Happy Homebuyer Does Not Realize His Real Estate Agent Just Lost Him $15,000
Sitting there at the closing table with the seller, I look across and see that the buyers are so happy and they just love their real estate agent.
What they do not know is that their agent just cost them an extra $15,000 for their home!
It's one thing when somebody makes a mistake and it is highly visible, but it's a whole other issue when nobody even realizes a costly action occurred. Here's what happened.
Expert Real Estate Negotiations
At Joe Manausa Real Estate, we pride ourselves on having highly educated and highly trained real estate agents. We conduct routine training on the subject of "Real Estate Negotiation Tactics" because we know how important it will be to our home sellers and home buyers during a real estate transaction.
Recently, when we were hired to sell a home in midtown Tallahassee, we advised the seller to price the home to encourage multiple buyers to compete for the home.
As we do with all our sellers, we explained that the buyer most likely to pay the most for the home would be the neighborhood stalker, and that we could get them to defend their offer with a higher price if they knew they were competing with other buyers (read about neighborhood stalkers HERE).
The key to winning a real estate negotiation it to enter it, armed with a professional by your side, who will put you in the most favorable position possible based upon your circumstances.
The homeowner followed our advice and their home hit the market priced perfectly at its "sweet spot."
Hire The Best Or Your Will Pay For It
Now the sad part of this story, before we get to how the buyer paid an extra $15,000 for the home, is that the seller paid the commission in this transaction (like most real estate transactions in Tallahassee).
Why is this sad you might wonder?
It is sad because regardless of who the buyer employed, whether his Sister, his Brother, his Aunt, his Father, his Fishing Buddy, or even the best real estate buyer's agent in Tallahassee, he would not have spent a nickel on real estate fees.
Think about it ... if the seller is footing the bill, why in the world would you not go out and get the best real estate buyer's agent who is formally schooled in negotiation strategy to work for you? Well, if you are most homebuyers, you probably just didn't realize it was important.
And many buyers don't even realize it after they buy a home. Just like the buyer in this situation.
There's More To A Real Estate Offer Than The Price
So the Friday morning that we put our midtown home for sale in the Tallahassee MLS, it was shown right away by a very nice real estate agent working with another company.
Prior to showing the home, the agent told us his buyers had missed out on two previous homes in the neighborhood and didn't want that to happen again. We advised him that we felt the home was aggressively priced and that we expected to have it sold before the weekend was over.
Sure enough, his buyers liked the home and before the end of the day, we had received a full priced offer from the agent. The offer was clean, well-written, and contained no contingencies adverse to the seller's interests.
In other words, at face value, it was a well-written offer. It was obvious this agent had sold a few homes before and had taken the Tallahassee Board of Realtors contract writing class at least one time if not several. I mean this offer was clean.
But it also contained a major tactical error. It was a mistake that we point out early and often in our regular real estate negotiations training classes. In this case, it was a $15,000 mistake because it allowed us to counter their perfect offer and force the buyer to pay more!
You see, the agent had planned on being tied up the next day with a family event, so he gave us 48 hours to respond to his offer. It made a lot of sense from a practical standpoint, but it was a costly blunder that should have been handled professionally.
How We Handled The Perfect Real Estate Offer
We advised our home seller to sign the offer but let us sit on it to evaluate the activity on the home. We knew the buyer had already lost-out on two other negotiations for homes in the area (as their buyer's agent so readily shared with us before the showing), and we knew this buyer was the most-likely to pay top dollar for the home.
Because of our aggressive pricing strategy, we had multiple buyers through the home within the first two days, and we encouraged all interested parties to make a strong offer because we already had one in hand.
Competing offers were presented and it culminated in a small bidding war. Instead of returning the offer signed, we were able to return it with a counter offer (and still do so within the 48 hour time constraint).
Well, you know how the story ends, the initial buyer got the home and was happy. But giving the seller 48 hours to respond to the offer (in order to facilitate the real estate agent's other needs) was the key to a $15,000-above-asking-price counter offer that they gladly accepted.
Had the roles been reversed, I would have made the response period a few hours and then had another highly trained real estate negotiator at our company handle the finishing touches on the contract if I had somewhere else I needed to be. No use letting the seller shop an offer, right?
Sadly, unless the real estate agent reads this article and recognizes himself, he will likely go out and make this mistake again.
Choose Your Real Estate Company Wisely
This story serves as a reminder to choose your real estate company wisely. This agent, who works as an independent contractor, apparently did not have another agent that could help him negotiate the offer for his buyer. This in turn cost the buyer $15,000.
Every homebuyer can actually interview real estate agents for the job of helping them buy a home. And they should. Remember, the seller is paying the bill, so go big. Get the best agent you can and the seller will actually pay you to out-negotiate their agent! And make sure that agent is part of a company that can support them and the time-sensitive nature of many real estate offers.
If you are planning on buying a home in Tallahassee, either now or within the next few years, we would love to sit-down with you in order to show you how we'll save you money. You can always reach us by simply filling out the request for contact form HERE.
The problem is, there are no direct incentives for the agents to bring the most benefits for the people they represent. Usually the agents' immediate goal is to have the sale so they can collect commissions.
By the way, the buyers do pay for the agents' commissions, only it's included in the purchase price.
In my opinion, the whole real estate agent commission model needs an overhaul, and it's ripe for disruption by technology companies.
Thanks for commenting Brian,
You make some fine points. Specifically, I agree that the industry is due for an overhaul and I do believe technology will be the disruptor.
But I also disagree with you, in part, on one point. You wrote "there are no direct incentives for the agents to bring the most benefits for the people they represent. Usually the agents' immediate goal is to have the sale so they can collect commissions." I can tell you, there are direct consequences for letting down somebody you are working with and the incentive for doing a great job is repeat and referral business from family members and friends of those that we serve. We get a lot of word-of-mouth (word-of-google) business from people who read our reviews.
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