Most real estate agents are honest and ethical and this post is certainly not a slight against real estate agents. However we recently came across a situation that we wanted to pass along to our readers that really suggests that all consumers should pay attention to and avoid if possible. In our opinion it borders on the less than ethical side of the business, although we cannot and are not suggesting that it is illegal by any means. We are just not sure that the agent does not have the best interests of the seller in mind. We would appreciate your opinion on this situation.
Offer to Purchase by Real Estate Agent
A friend of ours is selling their condo through a real estate agent. The market is slow and their unit has been up for sale for some time. Their agent has suggested they spend some money on upgrades to make their unit more attractive to potential buyers. Many buyers are looking for everything to be already completed so that they do not have to do any work at all to the unit when they move in.
If it does not sell in a few months she will buy it from them. Oh, and she is suggesting they lower the price. She is suggesting $20,000 in upgrades and lowering the price by $20,000 which is a net hit in the wallet of $40,000. Pretty steep in our opinion, and also a good deal for the real estate agent as well. She gets the property at a lower price and with many of the updates already completed which makes it easier to sell in the long run!
Does this sound suspicious? The agent cannot lose, if she sells the unit she gets the commission. If she buys the unit she gets the unit at a reduced price, it is upgraded and makes money. She also gets the commission when she eventually sells the unit.
Long Term Real Estate Prices
Real estate prices are on their way up in this area and over the next 6 months they are expected to increase by as much as 20% which is substantial. All the agent has to do is hold on to the property for a few months and she may make a 20% profit!
Would you take her deal? We don’t think they should! We think they should find another agent or take it off the market. Housing prices in the area are expected to increase by 20% this year. Who is making money on this deal? What do you think?
Everyone in situations like this must think for themselves. It is a good idea to look for advice from experts. However you really need to understand what the motivation is for each expert. Weigh that against the advice you are getting from them. If you are desperate, then maybe you want to take the deal. The deal closes and gives you the money you need from the sale of your property.