Bad Agents: Making a tough market even tougher

I fully realize that a post with a title such as the one above is going to get some attention and some are going to take issue with my position.  Nonetheless, this issue has become so pervasive lately that I feel it is a relevant topic and should be of vital importance to all who are considering buying and selling in San Carlos.  First, let me say that this is not intended to be a post about my skills as a realtor compared to others.  As I have said many times, the only ones who can comment intelligently on my skills as a realtor are my past and current clients.  Additionally, I wanted to pass along that I hesitated on the notion of writing this article because I did not want it to sound condescending or arrogant.  If you read it as such, please know that it was not my intention at all to do so. I did feel that if I was able to put together an article that was clear and concise with my message, it would allow some buyers and sellers to see their transactions in a different light.
Allow me to start by saying that San Carlos has many realtors who I would consider to be truly outstanding.  I feel that we are lucky in that regard. In my opinion, the first problem with the real estate world is that the barrier to entry is quite minimal.  I will spare you all of the details, but obtaining your license essentially involves taking some classes and then passing a 150 point multiple choice test.  I cannot think of any other profession where the entrance requirements are so minimal and the new licensee can immediately handle million dollar purchases. For many people in San Carlos, their purchase or sale is going to represent a fairly significant portion of their net worth.  I will never understand why some hand over such an important transaction to someone who is so ill-equipped to competently handle the transaction and protect their interests.
Many of you are probably thinking that you are smart enough to screen your prospective realtor and feel that you have chosen someone who is competent to handle the transaction and protect your interests.  The truth is that you are most likely correct.  However, that is not the message I am trying to convey.  The problem comes in when one of these less-than-professional realtors is on the other side of your deal. For the past few years many properties had multiple bids and the seller and listing agent could choose the offer that best matched with their goals on the transaction. During this time period the better agents would always ask the buyers’ agents to present their offers in person. This was done for two reasons, (1) so that listing agent could pin the buyers’ agent down on any questions regarding the offer, and (2) the listing agent always treated the multiple bid situation as an interview of the buyers’ agent.  As an agent, prior to entering into a transaction you should carefully screen the other agent to make sure they are competent, diligent and reliable.  Agents that came to the multiple bid table with the disclosures not signed, their contract was not filled out properly and were just generally disorganized were almost immediately dismissed from contention, regardless of their prospective purchase price.  More often than not, entering into a contract with one of these agents would result in the deal falling apart or more infrequently, a lawsuit.
Here is why bad agents are making a tough market even tougher….for everyone:  it comes down to this, with fewer buyers in the market the multiple bid situations are not nearly as frequent as they have been in the past.  Consequently, the only offer that you may get on your property may be from the bad agent. Let me give you a few examples.  In the past few weeks I have had two agents try and back their clients out of properties after all contingencies had been removed and both fully expected the return of their initial deposit. Their reasoning was that they really wished they had not removed the contingencies. Unfortunately, “really wishing you had not done something” is not a good excuse practically speaking, nor will it prove to be a valid defense in the courtroom. The problem in both of these cases is that the buyers’ representation was terrible. The agents could not fully explain the consequences of the contract and the required performance of each party under the contract. In both cases I felt bad for the buyers because I knew they had not been properly educated by their agent.  Additionally, a few weeks ago an out of area agent asked to use one of our conference rooms to write up an offer on one of my listings.  We gladly obliged and made it available to them. A few hours later the agent met me in the lobby and asked for help explaining an issue to her clients. Essentially, the agent could not articulate to her clients how a financing contingency worked. For those of you that may not be aware of how financing contingencies work, let me just say that there is really nothing more basic in residential purchases.  The fact that the agent could not explain how it worked to her clients was beyond mind-boggling.  I ended up walking them through how it worked, but I had an obligation to do it in the most favorable light for my sellers. I, again, felt bad for this set of buyers as they were now relying on the opposing agent’s knowledge. How can the buyers be expected to negotiate something that their agent cannot communicate to them effectively? They ended up negotiating a financing contingency with terms that were not most favorable to them.
The problem with many of these scenarios is that buyer will eventually figure out that their representation was less than stellar, they panic, and they want out of the deal.  In the mean time, the seller loses market time and momentum and is forced to put the property back on the market due solely to the incompetence of the opposing agent. The problem is that there really is not an easy solution for folks who have done everything right in these cases.  As an agent, the best that I can do is screen the opposing agent as carefully as possible when I believe that this issue may be in play and pose it as a risk-reward notion to my clients. Additionally, the better agents will tell you that they understand they will be working both sides of transaction.  In other words, be prepared to do the bad agent’s work as well, because they won’t. Be prepared to get creative and anticipate the pitfalls in the transaction…..have answers ready to go before those pitfalls are reached.  Each transaction is unique and requires a “totality of the circumstances” approach. Your agent will need to take total control of the transaction.  If he or she does not, it will fall apart.
Bottomline, recognize that you may have the bad agent involved in your transaction, be pro-active and anticipate the issues which are likely to surface. Choose to work with an agent that actively sells homes in San Carlos on a regular basis. Agents who regularly sell homes in San Carlos will be better prepared to deal with our more localized issues.  Ask them to give you examples of the bad agent and how they were able to save the deal from going south.  These days, having the ability to overcome the bad agent issue will put you in a far better position in this market.