In this hectic market, Who is REALLY Looking Out for You?
By now, you’ve heard the news... we’re in an exceptionally strong “seller’s market” in the Seattle area. This may be music to homeowner’s ears, as prices are increasing across the board.
Contrary to what you may hear however, selling a home isn’t a cake-walk in a seller’s market. In fact, this type of market leads to all sorts of shenanigans, usually cases of either skirting or simply ignoring the law or MLS rules. Unfortunately, home buyers and sellers are rarely aware of when these violations are taking place.
Question: How can a seller be CONFIDENT they are getting the best price and terms for their home, when few, if any “active” home buyers are made aware the home was for sale in the first place?
Answer: They can’t!
Update: 05/01/2013I'm so pleased that the NWMLS has released new rules today which will hopefully begin to put a lid on some of these "shenanigans," which are damaging to sellers, and neighboring homeowners' valuations - and activities which (in my opinion) were intended to circumvent other NWMLS members, solely for the agent's personal gain. The new rules which are effective June 1st, include the following:
No Promotion/Advertising When Listing Not Published: Members shall not promote or advertise any property in any manner whatsoever, including, but not limited to yard or other signs, flyers, websites, e-mails, texts, mailers, magazines, newspapers, open houses, previews, showings, and tours, unless a listing for that property has been delivered to NWMLS, or input by the member.
Underpricing & Limited Market Exposure
Real estate agents often get a “bad rap” in the eyes of the public. For the most part, this isn’t warranted. However, there are indeed specific circumstances when we do deserve scorn - one classic case in point, when an agent suggests underpricing a home to suit their own business interests, rather than the needs of the seller.
Another reason some agents may deserve criticism lately? - for not suggesting to their sellers in a time of strong demand, the option of holding offers for later review when the agent has good reason to expect that multiple buyers will be interested in the home in a short time-frame.
Why would an agent fail to act in the seller’s best interests in either of these cases? Simple... because the fewer days on market, means less time and expense of marketing the home, and the better the agent’s “performance statistics,” which they can in-turn use to convince other sellers they’re the “right agent” for the job (because everyone believes a homeowner is well-served when their home sells in one-day, right?)
These are “churn & burn” real estate business tactics, which obviously do not serve the client’s best interests - instead, they prey-upon the unsuspecting client, who isn't aware of the market dynamics, and/or their options.
Pre-Marketing, Pocket Listings & Dual Agency
Too often lately, we’ve seen homes going under contract in 36 hours or less - sometimes within minutes. Or worse - I’ve seen numerous MLS listings in the last few months at Snoqualmie Ridge which were entered into the MLS and then immediately changed to “pending inspection” or “pending” incredibly within only seconds after input; meaning, that it’s rather obvious a buyer was obtained before the listing was input into the MLS. This is typically a result of either a “pocket listing” or pre-marketing. (These are MLS rule violations by the way, because the purpose of the MLS is broker cooperation; it's not a performance database for agents).
And even MORE egregiously self-serving? - when the agent in these cases also practiced “Dual Agency,” serving clients on both ends of the transaction! What’s wrong with this? Well, it’s not illegal in Washington State, but it’s definitely very “risky business” and most often ill-advised - even by the most experienced and ethical of agents.
Personally, I’m not emphatically against Dual Agency in all cases. But, when both the seller and buyer are procured by the agent without the home being made available to other buyers - AND the home is listed in the MLS for only a few minutes - well... yes, this I have a BIG problem with, and so should any seller. Why on earth would a seller (friend or not) trust an agent so much, as to agree to preclude other buyers from seeing the home? Moreover, why would that seller then also PAY the brokerage (and ultimately the agent) for not providing any marketing services? It truly boggles the mind...
Acting in the Client’s Interests - It’s the Law!
I’ve recently had discussions with other local Eastside Seattle agents about these topics, in addition to a few folks at the Northwest MLS - and I’ll continue to press my case, particularly where it concerns pre-marketing and pocket listings. Fortunately, the Washington State license laws and Northwest MLS rules are firmly in my favor, and for good reason... because those laws and rules ultimately exist almost exclusively for the benefit and protection of buyers and sellers.
With specific regard to a fast-paced seller’s market, the fact is, that if an agent has reason to believe a home will have multiple parties interested in placing offers, it is their legal duty to inform the seller of this potential, so they may at least have the opportunity to consider the advantages of holding offers for later review. This is in effort to allow as many potential buyers the opportunity to tour the home, and possibly write offers. (And a “wise” agent, will have a record of such discussion in writing.)
Holding offers for later review in a period of exceptionally high demand isn’t terribly complicated (though, it may require more “effort” on the part of the agent). This strategy is part of a good marketing plan, and it simply makes sense - especially in this crazy market!
Yes, there are times where a seller will want to obtain a buyer immediately, regardless of the possibility that they may be “leaving money on the table.” Personal reasons such as divorce, unplanned job relocation, or unfortunately illness or death, are all common causes. However, even in these circumstances, most sellers will still wish to obtain the highest price possible. Have you ever known anyone who was “happy” to knowingly give away equity in their home? I think not...
Who is Ultimately Looking Out For You?
Despite what some think, real estate isn’t “fun & games.” Rather, it’s serious business which can greatly impact people’s lives. Unfortunately though, many home buyers and sellers don’t realize this until they’ve been underserved in some manner.
Thus, I implore all home buyers and sellers to hold their agents to a higher standard of professionalism, knowledge, care and skill from day one. Regardless, despite your efforts to hire the best agent for the job, ultimately it may be the case that the only person who is really looking out for your true best interests, is you!