(Article appeared in the New York Times on December 7, 2009)
Not too long ago, consumers had little access to details about homes for sale. Today, anyone can tap into this information. Real estate may be more transparent, but buyers and sellers still aren’t necessarily privy to everything. There are some things real estate agents can’t legally disclose, and others they don’t want to.
Here are five things a real estate agent may not tell a seller.
1. The agent and the broker may hold you to the listing agreement. In spite of what real estate agents may say, getting out of a listing agreement isn’t a slam dunk. ”Sometimes the agent doesn’t perform and you can’t make a change if you are tied to a listing agreement. It’s important for the seller to put in some kind of a clause that lets them out of the listing agreement. Some companies will (still) ask you to reimburse their marketing expenses,” or assign you to a different agent, says Patricia Kennedy, an agent with Evers & Co. in Washington, D.C., who puts a clause into her agreements saying either she or the seller can terminate the agreement by giving the other a written notice.
2. You may have trouble selling your house because it has an odor, the front door sticks or your barking dog is a distraction. Straight talk is difficult for some agents, especially in a market where every listing is precious and they don’t want to offend a seller. Odors are a particular problem. Home owners are usually unaware of them but they leave an indelible impression.
3. The list price they suggest isn’t realistic and they will be back in a couple of weeks asking for a price reduction. Studies show most sellers don’t believe the downturn has affected their own home, so it’s easy to be swayed by the highest price. Don’t forget that in the end, it’s the appraiser for the buyer’s lender who establishes value and that’s the challenge of today’s market, cautions Mark Nash, a Chicago real estate broker and author of several books including ”101 Tips for Buying and Selling a Home.”
4. How well they play with others. Real estate deals depend on cooperation. An agent who doesn’t return phone calls, isn’t connected with the local real estate community or has a reputation for being difficult isn’t going to have other agents rushing to show that rival’s listings. Experts suggest interviewing at least three agents before listing your property. Mention to each the names of the others you are meeting. A negative reaction or barrage of disparaging comments could be a red flag. Steer clear of that agent, recommends Nash.
5. How your agent splits the sales commissions with the buyer’s agent can affect the sale. A 50/50 or 45/55 split is customary, but it really depends on local practices. If your agent offers a cooperating agent a split significantly below the going rate, buyers’ agents may be less inclined to show your home. The same holds true if the original commission is so low there is little left to offer the buyer’s agent.
–On the flip side, here are five things buyers may not know:
1. The agent working with you might legally be representing the seller unless you have signed a buyer representation agreement. An agent who is listing a home and is also working directly with the buyer must disclose this to both parties and is considered a dual agent. Expect an agent you plan to work with to explain agency relationships at the earliest meeting and to offer you a choice of how you want to work with them.
2. The documents you sign when making an offer may also be the purchase and sale agreement. In some states the offer to purchase is actually the purchase and sale agreement. In others it is just an offer to purchase and the actual agreement is signed later. Usually when you’re ready to make an offer, there is a rush and the focus is on price and contingencies rather than the actual document. It is most important to understand how the earnest money will be held and under what circumstances it would be returned.
3. The home you want to bid on is in a high crime area or isn’t considered in a family neighborhood. By law, real estate agents can’t define neighborhoods, crime rates or schools. Fair Housing laws restrict the type of information agents can give to prospective purchasers to prevent the potential of an agent steering them toward, or away from, a specific property.
The agent also may not know that the house is a short sale, which means the seller’s lender has to agree to accept a price below the mortgage balance. If a property isn’t flagged as a short sale, the buyer’s agent may not know this when an offer is presented. Be prepared to allow a longer time to close.
4. The final walk through isn’t just a formality. Allow ample time to go over the property. Water heaters can leak or an appliance can break within a day of closing. This might be the rare exception, but anyone who has had this experience will tell you to be on the lookout for any indications that appliances as well as heating and cooling systems may not be working. Make sure doors and windows operate and that the property hasn’t been damaged during the move out and that all the agreed upon items remain.
5. All things related to homeowners associations (HOA). Although most states require HOA bylaws to be presented to buyers, agents sometimes aren’t aware that an association exists, particularly in older neighborhoods, so be sure to inquire. Also pay attention to restrictions that might be important to you, such as those regarding pets, vehicles (some associations require that campers or boats be parked out of sight of the street), clotheslines or potential alternations to the home. Some, particularly condominiums, may require new owners to pay a fee or assessment. For condos, pay particular attention to how well the building is run and exercise due diligence investigating the financial health of the association.
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