A Case Study in Lousy Austin Realtor Representation

A few days ago I wrote up a deal for a Buyer. The house was priced about $15K above market value, but it was a nice home that fit my buyer’s needs, so we ignored the list price of $239K+ and wrote it up at market value of $225,000. Along with the offer, I wrote that the offer was based on what we believe to be a fair price for the home based on our market analysis and current market conditions in the area, and that I’d be happy to send over the analysis along with the comps if requested.

The agent faxed back a counter-offer with the following written in the cover letter (with price typo and grammatical errors left unchanged).

“Making a offer $15,000. low was a mistake. If you would have offered say $133,000. they might have taken it but here is there counteroffer,”

Read that quote again. It’s exactly as written by the listing agent. He’s a great negotiator isn’t he? NOT!

The counter-offer was for $235,000. I discussed the deal further with my Buyer, and we decided to move on to another home with a more reasonable Seller and an agent who isn’t an idiot.

Part of our decision to move on was based on the fact that I’ve dealt with this agent before, and that the previous deal with this agent was one of the worst professional real estate nightmares I’ve ever had. In the end, it all worked out, but not before we had to terminate the deal during the Option Period and subsequently I had to spend a lot of time on the phone with the Seller, helping him understand how things work in a real estate transaction, before the contract was resurrected.

Why was I on the phone with the Seller? Because this agent is one of those Discount Brokers who takes a flat $500 commission in exchange for sticking the listing in the MLS, and is essentially absent from the rest of the deal, including the repair negotiations, which I was directed by the agent to engage in directly with the Seller, who was an extremely inexperienced Seller at that. The home had serious repair issues and the repair negotiations were truly a nightmare. But in the end, the Buyer got the home, is happy, and is now a good friend of ours.

Nevertheless, here was this listing agent again (I use the term “agent” loosely in this case), listing this home that was a good fit for my Buyer. I cringed as I emailed the offer over, wondering if this was going to be nightmare #2. I started to get worried when we were instucted to re-send the offer directly to the seller.

In the end, nightmare avoided by walking away, and my Buyer found another home. A financially ambitious and unrealistic Seller, who is saving over $6,000 in commissions on the listing side, and has his home overpriced by $15,000 (I hope he doesn’t have that $21K spent already), has let a very good, pre-approved and serious buyer walk away, in large part, because the buyer nor I want to deal with an incompetent listing agent nor do we wish to engage in dealings with an unreasonable Seller. The Seller gets what he pays for and my Buyer already has another better priced home under contract.

Questions:

1) Did the listing Agent’s counter-offer comments, quoted above, serve to help or harm his client?
Answer: This client is being poorly served. The comments are inexcusable, unprofessional and ridiculous comments to make to a Buyer’s Agent. The comments clearly harm the client.

2) Does the reputation and past dealings of a Realtor affect the marketability of that agent’s listings?
Answer: You bet your house it does – both favorably and unfavorable. In this case, the Seller is being harmed by the current and past behavior of his listing agent, and probably doesn’t even know it since his only apparent criteria for hiring the agent was the $500 listing commission. I don’t feel sorry for the Seller one bit, and will enter into any future deals with this agent with caution.

3) Can good Buyer Agents influence which deals Buyers are willing to try harder to get, and therefore which listings receive a more serious effort and stand a better chance of selling for more?
Answer: Yes. We do it every day. Listing agents like the one above seem clueless about that.

The most important relationship we have as Realtors is with the other Realtors we deal with. Clients are important, but they come and go, whereas, we deal time and time again with many agents, and our reputations preceed us. Clients benefit from the good reputation, trustworthiness and Good Will that good agents build over time with other agents in the field. Clients can likewise be unwittingly harmed by attaching themselves to a Realtor known by other Realtors to be hard to work with and less than competent. Such was the outcome in this scenario.

Posted by Steve
9 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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Keaton - 9 years ago

Discount brokerage is not for everyone, that’s for sure. If the seller doesn’t haven any idea on how to sell a house and doesn’t want to do some homeworks himself (cleaning out the home and getting ready for showing, host open houses, study the market and set a decent price, learn some basic rules of real estate contracting and financing, etc.), it’s a good idea to hire an full service agent. On the other hand, I’ve seen some horrible full service agents that are equally as bad. After all, I suspect that a good portion of all agents don’t have college degrees. Their analytical and language ability is truely far and apart.

Steve, here is my question. What if a realtor wants to sell his own homes? Does he need to hire another realtor and pay the full 6% or he can actually do the FSBO thing?

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Terrill - 9 years ago

It would be interesting to have a Realtors list of agents to be very careful with when doing a deal. I know I have a short list of difficult and incompetent agents on my list. Most of the agents I’ve worked with have been good but I’ve had some that were real stinkers. It sure can cause a lot of stress for us and our clients.

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Steve - 9 years ago

> Discount brokerage is not for everyone…
I do think, for savvy and experienced Sellers who’ve been through the sales process a number of times, there can be an appeal to using a limited services Broker, provided the Seller has the expertise, knowledge and time to fill any gaps in the competence of the Discount Realtor.

The problem is that most of the Discount Brokers I’ve ever personally dealt with lack the expertise and skills to compete as a full service Realtor, so they compete on commissions alone. This is the case, I believe, with the Realtor in my two situations above. He’s a real Bozo. Match someone like that up with a Buyer who cares about nothing else but the commission, and you have a match that may not result in the best outcome.

> It would be interesting to have a Realtors list of agents to be very careful with when doing a deal.
Terrill, of course, as Realtors, we can’t go around badmouthing other Realtors by name, or having blacklists, as it would be a violation of the Code of Ethics. Informally and unspoken however, I believe we all have our own mental list of agents who’ve been very difficuly to work with and who do not serve their clients best interests with their actions and behaviors.

Steve

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Mare - 9 years ago

“Making a offer $15,000. low was a mistake. If you would have offered say $133,000. they might have taken it but here is there counteroffer,”

Wow. Just….wow. As a buyer, I might have taken the time to respond accordingly directly to the seller. Did you know for sure that the seller insisted on this price, or could they maybe have just been going with a crappy CMA that their agent gave them? Better yet, do the discount brokers even bother with a CMA presentation?

‘What if a realtor wants to sell his own homes? Does he need to hire another realtor and pay the full 6% or he can actually do the FSBO thing?’

An agent can market and sell his own home without hiring another agent; however, they must disclose to potential buyers that they are indeed licensed agents/brokers.

‘After all, I suspect that a good portion of all agents don’t have college degrees. Their analytical and language ability is truely far and apart.’

Keaton, you have a point here, but I’ve come across my fair share of folks who have a degree and a whole other slew of fallicies to go along with it.

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Steve - 9 years ago

> Did you know for sure that the seller insisted on this price
The Seller signed the counter-offer for $235K. The agent wrote the coverpage note with the typo of $133K. We take a Seller’s written communication to be representative of his wishes.

>I might have taken the time to respond accordingly directly to the seller.
We’re not going to waste our time doing that. There are plenty of other good homes on the market.

>An agent can market and sell his own home
Correct. Only once have we hired another Realtor to list and sell a home we owned, and there were specific reasons for doing so. Every other property we’ve ever sold we listed ourselves.

Steve

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