- Don’t use the seller’s listing agent as your Realtor when buying a home
- Beware a Realtor who shows you too many of their own listings
- If you do happen to love a home that happens to be your agent’s listing, ask to be referred to a colleague
I’ve been a Realtor long enough now and have seen it often enough on the MLS that it is not a coincidence. In fact, it’s now become predictable.
I’ll be doing a CMA (comparative market analysis) for a client to determine their home’s value. I look through all the homes that have sold recently in the neighborhood. Every once in a while I see an outlier that seems to have sold for far more than the others in the neighborhood. “Wow!” I think to myself. “This one had something special going on – I wonder what it is?” I first look at the statistics – was it way bigger? Newer? Huge lot? No, no, no. Then I check out the pictures, expecting to see a fabulously upgraded home. No.
What happened? Why did it sell so might higher than similar homes? Then I see it.
The listing agent represented the buyer.
I don’t even include these sales on my CMAs anymore. Right there and then I junk it. It’s not reality. The price was way higher for only one reason. Clearly the listing agent put the seller’s interests before their buyer’s interest, simply so the listing agent could A) make their seller happy and B) earn both commissions. I’ll let you decide which may have been their primary interest.
Right or wrong, the real estate industry is set up so that Realtors are incentivized to sell their own listings. If they can get buyer and seller to agree to make them an intermediary, then they get the full commission instead of having it split between two agents. An ethical agent will resist that incentive and show you, the buyer, only the best homes that most closely meet your needs.
Sometimes it might happen to be your agent’s listing. But look at this math. There are 1442 active single family listings at this moment, and over 400 agents. That means the average agent has 3.5 listings, or 0.25% of the homes available. What are the odds that your agent’s listing is the perfect fit for you? (Answer: 1 in 400) Even the top listing agent in the area only has 61 active listings as of today, or 4.23% of the market. Less than 1 in 20 odds their listing is the perfect fit for you.
In these cases where I can plainly see buyers overpaying, I don’t know what may have happened. Maybe the Realtor only showed their own listings. Maybe they talked up the house to the buyer, insisting they had some special insight as the listing agent into how awesome it actually is. Maybe they fiddled with and inflated the market analysis. Maybe they did nothing wrong at all.
Is that even ethical?
It is not inherently unethical to represent both sides in the transaction (called Intermediary in Texas). There are instances in which I would do it (if, for example, buyer and seller already knew each other, already agreed on a price, and just needed me to make sure the paperwork is filled out correctly). But as a good business practice, I try to avoid the situation if at all possible. And I definitely wouldn’t never steer a buyer toward my own listings. That’s not only unethical, it’s bad service.
If a buyer did want to make an offer on my listing, I would refer them to a colleague (called Intermediary with Assignments). That way both buyer and seller still have their own agent – someone whose main concern is their needs. I still get a referral fee when that happens, and I’ll get my seller’s home sold! It’s a win-win-win for everyone.
For the love of everything holy, don’t call the agent on the yard sign. That is the seller’s agent, not yours. Their job is to represent the seller, not you. They are going to ensure the seller gets as much as possible from the deal, not you. If you call me on my listing, I will show you the home, but refer you to another agent if you want to make an offer.
If you are interested in buying a home, find your own Realtor. Do your own due diligence with them. If they are taking you only to their listings, or even their company’s listings, that is a major red flag. And if you do happen to fall in love with a home they happen to also be the listing agent for, go in with eyes wide open. Request that they refer you to another agent so you can do an “Intermediary with Assignments” and still have representation throughout the process. Your new agent will do a CMA for you, and hopefully make sure you are not overpaying.
This isn’t an idle caution. Like I said, I see it every day on the MLS. Buyer’s paying too much. Don’t let it be you!
If you’re looking for an agent, I am one! My fiduciary obligation is to you, and only you. No ones digs into the Fort Hood market like I do, and you will never overpay. Please do contact me to interview me for the job!