I often read and post to a question and answer forum on Trulia - a great site for people interested in real estate, whether you're searching for property or if you simply want to learn more about the process, real estate issues etc.
One question that has generated an enormous amount of interest, postings etc. is "Why Should Someone Buy in this Market?" It's a good question - one that I believe is better answered from a client advocacy perspective. Many of the individuals who have posted are real estate professionals - others are active buyers and sellers in their specific marketplaces.
What I have found is that there is a general tone or sense of distrust of the real estate community from many buyers and sellers - often blatant, rarely subtle. Real estate agents/brokers cannot be unbiased in their responses due to their vested interest in selling real estate - if buyers don't buy / sellers don't sell, agents don't get paid. Hence the dilemma in answering the question, if the market is in decline, why should someone buy?
State real estate license law requires that when acting as an agent I have a fiduciary responsibility to my client. In providing sound council, I must keep my client's best interest forefront in my mind. Regardless of what the law states, buyers and sellers aren't always convinced that their agent isn't necessarily focused on their commission.
The fact remains, some agents consider the cooperating commission in the MLS prior to showing particular properties to a client - even if they know the property may be a perfect fit - if the co-op commission is less than ideal, it may simply not be shown. It happens.
I recently attended an office meeting where the discussion focused heavily on the current state of the market - and even more specifically, how to handle short sales. As we discussed the process of negotiating a potential offer with a lender, the discussion turned to fact that in some cases, banks may not agree to compensation in a short sale, i.e. the cooperating commission that may have been stated in the MLS prior to the presentation of an offer may not be honored. The question was raised - "If there is a chance I won't get paid, why would I want to sell a short sale?"
I think it was a fair question, but again, one that is answered from a client advocacy perspective. If a client asks his/her agent to write an offer for a short sale, the agent should write the offer. Client advocacy is at the center of what we do as agents. We have a responsibility to understand the needs of our clients; We are obligated to work in our client's best interests.
The key to being a client advocate however is to ensure that our clients understand that we are not altruistic. Agents are compensated due to the value of the knowledge and services they provide. Some clients don't need the guidance and knowledge of an experienced agent - that's okay. Not every potential buyer has the same level of risk tolerance regarding an investment. To some buyers and/or sellers, the current market conditions may create ideal circumstances for them based upon their own investment objectives. Advising a potential client to buy in today's market may be based upon their client's own objectives, hence fulfilling our role as an advocate - our compensation should reflect our knowledge and experience to identify the best alternatives for an investment.
Wednesday, June 11, 2008
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