Many people don’t think much about how a bad real estate agent can cost you, but the truth is, a bad real estate agent can cost you a lot. I’m going to share with you a couple of examples how, and how much.
I tend to work with more sellers than buyers – currently I’m running about two-to-one sellers over buyers…but the last two deals I closed, I represented the buyer. As a buyer’s agent, my job is to get the absolute best deal for my client that I possibly can. As part of that, I help my clients with their due diligence, to make sure that they know everything there is to know about the property before they fully commit to buying it. No surprise there, right?
The surprise to me is that listing agents often do no due diligence of their own whatsoever. They begin showing the property with absolutely no disclosures available. They expect the buyers will make offers knowing nothing more about the property than what is visible to the naked eye. Amazing!
Sometimes, before they’ll take an offer, they will hurriedly get the seller to fill out the bare minimum set of disclosure forms – but often they won’t even do that, not until a price has been agreed upon and the home is under contract.
When I am working with the buyer, this is almost always a very costly mistake. The agent is leaving the seller open to re-negotiation of the deal, based on the buyer’s inspection findings. And that’s exactly what I – or any diligent agent – is going to do. It’s one thing to say it’s an as-is sale, but from a negotiation standpoint, it’s as was disclosed at the time the buyer made the offer.
How costly of a mistake? Depends on how you want to calculate that. The sale I closed a week ago we got it for 90.9% of asking price, and the average sales-to-list-price ratio in the neighborhood was 98.6%. As you can see, the seller of this property – who had virtually nothing in their disclosure package – did much worse than most sellers in the neighborhood. In dollar terms, this seller walked away with $50,000 less than he might have. In a word: brutal.
The sale I just closed today was a bit different; this one we had to beat out two other buyers, so we went in contract over asking price. But again, the seller had provided almost no disclosures, and based on inspection findings, we were able to chop $18,000 off the initial contract price. $18,000! And it could have been $0. We closed that one at 95.6% of contract price, and the average sales-to-list-price ratio in that neighborhood is 98.7%.
I’m not telling you this to toot my own horn. I’m passing this along as a cautionary tale. If you’re selling your home, make sure to prepare a complete and thorough disclosure package before going under contract with a buyer, and make sure your agent doesn’t rush you to market before this crucial step is taken.