I showed a home on Monday that was listed three days earlier for $219,000. Good neighborhood, clean property, updated with a newer roof, newer windows, and a new furnace in the basement.
The sellers weren’t looking at offers until noon on Tuesday, so we were still okay on timeframes.
The problem with this house, at least from my perspective, is that it was simply too obvious. These days, if there is nothing blatantly wrong with a house and the price is anywhere close to reasonable, especially at the lower price points, a bidding war is simply a foregone conclusion.
And so as we turned the corner and walked into the kitchen, there they were… 31 business cards from 31 different agents. I called the seller’s agent to get the scoop – 14 offers in hand, and counting. Multiple all-cash buyers.
“If your buyer can’t waive the appraisal clause,” she said, “don’t bother.”
And there you have it. The story of the Denver housing market in 2014 for buyers under $250k.
It’s demoralizing, really, whether you are a buyer or an agent. The fact is that 31 agents (at least) showed this home before I got there, 14 of them wrote offers, and in the end… one gets a paycheck (but only if his buyer is all-cash or willing to waive the appraisal clause).
For all the good news you hear about the Denver housing market, there’s another side to it. And that is the high number of agents (especially buyers’ agents) who are literally being starved out of the business by the amount of competition in pursuit of limited inventory.
When markets get crazy and emotional (like this one), bad behaviors become more common. While most agents have integrity and strive to do the right thing, not everyone plays by the rules.
This leads to some agents lying about cash offers, some agents lying about their buyers’ (supposedly) strong motivation, some agents making up stories about why this house or that house is “the one” for this buyer. Some agents will say their buyers plan to take the home “AS IS” (if it’s not written in the contract, don’t assume it is so), some agents will say their buyers have mom and dad on speed dial if the property doesn’t appraise, and so on, and so on, and so on.
It is a good listing agent’s job to verify all of it. Verify the down payment funds, verify who the lender is, verify the buyers’ story, verify the agent’s production history, verify where the money is coming from if it’s a cash deal.
Here’s what I know, based on 20 years of doing this: when the agent wants the deal more than the client, you are in trouble.
If you are planning to buy or sell a home, I think you need to pay attention to this.
Does my agent have the integrity and resources to look out for my interests, or is my agent simply desperate for a deal – any deal - so he can make his next car payment.
I’ve thought about this a lot, and I really believe if your agent doesn’t have six months of cash reserves in the bank, you may want to consider walking. Seriously.
Now I don’t know how easily you are going to be able to verify this, or if your agent is going to be willing to drive over to Wells Fargo with you this afternoon and have the teller print out a balance receipt in your presence, but I am not kidding around. Agents/people with no money do desperate things. Agents who don’t sell houses do desperate things. People living beyond their means do desperate things.
A license doesn’t guarantee ethics. A lack of ethics increases that odds you eventually won’t have a license, but a license itself simply means you are clear of felony convictions and you passed a test. That’s not the same thing as ethics.
“Does this agent want the deal more than I do?”
That’s the question you need to ask yourself. If you can’t answer it or aren’t sure, you need to back away, fast.
Buying or selling a house is a big deal with serious financial consequences. If your agent can’t afford to think about your needs first, you are in a bad spot.
If asking for a bank statement is too uncomfortable, then simply ask the question: Do you have six months of cash reserves in the bank to get you through the down times in the market?
Maybe you want to require 12 months. Heck, maybe 24 is your number. Go crazy. See what your agent does with the question.
But take it seriously, and don’t automatically count on others to have your back. However you choose to do it, make sure the people who say they are on your team are actually on your team.