Buyer Beware
Updated: Feb 10, 2019
Has the excitement of gaining a reward ever gotten the better of you? Take for example the radio competition to win a trip to a five-star resort only to find out that you have to sit through two days of a time-share sales pitch. Or when you fill out an entry form for a prize at your favorite store for them to sell your information to another company who bombards you with junk mail.
Believe it or not, these situations also exist in real estate. Buyers have the best intentions but in their eagerness to land their dream home can easily find themselves heading into muddy waters.
Unfortunately, sometimes the motivation is not always so innocent as buyers can become distracted in pursuit of a deal which exposes them to potential problems.
So here are a few scenarios that I hope will help avoid getting tangled up in situations while on the hunt for your next home.
The Open House Scenario
“We stopped by an open house and the agent showed us around. We really like it and think we want to make an offer!”
What’s so wrong with that? Well, there are a few things to establish before we get too excited about writing an offer. If the buyer neglected to mention that they are already being represented (and although the open house agent should have asked they are not always that professional!) then this could lead to an issue of “Procuring Cause” which, in short, is the open house agent claiming that he/she was the first to show the buyers that specific property and therefore is now entitled to the commission on the sale.
You can easily dodge this situation by immediately sharing that you are already working with an agent and if possible provide your REALTOR'S contact information or business card. This should set a clear boundary between you and the agent sitting the open house and allows clear lines of communication to be established. If you like the home and want to make an offer then the two agents can work together to make that happen.
The Buying from a Builder Scenario
“A builder was advertising a sale at a community we like. We stopped by the model home and found a floor plan that we love. We want to move forward with writing a contract and feel we can get a better deal if we work with them directly and not use a REALTOR.”
A couple of things to note- when talking with a sales agent at a model home you are essentially talking with the seller. i.e. you don’t have anyone advocating for you. (Read my blog on this topic.)
More importantly, the idea that you can save money by working directly with the builder (so the builder saves on the buyer portion of the real estate commission) has yet to be proven! Having worked directly for builders I can confidently say that builders will add the expense of paying real estate commission into the price of the home.
I have never seen it where the builder will give the buyer a credit for not using a REALTOR. It is simply calculated as a cost of doing business. If the buyer comes without an agent then that offers a bigger margin for the builder. I recognize that everyone wants to get a deal and the thought of saving thousands can be very tempting, but if you are going to pay the same amount either way then why not have someone on your side that can protect your interests?
The Change in Destination Scenario
“We have liked the idea of moving to Delaware but we have decided that North Carolina is where we want to be. We have started to work with an agent we found in that area.”
The ultimate goal is that you find an area where you are going to be happiest. Exploring other possible options to find the best fit is the nature of the business.
But what about the time, energy and effort that was spent by the primary agent in Delaware? Is there not something that agent can still do to assist you?
After all, they have spent a lot of time getting to know you and the most important aspects of your home search. This would make them a great asset in helping get the process started in the new area.
In these cases, making use of the primary agents’ referral network will be your best approach. The primary agent can review agent profiles, identify a suitable REALTOR partner and connect both of you together.
They can pass along useful information so that you don’t waste any time having to start from square one. This provides a head start for the new agent, a referral fee for the primary agent and a positive transition for you!
An Ally in Your Corner
These are only a few of the predicaments that buyers find themselves in as they revel in the excitement in the search for their new home. I do wish the process was without these kinds of hazards, but the support of an experienced, knowledgeable and trusted REALTOR will be your best ally.
Making sure you allow them every opportunity to represent you will be something that needs to be a priority. Don’t be a victim of “I just didn’t know.” Instead, have the confidence to place your REALTOR at the forefront of your search and let them work to bring the deal together!
Nitan Soni
The Nitan Soni Group
302-747-3333