We were in the middle of putting together a training blog when we ran into a real-life horror show that ended up costing a client of ours $5,000 dollars! In an unimaginable display of Broker evil, $5,000 was stolen from our buyer because our agent made a minor, but critical mistake.
Rule #1 of being a buyer’s agent: Protect your client’s money.
Holding a Buyer’s escrow is a good idea. There is no rule that states the Listing brokerage must hold the escrow payment. Never give up control of your client’s money. Because sadly, not every Broker manages their escrow money in the same fashion. Keep escrow in-house or at the very least with a Closing attorney.
Don’t overpay escrow? Putting $5K in escrow on a $200K dollar property isn’t necessary. Homes priced near Atlanta’s medium average wouldn’t need anything more than $2K in escrow.
Rule #2 of being a buyer’s agent: Give your clients a way out.
Agents don’t control the appraisal process. They have no idea when the appraisal will get done. But, it’s a safe bet, the appraisal won’t come back until all the other buying contingencies have expired. And, if you think, “this home will surely appraise”, think again! Always, and I really mean ALWAYS, include a line in a contract that states: “home must appraise for sale price”. If the property doesn’t appraise on price, your buyer has a way out of what probably was a bad contract.
Such was the case in our recent nightmare. Our agent forgot to include an appraisal line in the contract. And sure enough, a day after all other contingencies expired, the appraisal came back $30K under the sales price. That forced our buyer to come up with another $30K in cash to purchase a property they have just been told is over-valued, or forfeit all their escrow money. Talk about lose, lose.
It is truly hard to believe a home seller; when told their home wasn’t worth what they thought feels compelled and entitled to take all of our buyer’s money. As if our Buyer was at fault? As if our Buyer was leading some conspiracy with the Appraiser to force a price reduction? Good lord! In a move right out of the Trump University handbook, the Listing Brokerage pounced on our agent’s mistake to inflict the maximum level of pain. They took it all. Our agent lost $5,000 of his client’s money.
Rule #3 of being a Buyer’s agent: People can be crazy—(not meant to be a joke)
It’s so easy to become an agent. Worse yet, literally, anyone can become a Broker. Our industry is filled with people you wouldn’t want to hang out with. Be aware. The other side of the negotiating table may look like your “Nana”, but don’t be fooled. Don’t be so naive to think people will always act in good faith or with a sense of greater good.
Over the years, Wynd Realty has prided itself in remaining personality neutral. Sure, we make fun of the franchises and their business model. But we have never called anyone out. We don’t like NAR, but we find them more humorous than anything else. But, everyone at Wynd Realty has been so disturbed recently by one local Broker, I feel the Company must make an exception.
Nest Realty is responsible for the above story. They are the Brokerage who took advantage of our agent’s mistake and took the $5,000. If this had been over $1K or $2K dollars, nobody would have blinked. But they took all $5K! Jennifer Kjellgren, Broker of Nest Realty, who significantly over-priced the property in the first place, never once considered any other option. She HAD to win it all, which meant we had to lose it ALL. This is bad real estate in a very small town. God forbid one of their agents ever makes a mistake.
While terrible for our agent and their buyer, dealing with Nest Realty has re-confirmed our commitment to helping eliminate the “old school” ways of real estate. And make no mistake, Nest Realty is nothing more than shitty old school real estate dressed up in a new look.