I think that lack of trust between buyers/sellers & Realtors in the Real Estate industry is a major problem, both for consumers and the Realtors. This lack of trust is caused by many factors. Consumers may pay too much or sell for too little. They may not understand what happens in a transaction or why, and conclude that they’ve suffered. They may sell and find that the house has been flipped soon after. They may buy and discover that there are hidden costs. Realtors, on the other hand, are often burned by clients who don’t reveal their true intentions, don’t take advice, or who buy/sell with the competition.
As a result Realtors and the industry are commonly raked over the coals by the general public. Some people claim Realtors are the cause for high prices, and generalize that all Realtors are untrustworthy and out only for themselves.
On the Realtors’ side of things, there is a common saying: “Buyers are liars & Sellers are worse!” This is rooted in the common observation that a buyer will come to a Realtor wanting to buy a condo for $100,000 in Coquitlam. After spending lots of time and energy the Realtor gets a Monday morning call advising him the the Buyer stopped in an open house in Kits on the weekend and is now the proud owner of a duplex!
The distrust is a double edged sword. A client that does not trust his/her Realtor might ignore genuine advice, potentially leading to a missed opportunity or a loss of money. A Realtor that does not trust his/her client may put them on the back burner in order to help more qualified clients. Either way nobody wins, and everybody leaves with a bad taste in their mouth.
Trust is probably one of the most important factors in building a successful relationship with your Realtor. It is important to establish trust before you begin buying or selling real estate. It would seem that this step goes without saying, but I cannot stress this point enough. Trust is the foundation that everything else is built on, and its in the client’s interest to deal only with a Realtor that he/she trusts. Some of the best client/agent relationships emerge from pre-existing relationships where trust had lots of time to develop. The challenge in most cases, however, is to build the trust in a compressed time frame. Again, it is in the client’s interest to deal with a Realtor that he/she trusts.
From a first hand point of view, my most successful clients trust that I give them the best advice I can, and which I think is best for them. Even if they disagree with me, we can have an frank & open conversation to come to a consensus on what the course of action will be. Pricing is a great example. I can suggest, for example, a price of $265,000, only to find my client is set on $295,000. I’ll share my research and my thoughts. We may agree to disagree on value, and list at $295,000, but I’ll register my reasons with the seller. Being frank and open means that I admit that I could be wrong about the price. It may sell in the first week for $295,000. However, if it doesn’t the trust between myself and the seller will allow me to ask for a price reduction and will allow him/her to understand why he should give it to me. A smart client will realize that my idea of value is very objective and market based, while his/her diea of value is emotionally based, and has a substantial dose of greed (which isn’t always a bad thing). In that conversation the owner often admits that my value may be more realistic, but that his/her greed may pay off. We both realize that its a little more work for me, but if he/she gets lucky he/she benefits, and sometimes by a substantial amount. His/her benefit, after all, is the goal, and if we come to that conclusion through frank and open discussion I’m happy to commit myself.
Good clients understand the market and the risks. They are reasonable and realistic about values. They understand that an ongoing client relationship can bring a stream of benefits. Most importantly they honour the relationship because the trust was established from the beginning. The proof that the client honours the relationship is proven when difficult challenges arise: the sophisticated client works through the challenge with the Realtor, and maintains the relationship into the future.
Clients who employ numerous Realtors and commit to none of them often experience failed ventures, and end up blaming the Realtors. The real reason the client is left unsatisfied is because he/she plays the field and commits to nobody. Realtors either aren’t stupid, and realize that the client is employing other Realtors for the same job, and so they don’t put forth a 100% for that client, or they are stupid, don’t realize anything is amiss, but are poorly equipped to accomplish anything anyway. The result is the same.
Unrealistic clients selling their home think their home is worth more than the market does. They’ll employ the first Realtor that tells them what they want to hear. Of course this scenario usually turns into multiple price reductions, and/or an expired listing, but with a deep distrust of Realtors. This is due to a misunderstanding of the process. This is understandable: some pros would say that the Realtor lied to the client. Not because they are dishonest, but because he/she knew that they were only going to get the listing by telling the client what they want to hear.
Sometimes I run into unrealistic buyers who are recent ‘get rich quick’ grads. They expect to find investment property that is cash flow positive in the Lower Mainland with 10% down. In theory that’s a great plan. In the reality it’s not going to happen.
What does happen is that the client will view a million properties and write low ball offers based on their misguided perception of value. When the Realtor tries to explain true market value, or why the Seller countered their offer at full price, the Buyer begins to think that his/her Realtor is not representing their best interests, and maybe just trying to push them into a deal for the commission. The Realtor is left in a difficult position, trying to negotiate with the Seller, and left to convince his/her client that they are getting a good deal. It is not the Realtor’s job to convince the client of value. It is the Realtor’s job to advise on value. It is pretty tough to advise if there is no trust.
A sophisticated client will look at the numbers that the market supplies (and which are provided by the Realtor), do the math and recognize things as they are. They will work with the Realtor to maximize the upside, but won’t waste time trying to achieve the impossible. In contrast to the unrealistic client they will actually do business and build wealth.
In summary, a trusting relationship with a Realtor can deliver a lot of benefits to a client, whether the client is a repeat investor or someone who buys or sells very rarely. As a client you should make establishing trust your first goal. This brings us to the question of the incompetent Realtor that you absolutely adore because of his or her personality. If you know that they can’t sell your house, but you really like them, will you give them the listing? Traditional wisdom says that you will 🙂 My advice is make trust very important, but have competence follow close behind. A trusting relationship with a competent Realtor can be great.