5 Things Our Realtor Told Us That Weren't True

by Darwins Money on 11 April 2011 44 comments
Photo: coffeego

I wanted to share this post because if this happened to me, it is undoubtedly happening to thousands of other Americans who are being "represented" by realtors.

Let me start with a quick background. Our realtor was a friend, sort of — he is the husband of my wife's friend. He helped us out with a sale years ago. We've hung out together, and he offered to list our house at 2%. I still believe he's a pretty good, honest guy and represented us better than a typical realtor would have without the personal attachment. He did put in a lot of time on the deal, and ultimately, he didn't get a commission since we decided not to sell when we couldn't reach terms on both the buyer and seller ends. But in the process, he told us a few things along the way that turned out to be untrue.

Whether these were honest mistakes, or attempts to prod us along to get a deal done, we'll never know. But when your realtor tells you something, consider the source — because in many cases, they don't even know you and maintaining a friendship, reputation, or future business is even lower on their list than it was in our situation.

"It's A Couple Thousand Bucks"

During the process of looking at new homes, my wife and I considered houses with pools. We figured that since pools don't add much (if any) value to a home, we could potentially get a pool essentially for free in a home with an existing pool. We have young kids and thought it would be a neat addition to a new home since we don't have a pool now.

A few of the pools we looked at had pitting on the gunnite surface. It was evident the pools would need to be resurfaced if we moved in. Each pool was around 6-8 years old and we had serious concerns about the cost since we were pool newbies. When we asked what it cost to resurface a pool, he said with confidence, "A couple thousand bucks, that's it." Subsequently, we learned it's closer to $7,000-$9,000, depending on the size of the pool and other specifics. So, right off the bat, we would have been looking at an additional expense of approximately $5,000 over what we had budgeted if we took his word for it.

"Use My Mortgage Guy"

You'll probably encounter this a lot when working with a realtor. They'll suggest a particular mortgage broker and say he can get the same or better rates as the going market rates or something along those lines. In our case, because we were going to have to move fast and time a buy/sell simultaneously, he suggested we use his mortgage broker to make sure everything happened quickly and accurately rather than working with an unknown third party.

Well, the thing was, I had refinanced a few years back and had a great experience with another mortgage broker. Just to compare, I contacted both of them each time rates moved a bit (every few weeks). I asked each mortgage broker for their going rates, as if we were "about to do a deal" and I needed to estimate my costs if we proceeded. Each time, my old mortgage broker's rates were 0.125-0.25% lower than the recommended mortgage broker with comparable terms and closing costs. This would have meant thousands of dollars over the life of a loan! So, following his advice wouldn't have been in our best interest.

"Interest Rates Aren't Going Anywhere"

There came a point where we became discouraged enough with our lousy offers and lack of "dream homes" to move into on the market that we indicated we were ready to throw in the towel and just stay. I indicated that interest rates were at incredible lows and I was thinking about refinancing into a 15-Year Mortgage while rates were low. He said emphatically that rates weren't going anywhere — they couldn't until the economy improved, which wasn't going to happen soon. This was ironic on so many levels. (See also: Low Interest Rates Do Not Make Homes Affordable)

First off, it's a realtor trying to sell you into a larger home while he's saying the economy is going to remain weak (which is bad for home prices). Next, nobody ever does a very good job at predicting movements of the 10-Year Treasury bond, mortgage rates, or any free market movements — least of all, a realtor. As it turns out, he was dead wrong. We kept our house on the market, the White House made their QE2 announcement (which was meant to keep rates low), and they spiked. They have never come back down after that. We missed the refi rate I was targeting.

I think he honestly believed what he was saying when he predicted rates would remain low, but he was in no position to make such a prediction. It's like me predicting where stocks will be in a year with any assurance. I'm in no position to do so, nor is any financial "expert." Invariably, the vast majority of such predictions will be wrong and any that were right would be due to luck.

"You're Outgrowing Your House"

I was both amused and annoyed by this statement. When we were considering not moving, he highlighted why we were making a mistake — because our current house was too small. Yes, we have 3 kids and a dog and my wife likes to hang on to a bunch of stuff instead of throwing it out. We're not minimalists. But our current house is both bigger than the average house in America, and if you look at home size trends over the years, it has continuously risen each decade. Americans have felt the need for ever-increasing home sizes, which isn't a reflection of what's "needed" but rather a continual trend of waste, low self-esteem, and keeping up with the Joneses. (See also: McMansion to McCottage: Why Smaller Houses Are Smarter)

I grew up in a 1,300 square foot home. We now have a 2,500 square foot home plus a finished basement. So, I think our house is fine. We had been looking to move into something newer and slightly larger because we could — not because we outgrew our current home. Don't let a realtor convince you that you need a new home. If you haven't already convinced yourself, then maybe you don't really need to move. 

"We'll Price The Home at $440K and Target $420K"

We knew we'd end up taking a slight loss on our home when we sold since we bought at the peak in 2005. Since we made over $100K on the sale of our first home I bought in 1999, I didn't look at it as a net loss of money per se, just market realities with a net gain still in the grand scheme of things.

We were willing to live with a sale around $420K, maybe even slightly lower. The thinking was that if we were buying into something larger or in a better school district, we'd be saving much more on a comparable purchase. As it turned out, we didn't get a single offer anywhere near the list price, nor even anywhere near our target price of $420K. Our offers ended up all being in the high 300s and at the end of the day, even with purported savings on the purchase front, we just couldn't swallow selling the house at over a $50K loss. If I had to relocate or lost my job or had a lot of money to play with, maybe it wouldn't bother me as much. But it just seemed irresponsible to take such a huge loss when we didn't really have to move, especially when it was for so much lower than our target.

In retrospect, if he'd said at the start that we'd list at $410K and target selling at $390K, we probably never would have gone down that road at all and saved everyone a lot of time. But by starting with a somewhat palatable target, we were enticed to start the process. Again, I don't know if this was intentional or not, as our offers evolved over a multi-month period. But if you're on the fence and a realtor gives you a target price, you may want to go out and get some comps independently and make sure it's realistic.

I'd say our relationship is not the same after this experience, as he's annoyed and frustrated that we didn't follow through and do a deal after all the time he put in. But we had to do what was right for us obviously. Things changed. So, even if you're using a realtor you know — friend, family, or prior acquaintance — be on the lookout for semi-truths that make a transaction seem a little more palatable as well as other unanticipated moving costs. You'll probably want to independently check things you're being told rather than blindly take their word for it.

Do you have any similar realtor experiences?

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Guest's picture

Yes, like how in the world would a realtor know how to predict a market when so far, no one else can either!!! I think it's great that you took your time and stepped back a bit and looked at the big picture...it's the opposite thinking that got the rest of us in trouble with this housing mess!

Guest's picture
Juggler314

I have yet to meet a real estate agent, friend or not, that doesn't overestimate the final selling point of the home. Again they want to get you to list it in any way they can, because a lot of people will end up selling anyway (they have to for one reason or another). I once had to deal with a house valuation in a court setting, I got my house appraised at around 190k, the court, being stingy, didn't get their own appraisal, just asked for a local RE agent to work it up, they came back with 270-290. Of course that was ridiculous, so the court went ahead and ordered an actual appraisal, which came back "close enough" to not argue about it. (of course I got to speak to both appraisers, so it's not surprising they were close together...)

Guest's picture
Jon

Hmmm... I used to have a rule in rental real estate, "Never rent out a piece of property to which you have any emotional attachment." Maybe the same thing should apply to realtors, "Never work with a realtor with whom you could damage a relationship."

Guest's picture
Juggler314

I have a friend that's a RE agent, she wouldn't even comment on the houses I was looking at or the areas. Afterwards she told me she avoids helping friends because it never works out well.

Guest's picture
Juggler314

Oh yeah, next time I buy or sell a house...I'm representing myself.

Guest's picture
Welmoed

Add to this list: "Use my Home Inspector." If a Home Inspector is relying on a realtor for his/her referrals, there is always the chance s/he will overlook some issues that could jeopardize the sale. Choose your own Home Inspector by going to www.ashi.org and make sure you ask whether your inspector is independent.

Guest's picture

Wouldn't there be the same chance to overlook something if that inspector thinks he could get the business of a new agent?

Darwins Money's picture

Great point; I got burnt on our old inspector missing things on the current house (which is one of the reasons we considered moving!). He was referred to us by the realtor.

Guest's picture

I found out after a couple of years that an inspector I had been using had missed some things on a couple of homes and I no longer work with him. He was a former builder and knew many things but I am not an inspector. The only way to be close to 100% sure you are getting the best job done by a contractor or inspector is to have 3-4 different guys do the same job covering everyone. I don't get kickbacks and no one ever offered me one.

Guest's picture
Skip

My Realtor got really upset when I didn't use his home insurance guy or his mortgage guy.

I'm sure he was getting a aloof from both of them.

Guest's picture
JustAGuy

A "aloof"? Never heard that one. I think in Chicago we call that a kickback.

Guest's picture
Melyssa

"Use My Mortgage Guy", is what we're going through now. She said that her mortgage lady has done fha 203k loans, so we figured that it was best to go with someone who knows the ropes. Even BEFORE putting an offer on the house my hubby spoke to the mortgage lady and told him our plan of using our electrician as our licensed contractor. She said it was OK and we made an offer on the home. Weeks go by and the bank accepts our offer. After our electrician looked over the packet she sent over, he questioned if he was still OK to do the job. Hubby calls her and asks. She gets back to my hubby a few hours later and now says NO, that we need to use a general contractor, not just any licensed contractor. Now we're so far into the deal that we are STILL looking for a general contractor who can work within our budget. If this mortgage lady would have actually known that we couldn't use any licensed contractor, then we would have NEVER submitted an offer on the house.
And the mortgage company that this lady works for is actually supposed to be one of the top companies to work on fha 203k loans. Apparently she was not as informed on these loans as we were told she was.

Guest's picture
Ex-City Employee

Be especially careful if you are buying vacant land, or any property that you will want to improve and go to the city yourself to check the zoning. You don't want to show up at City Hall with a bunch of plans only to be told that what you want to do isn't an allowable use in that zone. When I worked in a planning/building dept., I can't tell you how many times I heard "but my realtor said I could build this here." There are a lot of reputable agents, but you should always check things out for yourself.

Guest's picture
R S

I was told, when negotiating on price, "You've got to understand that the seller is upside down! They bought this place at xxx". Since sale records & loans are public record, I had looked it up. They originally had 2 loans, and had paid off the smaller loan. So, they were not upside down (meaning they owed more than they were selling for), they would be selling at a loss, but not anywhere close upside down.
I was pretty upset, considering this was MY agent, not the seller's agent.

Guest's picture
Russell

It's entirely possible they are still upside down: mortgage total in tax records does not equal payment and existing equity. Depending on the mortgage product they have, they might well be upside down.

That said, it's irrelevant if they're upside down & your agent shouldn't be looking at that. All that is important for you as a buyer is the market value and what you want to offer. The seller can acept those numbers or not.

Andrea Karim's picture

Oh, yes! I will never use the mortgage broker that is recommended by an agent! Never, ever ever.

Guest's picture

What if they are the best mortgage broker? Why automatically exclude them? Check with three different mortgage brokers and compare.

Guest's picture
Sapphirescarlet

"I can get you in with no money down."

WOW! That was way off base. We made no down payment, BUT there was a constant barrage once we found the house; $1000 here, $500 there, another $600 to someone else. Money we didn't have, so we were continually borrowing from one or another parent, or letting bills go in hopes that we would be closing "in the next two weeks."

And that was another thing that was way off base. It was almost 3 months between our offer and closing. We were almost homeless, but for the generosity of my landlord and my husband's willingness to store his things in a moving truck for almost three weeks.

Guest's picture

I have people I refer my clients to but it in the end it is their decision. The only time I really warn them to be careful is with online mortgage companies who don't have local offices. Who are you going to get in front of if something goes wrong?

Realtors should not be guessing the price to fix things because they aren't contractors. They should tell you about a similar experience they have had but you should verify what the cost of repairs is everytime. What if the previous experience was a repair done by a friend? I have seen enough roofs done to guess what the price is but I still get contractors out there to do written bids. What if they find something else that has to be repaired to finish the job?

The reason I suggest you work with people I know is because of my past experiences. I have seen things go horribly sideways specifically with mortgage professionals. It is amazing how bad they can be. In the Oregon we have went from 15000 loan officers to 3500 in just a few years. A lot of the bad ones are gone.

There are some inspectors who some call "Deal Killers". The inspector I have writes up the most meticulous reports and every house, including the one he said was built well, had pages of things that could be or should be done and I wonder if they will still want it. It does me no good to have unhappy clients. And if someone wants to skip the home inspection I would have them sign a paper saying they decided against my advice to get the inspection. It is the best insurance policy. Also, always have a new home inspected.

Interest rates are worse than guessing the weather in the Pacific NW. Even a buddy, who is a higher-up at one of the banks and sets the rates they offer clients, won't guess where they will be. I am constantly annoyed at how economist predict our turn around as always three quarters away which they have said since 2007.

2500 sf plus a basement? The Osmond's don't need a house bigger than that.

Before 2005 I could pinpoint what price a home would sell for. It hasn't been the same since the run up. Right now the market is so soft I see homes selling for higher and lower than I understand. Pricing is tough.

Every profession has people who don't do the profession justice so please don't judge us all on the bad ones. I have told people they shouldn't buy a house and were better off renting for the time. One person just looked at me for about thirty seconds trying to comprehend what I was saying. "But you're a Realtor. Why would you tell me to rent?" In my opinion that was what he should do for his circumstance.

I tell every client this. In the end it is your money. I am like a presidential advisor. I have my expertise but you have the final say.

Guest's picture
dmh

NEVER take a realtor's word on costs of construction/renovation/upgrades. Most of them have little to no experience in this field, and are just throwing numbers out there that have no basis in reality. You as the potential homebuyer have to do your due diligence if you are considering purchasing a home that needs some upgrades or major repairs. In your case, I think it would have been better for you to work with someone that you didn't know personally. Perhaps you could have salvaged the friendship if you at least spoke to him directly and confronted him with his "half-truths" rather than not saying anything. The constructive criticism could have actually helped him better serve his future clients.

Guest's picture
Lisa

One thing my husband and I have learned over the course of many years of home-buying, remodeling and repairing issues is to NEVER hire friends or family. It's just not worth risking the relationship, and the hard feelings that often develop if things don't work out or turn out right ... if expectations aren't met or someone feels taken advantage of.

You say "He helped us out with a sale years ago." I'm wondering if there was any financial compensation at that time for the time and effort he put in on that sale. Not that he was expecting any - I'm just noting his prior willingness to give you his time and effort for the sake of your friendship. Then, you say that "He represented us better than a typical realtor would have without the personal attachment." - which says to me that he - again - put in a lot of time and effort on your behalf ... representing you better - by your own admission - than you probably would have been represented by another "typical" realtor.

OK, it didn't work out - and he made some mistakes in the advice that he gave you - and admittedly he gave advice he shouldn't have. But I cringed as I read you even mentioning the possibility that it could have been deliberate - in an article you put out on the Internet that he may possibly read - along with multiple thousands of others. Gee, no wonder your relationship has changed. Oh, and in defense of realtors, some sellers can be a real pain in the arse ... one demand and stipulation after another, changing their minds, backing out of deals, etc. My best friend and her husband are selling their house as we speak - yet her husband refuses to allow their realtor to even hold an open house. Go figure - and glad I'm not a realtor!

Darwins Money's picture

To address a few of your comments:

" You say "He helped us out with a sale years ago." I'm wondering if there was any financial compensation at that time for the time and effort he put in on that sale.

--> At that time, I found the buyer, showed the house and all the realtor did was show up at closing. He also got a handsome commission on the house we then bought - which the sellers paid for. Finally, I cut him a check on the side as an extra "thanks" for not charging us a commission - for basically giving us a boilerplate contract and showing up for closing. So we were more than generous that time around.

"Then, you say that "He represented us better than a typical realtor would have without the personal attachment." - which says to me that he - again - put in a lot of time and effort on your behalf ... representing you better - by your own admission - than you probably would have been represented by another "typical" realtor.

--> This is actually because my expectations for representation are so low I suppose. I've heard lots of horror stories about people not being happy with their realtor and even in this case - while he did a good job trying to get us a deal and negotiate on both ends, he also used to go days without replying to emails/calls and pulled some of the stuff I cited above. So, perhaps I was being too generous in my characterization.

"But I cringed as I read you even mentioning the possibility that it could have been deliberate - in an article you put out on the Internet that he may possibly read - along with multiple thousands of others. Gee, no wonder your relationship has changed."

--> I don't really follow. I blog anonmyously. I didn't mention him by name. And I posted this on another blog (not my own). So how could this experience possibly ever be tied to this realtor? Nothing I said was untrue and nobody would know who I'm referring to.

--> I didn't get into a lot of the "personal relationship" stuff in the article because I didn't think it was value added for readers. But since you're questioning our actions, there was plenty of blame to go around which wasn't shared here. I was actually planning on cutting him a check on the side for his efforts, which your husband would agree, is completely unheard of in industry when a deal falls through - but he's behaved pretty unprofessionally and rudely toward us when we opted to not proceed. See, we're not going to move for him. It wasn't right for us. That's the nature of the business. Sometimes they make a lot of money for very little work. Sometimes they make no money after putting in a lot of work. In this case, we couldn't reach terms we could live with on both ends and now he won't even return phone calls or take the lock off our front door which has been there for months now. Unprofessional to say the least. And well, if he's going to continue to act in this manner, then it just cost him some money!

Guest's picture
sd

This article outlines several expectations people had for real estate agents which they really should not have had. No real estate agent is going to be an expert on every facet of home repair and maintenance. No real estate agent is going to be privy to every aspect of every lender to know which one will be best for you. No real estate agent can predict with any certainty the timeframe or price range in which every house will sell.

You are hiring someone to show your home (or show homes to you) and to run the gamut of paperwork involved in buying and selling real estate. You're not hiring a contractor or a banker or an economist. Trust, then verify, and you'll get what you're paying for.

Guest's picture
Lisa

My apologies for apparently giving the impression that I was insinuating that you had treated this person unfairly. So much intent or meaning can be lost here online in written posts; I was "questioning", but not passing judgement. I just picked up on a couple of things you mentioned that spoke favorably of this man, and I was also putting myself in your wife's place, but substituting my own feelings and reactions - as if I were in the situation. You said that this realtor was the husband of your wife's friend. Women do chat, and I imagined that perhaps your wife might have mentioned to her friend that her husband(you) write articles online that are posted on a site like Wisebread, which has a huge readership. I know I would feel proud of my husband if he were writing articles that were being picked up online, and would probably share that info with a few of my friends. I would have just been afraid that if my friend saw the article, it would cause hurt feelings and possibly end the friendship. Of course, as you have filled in further details, it might well be that your wife might not mind if the friendship were affected; clearly - in your further explanation - this man did not handle the situation professionally, and you are STILL being affected by his actions, even though you have decided not to sell your home.

And you're absolutely right about another point: Realtors sometimes make a LOT of money from very little effort, as some properties sell in a very short period of time. Others can take a lot longer and, in cases like those, more time and effort from the realtor is obviously required. And as you pointed out, that is part of the deal that a realtor takes on when he or she chooses the job.

I do thank you for sharing a bit more of your story with us here. It does make a lot of things more clear - and more understandable ... especially for us "sensitive types". ;o)

Darwins Money's picture

Oh, no need to apologize at all - it's a long story and I felt compelled to at least share the high points since this same scenario is likely playing out all over the country right now. Realtors need to make a living too and I get why they're aggressively trying to make a sale. I just want to point out to prospective buyers and sellers some of the common statements they might hear that turn out to be problematic later on when they find out for themselves.

Guest's picture
Elizabeth

Please don't forget the oh-so important home warranty! You one, and it will save you $$! And did the realtor mention they just love working with a specific home warranty company?

My husband and I made the mistake of believing that, along with several of the things you mentioned, and, in the end, it cost us.

Thanks for sharing this!

Guest's picture

Reminds me of House Hunters when the agent starts talking about how easy it is to remove walls. Unless you're certain you are going to live in a house for 5+ years, the math doesn't work out for buying a house (in the absence of spectacular price rises)

Darwins Money's picture

That sounds funny, like "just rip out a wall here throw one up there". Totally, it's not chump change, especially when it turns out to be a load-bearing wall or have other issues.

Guest's picture
MarkS

So let me see if I understand this post You had your friend help you with your real estate. You told him upfront that you were not going to pay him for his services (2% listing) you wanted him to find you a house where you could basically steal something (in this case a pool) and then your house does not sale so you write up this post downing your friend that did all this for free. You do make some good points like agent not knowing what rates will be, and just a few thousand but how much homework do you expect "your friend" was going to do for free.

Darwins Money's picture

Wow Mark. To clarify...
For a transaction from 1999, I found a buyer through my workplace, showed the house myself and negotiated the price. At that time, this realtor (a husband of my wife's co-worker) made a proposal - hey, I'll represent you at closing and for your next purchase and you don't have to pay me for your sale since I'll get a commission on the buying end. It was a win-win he proposed. At that time, a lot of people were going without realtors trying to save buck since home prices were so high (my buyer didn't have a realtor for instance). The realtor only showed us 3 houses, showed up at inspection and closing and collected a 3% commission. Let's say for sake of argument he spent 20 hours on this deal (generous) and the agency took 1 %. He then got around 9K for 20 hours of work. That's a few hundred bucks an hour. Not too shabby and far from free.

The 2% listing was for this more recent deal, which frankly is the going rate for many sales anyway since the old 3/3% rule is dead. Houses aren't selling, realtors are hungry and sellers are taking a bath. Getting 2% on our sale and then 3% to the new construction builder would have been a pretty nice take - again, far from free.

As far as "stealing" a pool? That's a very unique way of looking at it, no? If the real estate market does not reward people who put in pools with a premium, should buyers pay more than the going price? If a house is worth 500K, they put in a pool and it's still worth 500K later because many buyers just don't want pools, why would I pay more than the market rate? I'm not sure how that would be considered stealing.

Guest's picture
Guest

Its aggravating to see people commenting about Market Value. Nobody knows what Market Value is. It is simply the price, somebody is willing to pay for something, and the other person is willing to sell it for. If you had 2 homes both identical, both sell on the same day, one person buys it at 200k, another person buys the identical home for 250k, what's the market value?

Guest's picture
Geckotraveler

As a former realtor and trainer, I hear all of the arguments and understand that both sides have valid arguments. There is no one size fits all and each customer and transaction is vastly different.

A real estate professional earns their money. So many things go on behind the scenes that a customer usually never knows about and that is what the commission is paying for, expertise, experience, knowledge and the ability to get a job done. To assume that everyone who hires a real estate professional should know every move that is required to complete a transaction and do the rest of their business is absurd. I do not need to know how you spend every minute of your time just because I read your blog. Somehow when the actual number appears on a closing statement and the people involved with the transaction see it automatically the discounting of the abilities, skills and needs come into question.

I will be the first to say that a lot of people in real estate are not professionals. I will also say that if sellers and buyers were more up front about expectations, financial situations and would take the time to read through a contract and if they do not understand it take it to an attorney to have it expalined to them many issues would not be encountered in the first place.

By the way in many states real estate professionals are not allowed to accept kickbacks, federally no mortgage broker is allowed to give kickbacks. It is also illegal in many states for a real estate professional to accept any form of payment or gift (dinner, theater tickets, etc.) unless it first goes through their broker and may even be kept by the broker if they so choose without passing it on the the associate. A commission is the payment for services unless disclosed upfront with all parties concerned. Also the commission usually never fully belongs to the real estate associate, it is split with the broker or in many instances pays for the usage of the "desk". An average breakdown of what an associate keeps versus what you see on the closing statement is vastly different.

In the end I did not do business with friends or relatives. I did not try to make friends with my customers. I explained up front I not was there to be their friend, but a professional. It kept the transactions and expectations neater and there was never a question in the back on my mind that I was not able to be forthright with a person because we may be uncomfortable at a BBQ.

For those people who decide you prefer to handle a transaction of this magnatude of your own I think that is great, but at least seek the advice of a real estate attorney to assist you through the process and be a source that can provide you with assistance should you stumble into dangerous waters.

Darwins Money's picture

If anything, this post has generated some conversation on expectations on both sides and some things buyers should research themselves instead of asking of their realtor. Lesson learned. We figured out offline that these and other statements were not accurate; many buyers find out after the fact and there's bad blood later on. Best if a realtor says, "I don't know" or "here's how you can find out" rather than give an inaccurate estimate on something.

As far as kickbacks, that wasn't alleged here, I'll never know what sort of partnership or business relationship they have. In the end, it wouldn't have been in our best financial interest, so buyers should get multiple quotes IMO rather than blindly using the suggested mortgage option.

Guest's picture

For example, on interest rates. Nobody knows where interest rates are headed, that's true. But that doesn't stop zillions of people from expounding their opinions in a general way. Everyone from economists on down. Economists are paid to make such predictions, but don't get it right any more than anyone else.

Still, he was probably thinking of interest rates in a broader sense. I don't track them day to day, but I know that they have been historically low for some years. I also expect that they will not go much higher. However, as potential mortgage customer, you were tracking the rates in greater detail. Every basis point is money in or out of your pocket, so when they "spiked," to you that was going "somewhere." For most of us, they have not. I don't when if or when my savings will ever earn 2% again.

"Outgrowing your house" is probably also one of those things he has said and says automatically without really analyzing it the way you have.

At root, he's a saleperson who wants a deal to go through and so has a tendency to want not to get hung up on details.

Guest's picture
joe23521

We're house hunting right now with a friend as our agent. Our families are good friends and attend the same church.

He is 100% honest and trust-worthy to us. He's normally the first person to point out problems or potential problems with a house or neighborhood. He would say, "As your agent, it's really not professional for me to say this, but as your friend, I have to tell you..."

It takes so much stress out of the process when you don't have to filter what your realtor says to you and know that he's actually watching out for your interest.

Guest's picture
Guest

@JOE, that's a situation in which you'd want to be careful.

First, I've been a part of many real-estate transactions and a couple of them have had serious problems. I'd hate to lose a good friendship over an event during a sale which neither one of you can control to your mutual satisfaction. And unless YOU are paying your friend for his services, he is not working for YOU; he is working for the seller and agency.

In addition, your friend has to be careful that his "not professional" comments don't go as far as pointing out, for example, that the residents of the area are not the same religion as you or that they are primarily of other races have different national origins or economic circumstances. He also should not be passing judgment on problems with the house itself that he is not qualified to evaluate (that's one of the points the article writer made).

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ljkingston

I love the "Use My Mortgage Guy" section. I hear those stories all day long. Shopping around is the best thing to do when getting a mortgage. If you want to get a quote from their "mortgage guy" go for it. BUT get other quotes to compare. Jammony.com has a good section on how to find the best mortgage.

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ljkingston

"You'll probably encounter this a lot when working with a realtor. They'll suggest a particular mortgage broker and say he can get the same or better rates as the going market rates or something along those lines."

This makes me laugh because every lender can offer the SAME rates. Closing costs are different because of how much you pay for points and origination. SHOP around for your mortgage. Get multiple quotes. This video makes another good point when trying to cut your closing costs down. http://bit.ly/mNDBMP

Guest's picture

i have an age old idea. how about just rent? you are immune from all natural disasters, all repairs, and you can move when you like. let all of this be the landlords problem. and folks, you never own anything in life. everything is rented because everything perishes with time, including yourselves. enjoy it while you can and stop getting into all these headaches with gibberish salesman talk and unnecessary complicated paperwork created simply to give someone a job.

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Guest

I have so much to say! I just bought a property and there was stuff that really irritated me. Please tell me if you think I am seeing things correctly.

Things the realtors/lender did that annoyed me:

It took me FOREVER to get my loan choices written down so I could see them all and make a choice. I felt I had to beg the loan lady (*itch) to get this. FINALLY, my realtor got the terms all written down and they were WRONG! I found out at escrow. I had to quickly ask for the accurate loan terms, my lender took offense wrote me two long emails on how I screwed up (I didn't) and I STILL didn't get the loan terms. FINALLY, after finally hearing me, she wrote them down hastily, FAXed them to me late at night and my realtor (who "befriended" me) PUSHED to make a choice that day! I said "I need a day, OK?" I was so annoyed.

On the add for the property, I discovered recently, they got the square footage and price per square foot wrong (in their favor). I discovered this at about a month after the deal closed. I just mentioned it to the seller's agent and he tells me I am wrong. I said "but I measured". He said "oh, they don't count INDOOR living space, it's all measured outside the building counting a lot more square footage.

The seller and seller's realtor said they would shampoo the carpets. I said "great". I find out no shampooing was done and nobody admitted the truth. I hated being lied to.

When I was thinking over my loan choices and being pushed to SIGN, my realtor called "you are not shopping around with other loan agents are you"? I said no but I was very very annoyed at this question. So what if I was? What was it to her? It made me think I should have shopped around more. Never ever will I use the same loan agent again. Why did my realtor say this? Why didn't she encourage me to shop around if I wanted to?

One little thing...I was recieving the old owner's mail and it was piling up. The seller's agent said "I'll come by and pick it up". A week goes by no pick up. I finally bring it in and handle it myself. He made so much, couldn't he have come thru with this little task?

This experience shocked me. I will be better educated next time on how to empower myself whether it's finding my own lender/appraiser whatever. Also, maybe use a discount service to save big bucks. Why should I be pressured?

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sd

Guest, welcome to the board. Yeah, house-buying is a complicated, confusing task, and it sounds like there are a few things which would have made your experience better. There are a couple of things I would have done differently:

1) You don't say if you were pre-approved (not just "pre-qualified") before you started shopping. If you weren't, you should have been. Getting pre-approved means you've already shopped around for the terms that best suited you. And knowing you already were approved elsewhere would make it easier to judge the RE company's lender's terms. The middle of a purchase is not the time to figure out where you're getting the best deal.

2) Unless your agent was hired specifically as a "buyer's agent", he or she represented the seller, not you. At the same time, especially in THIS RE market, buyers get to call a lot of the shots because there aren't that many good ones out there. Until you sign, nobody gets paid. Use the power you have in that situation to ask as many questions as you need to and take the time you need (understanding, of course, that there are deadlines and that an accepted purchase offer helps lock things in).

3) It is hardly ever a good idea to require sellers to do maintenance of any kind. They have no incentive to spend a dime on it, never mind do as good a job as you like. For all you know, the carpet "cleaning" they did was a can of supermarket rug cleaner. Next time, negotiate maintenance into the price you settle on.

3) House measurements are notoriously "off". Measuring the outside of the house to determine square footage sounds misleading to me, but if that is the custom in your area, at least all property is measured that way. You'll notice lots of RE ads and paperwork states that information is “deemed reliable but not guaranteed” -- the agent may have taken dimensions from the ad the last time the house sold, or someone may have screwed up typing in the numbers ... If you want to be sure, measure it yourself.

4) As in every business, there are RE agents with great work ethics and a lot of integrity and there are RE agents who are distracted or burned out or shady. There are people like that in any business. Not to defend RE agents too much, but the commission they receive isn't always all theirs. Out of that comes marketing expenses for the property, typically office rent or some sort of fee by the company they're with, taxes, and so on. I used to think being a RE agent was easy money until I learned more about how the business works; there aren't THAT many truly rich RE agents.

As in most major purchases, educating yourself about all the alternatives will pay dividends. I sincerely hope you enjoy your house. But if/when you're ready to move on, spend a little time boning up on your choices and I'll guess the transaction goes a whole lot smoother.

Guest's picture
Carrie

So right on the ridiculous "outgrowing" thing. Many of us would _like_ more space, but seriously most people in the world have less space than my family of 5, and we are in 1400 square feet, no finished basement. Totally normal anywhere but suburban America in 2011.

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Guest

It sounds like the Realtor's comments were pretty generic. Saying a few thousand dollars really depends on the amount of work one wanted to do on the pool. In the grand scheme of things, when you're buying a home for 400k and you're looking at a 4k to 8k pool change, he could have said, that will be around a 1 to 2 percent cost. Which is probably the same amount as your closing costs anyways.

In regards to the target price, he can only base the price on recent sales in your area of similar homes. He estimates a cost and the market (people bidding) determines the market value of the home (what someone is willing to pay for it). Also, you could have staged the home properly, fixed possible repairs that the home may have needed to increase the price further.

Overall, I highly doubt your real estate agent was that bad. There are worse out there that will tell you far worse things to try to make a sale.

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GuestRon

Seriously? You are going to base an article on one persons experience?
First off NO Realtor should give advice out of the area of expertise and even then it must be qualified with, "It is an educated guess". These articles are getting sillier and sillier. I am a Realtor and I tell my clients that I have no idea what your home will sell for. I present what comparables have sold and what the available competition is. I always include my clients in everything from marketing materials and verbage to agrreing to a realistic price "range". I am not a fortune teller nor do I have a crystal ball.
I personally many many Realtors who operate the same. One story...one opinion does not make a good story...sheesh.