Inept real estate agents cost clients thousands and thousands of dollars. This is often self inflicted; buyers and sellers select agents without proper vetting and research. They remain with them
despite poor communication, poor performance and they fail to hold their agent accountable. From inept data analysis, contractual gaffs, improper transaction management and things that you cannot imagine...hack agents cost their clients thousands.
Money Lost on Closing Costs
Here's a very common buyer agent gaff, leaving money on the table. It's also a great example of the buyer's agent NOT working closely with the lender. We listed this investor home at 215K, the buyer was using a conventional loan and putting less than 10% down. The offer came over with a request for 10K in closing costs. With that loan and down payment, seller closing costs are capped at 3% of the purchase price; meaning that 10K was not going to be used.
We called one of our trusted lenders and verified that in this case, closing costs would be capped at 3%. We then leveraged this "great deal" that the seller was giving them and negotiated a small concession for inspection concerns. Several days prior to release of the preliminary closing statement, the buyer's lender asked for an amendment stating that the seller was paying $6,450 (3%) of the buyer's closing costs.
This request came from the buyer's lender and the buyer's agent was copied. We sent over the amendment, they signed, and the phone rang the day before closing. At this point, the buyer's agent realized his mistake. He said that he was sending over a third amendment assigning the balance of $3,550 to a contractor for "repairs". I asked how that is considered closing costs, he had no answer so I suggested he speak with the lender. The lender then conferenced me with the agent, they suggested lowering the price by this amount. After laughing that off, I directed their attention to the contract and signed amendment.
This buyer left $3,550 on the table due to agent and lender incompetence. The agent failed to initially query the lender about closing costs and then failed to rework the contract/amendments in a way to recapture that money. The lender obviously saw this contract early in the process and was either indifferent or simply not skilled to catch an obvious error. A double dose of incompetence.
Real Estate Agent Incompetence
The recent real estate commission lawsuits highlighted several issues within the real estate community, especially agent incompetence. The bar to entry and retention is farcical; and that is by design. This industry relies on agent fees to survive, quantity is much more important that quality. By keeping requirements inexplicably low, agents continue to pay all sorts of fees while learning that this industry actually is a profession. The vast majority of new agents are gone before completing their second year. Well over half of active agents have never completed a sale.
The public bears much of the blame and to a large extent, damages like the above are self inflicted. Many buyers and sellers fail to spend even five minutes simply Googling a potential agent. Many look to work with those that discount fees or provide kickbacks, either not caring or not realizing that these agents do this to get business. Some agents feel compelled to use family or friends knowing that they are not experienced or properly seasoned to the current market. Agents in GA have NO FIDUCIARY responsibility to clients; failing to spend even a few minutes to verify an agent's credentials will cost clients money.
Posted by Hank Miller on
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