In Red-Hot Real Estate Market Beware Greed Factor
The recent real estate boom in the metropolitan areas has afforded everyone involved the chance to reap previously unheard-of profits.
Realtors who had to pound the pavement just to make rent are now regularly pocketing five-figure commissions.
I’ve seen million-dollar all-cash deals go down with the nonchalance of someone ordering a cup of coffee. When this amount of money is at stake, real estate sellers, real estate buyers, and agents alike become greedy–and that greed can lead to ruthlessness.
I experienced the cold-bloodedness caused by unbridled greed firsthand when a couple I helped for five months unexpectedly cut me out of a real estate commission.
When I began consulting with them there was absolutely zero chance they were going to get anywhere near their two-million dollar asking price. That was largely because their home’s only entrance led through the study. I explained that when a buyer views a property they usually make up their mind about the place within minutes. I advised them that by moving the entrance so that people had to pass through the living room instead of the study we would be creating the “Wow” factor their listing needed. This involved a lot of planning and consulting with real estate stagers, contractors and handymen. There were other problems with the home as well—heavily damaged French doors, a rotted two-tiered deck and failed windows—all of which were out of the couple’s budget to replace.
Through my personal contacts in construction—well earned over thirty-five years as a leading Realtor in San Francisco—I was able to come up with money-saving repair solutions, saving these real estate clients thousands of dollars. But my work wasn’t done. I had to reconfigure the floor plan so that I could market this seller’s home as a three-bedroom. The final step was repainting the exterior, which I got done for them at a discounted rate. As we were finishing up all this work and planning to go onto market mid Spring, we paused for the Christmas holiday season. Here is the point where greed made things extraordinarily messy:
A real estate buyer, already represented by their own Realtor, contacted the people who were my clients without my knowledge.
The Realtor informed my real estate clients that if they did the real estate deal with her exclusively, they could make even more money—so now it is off with my head! When the transaction with the other Realtor went through, the wife—who we’ll call Anne for her resemblance to the head-chopping Queen Anne Boleyn—had the gall to brag to me about the amazing price she got for her home. I was aghast as she hugged me ever so tightly, exclaiming over and over again: “Isn’t this miraculous that we were able to get two million dollars for our home, just miraculous!”
But it really wasn’t a miracle from heaven—it was me! It was my thirty-five years of hard-won experience that got these clients $400,000 over what they expected. I was the one who instructed them on how to show their home in the best possible way without overspending. Not wanting to address her greed directly, I told her, “Well, the Universe certainly did give you a gift, but I hope you realize you hurt someone in the process.”
Anne backed away in anger and snarled: “Who? Who could I have possibly hurt?”
“Me,” I said, as softly as I could. Anne screeched as if I had given her a physical blow. “HOW? How could I possibly have hurt you?” Again I was the epitome of calm. “Well, I happen to have copies of all the emails and phone calls you and I had over the last five months as well as an accounting of all our real estate consultations.” I pulled out a three-inch thick folder from my purse and attempted to hand over the evidence.
She almost tripped over her feet trying to get away from me. “You are incredible Paula Pagano! You have the gall to give me a bill?” “This is not bill,” I said, hoping there was some rational thinking and fairness still inside her. “You have an opportunity here to do the right thing,” I told her. She waved her hands furiously, as if I were a spot of dirt she was trying to scrub clean. “You know, our lawyer told us we owe you nothing. NOTHING!”
Ah-ha! So the truth was finally out in the open. I knew then in my heart of hearts that these sellers would not offer me any compensation. I could sue them in small claims court and win at least my cost per hour. But was it really worth my aggravation and time to deal further with these unscrupulous people? I had known Anne for three years, but did I really know her?
Beneath Anne’s initially charming persona, greed lay quietly, waiting to rear its ugly head. This time I bore the brunt of its aggression. Learn from my mistake: to be a successful real estate agent you need to understand that everyone is capable of capitulating to greediness when there is an overwhelming amount of money at stake. Be smarter than I was in this one situation–and did not get a signed contract with someone I thought was a friend. Get a real estate contract signed no matter who the client is, no matter the circumstances, no matter what verbal promises have been made. At the end of the day, you will be glad to have legal protection against the worst of the seven deadly sins!
For more on the eight pitfalls to success in real estate, I invite you to order my new book, Getting the Property SOUL’D – A Breakthrough System for Successful, Stress-Free Buying and Selling, available on Amazon in April. I also invite you to visit me at Paula Pagano.com.
Be aware that any clients’ names have been changed to protect their privacy. Furthermore, Paula Pagano does not accept any liability for the content of any Blogs and this Website or for any actions you take or resultant consequences of actions taken based on the information provided in this communication. Any advice is my opinion after being a 35 year experienced real estate agent in San Francisco.