Rookie real estate agent mistake #1

Can there really be a #1 mistake that a real estate agent can make? Mistakes are made everyday in any profession but in mine, there is a lot of money at stake.

I remember my first couple years. It felt as if I fumbled from one mistake to another. Nothing “big” thankfully and the support of my broker and mentors kept me on track. Mistakes are just part of the massive learning curve.

In choosing my number one you will need a little background. I believe that an agents roles is that of consultant and advice giver. Today, the legal definition has evolved to fiduciary. Interestingly, real estate agents are only paid when a deal completes. This can create a conflict.

If an agent needs a “sale” or commission, how likely is this to affect their ability to act as a true fiduciary?

Number one mistake agents make: “needing the money”.

Money is important. Zig Ziglar says “it ranks up there with air”. But needing the money is the problem.

Ask your agent, how are they financed? Do they have cash reserves if they do not do a deal for a month or two? Is their advice given without undue financial interest?

It might surprise you to know that most of us aren’t that busy.

 

 

The New answer is “no”

A big change just occurred in BC real estate with the banning of LDA, Limited Dual Agency. When seller’s asks, “do you have a buyer for my house?” The new answer is “no”. Or, it should start to become the proper answer.

All to often in BC and other markets, some real estate agents’ business practices revolve around the “list with me, I have a buyer for your property” mentality.

When I sold in Ontario 14 years ago, my agent gave me this line as a powerful incentive to sign a listing agreement that night. At the time, I was not a real estate agent. The urgency to sign the paperwork was miss placed yet we were powerless. We were scared, didn’t understand the system and the thought of the agent having a buyer waiting in the wings was all to tempting. Papers signed. Not wanting to “risk it” and feeling no need to question it, the listing presentation, contract paperwork, hugs and kisses all took about 2 hours.

Did my agent at the time give me a harmless little white lie?

There were more than 500 realtors in my area at the time. His team of 15 people technically had a slightly better than 15 in 500 chance of selling my home to one of their clients.

What we failed to focus on was the service and support the agent would offer us. How would he or she “stick up” for our price? What was their negotiation style? Who would be helping us with the actual sale (we never met the listing agent a second time and we got handed off to a junior, inexperienced “salesy” guy)? This poor experience motivated me to become and agent and write this blog. It’s been 14 years.

Many will decry the loss of LDA. Me, not at all. Sure, LDA can work at times. However, if you want your agent 100% in your corner, it’s best that the answer to the question be “no”, I don’t have a buyer. But, I will help you get the best price and terms from the best one that comes around…

Undivided

One tenet of agency is to provide “undivided” loyalty. It’s an important step in becoming a true fiduciary.

Limited Dual Agency(LDA) in real estate is when one agent acts for two parties in a transaction. LDA will officially be banned in March 2018. The most common iteration is when the listing agents brings a buyer for the seller (or offers to act on behalf of a buyer who calls the listing agent directly). Interestingly, many sellers hire their listing agent in the hopes they have a buyer for their property. To me, this is like asking the prosecution lawyer to also act for the defence in a court case.

At the same time, this practice has been going on for years and many point to the great success this has provided clients both buyers and sellers.

The idea that the seller’s agent is tasked with selling the client’s property quickly, for top dollar and for terms benefiting the seller while keeping their personal story private seems at odds with suddenly being able to switch a gear and become “impartial” to the transaction by evoking LDA.

What about the buyer’s desire for the best price and terms and impartial due diligence? With a “double end” commission on the line and a fast flow of communication, agents who specialize on this transaction can be greatly rewarded but are they not somehow to close to the “deal”? The superintendent thinks they are.

It’s exciting to see how my profession will grow with this important change.