Buying or selling a home is a formidable process that most consumers choose to hire a professional to help them navigate. In 2018, Over 91% of sellers and 87% of buyers used a real estate agent or broker to help guide them through the process. But despite these high numbers, real estate professionals rank towards the bottom of Gallop’s list of professions that people believe demonstrate honesty and ethical standards; better than lawyers and telemarketers, but below contractors and bankers.
I understand the concern. Even as a working agent, I still struggle with the issue of trust sometimes when dealing with other agents on behalf of my clients. But there are a few things I have learned and that I share with my clients to help them put the issue of trust in perspective and help them to be able to evaluate the information provided by an agent.
In order to serve my clients, I spend a good deal of time and effort soliciting information from the agent on the other side of the deal. For example, when representing buyers, I always ask “How many offers have you received, and are they at, above or below list price”. The answers to this question can range all over the place, but in general, most agents are pretty forthcoming with answers. When I report back to the client they immediately want to know if the answers are truthful.
This is a tough question to answer.
The first thing every consumer should know is that California real estate agents have a fiduciary duty to their clients. To her client, an agent owes the utmost care, integrity, honesty & loyalty. This is the law and the first document every agent has their client sign is a disclosure that outlines the responsibility an agent has to his client and the other parties in the transaction. In addition to owing their client a fiduciary duty, the agent owes both sides reasonable skill & care, honest & fair dealing, and disclosure of known facts. I genuinely believe a majority of agents take these duties seriously, if not for the adoption of ethical values, then at the very least to avoid liability down the road.
However, I would be naive (and not demonstrating honesty) if I told my clients not to worry, the agent on the other side is telling the truth in every instance. It’s rare, but if I do catch the agent on the other side lying, or misrepresenting the facts, that will basically answer the question in the negative. I have met, and worked with a few agents that I know for sure are not living up to the ethical standards described above. In one instance recently, the listing agent for the property I was representing the buyer on failed to disclose his ownership interest in the subject property. I discovered this fact and when I asked him about it, it became obvious he wanted to conceal this fact. From that point on neither I nor my client could trust this agent and my client eventually canceled the escrow.
In addition to the fiduciary duties, an agent is subject to, Real Estate sales is a community of agents who work with each other on each and every deal. If an agent lies or acts in a manner that is unscrupulous, their reputation can be in jeopardy, putting future deals at risk. Most agents will avoid being in this position. This is one reason consumers should ask themselves before committing to working with an agent; “does this person seems to have integrity?”. You want a fighter on your side, but your agent should get what you want in a manner that preserves their (and by extension) your own integrity.
Finally, when addressing the information provided by agents on the other side of the deal, I advise all clients to take the information provided as a data point in their decision making but not to hang the decision entirely upon the words of the agent. It’s like a home inspection. You view the house, you ask if this or that works or needs repair, then you hire a home inspector to give you a full report on the condition of the house.
So back to question I posed to the listing agent on behalf of my buyer about the other offers. She tells me they have multiple offers all at or somewhat above list price. How should my buyer use this information in determining the price to offer? Assuming I do not think the agent is full out untrusty worthy, I explain that the buyer should consider this information in light of all the other information I provide and they research on their own. I provide a comparative market analysis to help the buyer judge the overall value of the property. We look at how long the property has been on the market, and then I say with all of the information you have what does your desire and budget make sense in terms of the offer price & how much do you want to pay to ensure that your offer is accepted. My point is that the information provided by the agent on the other side should not be the one data point that drives your decision. In that way, you are not really dependent upon the trustworthiness of the information provided by the agent.
As a real estate agent, I work hard to communicate to clients my own sense of integrity, I truly believe it is an asset that helps me differentiate from other agents who spend most of their time and effort getting clients and deals. But in the end, you should always be seeking information from other sources to surround what you are being told with information that helps you determine if it is true.