Real estate 'client control': use and abuse

Mood of the Market

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Nov. 29, 2010

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Mood of the Market

Tara-Nicholle Nelson
Inman News

Q: My husband and I are buying a $1.2 million home. The inspections indicated that a number of repairs are needed, and we asked the sellers to chip in $25,000 to get them done. They countered with an offer of $8,000 and are not coming up, even though we asked them to meet us halfway at $12,000.

My agent says that it's not worth losing the home over, which I agree with. But then he said something that made me concerned. He repeatedly said the seller's agent doesn't have any "client control."

That makes me feel like my agent thinks he does have control over us, and I don't like that -- it makes me think he's just trying to close the deal, and wonder whether he's giving us advice that is actually in our best interests. It actually makes me second-guess whether we should be taking his advice and compromising on the repair issue. Are we being "managed"?

A: You may be being "managed," to some extent, but (a) that's not necessarily a bad thing, and (b) that does not necessarily mean you are getting bad advice on this repair issue.

This "client control" to which your agent has repeatedly referred sounds much worse than it actually is, in a best-case scenario.

In an ideal real estate agent-client relationship, part of the unique value the agent brings to the transaction is in helping manage clients' sometimes irrational or unreasonable emotional responses that can interfere with sound decision-making in the course of their real estate transactions.

Another valuable version of "client control" is when agents correct clients' unrealistic expectations, or educate them to correct misconceptions about the contract, negotiating or financial aspects of the real estate transaction as necessary to empower better decision-making.

In fact, successful real estate agents tend to be expert course-correctors when it comes to steering their clients away from courses of action that may seem savvy to the client on the surface, but in fact threaten the clients' ability to actually achieve their aims for the transaction.

My sense is that when your agent bemoaned the listing agent's lack of client control, this is likely the sort of client management he was wishing his counterpart had.

Your agent likely thinks the seller is being shortsighted and unreasonable by not coming closer to covering the repair costs you asked for, and feels that if the listing agent was able to exert more influence in educating and convincing the sellers that they were putting an otherwise amazing deal in jeopardy over such a tiny percentage of the overall purchase price, your current dilemma would not exist.

With that said, your agent probably also feels that his job is to keep you and your husband on track in terms of meeting your own goals of obtaining this property (which is, of course, in alignment with his own interests in closing the transaction), and that he is doing his job by advising you not to throw the baby out with a few thousand bucks of bathwater.

So, are you being "managed"? Probably so. But probably not in the sinister sense you're thinking. The opposite of the "good" version of "client control" is the bad version, also known as "Total Abdication of All Common Sense."

There are real estate clients who actively make decisions that are injurious to their own best interests, against all common sense, because they would rather outsource all decision-making to their real estate agent.

Even in these scenarios, nine out of 10 agents I know actually step their game up when it comes to looking out for their client, out of the sense of increased duty that arises from a client who cannot or will not proactively express what's important to them and do the work involved to protect themselves.

The occasional bad-apple agent does exist who will take advantage of these types of clients, though. In those rare cases, "client control" plus bad agent advice equals real estate disaster.

Clearly, you are not that type of real estate consumer. You seem to have a strong sense of what is and is not important to you -- from within, versus from your agent.

It was a wise move to request credit from the seller, and a smart step to counter their low contribution offer to try to pull it upwards. But if they refuse, and you love the house, it -- as you already know, deep down -- does not make sense to let a deal that size fall apart over that sum of money; and that's from the perspective of your best interests, not your agent's.

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