When things go terribly bad with your real estate agent
Sadly, some of the most distrusted business professionals are real estate agents. Often, they’re treated with the same contempt as used car salesmen.
When we sold our first home, we used a discount agent. We had used them to buy the home, and because we didn’t know anyone else, we simply went back to the same agent to sell our home. During the sale, our agent didn’t do much more than push papers in front of us to sign. He gave no advice regarding our disclosures and repeatedly said things like “I’ll pay for that repair” but never did. In the end, the buyers threatened to sue us for things that were visibly obvious, but we hadn’t put in writing in our disclosures and wasn’t in the agent’s disclosures either. Ultimately, our agent’s lack of professionalism (and illegal behavior) cost us several thousand dollars.
Hopefully, your relationship with your Realtor® hasn’t deteriorated to the point that it is not possible to correct. However, if you have mistakenly hired a bad real estate agent, then this article is for you. We look at what causes these relationships to sour, what to talk about when hiring a agent, and if necessary, how to break up with your agent gracefully.
It’s not always bad agents, but often misaligned expectations
Not all breakups are caused by bad real estate agents. Even under the best of circumstances, sometimes your relationship with your Realtor® doesn’t work out.
James McGrath of Yoreevo, an upstate New York brokerage says “Most buyer / agent breakups happen because of a misalignment of expectations. A buyer may get frustrated because they didn’t get a quick response to a 10pm text or can’t see a property in an hour. An agent may get frustrated when the buyer said they have a pre-approval but actually only briefly spoke with a lender and didn’t go through the whole process.”
“Most buyer / agent breakups happen because of a misalignment of expectations”
It’s better to keep clear and open dialog between agents and clients. When your expectations don’t align, have a calm conversation with your agent about what you’re expecting and see how they might be able to better meet your expectations.
If you cannot find a way to work out your differences, you may want to break off your relationship and change agents. If so, here’s several suggestions for breaking up gracefully and keeping yourself out of trouble.
How do you know when it’s time to fire your agent find another Realtor®?
Don’t return your calls or reply to emails
A good real estate agent will be very communicated. If your agent isn’t, it’s probably time to change agents. Unfortunately, you don’t normally see this behavior until it’s too late. If your transaction is in the weeds or you get sued, then agents can quickly become non communicative. If the agent doesn’t return your messages, try reaching out to their broker. This may get things back on track, but often times just gets ignored by brokers.
When your agent lies to you
Years ago I took an auto shop class where the teacher started the first day of class by saying, “If you lie to me, you’re out of the class. If you lie to me, you’ll steal from me.” If you catch your agent lying to you, and it’s not just your interpretation of the facts, it’s probably time to break up with your real estate agent.
Don’t show you all of the homes in your price range
One the favorite tricks of agents representing buyers is to show them a really run down home that’s over priced. Then, after you walk away shaking your head, they show you a home that is in good condition and similarly priced. With the Internet, buyers can see almost every home listed for sale. If your agent is only showing you the homes they want you to see, and not everything in your price range, then you probably need to fire your agent.
Aren’t willing to provide you advice
Agents walk a fine line when it comes to advice. By law, they are prohibited from giving legal or tax advice. As a result, they may seem unwilling to provide you with advice. However, they should be knowledgeable enough to tell you that a transaction may have legal or tax ramification and that you need to speak to the appropriate professional. They should also be able to tell you if a home you’re looking to buy may be difficult to resell later due to it’s floor plan or location. What they shouldn’t try to tell you is, “You’re going to love this house” to convince you to purchase it.
How to break up with your Realtor® gracefully
Recognize your agent’s unseen effort
When breaking up with your agent, it’s important to acknowledge your agent’s efforts, especially the ones you don’t see. Realtors® receive and answer calls seven days a week. They answer calls during their dinner hour. And they answer calls at other times when they just wanted to spend with their families. Even though they may have a 9-5 office hours, they spend countless hours working unseen overtime.
In addition to the “overtime”, your agent probably has spent several hours marketing your home. It may be networking with other agents and telling them about your home. They also spend significant time using complicated industry software that doesn’t always work, crashes periodically and loses all of their work. Sure, this is true of every business, but it’s helpful to recognize your agent’s hours and effort to sell your house that you don’t see.
Acknowledge your agent’s out of pocket expenses
Your agent may also have spent money marketing your house, beyond just posting in the Multiple Listing Service (MLS). Good agents will often pay for services that blast your listing to multiple websites or they may even pay for pay per click ads on Facebook. Open houses also generate costs for your agent whether it be balloons, color flyers or snacks. In rare cases, agents may even pay for repairs out of their own pocket just to make the transaction work.
Be willing to say “Thank you” in a tangible way
If you’re going to break up with our agent, be sure to say “thank you” in tangible way.
Ron Humes, with Post Modern Marketing referring to the Golden Rules says, “As we have been taught in a variety of ways since we were children, we should treat others as we would want others to treat us. If a buyer or seller feels that they just need to take a different direction, even though their agent made a reasonable effort to find them a home or sell their property, it would be a nice gesture to offer a gift or some monetary compensation for the agent’s time and resources.”
“It would be a nice gesture to offer a gift or some monetary compensation for the agent’s time and resources”
Example of tangible thank you
I’ve witnessed some pretty awesome “thank you’s” given to agents.
In one case, my wife who is an agent, spent several hours helping a potential client with suggestions about what repairs were needed to sell their mom’s house. Additionally, she helped them compare what they could sell the house as is to an investor versus through an agent. In the end, a neighbor approached the sellers directly and bought the house for cash.
To say thank you, the sellers sent my wife a very nice thank you note, with an invitation to spend several nights at their air BnB for free, and money for a nice dinner out. Although it wasn’t necessary, it said “We appreciate your efforts and want to say ‘Thank you'”.
It goes a long way for a client to send a “Thank you” note with even a little bit of money. You’re acknowledging you appreciate what they’ve done, and recognize their time and possible expenses.
Tangible thank you’s that don’t require money
Benjamin Ross, a Realtor® for almost two decades offers another tangible way of saying thank you. “If you want to continue to be friends with your Realtor, offer them a good review about their strong areas”. Getting a positive online review will be very appreciated by your agent.
“If you want to continue to be friends with your Realtor, offer them a good review about their strong areas”
Compare this to the client who ignored their agents repeated suggestions to price the home at a price it would sell. Only after they hired a new agent did they price the home appropriately. Did they send a thank you note or offer any kind of tangible appreciation? Nope.
Get a signed cancellation of contract
When breaking up with your agent, it’s important that you get a signed release from your existing real estate contract both from the agent as well as their broker. Ross says “If you are under a contract, ask your Realtor to release you from the agreement. From my experience, most Realtors will release you from a contract because they do not want bad reviews or the stress that comes with staying in a bad relationship. ”
“If you are under a contract, ask your Realtor to release you from the agreement.”
He goes on to say, if they are unwilling to sign a release, “you must find out if your Realtor® violated any of the contractual terms and inform your states real estate commission.. If you are not sure if there are violations, the real estate commission can help you.”
Why is this important? If you have signed a contract with your agent to represent you, and you later buy a house that they previously introduced you to, or brought you the buyer, then you may still owe them their commission. This is known as procuring cause. It basically means that if your former agent participated in making the sale happen, even if it was before they were fired, you may owe them their commission.
Collecting the commission for procuring cause is probably going to be difficult and each MLS will have different rules. However, your agent keeps a log book of who signed in and each guest that visited your open house for more than just your benefit. It also shows that they participated in making the sale happen if you later change agents.
Acknowledge your contribution to the problem
It’s also helpful for the client to acknowledge their contribution to the problem. McGrath, suggests “if you want them to feel better, make it a little about you.” If the business relationship isn’t working out because of unmet expectations, express that you may be partly at fault.
McGrath gives an example of what you might say to your agent. “Preface it with “I know I’m a high maintenance client, I get very anxious and I need someone who is always going to be available”. As long as you don’t make it personal (“You’re a terrible agent!”), there’s no reason you can’t maintain a good relationship.
Be transparent and honest, but not angry
Years ago I was looking to buy an abandoned house out of town to potentially live in. I had heard about this house through a family member, and was seriously interested in buying the home. I had already been working with a local agent and ask them to find the owner of the house so we could contact them. After a couple of months of waiting for the agent, a family member finally went to the county offices and pulled the owner information for me. Needless to say, I was frustrated that my agent couldn’t have done that.
I had to have the “Dear John” phone call. After explaining that I had asked him to find the owner information and that finally a family member did it for me, I then told him that I was letting him go as my agent, and that I would be looking for another agent. I wasn’t abusive, I simply stated why I was breaking up with him as my Realtor®. Of course he gave me lots of reasons why he hadn’t done it yet and that he had done lots of other work for me, but for me, it was too little too late.
Things to be discussed before hiring an agent
If you’re just getting started hiring an agent, or if you’re changing your agent, here’s some things to discuss with your agent before you agree to hire them.
Are you looking for a quick sale, or just to get the highest price?
Some sellers are honestly looking to sell their home. Others, are simply testing the waters. If they get the price they want, they’ll sell. If not, they’ll stay. Whatever your goal, you need to be clear up front with your agent. Then ask how much that will affect their marketing your home? Will they still want to do an open house? How will the price, impact how much time they spend. Remember, your trying to make sure your expectations are clear.
Who’s estimate of value are you going to trust?
Years ago a Realtor® friend of mine marketed a home for a seller. The seller had a goal of getting a certain amount of money from the sale of their home so that they could buy another home. Unfortunately, that amount was significantly over the agent’s estimated value. Even after hiring an appraiser, the sellers believed their estimation of value was more accurate than the appraisers.
With the Internet, there are many sophisticated algorithms for estimating your home’s value. However, they are just computer formulas without intimate knowledge of your neighborhood or market conditions. You may feel that your home’s value is more than your agent’s valuation.
If you do, that’s okay. However, you shouldn’t blame your agent when your home doesn’t sell for the price you thought it was worth. Fair market value is a willing buyer and a willing seller agreeing to a price. Without a willing buyer, you will continue to own the house no matter what you think it’s worth.
Things to think about before hiring an agent
Are you smarter than your agent?
Several years ago I was expressing my frustration to my agent regarding another agent who didn’t seem to be very knowledgeable. She said, “Robert, you expect your agent to know things about real estate, that only you would know as a real estate investor. However, they know things about real estate that you don’t know, just as you know things about real estate that they don’t know.”
That was eye opening and a good reminder that due to many factors, we may think our agent should know certain things that we do or vice versa.
Are you going to be hands off or hands on?
If you’re a really hands on type of client, you need to ask yourself if that’s in your best interest? A broker friend of mine was recently trying to sell the home owned by another real estate agent. Unfortunately, the client couldn’t get out of the way of the transaction. The client was negotiating directly with potential buyers rather than through their agent. The result, was continued conflict between the two, with multiple buyers walking away and ultimately the house went into foreclosure.
Like any profession, there’s good and bad agents. Good agents can help you navigate the pitfalls of your real estate transaction. If you make sure to clearly define your expectations and keep an open communication channel, you’ll probably have a great transaction. If however, your expectations are not clearly defined from the very beginning, you may have work to do to get things back on track.