Working with a real estate agent/realtor can be quite a relief when buying a house. On average, 87% of buyers and sellers hire realtors to handle all the paperwork and legalities.
While it’s important to maintain open communication with your real estate agent, sharing too much information can sometimes work against your interests, particularly regarding negotiation. Over-disclosing, like revealing your highest budget or urgency, might lead to less favorable negotiation outcomes or compromise your position.
In this article, we cover information you should give your agent and things you should keep to yourself. So read on before you visit your local agent for friendly chit-chat, and don’t sign that agreement just yet.
Here is a list of 11 do’s and don’ts you must remember when working with your realtor.
11 Things You Should Never Disclose to Your Agent
Table of Contents
1. Your Top Price
Keeping your top budget a secret can be a game changer in your house hunt. If you disclose your absolute maximum budget to your realtor, you might find yourself steered toward houses at the upper end of your budget range.
This can result in little to no wiggle room for other expenses such as home improvements, moving costs, furniture, and contingencies for unexpected repairs or maintenance.
For instance, if your maximum budget is $500,000 and you reveal this to your realtor, they might primarily show you properties priced around $475,000 to $500,000. This could limit your options, as you might not see other properties priced at $400,000 that, with a bit of renovation or decoration, could potentially be your dream home. Besides, spending the full budget on the house purchase alone might not leave you with enough funds for other incidental costs associated with moving into a new home, like moving services, new furniture, or initial maintenance work.
Hence, it’s wise to share a target budget that gives you some financial flexibility. This can broaden your options and strengthen your negotiating position when it comes time to make an offer on a property. Also, this approach can help ensure you have funds set aside for additional costs that invariably crop up when moving into a new home.
2. Your Enthusiasm
Revealing your enthusiasm for a particular property can also have unintended consequences. If you show excessive excitement or interest in a home, your realtor may infer that you’re willing to go above and beyond to secure it. This perceived eagerness might weaken your negotiating power regarding price discussions.
For example, imagine you’ve found your dream house, and you can’t help but gush about it to your realtor, expressing how it’s the perfect fit for you and your family. Your realtor, interpreting your excitement as a sign of your willingness to stretch financially for this property, might convey this sentiment to the seller’s agent, intentionally or unintentionally.
Armed with the knowledge of your intense interest in their property, the seller and their agent might become more rigid in price negotiations. They could stick more firmly to their listed price, knowing that you might be willing to pay more to secure your dream home. This could cost you thousands of dollars that you might have saved if the seller was unaware of your strong desire for their property.
While it’s natural to get excited when you find a property that checks all your boxes, it’s essential to maintain an element of restraint and objectivity. Conveying a measured interest gives you a better footing in negotiations, helping you keep the purchase price within your budget. This way, you can secure your dream home without potentially overpaying for it.
3. anything Related to personally sensitive information
When you hire a realtor, you must work closely with them to get the best deal. You naturally build a good rapport with them during the home-buying process, which can work in your favor. However, this does not mean you reveal personal information to them. Instead, keep the discussion professional and on a need-to-know basis.
This is because they can use your personal information to manipulate you into buying a property just to close the deal quickly. For example, if you tell them that you prefer staying close to a sports club or your office to close quickly, they might tell you that you will not get a house closer to the one they are showing you.
What are your hobbies, how you spend your free time, how often do you travel and where, and what difficulties are you facing in your current home—the agent does not need to know any of this. So keep your personal, sensitive information to yourself and only use it to evaluate the feasibility of the house. Putting all your cards on the table for the realtor can be a bad idea sometimes.
4. details about Your Finances
Keeping personal financial details to yourself when dealing with a realtor is essential to protect your privacy and maintain negotiation power.
Give only the required financial information to the realtor. For example, they do not need to know your total income or how you spend your money. Similarly, your investments and the properties you own are none of their business. However, on the contrary, if you are pre-approved for a loan, you can share this information with the realtor. That’s because this information helps them gauge that you are a serious buyer and convince a seller that the client is genuine.
Even when sharing this information, you need to be careful because an email containing this sensitive information or a government ID photograph can be leaked. Whether this is done on purpose or by accident is another matter.
There have been many data breaches, a case being the one at First American Financial Corp, a top title insurance company, and the one exposed by Ascension, a financial data firm. While the first involved about 885 million mortgage-related files, the second exposed 54,000 mortgage borrowers’ financial data.
If big corporations can face such issues, smaller real estate agencies or realtors are small fries for hackers and fraudsters. So always check what kind of safety measures your agent is using. Check if they encrypt the data in their office before sending it to them. Ideally, do not send any sensitive information via email. You should either do it personally or through secure online portals.
4.1 Information you can share with the realtor
To help you decide what information to share, here is a list of documents that your realtor may need:
- Your name and address, along with an email ID and telephone number
- A copy of the pre-approval letter
- If you are paying in cash, a letter from your bank mentioning that you can pay the amount
- If you are taking a mortgage, then the type of loan and the percentage of the down payment (no need to share the interest rate or the duration of the loan). This information is needed to prepare the purchase contract.
- What kind of house are you looking for, floor area, and a broad location
- Your tentative budget (always give a lower figure than your actual budget)
4.2 Things to Keep to Yourself When Dealing with a Realtor
You should not share the following information with the realtor:
4.2.1 Total Savings or Investments
Disclosing your total assets might make an agent think you can afford more than you’re comfortable spending.
4.2.2 Income Details
Sharing your income details may lead the agent to push for properties at the higher end of your budget.
4.2.3 Debt Details
Disclosing your debts might affect the agent’s perception of your financial stability and influence their recommendations.
4.2.4 Future Inheritance
Mentioning any future windfall or inheritance may give the impression that you have more financial flexibility than you currently do.
4.2.5 Financial Struggles
Revealing that you’re financially stretched might make the agent think you’re desperate to close a deal, which could weaken your negotiating position.
4.2.6 Pre-approval Amount
A higher pre-approval amount can lead an agent to show you homes above your comfort level.
5. your Spending Habits
Telling your agent your spending habits can do you more harm than good. Here is why.
5.1 It can influence your property selection altogether!
If your realtor knows you often make extravagant purchases, they might assume you have a higher spending capacity. As a result, your realtor will start showing you homes way above your comfortable budget.
He might even push you toward luxury properties, and why not? They are earning a more significant commission for them, after all!
5.2 It can impact your Negotiations.
If your financial extravagance is known, it could indirectly affect negotiation discussions.
For instance, if a seller’s agent learns about your spending habits in a conversation with your agent, they might believe you could afford to pay the total asking price, thus hampering your negotiation leverage.
5.3 It is technically breaching your Privacy
Your spending habits, like your financial status, are private. Sharing such information could unintentionally reveal more about your personal life and economic health than you’d prefer. This could invite unsolicited advice or judgments affecting your relationship with your realtor.
Ultimately, your interaction with your realtor should focus on finding a property that suits your needs, preferences, and budget. Unless directly related to the property purchase, your spending habits don’t need to be part of the conversation.
Try avoiding the following.
- You are willing to pay more than the listing price if you have selected a house.
- That you are willing to stretch your budget for the right house
- How much you spend on vacations or your other expenses; realtors are smart enough to gauge your net worth by your lifestyle.
- You always take a business class seat on flights when you travel and never travel by economy.
- That you plan to buy another house soon.
- That you are selling off one of your houses to fund the current buy
- That you buy the most expensive clothes and accessories/
- Avoid making any show of how much money you have. E.g., Avoid driving to a realtor’s office in a Mercedes or a BMW. That’s asking for trouble.
All this information can be detrimental to you if it is revealed to the realtor. They might use this information to convince you that you are getting the best price (even if the house is overpriced) and to close the deal quickly.
Also, it would help if you corrected your realtor when they suggested a house over budget. If they are trying to push you to buy something that will ruin your budget, you need to consider changing the realtor.
6. You Have Found Your Dream Home
Imagine this: you are selling a product, and suddenly there is a surge in demand. Will you be selling it at the same price henceforth, or will you raise the prices to capitalize on the circumstances? Obviously, you will increase the price if the demand is higher, right?
Similarly, it is never a good idea to mention to the seller or the agent that you like the house and have decided to purchase it. This puts you in a weaker position during negotiations.
Even if you have your heart set on a house, tell the realtor that you want to see more options. As long as the seller and the realtor feel you are keeping your options open, you have a great shot at negotiating the best price.
For example, avoid saying all this in front of your realtor:
- You really loved the house and want it at all costs
- This is the only house you are considering
- My wife/husband loves the house!
- My children love that there is a playground nearby.
Also, avoid the following:
- Any comments you or your family make while seeing a house must be subdued and professional. Do not reveal too much.
- Immediately making an offer on the house. Keep the realtor guessing. Come back with an offer in a few days.
- Showing desperation in any way.
- Commenting on anything during showings; questions about the house are okay since you need to know as much as possible to decide.
7. That You Are Under Pressure!
Disclosing to your realtor that you’re under pressure to buy a home can inadvertently impact the home-buying process in several ways:
- Compromising Negotiation Power: If your realtor or the seller’s agent knows you’re under pressure to buy quickly, you might lose some negotiating power. They may assume you’re willing to pay more or forego certain contingencies just to close the deal faster.
- Influencing Property Selection: Realtors might present properties that don’t fully meet your criteria but are available for immediate purchase. This can limit your options and potentially lead to dissatisfaction in the long run.
- Haste Over Quality: Knowing that you’re in a rush, the realtor might unintentionally expedite processes like property inspections, due diligence, and reviewing legal documents. Overlooking or rushing these can lead to costly issues in the future.
- Strained Realtor-Client Relationship: If the realtor feels stressed about finding you a home within a strict timeframe, it could strain your relationship with them, making the whole process tenser and less enjoyable.
7.1 Avoiding Pressure Situations
Buying a house is one of the most important transactions in your life, and it needs to be done with a calm and balanced mind.
It is natural to feel stress when buying a house, so you can try to relieve the pressure with the help of some tips or mental exercises such as meditation. Make it a point to manage your anxiety to make the right decision. You will be living in the house for quite some time, so don’t agree to buy it unless you are satisfied that you are getting a good deal.
If you reveal to your agent that you have some constraints, they may try to take advantage of your position and force you into closing a deal you are not entirely happy with. For example, if they delay the deal, you will come under pressure to settle at a higher price.
Here are some things you should avoid telling your agent if you want to avoid any pressure.
- Don’t tell them you have a deadline to buy the house because you are selling another home and need the transaction completed in a month. The realtor may not bother to show you many houses because you don’t have much choice but to buy quickly.
- Don’t tell them if your lease expires in a few weeks and you want to move into the new home immediately. Rather extend the lease or make a makeshift arrangement until you find the right house. This will reduce the pressure.
- Don’t tell them if you are in the midst of divorce proceedings and need a house to shift in quickly. Make separate arrangements to lower the pressure.
Further, you can do the following to avoid pressure situations.
8. Your Lack of Knowledge
Another crucial point to remember is to avoid displaying a lack of knowledge regarding the real estate market or the home-buying process. If a realtor perceives that you don’t have a good understanding of these areas, they might be tempted to exploit this, possibly leading to less favorable outcomes for you.
If you find yourself in a situation where you’re unsure about something, it’s advisable to note it and conduct your research later. Rather than exposing your uncertainty at the moment, seek clarity afterward. You can do this by investigating the issue online or by consulting another realtor at a later time. Remember, with a bit of dedication and effort, there’s no aspect of the real estate process you can’t gain a strong understanding of.
For instance, familiarize yourself with the property prices in the area of interest, and compare prices of similar homes to ensure you don’t end up overpaying. Also, thoroughly read about the home-buying process before you approach a realtor. You can find a wealth of information in articles like this one. (Here is where you can link to a relevant article.)
While a realtor is certainly a valuable resource, it’s essential not to rely solely on their advice. Be an active participant in the process. This enables you to make more informed decisions and could spare you a lot of trouble down the line.
By staying informed and engaged, you can avoid common pitfalls and ensure your home-buying journey is as smooth and successful as possible.
9. Future Plan
Avoid revealing your long-term plans for the property to your realtor. Let’s say you have an innovative idea to transform the property into a Bed & Breakfast because of its ideal location, meaning you’ll soon turn it into a profit-generating investment. If you share this plan, your realtor might view it as an opportunity to capitalize on your future profits.
Consider this scenario: You spot a house listed at a modest $200,000, but with some improvements, estimated at an additional $50,000, you can transform it into an appealing lodging option. If these renovations could increase the property’s value to $400,000, your agent might recognize the lucrative nature of your plan.
The danger here is two-fold: your realtor may divulge your strategy to other prospective buyers, instigating a bidding war and driving up the price because of the moneymaking potential you’ve uncovered. Alternatively, if your plans indirectly reach the seller via your realtor, they could immediately hike up the price to capitalize on the commercial benefits they know the property can offer.
Sharing too much information may complicate your negotiations, and you could lose the chance to secure a profitable deal in the real estate market. Hence, keeping your plans under wraps is wise until the deal is done.
Remember, while it’s essential to maintain a transparent relationship with your realtor, being discreet about specific information, especially regarding your future intentions for the property, can serve your best interests in the long run.
8. You Are an Outsider
Learn everything about where you are planning to buy the house. Meet different realtors, and understand the good places to buy a house. Note the good and the bad localities. This will prepare you if a realtor tries to sell you a property in an area where property prices may not grow.
If you plan to invest in a property and not stay here, there is still no reason to reveal this to the realtor. They might change their pitch and tell you this is a fantastic investment property, even if it is not. An investor always expects to profit from the property, so the agent may feel that you don’t mind paying a little more for such an investment. This will be hard on your budget. You can tell them you plan to move here someday if things go right.
Also, if you inform them that you are an outsider, they will assume you don’t know much about the area. So research and contradict the agent if they make an inappropriate comment. This way, they will see they cannot take you for a ride.
Similarly, do research even if the agent surprises you by showing you a house in an unfamiliar area. After seeing the house, walk around, and talk to the people living there. They are the experts in their locality. Talk to other realtors to get a balanced view of the area. Always cross-check the information provided by the seller and the agent; don’t take it as the bible truth.
9. Your Negative Comments Opinions about the Property
Expressing negative opinions about the properties your realtor shows you require a balance of honesty and diplomacy. While it’s crucial to convey your preferences and dislikes so your realtor can refine their search, overly harsh criticism might strain your professional relationship.
For instance, suppose you visit a property that doesn’t meet your expectations. You might feel inclined to express your disappointment or critique the property extensively. While constructive feedback is helpful, excessive negativity or harsh comments can be off-putting. Realtors put significant effort into curating potential homes based on your requirements, and consistent harsh criticism can feel discouraging and diminish their motivation to assist you.
Instead of openly criticizing, consider framing your feedback more constructively. If you dislike a property due to its outdated kitchen, rather than making negative comments about it, you can say something like, “I prefer homes with more modern kitchen designs.” This approach offers your realtor valuable insight into your preferences without causing unnecessary strain.
Maintaining a positive and respectful relationship with your realtor can facilitate better cooperation, ultimately aiding them in finding the perfect property that aligns with your preferences and budget.
10. Desperation To Buy
Conveying a sense of desperation or urgency to buy a home can set a difficult tone for your home-buying journey. While it’s understandable that you may be operating under time constraints or keen to settle into a new property, indicating a rush to your realtor can lead to complications.
Firstly, a hurried approach might lead your realtor to expedite the process, potentially skipping over crucial details in the rush to secure a home. These overlooked aspects could range from minor issues like incomplete paperwork to significant ones like not conducting a thorough property inspection, which could reveal structural issues or the need for costly repairs.
Secondly, sellers and their agents are often savvy enough to sense when buyers are operating under pressure. This knowledge could weaken your negotiation position significantly. For example, if a seller is aware that you’re in a hurry to close the deal, they might be less willing to negotiate on price or accommodate other requests, knowing that you’re unlikely to walk away.
Therefore, while it’s essential to communicate your timelines to your realtor, avoid creating a sense of desperation. Instead, express your eagerness to move forward while also emphasizing your focus on thoroughness and due diligence. Remember, buying a home is a significant investment, and the key to a successful purchase lies in balancing urgency with careful consideration.
While your dealings and conversations with a realtor need to be measured and controlled, you must remember that your agent is your partner. They are committed to getting you the best deal, and they need your cooperation. If you are gruff and don’t build a rapport with them, they might lose interest in working with you. Working together on the buying process as a team will get you the best results.
Keep it professional and divulge information on a need-to-know basis. There are several advantages to building a good client-broker relationship and many disadvantages to going overboard and being over-friendly. Keep your personal details and paperwork safe; ideally, don’t share it by email if you can help. Personally deliver only the required data— check this article to see a list of this information.
Be polite and build trust with one or two agents. Working with too many will only create confusion. Be open about working with more than one agent if you want to. Give the realtor the option of refusing your business. There is a lot of information you need not disclose to the agent, but make sure not to come across as too guarded. Nobody prefers or likes to work with someone who doesn’t trust them. Keeping things professional is the best policy. As they say, better safe than sorry.