Was I cheated by my real estate agent?

After reading comments on my blog and responding to numerous questions I thought it best to do this write up. Trust me, you’ll be glad you did. So… were you blindsided by your agent? Were you bullied? Were you lied to? Did your agent offer you the right services? Homeowners and investors may feel as if they are being taken advantage of in some way or another. It causes distrust and a loss of appreciation for the added value an agent brings to your transaction. So what do you do? How can you tell? Here are some things to consider

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Location

If you live in an area where real estate transactions are regulated, with zoning laws, harboring licensed and certified real estate agents (agents immobilier), chances are you probably did not experience any of that. Hold on, I am NOT saying that there aren’t shady professionals, however, in regulated economies the threat of dire consequences to your finances, your reputation, loss of your real estate license, career, potential litigation and even up to imprisonment is a strong deterrent to objectional behavior. Compare that to an economy where these features are not in place, and the probability of having been cheated rise significantly. Why? its simple… the stabilizing factors that allow for a transparent, productive and valuable experiences hinge solely on the real estate agents integrity and desires. That’s tough. In areas where commissions are defined by the agent and agreed to arbitrarily by unsuspecting investors, once that contract is signed, you are on the hook. We usually put ourselves first, nothing wrong with that, but when we come first, the person on the other side of the table will surely come last.

Type of Transaction

What real estate transaction are you involved in? Is this a sale? A purchase? A lease. Transactions with huge commissions tend to have more scrutiny. For e.g. a sale or a purchase may involve significant amount that raise eyebrows and demand additional accountability. Transferring property will always involve lawyers, notaries, and there are tax concerns. Commissions will be scrutinized. Leasing or renting is different. Its temporal and often small in comparison to a sale or purchase. You could spend more than you need to if you don’t pay attention.

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Agent Affiliation

When your agent is affiliated with a reputable company, internal company processes, audit, checks and balance, and most importantly imposed or supervised accountability will reduce negative experiences. You have to stick with a firm, preferably one with transparent functions, with different layers of management, with online access, licensed. These assurances provide a peace of mind throughout your transaction. Remember your agent has to split his share of commission with its respective firm. Depending on the arrangement, agent/broker splits can be as little as 5% but as much as 50%. So your agent may not be making as much money as you think.

Know the answers to these questions

1. If my transaction falls through do I have recourse
2. Am I Required to pay commission? As a Seller or a Buyer?
3. Is there a standard commission percentage or is it subjective
4. When is this commission disbursed?
5. Is there a tax advantage for this type of disbursement?
6. To whom is the commission owed? (especially when dealing with a firm!)
7. How is it paid? Cash, check, credit
8. Was I told about the commission up front? *** Big deal
9. Are commissions refundable if the deal falls through

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At the end of the day, having a reputable real estate agent is a huge plus, they will market your home effectively, place signs, solicit offers, perform open houses, solicit buyers, show your property, provide high level evaluations, validate your contracts, protect your interest and follow through on all leads. There is no waste of time and agents work hard to earn their commissions, from phone calls to constant negotiations, it is a lot of work. There is no ‘easy’ money to be made here.

Bottom line, if you are being resentful of the agent earning a commission, when in-fact you were not harmed, and in-fact were rewarded in the process then you may need to reevaluate the value that you believe that agent brings to your transaction. Don’t be fooled… they have the knowledge, hire them, hold their hands, relax and enjoy the ride.

Contact an agent at www.secpeinvestments.com for investments in Africa.

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