Posted on 7/21/2021 by Erik H. Reisner
Proverb: The less you pay for something, the lower quality it will inevitably be, especially when there are pricier options.
We’ve all heard this proverb and it applies to everything from tangible goods to services offered. Real Estate brokerage is no exception. Let me share an example that just played out in a transaction where Mad River Valley Real Estate represented the Buyer.
The listing agency was a discount brokerage firm that charges a fixed price to list a seller’s property in the MLS. In this circumstance, the commission offered to buyer’s agents in the MLS was less than what MRVRE generally charges for buyer representation. I approached the buyer and explained what was being offered, and what we generally expect to be compensated to properly represent buyers. I also explained in detail what I would do as Buyer’s agent throughout the transaction: Provide guidance on contract negotiation, help refer qualified property inspectors, lenders, vendors, and attorneys, attend all inspections, provide guidance and help negotiate regarding any issues uncovered during the property inspection, and be there as a resource up to and beyond the closing date. After hearing this, this first-time home buyer was happy to pay the difference between the flat-rate agency offering and our generally expected fee.
Onto the transaction: We’re in the midst of the strongest seller’s market Vermont has ever seen. The subject property had multiple offers within days. This is a really tough market for buyers, and even more daunting for this first-time home buyer. I was able to advise my client on how best to make a competitive offer, and his contract was the one that the seller ended up signing after receiving at least two other offers. Yea! Step one complete.
The next challenge: Property Inspection. The seller had provided a fairly detailed Seller’s Property Information Report which I reviewed with the buyer prior to the contract offer and he signed it acknowledging what the seller had disclosed. During the very thorough inspection, the property inspector identified several deficiencies that can best be described as minor, but also a few things that were a bit concerning related to mold in the attic space. After the buyer received the written report, I reviewed it in detail and answered several questions as these inspection reports can be somewhat daunting in the detail they provide. I reminded the buyer that we are in an insanely competitive “Seller’s Market” and that while we should ask for some repairs and credits, many seller’s agents are advising their clients to hold firm as there is likely another buyer out there that would accept the property “as-is.” I suggested that we ask for remediation of the attic mold issue and ask for a credit at closing for some of the other minor issues but set the expectation that the seller’s agent might advise his client to hold firm. I sent the signed proposed addendum to the fixed-rate seller’s agent, who promptly returned it with the seller’s signature. No push back, no questions, no negotiation from the fixed-rate seller’s agent… Just sign on the dotted line.
As we approached the closing date, I emailed the fixed-rate Seller’s agent and requested copies of paid invoices for the repairs completed, and info on utility providers so that there could be a seamless transition at closing. Crickets… The location of this home is right on the line between where Green Mountain Power and Washington Electric service, as well as two different telephone/internet providers. Having not heard back from the fixed-rate agent, I took it upon myself to find out who the providers were and had to contact the Seller directly to get details on the work performed.
Closing Day! I went to the property ahead of the walk-through to take a photo of the propane gauge to send to the fuel provider. I also noted a fair amount of cord wood. The buyer’s attorney had circulated an email earlier in the week asking about any fuel prorations. Propane is dealt with outside of closing, but oil and cord wood are prorated at closing. The buyer’s fixed-rate agent never informed the attorney about the amount and value of the cord wood left on the property, so the buyer inherited some free wood! Nice!
I meet the buyer at the property to do the final walk through only to find the seller still has not moved out! There were some things boxed up, but she was clearly still living there. The buyer told me that the seller contacted him directly and said she needed a few more days to move out. Where was the fixed-rate Seller’s agent to advise his client? I texted him and he didn’t know anything about his client still occupying the home. Way to be there for your client! The buyer was not overly concerned as he did not need to move into the home that day. However, the buyer’s attorney was less than pleased. The seller was technically in default, and the closing did not happen that day. On top of the delay the Seller had to credit the buyer more money due to the default/delay!
The moral of the story? What the seller ended up conceding on price, repairs, credits, and cord wood likely cost her more than she saved by hiring a fixed-rate real estate agency that did not represent her well from start to finish. On the contrary, the buyer purchased at a reasonable price in an unreasonable market and got money back at closing that far exceeded the small commission he paid. As the proverb goes: You Get What You Pay For!
Are you in need of proper buyer or seller representation? If so, reach out to any of the Mad River Valley Real Estate agents.