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Tuesday, October 23, 2012

Do You Equate Real Estate Agents with Used Car Salesmen? Think Again!

[Published Oct. 25, 2012, in the Denver Post and in 4 Jefferson County weekly newspapers]

Every now and then I encounter someone with a very low regard of my profession.  That person may have good justification for their attitude toward my colleagues — and for applying their judgment against every member of that profession, including me.

Perhaps they were harmed in a real estate transaction one way or another, or believe they were treated unethically or rudely. Perhaps they felt the agent did not earn his or her commission.

You probably have your own list of grievances against real estate professionals, much as you might against other professionals.

But today I’d like to share why I think my profession — despite its occasional “bad apples” — is a lot better than some portray it.

First, however, I want to apologize to used car salesmen for this column’s headline.  In our culture  the used car salesman has (unfairly)  become a metaphor for dishonesty and misrepresentation.  I use the expression, however, only as a metaphor and not because I share that opinion of car salesmen.  I’ve bought enough cars, new and used, to know that it is not a valid generalization.

Having said that, however, let’s compare that profession to mine.

One similarity is that both of us are paid on success and not on effort. Even a successful agent like myself spends time and money day after day on sellers and buyers without getting paid for that time and expense. Just like selling cars — unless they’re on salary.

However, a car salesman always works for the dealership — it’s understood by you that he’s not on your side.  True, you can hire an auto broker, as I do (ask me for a recommendation)— but few car buyers do that. For the most part, we go to a dealership and work with a salesman whose goal is to sell you one of his dealership’s cars for as close to the list price as possible, for which he’s rewarded. 

In real estate, most buyers are represented by agents who have a fiduciary responsibility to negotiate in their buyer’s best interest. Even when the buyer is not our client, we are legally, not just ethically, required to treat the buyer fairly and with full disclosure of defects..

We can be disciplined and even lose our license for not putting our clients’ interests ahead of our own, or for not disclosing all material facts.  I’m not aware of a similar penalty in most other professions.

Cooperation with other agents is a hallmark of our profession. Imagine that you went to a dealership, and the salesman could sell you a car from any lot in town.  Because of the MLS, we can do the equivalent of that with homes.

5 comments:

  1. Jim, as someone who enjoys your columns, I just want to clarify your comment about using an "auto broker".

    Colorado does not recognize auto "brokers". Under Colorado law, the only type of licensee that can represent the buyer as a principal is a "Buyer Agent".

    There are very strong limits on the powers of a Buyer Agent, most important that they can not own the vehicle they are helping you buy, and they have to be paid by the buyer, not the dealer.

    A "broker" however, can own the vehicle and has to be licensed either as a dealer or a salesman.

    Regardless of the implication of the term "broker", your comment that a car salesman "always works for the dealership" is correct. In fact, there is a prohibition against a "broker" implying that they represent the buyer.

    Here is a little more info:

    1) BUYER AGENT DEFINITION (from: CO Department of Revenue Application)

    "A buyer agent is any person that is retained or hired by a consumer for a fee or other thing of value to assist, represent or act on behalf of a consumer in purchasing or leasing a motor vehicle.

    A person whose business includes the purchase of motor vehicles primarily for resale or lease (i.e. a motor vehicle dealer) CANNOT be a buyer agent. Any person having an ownership or financial interest in, or an employment relationship with a dealership, cannot be licensed as a buyer agent.

    Licensed salespersons cannot obtain a buyer agent license because they receive compensation from a dealer. Buyer agents are strictly prohibited from being employed or receiving any fee from a dealer."

    2) From Boulder-Denver BBB Brochure - "Auto Brokers"

    "Colorado law also requires car dealers, who are brokers, to disclose the fact that they are dealers in their advertisements, and they are prohibited from creating the false impression that they are a buyer's agent."

    Bottomline, after Jim has helped you buy your home, and you go make the 2nd largest purchase, be just as informed about the relationship you have with the person you are dealing with as you are about Jim.

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