Good question. Some people might say, “Their lips are moving,” but I think the American Bar Association could hold the copyright on that punch line. Since first writing this blog, I have added to it several times. Suffice it to say no one will ever write a definitive treatise on this subject. Nonetheless, what follows should be helpful, and at least cover some of the biggest whoppers told.
If you are selling your house, and someone who is trying to get the listing is telling you that you can get your dream price, there is a pretty good chance you need to beware. Never choose a REALTOR® to list your house based on the price they promise you they can get unless they will put in writing an offer to buy your house themselves for that price in sixty days. Then jump on it!
So one quick trick anytime you wonder if they are telling the truth is to ask, "Will you put that in writing?" If they say, "Sure," call their bluff and hand them a piece of paper and a pen. While you're at it, look over everything I've already put in writing (my FAQs, blogs, Testimonials, etc. . . .).
If you're selling FSBO and someone tells you they have a Buyer who wants to make an offer, but you have to list with them first (exclusive listing, not an open listing where you can still sell it without them—like I offer Unrepresented Sellers), red flags should be waving.
Ask for, and check, references. By the way, here are mine: Testimonials If you really want to check references, call the local Board of REALTORS® and ask what committees is this person on currently or in the recent past. Typically organizations will put their most trusted and respected people on their finance committees (where I’ve served the last three years) and ethics or professional standards committees (where I’m in my fifth year of service).
If someone tells you there aren't any real problems to worry about with a First Right of Refusal Contract, a Contingent upon something else closing Contract, or a Lease Purchase, run. See my blog here on "Contracts to Avoid."
Are they consistent? Do they change their advice depending on their needs? For example, my advice is always: "Whether buying or selling, if there is a neighborhood expert, use him or her." So, if a buyer wants to buy one of my listings in Piney-Z, but they have got something else to sell across town, do I change my advice and say I will list their home for sale? If I'm consistent, and I want to get my listing sold ASAP, I help them find their neighborhood expert to sell. For the good of everyone involved, I refer the business. And I can prove in writing this is what I do. Click to see proof.
If someone says, "Nah, you really don't need a lawyer," get one FAST, and one that specializes in real estate law. Often when I encounter a problem with a customer my first advice to them is consult a lawyer. That way, 1) if I am making a mistake, hopefully someone can catch it before harm is done, and 2) it is going to be very hard for anyone to prove malice of intent against me when I'm advising them to get a lawyer.
After buying and selling a couple of houses and being lied to by people I thought I could trust, I decided the best way to answer that question was to take the real estate pre-licensing class so I would know. Well, I liked what I learned. Then I decided, “I may not be the best real estate person in the world, but I can be better than most of the people with whom I’ve dealt.” So, here I am.
Twice when selling homes I was begged to accept a low offer and told by two different REALTORS®, "The first offer is always the best." I wondered at the time, how would you prove that claim? When I asked them, "But what about the price you told me we could get?" both responded, "Now is just not a good time to argue about that." I have told every agent who has put their license with me I will fire you on the spot if you ever tell a Seller the first offer is always the best. That claim is the mantra of the people the book Freakonomics compares to Ku Klux Klansmen (see below). Now I know, and now you know.
One thing I tell my Buyers is that if I lie to them, I will have to face them at the Home Owners’ Association Meeting, at the swimming pool, the annual Bar-B-Que, . . .. If I lie to them, they get to call me down in front of my neighbors, and ruin my business.
That hasn’t happened, and won't happen (see David Tucker's Testimonial and what he says about "honesty.")..
What has happened, is several people who have bought my listings have called me when it was time to resell. In all, 302 of the new houses sold in Piney-Z have already been on the market as a "resale," and 46 of those "resales" have been on the market a second time. Of those 46 Sellers, 4 had been "my" Buyers, and 3 of those 4 listed with me (that's a 75% Customer retention factor in an industry where most people rate real estate sales people below used car sales people). Of those 46 Sellers, 14 had been working with another REALTOR® when they bought my listing, but 7 of them listed with me. That's a 50% cross over factor in my favor. Altogether 14 of the 46 stuck with the same REALTOR® they had used previously, and I was that person 7 of 14 times. As many of my customers chose to work with me again and chose to keep their old REALTOR® combined! (Click here to see statistics taken from the Tallahassee Board of REALTORS® MLS on September 17, 2008, and viewable in an Excel spreadsheet where you can see all MLS closed re-sales by address, closing date, listing agent, and selling agent, then sort them and count them yourself. You will see I list more, I sell more, and I have more repeat customers than anyone else servicing Piney-Z Plantation.)
Another way to tell if someone is lying, ask them for hard data. When it comes to backing up sales claims in Piney-Z, I give you all the MLS data in a form you can search, sort, and compare. Click here to see statistics.
It also stands to reason, the real estate professional who is lying to you about real estate in general probably doesn't want you to get your hands on good, professional information that will show them up. So ask, "What resources do you give or loan your customers to help them sort through this process?" I will give you a copy of Elizabeth Razzi's The Fearless Home Seller, loan you my copy of her The Fearless Home Buyer, loan you two books on staging, and several of David Knox's DVD on everything from picking an agent to pricing you home. Click here to see Training Materials. And, I offer you all the National Association of REALTORS® materials for Buyers and Sellers http://www.realtor.org/buyers_and_sellers.
Before you hire a REALTOR®, read the Introduction and Chapter Two, “How is the Klu Klux Klan like a group of real estate agents?” in the best seller, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner (HarperCollins, 2006). Click here. What you will learn is many real estate sales people will list with you promising to get you top dollar, then beg you to take a low offer when it comes in. Reason being, if your asking price is $200,000 and the offer is $190,000, your $10,000 loss, at 6%, split with the Buyer’s Broker 50-50, then split with their Broker at up to 50-50 (70- 30 if you list with Keller-Williams), could be as little as a $150 loss to your real estate salesperson. And most people would rather know they are getting a $2,350 check this month than work another month or two and hope to get $2,500 some time in the future. “A bird in the hand . . ..” Your loss; their gain. Hence, “the first offer is always the best (for the listing agent!).”
How can you tell if a real estate person is lying to you? Compare what they say to the facts, the statistics in the Multiple Listing Service, other printed resources, and check their references.
Thank you, and Good Luck!
Bill Groover
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