When the Buyer’s Agent Fails, Buyer’s Pay the Price

In today’s market where inventory is scarce, interest rates are rising, and prices continue to climb, hiring the wrong agent could cost you thousands.

I recently helped a family member sell their home. We listed the property for $685,000. Properties in the neighborhood were selling between $685,000 and $715,000. I cautioned my family that comps in move up neighborhoods selling for $720,000 and above would not be viable comps and if we did receive an offer above $715,000 the property might not appraise. If it did not appraise, we might have to lower the price to the appraised value.

We received a total of five offers ranging between $701,000 to $715,000. These buyers had been properly educated by their agents. Then, out of nowhere, I received a sixth offer for $730,000. Baffled, I called the agent to ask why she had given us such a high offer, concerned the appraisal would not come in. She told me that is what her buyers wanted to offer. I asked if her buyers would be willing to pay the difference if the appraisal came in for less than what they offered. She went back to the buyers, verified they would, and we accepted their offer.

The agent who had been at the open house when the property went on the market had met these buyers. She said they were not pleased with their agent because they had been writing offers for quite some time but nothing was being accepted and they were stuck in a buyer broker agreement for another three months. Tired of rising rates and climbing prices, the buyers took control and told their agent what to do.

I mean… no wonder their offers were not being accepted. Their agent did what so many agents do. She ran comps, told them what the “value” was, and wrote offers accordingly. But in a market with low inventory, high demand, and rising prices, the comps may not show the true value. Had their agent called me BEFORE writing the offer and asked the right questions, she would have known how to write a better offer. The buyers not only paid $15,000 more than necessary, they lost out on an additional $4,000 worth of repairs the seller was willing to make before closing.

Don’t get me wrong. I was happy that my family had such a wonderful outcome and the buyers are happy with their decision. I share this because it sheds light on some of the inner workings of our industry and the importance of working with a true professional. Had it not been for the agent at the open house, these buyers would probably still be looking for another house to buy, guided by a lack of follow through and diligence on their agents part. These are the agents that look for another job when the market tanks; we call them order takers.

The highest offer is not always the best. Sometimes I will encourage my clients to increase their offers, sometimes not. It depends on what motivates the seller and how many offers are on the table. The only way to know how to write the “best” offer is if I call the listing agent and ask questions. I won’t give away my secrets here. But if you are a buyer in the market to purchase a home, do not sign anything with an agent until they have answered a few questions.

How will you get my offer accepted? How do you know what a property is worth? Is the highest offer always the best offer? How many properties do you usually show a buyer before their offer is accepted? What is the average timeframe that it takes you to get an offer accepted? Will sellers make repairs?

By interviewing several agents and asking these questions, you will know which agent to hire, and which agent to avoid. Hiring the wrong agent could cost you thousands.