And thanks for sharing!
Meet another netizen who has it all figured out.
It's not like I look for examples of how wrong people can get real estate. It's just that I spend time on the Internet.
And it was there that I ran across "Buying a house--lessons learned", posted on a site that from its name seems geared to engineers. Very few agents will find this surprising. Engineers have been, and are, some of my best and favorite clients, and I show latent engineer tendencies myself. But there's something in the genes of more than a few engineers—no, make that more than a few numbers crunchers—no, make that the 99 percent of us who demand quick and easy answers—that compels them/us to look for the non-existent key, the simple misleading explanation, the black-and-white set of rules in this world of grays—the neat algorithm or ledger entry—the quick substitute for judgment and experience—that must exist so that the novice can unlock the mysteries of a complex and nuanced subject.
And because the Internet exists, and because anyone burning with new-found zeal and bursting with new-found knowledge can post anything to it, the Internet lets people share their experience. Or at least share their take on what they think is their experience. Thereby empowering others. Or not.
And so we have someone, who I'll call Been There Done That, or Been for short, who shares his "lessons learned" about the home-buying experience. Let's see what Been brings to the virtual table.
...the "buyer's agent" is legally called the selling agent. If you are buying a home, this is supposed to clue you in that "your" agent is really not acting in your interests. Here Been seems confused by the similarity between "selling agent" and "seller's agent". Or—and now I'm probably giving Been too much credit—he's referring to "sub-agency", a little-known and less-understood concept that turns the "buyer's agent" into the seller's agent the moment Buyer's agent implicitly agrees to accept the commission Seller is offering by submitting Buyer's purchase offer.
Which is something buyers should definitely know about, except that sub-agency hasn't been used in this area, the area where Been bought his home, for years. So Been's buyer's agent really was Been's buyer's agent, not the seller's agent, and you can call Been's agent either the "buyer's agent" or the "selling agent" without changing his role and the fiduciary duties the law says he owes Been. Been would've known this if he'd read and understood something called an Agency Disclosure, a simple form drafted by the state legislature to "clue you in" to just this important question, a form the law required Been's buyer's agent to show Been and have him sign before discussing the purchase offer.
I might add that Ben should have known his agent was his agent simply by his agent's actions. The fact that Been didn't is more than a little worrisome. It may say something about Been and, also, perhaps something about Been's agent.
So Been has managed to turn the idea of buyer agency—that the buyer's agent owes Buyer his highest allegiance, while he owes Seller only a duty of fair dealing—in other words, the important legal concept that Buyer's agent really is Buyer's agent and advocate—on its head. Aside from this, Been shows real insight into the buyer-agency relationship.
And thanks for sharing! Because you can imagine the consternation and confusion Been's "insight" will create among home buyers who run across his post and take it seriously. They will, at the very least, start looking at their agent funny and, worst case, they'll refuse to trust the one person they need to trust to get the job done.
Extract more money from the mortgage broker. Sounds like a good idea, and it might be, up to a point. But what Been calls a "kickback"—the 1 percent or so the mortgage broker gets from the bank—is in fact how the mortgage broker, and the loan agent working for the broker, get paid. Loan agents work on commission, not salary, and that 1 percent or so isn't a kickback, it's how they put food on the table. Been discovers he can't get a better deal by bypassing the mortgage broker and working directly with the bank, and calls this "stupid behavior" on the bank's part. Ever notice that whenever someone calls something stupid behavior—or throws around words like kickback, which imply dishonesty or conspiracy—it's usually code for "I don't get it"? Because the reason Been can't get a better deal by by-passing the mortgage broker in favor of the bank is that the bank both lends directly to the public and wholesales its loan products to mortgage brokers. "Wholesales?" Yes, mortgage brokers get their loans from lenders wholesale, at a discount, then retail them to the public.
And thanks for sharing! Because now every home buyer who runs across Been's post and takes it seriously will do what Been did and run all over town looking for that screaming deal on a loan that doesn't exist.
It's hard to avoid a selling agent. Been thinks he'll save the 3 percent the buyer's or selling agent gets but finds that everyone in the real estate business...reacted very negatively. I wonder why? Perhaps because "everyone in the real estate business" knows that a buyer who represents himself has a loose cannon for a client, which means even more ways for the transaction to get screwed up, which means even more work and even more liability for the listing agent and his or her clients.
So Been runs out and finds himself a discount broker to represent him, and for his opening strategy, [the agent] suggested that we figure out the maximum amount of money we would be willing to pay for the house, and offer that. No way! Been's competing with two other buyers, and a buyer in a multiple-offer situation usually gets just one chance to make a good first impression. If Been's offer is second-rate, Been will usually be sent home without a chance to improve it. Been apparently wants to keep something in reserve, an ace up his sleeve, a strategy my first buyers who faced a multiple-offer situation also employed. In their case, there were five offers. My buyers came in sixth, and they never got the chance to pull that ace out of their sleeve.
And thanks for sharing! Because now every home buyer who runs across Been's post and takes it seriously will "save something to negotiate with" in a multiple-offer situation, and most will never get the chance.
Been does get that chance, and based on his experience (or more accurately, his murky interpretation of his experience) he advises sellers to never counter-offer all of your bidders. From the way he tells it, Been's offer was the stand-out, and if that's true then, yes, Seller has no business countering all three offers. It's just another instance of infamous seller greed.
But what if all three offers—or if three of, say, eight offers—are similar? Been says Seller shouldn't counter those three buyers, even though 1) the two who don't get countered will be rightfully ticked off at not getting the second chance they deserve, even if they do nothing with it, and 2) at least one of those three will almost certainly step forward and pay more, sometimes even more than Seller's counter asks for.
And thanks for sharing! Because now any seller who runs across Been's post and takes it seriously will refuse his or her agent's advice to counter all offers, even when it'll get Seller more money.
Been then explores the various ways a buyer can fool himself into thinking he's saving a buck. He muses that If I had used the "listing/selling agent" terminology instead of "seller's and buyer's broker" terminology, I might have broken through. No, Been, Listing Agent would have still seen you coming a mile away, even with your Berlitz book of handy phrases. He then relates that in a previous purchase, the seller's agent pretended to represent both buyer and seller, and changed his fees to the seller from 6% down to 3%. Of course, Been wasn't the seller, so Been doesn't really know what commission Seller ended up paying, but I don't see much incentive for any listing agent to "pretend" to represent the buyer—because the law doesn't, and juries don't, cut agents any slack for "pretend" fiduciary duties—then cut his commission in half and exponentially increase his liability exposure by "pretending" to represent both parties.
Something got lost in translation here. Maybe someone kidded Been. No, that couldn't be. Been has it all figured out.
But here's the capstone of Been's advice: Pay the selling agent directly, instead of allowing the listing agent to do it. Why is this genius? Because it's worth a lot to the buyers, since they pay property tax on the amount paid to the agents for as long as they own the house. Been points out that it's also worth money to the sellers since they save transfer tax. Of course, the various county and city taxing authorities involved in real estate transactions don't mind if you short-change them. No, government is always too dumb to figure out what smart guys like Been are up to, and even if it somehow does figure out it's been cheated, it never cares.
And thanks for sharing! Because now any buyer who runs across Been's post and takes it seriously runs the risk of being sued by the county tax assessor for understating the total purchase price. A while back my office was warned that this is starting to happen. And Been's agent, who obligingly arranged this sleight of hand during escrow, the very agent Been lauds as "professional", runs the same risk. Everyone involved had better darn well hope that no one in the assessor's office reads Been's post, because Been uses his real name. And it is Been's real name, because I verified this escapade through the MLS and county records.
Multiply Been's "insights" by a billion and you have the Internet community empowering itself about real estate, although not everyone leaves himself open to a civil suit in doing so. Multiply that by a billion and I haven't verified this but I suspect that you have the Internet community empowering itself about every complex aspect of life.
Wherever he his, I hope futurist H.G. Wells is happy.
And thanks for sharing!