Representation vs. Sales

by your real estate dude

Some time ago I closed an escrow that had me wanting to dust off my soap box, grab my megaphone and shout opinions to every passer by at the nearest street corner. Fortunately, I write this column, so I don’t have to strain my voice or get pelted with tomatoes by those who may disagree with what I am about to say.

In every industry there are things that rise to the level of pet peeves for those who work in the business, and I am no different in that I have pet peeves when it comes to real estate. While some peevish things are just irritating, others can cause genuine and lasting harm. It is one of the latter that I am going to tell you about today.

The greatest pet peeve I have with regard to real estate can be found in the fact that many do not clearly understand the difference between representation and sales. While real estate agents are often looked upon as “sales people”, the truth is that a real estate agent has a fiduciary duty to his client under the law. The fiduciary duty is one that requires the agent to act with the utmost care, integrity, honesty and loyalty in dealing with the client. In plain and simple English, the agent is to act in the best interest of the person whom he or she represents. Unfortunately, agents sometimes lose track of whose interest they are representing. Take the escrow I mentioned earlier for instance.

I was representing a client in the sale of her home. We received an offer to purchase the house and I began negotiating with the buyer’s agent on behalf of my client. My goal, as the seller’s representative, was to get the best possible deal for the seller.

The buyer’s agent made some mistakes at the outset by drafting the offer in an incomplete manner. This gave me the opportunity to take advantage on behalf of my client and save her the cost of a few items. So, I drafted a counter offer which clearly shifted the cost of certain items totaling about $3,000 to the buyer. I told my client that the buyer’s agent would surely catch it and negotiate these items out of the agreement, but it was worth a try. After all, as my grandfather use to say, “If you don’t ask, you don’t get.” As it turned out, the buyer’s agent was so eager to get the “deal” that he just had his client sign the contract as written and never raised the issues.

Twenty some odd days later, the buyer received the estimated closing statement with an itemized list of the buyer’s costs. The buyer was blindsided and upset. Right there on the list of costs were items generally paid for by the seller. But, the buyer, without being forewarned by his agent, had agreed to pay for them.

As you might imagine, the buyer expressed his displeasure and I received a frantic call from the buyer’s agent. It seems that the agent was upset that I had negotiated effectively in favor of the seller. During the call, I explained my responsibility as my client’s representative and that my job is to look after my client’s best interest. With a sound of disappointment in his voice, the buyer’s agent said, “When we started this deal, I thought you were a nice guy”.

This agent did not understand where his loyalties should have been. While I viewed my job as one of “representation”, he viewed his as “sales”. During the transaction, he was a “nice guy” and was happy to give up whatever it took to make the deal. I was pleasant to work with but took every opportunity to get the best possible arrangement for my client. While the buyer’s agent’s loyalty was to the “deal”, mine was to my seller.

Make no mistake; there are hundreds and hundreds of good, honest and trustworthy real estate professionals working hard for their clients in San Diego County. While some forget where their loyalties lie, and become more concerned with making the sale than with their client’s best interest, it is by no means accurate to label every agent as self serving and mercenary. The important thing is to be able to tell one from the other.

The easiest way to find a good agent is by referral. As the old saying goes, “Word of mouth travels faster when it’s bad”, so get referrals from friends whom you know and like and trust. If their real estate agent took good care of them, you’ll probably have a similar experience. One way or the other, if the agent seems more like “sales” than “representation”, my advice is to kindly excuse yourself and find someone else.