Way back when the 21st century was young and the president was just a horse’s ass instead of a deceptive, calculating horse’s ass, I worked for a Realtor in Bethesda, Maryland—one of the top-selling Realtors in the nation, she’d have you know. And the first thing she did when she got yet another multi-million-dollar listing was send a professional photographer to spend an hour taking exterior and interior photos of the house.
When this particular Realtor landed a run-of-the-mill, three-quarters-of-a million listing, she sent me.
Sense something’s not quite right? In a transaction as big as a house sale, you should pay attention to those worrisome signs.
Granted, she was one of the best at what she did, and those six-figure houses sold just as well and as rapidly as the multimillion houses. This was, after all, 2001 in suburban Washington, D.C. The market was awhirl. But I should have been a walking red flag to those sellers that my boss wasn’t going to devote the time nor treasure to selling their houses as she was to those of her upper-tier clients.
Red flags in buying and selling homes aren’t necessarily deal-breakers, but they should get your attention. A soft market can tempt unscrupulous Realtors and lenders to cut corners or push deals. Here are things to watch for so you don’t get burned.
In both buying and selling, a Comparative Market Analysis (CMA) is essential. This is a look at houses that are currently listed and have been recently sold, among other data, which Realtors pull from the MLS system. If you are selling your house and interviewing Realtors (you should interview them like a job applicant, not pick the one with the best headshot) and he or she doesn’t bring a CMA, that should be a red flag. Either that Realtor is not on top of his or her game, or they’re time-pressed and sloppy.
If you’re buying, the CMA should be a starting point to look at the local market. Don’t be pushed around or hurried by a Realtor. Make sure they understand exactly what you’re looking for and how flexible your price range is. If the Realtor feels overtly aggressive while you’re discussing these things, or if she or he doesn’t seem to listen, that should raise a red flag. Communication is key.
If you’re selling, your interviews with Realtors should be thorough. At what price will different Realtors list your house? Why? If a Realtor tells you he or she can sell your house for what sounds like an outlandish price (and doesn’t have the CMA to back it up), that should raise a flag. You want the hard truth, not an agent who’s willing to tell you what you want to hear to get your business.
Here’s a quick list of other red flags. They may seem obvious, but people keep ignoring them.
—Seller says there’s no need for a home inspection: New or resale, you need a home inspection before you close. If your Realtor disagrees, that’s red flag number two.
—Dual agency: When one agent represents both the buyer and seller, he or she can’t look out for both interests. Local real estate blogger Jim Duncan (realcentralva.com) is critical of dual agency. Listen to him.
—Realtor acting as loan originator: A California couple is suing their agent, who was also their mortgage broker, for selling them a house at an inflated price. Yup, sounds about right.
Individually, a red flag isn’t a reason to torpedo a deal or end a business relationship. But it’s a reason to ask a few questions, maybe toughen up your stance. A bundle of red flags, well, that’s something different altogether.