I got a real estate call from my tech assistant who lives in another state. He was in love with a property and thought it was overpriced. Could I help?

Here is his story:

Prospective Buyer:

His rent is going up $200 a month. His current place is very nice, but truth be told, it is one bedroom too small. That spurred him into action. He’d been looking around at real estate and came upon a place that was beautiful! perfect! and $60,000+ more than any other three bedroom place he looked at. 

His question: “Should I make an offer?”

I asked him what does his agent say? He says he has a “transactional agent” who showed him the townhouse. The agent works in the same company as the listing agent. He and the agent spent a whole hour in the place, some of the time just sitting on the balcony and talking. The agent did not talk to him about the price.

Me:

Together, we took a quick look at local sales and found that there were both free-standing houses and townhouses that had sold for $60-100,000 less in that city during the past six months. I had to follow his lead on neighborhood differences. We ruled out a fair number of houses in not-as-tony areas. Still, the property seemed overpriced.

There is another unit in the same complex that was also for sale – and also not selling – that has an asking price about $10,000 more than the one he liked.

I gave him my advice.

  1. Do the math about your monthly payment. Choose a top price that you won’t go over. I am sorry that you don’t have a comparative market study that you can depend on for this purchase.
  2. Meanwhile, I will network to a buyer’s agent who can give you the kind of advice that you need. I can’t do it from afar because I don’t know the neighborhoods and the market in this city. There are likely to be buyer’s agents in your city. It’ll take me a day or two to find one that practices in a way similar to my company.

Follow up:

By that afternoon, his transactional agent called to say that another party was seeing the townhouse at 6 PM.

My tech assistant made his offer that night.

He got a counter-offer that was still too high. Along with the news that there was another showing of the townhouse that morning at 11 AM.

My tech assistant turned down the counter-offer.

The debrief:

What is a transactional agent and why they won’t help a buyer?

My tech assistant was frustrated that he wasn’t getting advice from “his agent.” He signed a disclosure saying that he was aware that this agent was not his agent, but still… The agent was forthcoming with information, but not information that he needed to know that he wasn’t being fleeced. Thus, his call to me, two time-zones away, for a reality check.

In retrospect, he feels played. He doesn’t believe that there were other showings. He thinks the agent was being fake to sit with him at the townhouse; he was selling the property all the time!

A transactional agent is an agent who does not give any fiduciary advice. No advice on pricing, resale values, or negotiation strategies. They are obligated to present the property fairly and to disclose known defects in the property. They must keep track of funds that they handle. They are not obliged to keep any information confidential for either party.

There are variations in state law about what transactional agents do. In Massachusetts, consumers can choose to hire their transactional agent as a fiduciary agent. However, I see problems with hiring a buyer’s agent who works in a team with the seller’s agent.

In Massachusetts, agents in this position are called facilitators. In the disclosure for our Commonwealth, they are defined like this:

(NON-AGENT) FACILITATOR

When a real estate licensee works as a facilitator that licensee assists the seller and/or buyer in reaching an agreement but does not represent either the seller or buyer in the transaction. The facilitator and the broker with whom the facilitator is affiliated, owe the seller and buyer a duty to present all real property honestly and accurately by disclosing known material defects and owe a duty to account for funds. Unless otherwise agreed, the facilitator has no duty to keep information received from a seller or buyer confidential. Should the seller and/or buyer expressly agree, a facilitator relationship can be changed to a seller or buyer client relationship with the written agreement of the person so represented.

The aftermath:

My tech assistant is signing another lease and will look for a purchase at a later time. Before he sets forth again, he will hire an exclusive buyer’s agent to give him advice. I found a company for him in his city.

If you have a friend or relative anywhere in the US, chances are we can find them a buyer’s agent who will give them good service.

Not every city and town has exclusive buyer’s agent (agents who work in companies that do not represent sellers seeking the highest price for their properties). In those places, we depend on high quality buyer’s agents with track records of giving good service.