Published On: Fri, Jan 17th, 2014

Top 5 Things Your Real Estate Broker Won’t Tell You

There is an old stigma attached to real estate brokers. Most people are cautious of them because at times they can be too eager to make the sale that they intentionally “forget” to mention any detail that would deter you from purchasing a property. Although this isn’t true for all brokers, there are some unethical ones who always manage to leave out the important details. Just to be on the cautious side, below are the top five things your broker is unlikely to tell you:

  1.  “There Might Be Some Hidden Problems” – Some brokers would do just about anything to close a sale. This is especially true for those who are still new in the profession and those who are in a financial fix. These unethical brokers would hide pertinent information from you such as potentially large repairs that may just turn their buyer off. These hidden problems include trouble with pest control, cracks in the foundation of the house, leaks in the roof, and others.
  2.  “I’m Not As Knowledgeable As I Appear” – Let’s face the facts. Other than having to a pass a licensure exam issued by the National Association of Securities Dealer and some other state exams, there really are no other investment courses required to become a real estate broker. Because of this, some brokers may appear more knowledgeable than they really are.Other brokers also like to suggest big ideas to their buyers when in fact they don’t know much about zoning. One broker encouraged his client to buy a property with a dilapidated house situated on a beautiful marshland, with the advice that the buyer can do pretty much whatever he wanted on his property. The buyer went on to purchase the property, cut down some trees, and filled in some areas of the marshland only to find out that his actions did not fit with environmental regulations. Before believing everything your broker says, make sure to check with the correct authorities.
  3.  “Your Open House is A Way for Me To Get More Clients” – One of the things that most sellers don’t know is that open houses can provide a way for brokers to meet more clients. In fact, some brokers prefer to stage an open house not to sell your house, but to gain more clients. In fact, it has been reported that the success rate of open houses is at a mere 2%. This is something to consider the next time your broker suggests it. However, if you are willing to take the extra measure to sell your home, then having an open house might still be worth your while.
  4.  My Fees Are Actually Negotiable” – The aura that most brokers like to give off is that their fees are fixed and non negotiable. They make it appear to their buyer that they have a standard rate and they would like to stick with that. However, if the buyer just really asks (and maybe at times haggle), the real estate broker can make some adjustments to their asking fees. This is especially true in a brisk market where many brokers pit against one another for a property that they can sell fast. Some small time brokers may also lower their fees just by asking.
  5. “I Can’t Keep Secrets for You” – One thing that both buyers and sellers have to remember is that their brokers will take the side of the one who hired them. For example, if a seller took on a broker to sell his property, then that broker is obliged to give the seller information that might be useful in getting the biggest gain for the seller. For example, a buyer might reveal to a broker his budget for buying a property. Some sellers may ride on to this information and opt not to lower his selling price or not help out with the closing taxes because he knows that the buyer can afford the home.

Not all brokers are the same and some are humble enough to admit their lack of knowledge or they really go out of their way to explain some pitfalls of the property. However, whenever you employ a broker to help you find a property, it is always useful to exercise caution. After all, buying a property is an investment decision that takes a whole lot of money, plus there’s no return and exchange policy. And when it’s all said and done, in the end, the decision was made by you and not your broker.

Dominique Brown

About the Author

- Dominique Brown Dominique Brown is a husband, father, financial planner, author of the book "How to Fix your Credit," author of Your Finances Simplified, owner of S&D Capital Holdings and a landlord. Mr. Brown's advice can be found on the Huffington Post, Business Insider, Yahoo, Madame Noir, HR Block and Ebony Magazine.

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Did you know?

African Americans are significantly more likely to have some type of debt (94%) compared with the general population (82%). Credit card debt, student loan debt, and personal loans are all significantly higher in the African American community.

Source: Prudential’s 2013 "African American Financial Experience" study