One of the most powerful tools in real estate is the truth. It can be surprisingly unpopular, though, as some home sellers and home buyers may not want to hear it or to tell the whole truth as required by law (and that may apply to their real estate agents as well).

The importance of truth

Listing agents and sellers

Real estate agents sometimes accidentally miss the mark with pricing, and may tell a home seller a price that is too high, which of course usually causes the  home not to sell – in fact, the main reason why a home won’t sell is having a price that’s too high.

Sometimes, though, the seller does not want to hear the agent’s honest assessment of value. Some sellers insist on a high price and may even challenge his or her agent to back it no matter what. I once had a seller tell me “I want to hear your enthusiasm for my price”. I could not do it in good conscience, and allowed that client to cancel the listing. I wasn’t going to lie and just say what that home owner wanted to hear.

Other times, agents may be afraid to tell the home seller the hard truth about the property condition, such as the need to paint over garish colors or replace tired, worn carpeting. It’s harder to tell the truth if sellers either bite your head off or cry when you are truthful with them. Buying and selling is stressful, and emotions can rise to the surface easily. If getting top dollar is important, it’s imperative that sellers welcome the truth, not fight it or pressure their agent to tell them what they want to hear.

Here are some of the hard truths for home sellers to understand:

  • old carpet may need to go
  • the home may need painting
  • the home may need staging
  • it may not be worth what you put into it
  • buyers may not like your wet bar, wallpaper, or decor
  • the way you live in the home is not the way you sell a home
  • not every home sells – yours may not, either
  • advice from friends and relatives may undermine you
  • the house may not close escrow on time, allow some wiggle room in your schedule
  • some agents may tell you what you want to hear instead of what you need to hear

Listing agents and marketing

Listing agents need to be careful to present a true description of the property in both words and photos. For instance, high voltage power lines should not be photo-shopped out of the images. Descriptions should not over-state improvements. Phrases like “fully remodeled” could be misleading unless the home is just about rebuilt. Truth in marketing is part of the duty for “fair and honest dealing” with all parties.

Disclosing the truth about the property you are selling

As a home seller, it’s important for you to disclose the actual condition of what you are selling as well as past repairs and issues. Sloped floors on a hillside lot? You may not want to mention it in the hopes that buyers won’t notice. Or you may not want to disclose that you did repairs, but the problem came back later. Not telling the truth in that case is like setting a time bomb for your own future: eventually, the new owners will find out what you did not disclose and will sue you. The sellers have the money and the buyers have the problem. Which way do you think that case might go?

Sellers should be careful where remodeling is concerned, as many things need permits and finals when replaced (example: a water heater replacement). A sure fire way to make buyers upset is to assert that all remodeling was done with permits and finals, and later to find out that it wasn’t the case. Proceed carefully so that what you disclose is true.

Non disclosure by sellers to buyers is the number one reason for real estate lawsuits. If you want to stay out of legal trouble, be comprehensive in your disclosures and don’t overstate improvements.

The truth about the offer you are presenting

As a home buyer, the presentation of your offer is supposed to be a truthful picture of your intentions. Some home buyers may be tempted to get into contract and then change their minds about various things (inspections, loans, timing). Messing around when you are in contract causes stress and could potentially put your initial deposit at risk.

When the market is red hot, like it is right now in many areas / price points in Silicon Valley, some homes will get loads of offers and ultimately sell with few or no contingencies. To make an informed decision, you’ll want to get a true picture, as much as possible, on the anticipated number of bids for the home you’re trying to buy. That said, listing agents don’t always know. I have had times where I thought I’d get 4 offers and ended up with none, and other times where I thought I’d get 4 offers and ended up with 8. Some buyer agents swoop in at the last moment with an offer (not ideal, and it feels like an ambush).

Hard truths for buyers

  • decide on your loan before you get into contract, you won’t have time later
  • you may have to pay more than list price to get the home
  • you may decide to give up contingencies to buy if there are multiple offers
  • you will get about 80% of what is on your Wish List or even your Must Have List
  • advice from friends and relatives may undermine you
  • the house may not close escrow on time, allow some wiggle room in your schedule
  • some agents may tell you what you want to hear instead of what you need to hear

The value of a truthful reputation

Having a listing agent or a buyer’s real estate agent with a truthful reputation will be a help in maximizing sale price for sellers and getting offers accepted for buyers. The real estate industry is a little different because one day two Realtors can be competing and the next day they are cooperating. When the real estate licensees are known by their peers to be straightforward, no games, honest, and cooperative, it makes others want to work with them.

No matter where you fit in with the real estate puzzle – buyer, seller, or the professional real estate agent – all benefit and reduce risks by being truthful at the highest levels. I would say that most people do strive for this, but it’s not 100%. Fear, misinformation, indecision, and sometimes a lack of backbone can set people up for doing less than they should. We can all encourage truthfulness across the board when we don’t overreact to information we don’t like.