A Realty Times reader wonders if her agent isn't asking her to offer more on a home because the agent wants a higher commission. Good question or unreasonable suspicion? Realty Times provides some answers.
Dear Realty Times:
My boyfriend and I just tried to buy our first house, but there was so much junk going on that we didn't even know what was happening. We first saw this house on MLS.ca and the Realtor we had before showed the house to us, but she wasn't the one that the house was listed through.
We made our first offer; they turned it down saying they wanted a little bit more. We told our Realtor that we'd go up to $180,000. She never even put that bid in for us because later that night she called us to come down and fill out all the papers and give our best offer because the other real estate agency supposedly had two other offers. So we told her that we would go up to $190,000.
We got another call the next day and our Realtor said both bids were really close (Is she even allowed to tell us that in the first place or was she just trying to get us to go higher?) and if we put another thousand on it we would have the house. One of the other bidders dropped out so it was just us and another buyer competing for this house. Of course we told her $190,000.00 was firm and we didn't want to go any higher because we thought that was a fair price considering some of the fixing up we'd have to do.
Then she told us that there was no counter offers at all, and she seemed stumped that we even knew what a counter offer was. So that really had us wondering if we were just getting played so that she could get more money. Then yesterday she called me twice: the first call was to tell me that the other Realtor didn't know what her client was going to do. Then she slipped that she knew we were higher in the bidding price (either she slipped and said that or she was just playing games with us) and as she could see, we'd probably get the house. Then about three hours later she called us back and told us that the sellers were going to go with the higher offer from the other buyer and that she was sorry and wondered if we would like to look at a different house.
Is this normal for Realtors to do to the buyers? Just to see how much money they can get out of us? And what about all these hidden costs for deposits and lawyers and building inspections and everything that a person could imagine? Could you please give us some insights on what to do next time?
-- Shelley
Realty Times responds:
Hi, Shelley. Wow, you certainly are suspicious. Is it that you don't trust Realtors in general or your Realtor in particular?
It sounds as if you are trying to buy a home in a seller's market. Seller's markets are characterized by fewer than normal homes for sale (particularly in certain price ranges). Because there are more buyers than sellers, sellers have the upper hand and are able to ask buyers to compete for the home. That means they can look at multiple offers or bids and choose the one they like best.
It seems unfair to you to make an offer in good faith only to be told that another buyer has upped the ante and offered more money. That seemed to be okay with you as long as you were the highest bidder, but when someone beat you to the punch, then it wasn't okay.
You need to face reality about what it means to negotiate. The goal is not to win, but to get what you want. Your Realtor isn't there to help you win, she's there to help you get what you want. For you, winning meant holding back on that extra $1000 she said would have secured the house. You didn't get the house, so did you get what you wanted? No, you didn't. I don't know whether the decision was financial or one of pride, but that $1000 was the tipping point.
Now, you say the Realtors were trying to drive up the price of the home to make more money. If she split the commission four ways on that $1000 with the selling broker, selling agent, and her broker and herself, she would have stood to make $15 extra. Do you think anyone in their right minds would have risked a deal that close to closing over $15?
So clearly, it wasn't money that was motivating her; it was getting you the house you wanted!
It's not your Realtor who is driving the price up. It's the competition from other buyers. It seems from your letter that your Realtor did everything possible to get you to make an offer that would have secured you the home you wanted. When you didn't get it, she seemed willing to try again on your behalf.
Keep in mind she doesn't get paid unless you actually buy something and it goes to closing. That's when she gets paid. I think the fact that the house you wanted was sold out from under you after she advised you to go higher illustrates that she was trying to represent you to the best of her ability. She assumes that you want to buy a house, not score points against the seller. You wanted to send the seller a message, but it simply didn't work in your behalf because you didn't get the home. The home may have been fairly priced at $190,000, but the fact that another buyer was willing to pay more changed the market for that particular home.
Why? The law of supply and demand -- any home is worth what a buyer is willing to pay for it, and the other buyer was willing to pay more than you were.
Some shenanigans do go on in real estate, but in a seller's market, the negotiating odds aren't in your favor. You have to go for it if you want a home.
Your agent seems to have gotten you fairly close to getting this home and is willing to try again. I would let her, if I were you, and this time, do what she tells you to do. The goal is to get into a home you can afford but will return value to you, isn't it?
So, next time, be clear about what you want. Do you want the house or do you want to teach the seller a lesson? Remember, it isn't about winning, it's about getting what you want.
