A Realtor has a fiduciary responsibility to help you avoid short term thinking which might cause long term financial problems
Today I was talking to another Realtor in our firm. We were discussing how to help her clients secure a home in an overly competitive real estate market. She explained that her buyers had looked at one house, and despite her cautions to avoid it, they were strongly leaning toward writing an offer.
These buyers clearly understood that they had fierce competition and that they’d have to make some concessions if they were going to secure a good property and stay within their budget. What they didn’t understand was that they should be very careful about what concessions were smart, and which ones might hurt them in the long run.
I had full faith in the Realtor I was talking with. She is great at her job. She’s caring, smart, and always gets rave reviews from her clients. She understood the buyer’s frustration with finding a good home, and she was worried that the client wouldn’t heed her advice and end up with a property that she was confident would be hard to sell if, and when, the market shifts.
As Realtors, we both knew that winning the bid in this market was only a tiny fraction of the real estate story. We could figure out how to help buyers win an offer, but as Realtors, we must also look to make sure they really “won” if they managed to succeed in their bidding and end up purchasing this particular property.
Within a few months or years, this frenzied seller’s market may have disappeared, and most likely, that would be the timeframe when her clients would be selling. In a “regular” real estate market, the home they were considering would take longer to sell because the floorplan isn’t well-liked in the Raleigh/Durham area. Over the years, we have seen how homes with this look stay on the market longer and garner lower selling prices because the Triangle buyers think the floorplan is too “boxy.” My fellow Realtor was sure, and I agreed, that although these buyers would have “won” by getting a house now, that decision to “settle” would come back to bite them later.
As we talked, we scoured our MLS system and saw a new listing that was definitely a better option for her buyers. This was a little bit different than what they were hunting for, but it was a better fit for their lifestyle. That new option is still in a great location, it features a highly likable floorplan, and on top of all that, it actually costs less money. By the end of the call, we figured out how to design an offer for the better option if the buyers wanted to take her advice and drop the poor choice to pursue this. It made sense to us. After all, the buyers would spend less, get a better floorplan, and the house would have a better chance of appreciating faster in the years ahead.
Triangle area buyers are paying top market value right now, but sometimes they lose track of the importance of long-term market perceptions. If you are paying top value, it’s always smart to keep a level head and also focus on what sells best in all markets. Smart Realtors work hard to protect their clients from running into problems later. We want to avoid this scenario of buyers purchasing a house in a frenzied market, only to try to sell later and realize that they compromised on the wrong items. The buyers we were talking about were up against this problem, and they couldn’t see it. Their Realtor saw it clearly, though. She knew the house they would settle for is priced really high in this market. In a less frenzied market, it may not be as appealing, and these buyers could end up losing a lot of money.
As you read that story, you were peering into the real-life interactions of what a Realtor does. I hope you also understand that Realtors are nervous right now too. We are not fans of this hot market because it brings up many of these types of problems. We have a fiduciary responsibility to our clients, so we are obligated to review your choices and think about what the downsides are.
When a seasoned Realtor looks at homes, we are trying to figure out ways that you can win the bidding war, but we are also looking out for what is a potential problem for you in the years ahead. We can do that because we sell in the market. We see what is liked, not liked, and what is absolutely hated. We encounter building and repair issues, and we have to deal with mortgage, appraisal, and legal problems that frequently crop up in real estate transactions. We encounter it all, and we are paid to watch out for trouble before it arrives. The bottom line is that an outstanding agent can determine which house is a gem and which home is a risky venture, so please listen if an agent is warning you away from a particular home even when the market inventory is this limited.
I hope her buyers decide to take the advice and go with the better option we found. It will serve them well, and we will all sleep better knowing she has truly helped them make a smarter decision which will save them a little money in the process.
Always buy for the long term, and if when you have to compromise, be careful that you truly understand what is important in the long run.