What Would You Do?
Categories: About Realtors, For Buyers, Hoboken Condos
Hypothetical Hoboken Condo Buyer Scenario 
I thought it might be fun (and educational) to discuss a possible response from you, the Hoboken condo-buying public, to a pretty common situation that might arise when you’re home hunting in Hoboken. While I sometimes get ideas for blog posts from real life situations, this is a hypothetical that I made up for the sake of this post and bears no relation to any particular “deal” in reality.
Let’s say you’re looking to buy a condo in Hoboken. You’ve found a real estate agent whom you really like and whose expertise you think highly. Your agent has been taking you to see a bunch of properties. In fact, you’ve now spent a few months looking at Hoboken condos on a pretty regular basis. Your agent has been responsive, diligent, informative, and generally helpful to your search process. Overall, you have seen some really nice properties and you’ve been very happy with your agent’s work on your behalf.
Most people refer to a realtor as their ‘agent’. Now, in some parts of the country, a buyer will sign an agreement with an ‘agent’ that creates a true agency relationship. That agreement also obligates the buyer to compensate the agent for his or her services no matter where the buyer finds the property they ultimately buy. In addition, the agreement makes the buyer’s agent an actual legal agent of the buyer. In Hoboken, that is rarely the case.
Most buyers work with someone called an “agent” but that person is just there to help find you a new home and facilitate the deal from finding the property through closing. We call that realtor a “transaction broker” to differentiate them from a true agency role. If you ever sign a New Jersey standard form sales contract, you will see that term. There is no overt or express contractual relationship or legal agency between the buyer and the agent. So let’s say that is the case in our hypothetical scenario. Your agent and you have not signed a buyer’s agency agreement so your ‘agent’ is really a transaction broker.
One day, you are walking down the street, or browsing the web, when you see the condo of your dreams. It’s is for sale by the owner (we call them fsbo’s). Since you’ve got no contractual duty to include or compensate your agent in a transaction regarding this new fsbo property, what do you do? How do you handle it? The possibilities range from:
- offering to sign a buyer’s agency agreement right away so that you will compensate your agent and they will represent you from start to finish in your fsbo deal.
- informing your agent about the fsbo property you’ve found so your agent can find out if the seller is willing to pay a commission to your agent for bringing a buyer (you) to see the property and to handle the transaction on your behalf.
- you drop your agent like a hot potato and avoid his or her calls, emails and questions and persue the fsbo on your own. When they track you down to ask where you’ve been, you lie and say you no longer have any interest in buying.
Of course, there are many shades of grey in between these three options but you get my gist. I’m curious to hear what you all think is the right / best / moral / ethical/ honest / expedient way to handle this type of situation.
Does it matter what stage you are at of the buying process? What if you’ve found a place together with your agent, have made an offer which was negotiated by your agent, have done a home inspection with your agent, and are still in attorney review on the first property when you come across the fsbo you now wish to buy instead? You certainly have the right to cancel the contract on the first property and buy the second. But does that change your answer?
Remember, situations like this do on occasion arise in Hoboken, I’m posing the question merely because I’m curious to see what you all have to say on the subject and what your experiences in similar situations may have been.
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A Realtor’s Response
Categories: About Realtors, Hoboken Condos
Today I’m posting a response from a local realtor to a comment made by one of our commentors who goes by the name of “Interested”. You may remember, he is the guy who told me he found out about a property from my Weekly Wednesday Wrap Up; corresponded with me privately about my opinion of the property and its value; and then made an offer through another agent. Well, seems he’s ticked off the listing agent for the property as well. Here is what she had to say:
I would like to respond to a [comment to a] post I read recently on your blog. As a frequent reader, and local real estate agent, I was surprised to read a [comment on a] post which, I believe, was indirectly critical of me. This [comment] was by “Interested” on August 5th regarding the apartment he purchased.
In that post he commented “the Seller’s had no clue how to stage their place or what the price should have been. I think their Realtor just wanted to move it and make her commission.” and “A few minutes with a GOOD Realtor and the Seller would have gotten a lot more and we would have paid it!”
I knew the potential that apartment had and what it could look like as I was also the listing agent for the unit that “Interested” referenced as having sold for 23% more in a *different market*. The higher selling apartment was beautifully furnished with expensive pieces, painted with warm colors, had stainless steel appliances, wine fridge, undermount cabinet lights, custom backsplash in the kitchen, did not have the wear and tear of two children, and was a bit larger. It was also not directly above the garage with a view of the street, and where you can hear the garage door open and close when the other residents move their car.
As a Certified ASP Stager, I can see the commenter’s point regarding the staging of the apartment and, in fact, I felt the same way and advised the sellers that there were many things that could be done to make the apartment appealing to more buyers. In some cases the sellers have the budget and time to do the things necessary to sell at the best possible price, in other cases they don’t.
If money had been spent on paint, appliances and proper staging the apartment would have appealed to more buyers and they could have gotten more money. It would have taken about $20k to get the home in optimum showing condition. However, even in perfect condition it was not worth $75k more in this market because its a walk-up building, not concrete construction, it is directly above the garage, and there are too many homes in the $500k-$600k price range that are new construction to justify asking over $600k.
The [sellers] had intereviewed at least one other agent that had advised them to price it $20,000 LESS than my price. The reason they were given an even lower number by someone else WAS the condition of the property. It was not in bad shape, but not everyone lives like a photo in a Pottery Barn magazine – especially when they have two children, the 2nd of which was a newborn.
I agree there are bad Realtors out there that are lazy, clueless, greedy – and even unethical. But I am not one of them, and don’t take lightly the criticism that I was the reason the home wasn’t staged and didn’t sell for more. The buyer should be happy he got what he felt was a good deal, instead of bashing the Realtor that has no control over how the seller’s decorate their home.
And if you can’t understand why THEY wouldn’t stage- maybe you should take into account that they just had a new baby and prefered to use their time, money and energy on setting up their new home with their newest member of the family.
TANIA PATCH
Broker-Associate
CENTURY 21 INNOVATIVE
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Is “Procuring Cause” Cause for Trouble?
Categories: About Realtors, For Buyers, Hoboken Condos, Legal Matters
Going To Look at Some Open Houses This Weekend? Beware!
We all know the drill. You’re not ready to commit to really start house hunting but you want to get a feel for the Hoboken condo market, so you decide to go to some open houses. As you walk in, the hosting agent asks you to “sign in”. Not wanting to give your info for fear of being hounded by the agent and inundated with emails, you make up a name or email or just scribble illegibly. No problem with any of that, but what happens when you see a place you really like?
On several occasions recently, I’ve had a potential buyer contact me because they found a property at an open house they were thinking about buying. You might think that, as a real estate agent, such a call would make me happy. Wrong. Too often, the buyer went to an open house, spoke at length with the hosting or listing agent, and maybe even told that agent that they wanted to make an offer. Sometimes the buyer mentions that they have their own agent, sometimes they don’t. Then the buyer calls me. So what’s the problem? It’s called procuring cause.
Reasonable people can disagree about what is the procuring cause of a sale. Would the buyers not have made an offer had they not seen the property at the open house? Or did the buyers’ own agent convince them by providing advice, comps and/or by showing them other similar-but-inferior properties that the property was a good deal and worthy of making an actual offer? The answer may be “it depends.”
Procuring cause is the sine qua non of the sale. But for the efforts of the procuring agent, the sale would not have happened. Whether an agent is the procuring cause of a sale must be factually determined on a case-by-case basis. Many factors impact a determination of procuring cause, but no one factor is by itself determinative.
Not surprisingly, the listing agent wants to sell her own listing (and get both halfs of the commission) so she is going to claim that the buyer is “her customer” and that she the procuring cause. The other agent will say that the buyers walked into the open house on their own (or may even have been sent by their agent) but he or she did the groundwork, showings and educating that led to the offer.
There is also a very valid debate whether it is a conflict of interest to be a seller’s agent and also work with the buyer (that’s worthy of a post of its own). Nonetheless, doing both sides of a deal is allowed and legal in New Jersey. So what should a buyer do if the buyer sees a nice property but does not want to deal with the seller’s agent? Here are a few suggestions:
- When you go to an open house, tell whomever is hosting it “I have a realtor that I am already working with“. You need not give a name. You need not even be telling the truth. But stating it upfront and clearly protects you from having the host (who is the seller’s agent) “claim you are theirs”. In fact, when they ask you to sign in, write “I HAVE MY OWN AGENT WITH WHOM I AM WORKING” on the sign in sheet right next to your name.
- If you have questions about the property after seeing it, do not call the listing agent directly. Find an agent you like and with whom you want to work, if you don’t already have one, and let your agent call the listing agent for you. (Remember, the listing belongs to the agency so the agent has to be from another agency entirely).
- If you think you might be in the market for a property, shop for an agent first. Call and talk to a few, or ask for recommendations from happy customers. You can still go to open houses on your own, you can still scour the internet, but when you see something that catches your interest, you’ll have your own agent to call the listing agent on your behalf.
Recently, a buyer went to an open house and had some conversations with the listing agent. The buyer then called me to make an offer on the property. He had learned that the property was owned by the listing agent’s spouse. The buyer felt that the listing agent couldn’t really represent him especially given the ownership issue, (which should have been disclosed in the listing, but wasn’t). After asking many questions and explaining the procuring cause issue to the buyer, I guess the buyer went back to the listing agent to tell him he didn’t want to make the offer through him. The listing agent told the buyer he would sue and that buyer would not get the property if he used a different agent. I ran quickly in the other direction wanting nothing to do with the deal.
As a buyer, if you wish to keep your options open and want to be able to use what ever agent you choose, take my advice – be very careful when you go to open houses or call about an ad or something you see on the internet. You may find yourself working with an agent who is not in the best position to represent you since they work for the seller.
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