clauses I've ever seen in any contract - and prior to real estate, I regularly wrote business contracts from scratch.
  - conductr 4y ago
    > I saved a client a ton of money last night because I out-negotiated the other side You’re in the business so this might seen brash but it’s not meant to be. I’m just a pretty experienced buyer/seller. The assumption I have to make is 1) buyer couldn’t have negotiated that themselves (I happen to be a good negotiator) and 2) further negotiated to keep the buyer’s agent portion of the commission (it’s a standard seller’s cost they’ve already agreed to pay so doesn’t matter if it goes to me or to an agent, net to seller is the same). I’ve done both, regularly. It’s not for everyone for sure, negotiating skills are the hardest to screen for when I have used agents but people not knowing how to negotiate should definitely focus on trying to find that skillset. But saving more than you cost someone is good, but not guaranteed and it’s always possible to pocket the fee you do charge; so you still have a cost and I usually have to decide if “you’re” worth it for something I can do over a handful of calls/emails. Also I’m a landlord and those contracts like you said are much more dense. Where I am, the standard sales contracts change annually but not significantly in the last 15 years anyway. For example, I’ve noticed they’ve recently done away with the X days after in favor of precise dates. The math involved in X days and then finding later it lands on a Sunday or something was always sloppy IMO so I welcomed this change. But anyway, the fact it’s focused on a sale makes it so much easier to read than a lease which specifies so much more about condition, use, pets, roommates, etc.